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CertainTeed Corp. v. Williams

June 27, 2006


The opinion of the court was delivered by: James F. Holderman, District Judge


On May 31, 2006, plaintiff CertainTeed Corporation ("CertainTeed")*fn1 filed a one-count complaint, alleging breach of contract against its former employee Jerome O. Williams, Jr. ("Williams"). (Dkt. No. 1). Pending before the court is CertainTeed's motion for preliminary injunction that was first submitted to the court's chambers as the "Emergency Motion for Temporary Restraining Order and Preliminary Injunction" and has been filed today, June 27, 2006, nun pro tunc to May 31, 2006. (Dkt. No. 25). This court has considered the parties' written briefing and "Stipulated Facts." (Dkt. Nos. 22, Ex. 1; 24-26). This court also conducted an evidentiary hearing on June 27, 2006, during which this court heard the opening statements of counsel for the parties, and plaintiff CertainTeed was given a full opportunity to present its case-in-chief. (Dkt. No. 27). At the conclusion of CertainTeed's case-in-chief, Williams made an oral motion for judgment as a matter of law pursuant to Rule 52(c) of the Federal Rules of Civil Procedure, ("Rules"). For the reasons set forth below, this court grants Williams' oral motion for judgment as a matter of law and denies CertainTeed's motion for preliminary injunction.


This case involves the movement of a management employee, Williams, from CertainTeed, to IKO Industries ("IKO"), a competitor of CertainTeed in the roof shingle industry. The primary issue before this court is whether the Non-compete Employee Agreement ("Non-compete Agreement") (Dkt. No. 24, Ex. B), signed by Williams while at CertainTeed can lawfully prohibit Williams' new employment at IKO.

Williams began working at CertainTeed as a Plant Engineer in CertainTeed's Ennis, Texas facility in August 1999. (Dkt No. 24 at ¶ 18). He was promoted to Operations Manager in September 2001 (Id. at ¶ 21) and to Acting Plant Manager in June 2002. (Id. at ¶ 23). Williams was an "at-will" employee at all times during his employment with CertainTeed. (Id. at ¶ 35). Williams executed the Non-compete Agreement on June 12, 2002. (Id. at ¶ 26); (Id. at Ex. B). Prior to becoming Acting Plant Manager in June 2002, Williams was only required to read and to follow CertainTeed's "Code of Ethics and Business Conduct Statement for Exempt and Non-Exempt Salary Employees." ("Code of Ethics") (Id. at Ex. L). The Code of Ethics imposed various requirements on covered employees including the protection of CertainTeed's confidential information and the prohibition on CertainTeed employees against attempting to "acquire a competitor's trade secrets or other proprietary or confidential information through unlawful or unethical means [including] disclosures by the competitor's present or former employees, or breach of a competitor's non-disclosure agreement by a customer or other party." (Id. at Ex. L, pg. 14).

Under CertainTeed's policies there are employees, primarily union employees, who have some access to a portion of CertainTeed's confidential information despite the fact that they are not covered by either the Code of Ethics or the Non-compete Agreement. (Id. at ¶¶ 103-115). By way of example, the testimony presented at the June 27, 2006 hearing was that fifty of the sixty-five employees at the Ennis, Texas plant are union employees, and in turn these fifty employees are not covered by any type of nondisclosure, non-compete or other restrictive covenant. Furthermore, CertainTeed has no formal policy in place directing employees to mark or otherwise designate documents containing information CertainTeed deems to be confidential as "CONFIDENTIAL." (Id. at ¶ 116). Nor does CertainTeed provide standard training to instruct employees on what information is confidential or the proper procedures for keeping that information confidential. (Id. at ¶ 117).

