Indiana Intellectual Property Law News
Indianapolis, Ind. – The Indiana Court of Appeals has affirmed the judgment of the Hamilton Circuit Court granting a preliminary injunction in favor of Classic Restaurant Services of Westfield, Ind. against former employee Christopher Snyder for tortious interference with business relationships.
Classic Restaurant Services, LLC (“Classic”) provides heating, air conditioning, refrigeration, and cooking equipment sales and service predominantly to restaurants throughout central Indiana. Christopher Snyder began working as a service technician for Classic in 2009. Snyder did not have a non-compete agreement with Classic and was expressly permitted to do residential jobs on the side while using his company vehicle. During his more than three years of employment, Snyder serviced all of Classic’s customers.
In the summer of 2011, Snyder began organizing his own competing business and planning to take customers from Classic. By July 2011, Snyder had succeeded in taking the business of two Subway restaurants from Classic. He serviced these restaurants after hours on his own behalf. Classic did not know that it had lost these customers to Snyder.
In the fall of 2011, Snyder unsuccessfully attempted to solicit Ruby Tuesday restaurants to transfer their business to him. Although he was still employed by Classic, Snyder had prepared to compete by purchasing and outfitting a van, obtaining business cards and insurance, and printing marketing flyers. He distributed his flyers to several restaurants in central Indiana and, in February 2012, organized his new company, A Plus Air LLC.
Snyder resigned from Classic in April 2012 but retained a binder that contained contact information of all Classic’s vendors and customers. This list was marked confidential and Classic employees had been directed on numerous occasions to keep its contents confidential. Snyder continued to use the list for his new business. He also obtained additional Classic documents from Doris Warswick, Classic’s office manager, who knew of Snyder’s intention start a competing business.
Classic sued, asking that Snyder be enjoined from “continuing to interfere with the relationships that Classic had with customers while he was employed” but agreed that Snyder should be otherwise free to compete in the local restaurant HVAC business. The Hamilton Circuit Court found that “while he was Classic’s employee and agent, Mr. Snyder engaged repeatedly in self-dealing and other acts of disloyalty to his employer and principal, thereby breaching his fiduciary duties to Classic.” It concluded that Classic had a reasonable likelihood of success on the merits on its claims for 1) tortious interference with Classic’s business relationships and 2) misappropriation of trade secrets and granted the injunction.
Snyder appealed. He did not dispute that he had actively violated his fiduciary duties to Classic during the last year of his employment but argued instead that this prior misconduct should not affect his ability to compete with Classic following the termination of his employment.
In a unanimous memorandum opinion, the appellate court upheld the injunction on the grounds of a likelihood of success on Classic’s tortious interference claim. It further held that Snyder’s claim that a preliminary injunction was improper because he no longer owed a fiduciary duty to Classic was entirely unsupported and without merit. The appellate court did not reach Snyder’s arguments against Classic’s trade-secret claim, as Classic’s tortious interference claim was sufficient to support the trial court’s grant of a preliminary injunction.
Practice Tip: As the appellate court stated: “An employee owes his employer a fiduciary duty of loyalty. To that end, an employee who plans to leave his current job and go into competition with his current employer must walk a fine line. Prior to his termination, an employee must refrain from actively and directly competing with his employer for customers and employees and must continue to exert his best efforts on behalf of his employer….” Further, although the employee’s fiduciary relationship with his employer ends upon the termination of his employment, he is not then “free to enjoy the fruits of his breach of fiduciary duties.”
This case was assigned to Indiana Court of Appeals and assigned Case No. 29A02-1207-CT-592.