Williams' promotion to Acting Plant Manager in June 2002 resulted in a $250.00 per month raise in salary. The Non-compete Agreement executed by Williams when he commenced his tenure as Acting Plant Manager imposed additional restrictions beyond those previously required of Williams under CertainTeed's Code of Ethics. Under Paragraph 3 of the Non-compete Agreement, Williams promised (1) to protect CertainTeed's confidential, trade secret and proprietary information, (2) to only use that information in the performance of his duties at CertainTeed, and (3) to return confidential, trade secret and proprietary information when he left CertainTeed. (Id., Ex. B, at ¶ 3). In Paragraph 6, Williams agreed not to work for a competing company while working at CertainTeed and not to work for a competing company for one year after leaving CertainTeed. (Id., Ex. B. at ¶ 6). Paragraph 7 of the Non-compete Agreement stated that:

I acknowledge the nature of my employment, and [CertainTeed's] inability to be adequately compensated by money damages as a result of loss of Confidential Information, is such as to require some restriction of my activities should I leave my employment. Therefore, in consideration of my employment, continued employment, increased compensation, change in responsibility in my present employment, or other benefit, I agree to the following obligations pertaining to any post-employment period:

I shall not, without written consent signed by an officer of [CertainTeed], directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time during the one year period following termination of my employment with [CertainTeed], engage in or contribute my knowledge to any work or activity that involves a product, process, apparatus, service or development (i) which is then competitive with or similar to a product, process, apparatus, service or development on which I worked or (ii) with respect to which I had access to Confidential Information while at [CertainTeed] at any time during the period prior to such termination. The preceding sentence shall not apply if my employment is terminated by [CertainTeed] without cause. The above one year period shall not run during any period in which I am in violation of this paragraph.

In event of a breach by me of this covenant, and in recognition that any remedy at law for any breach or threatened breach would be difficult to measure and inadequate and that any such breach or threatened breach would cause such immediate and permanent damages as would be irreparable, [CertainTeed], in addition and as a supplement to such rights and remedies as may exist in its favor, may apply to any court of law or equity having jurisdiction to enforce the specific performance of this covenant, and/or may apply for injunctive relief against an act which would violate this covenant.

If any provision of this Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, such provision shall be deemed to be amended to conform to applicable laws so as to be valid and enforceable, or if it cannot be so amended without materially altering the intention of the parties, it shall be stricken, and the remainder of this Agreement shall remain in full force and effect. (Id., Ex. B at ¶¶ 7-8).

CertainTeed alleges that Williams' position as Acting Plant Manager and Plant Manager of the Ennis, Texas plant allowed him to work with and have access to CertainTeed's confidential, trade secret and/or proprietary information as to CertainTeed's: (1) manufacturing procedures, (2) manufacturing strengths and weaknesses, (3) impact resistant shingle design, (4) wide track manufacturing technology and design, (5) sales projects and plans, (6) financial information, (7) quality control programs, and (8) product performance. (Id. at ¶ 33). CertainTeed also alleges that Williams was able to interact frequently with other CertainTeed plant managers across the United States, CertainTeed's Vice-President of Manufacturing, and individuals in CertainTeed's Research and Development corporate group. (Id. at ¶ 34). These communications were designed to allow the sharing of technology and best practices among CertainTeed's manufacturing plants.

Although Williams was required to sign the Non-compete Agreement, the testimony at the June 27, 2006 hearing revealed that not all CertainTeed plant managers were required to sign an agreement identical to Williams' Non-compete Agreement. Two of CertainTeed's eleven shingle manufacturing plant managers and three of fifteen total plant managers in the United States were promoted to their position without being required to sign the Non-compete Agreement. All CertainTeed plant managers are covered by the less restrictive Code of Ethics. However, the testimony was that no efforts were made to distinguish these three plant managers who had not signed the Non-compete Agreement in CertainTeed's sharing of technology and best practices among its manufacturing plants.

The parties agree that Williams' employment at CertainTeed terminated on April 11, 2006, though the parties dispute whether Williams left on his own accord or whether he was effectively pushed out. When he left, however, Williams refused to tell CertainTeed his future employment plans. (Id. at ¶¶ 22-23). Later in 2006, CertainTeed learned that Williams on March 22, 2006 signed an employment agreement to become the Plant Manager of IKO's Kankakee, Illinois plant. (Id. at ¶ 43). The parties agreed that Williams had been looking for outside employment while at ...

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