Case Title: Ex Parte Caribe, USA, Inc.

Citation: 702 So. 2d 1234

Docket Number: 1952046

State: alabama

Court: Alabama Supreme Court

Date: 1997-02-28T00:00:00Z

Document:
702 So. 2d 1234 (1997)
Ex parte CARIBE, U.S.A., INC.
(In re Dane ROMANO v. CARIBE, U.S.A., INC. [and two other cases]).
1952046.

Supreme Court of Alabama.
February 28, 1997.
*1235 K.W. Michael Chambers and R. Scott Hetrick of McRight, Jackson, Dorman, Myrick & Moore, L.L.C., Mobile; and John F. Young of Young & Associates, New Orleans, LA, for Petitioner Caribe, U.S.A., Inc.
G. Hamp Uzzelle III and E. Luckett Robinson II of Hand Arendall, L.L.C., Mobile, for Respondent Dane Romano.
HOUSTON, Justice.
Caribe, U.S.A., Inc., which was in the break bulk cargo liner service business, hired Dane Romano as general manager of export operations. Romano had been previously employed by Bordelon Brothers Towing (which was also in the break bulk cargo liner service business), where for approximately four months he served as director of export operations, directly involved in booking break bulk cargo. Pursuant to an employment agreement between Caribe and Romano that contained noncompetition and nonsolicitation-of-customers provisions, Caribe was allowed to seek injunctive relief and other remedies in case of a breach. In negotiating the agreement and before he agreed to these restrictions, Romano insisted on and received additional language that provided him more compensation. Six weeks after Romano was hired, Caribe discharged him because of allegedly poor performance. Subsequently, Romano was employed by G & B Marine, Inc., as an export coordinator.[1] Subsequently, Romano induced G & B to compete directly with Caribe by soliciting its customers. When Caribe discovered Romano's activity, it sent him a letter by certified mail asking that he cease and desist from soliciting its customers and adhere to the agreement. Romano refused. Consequently, Caribe sought a temporary restraining order and preliminary and permanent injunctions requiring Romano to comply with the terms of the employment agreement, and it sought damages for breach of contract. Romano asserted that the employment agreement was void and that Caribe did not have a protectable interest to *1236 support the enforcement of the nonsolicitation and noncompetition provisions of the agreement. The trial court, after hearing ore tenus evidence, granted Caribe's request for a three-year injunction against competing with Caribe or from soliciting those customers for which Caribe had actually shipped cargo as of December 31, 1992 (Romano's last day of employment with Caribe). The trial court's judgment provides as follows:
Furthermore, although the trial court was reasonably satisfied that Caribe suffered damage as a result of Romano's violation of the noncompetition and nonsolicitation provisions of the agreement, it was not reasonably satisfied as to the amount of damage. Therefore, it awarded Caribe only nominal damages, in the amount of $1, but held that Caribe was entitled to reasonable attorney fees, costs, and expenses, which were to be determined at a later date. Subsequently, Caribe filed a bill of costs; following an ore tenus proceeding, the trial court entered an order awarding Caribe attorney fees of $98,000 and costs of $2,998.09. Romano appealed, maintaining that the trial court erred in holding that Caribe had a protectable interest sufficient to enforce the noncompetition and nonsolicitation provisions of the employment agreement; in concluding that the nonsolicitation provision in the agreement was only a partial restraint of trade; and in awarding Caribe nominal damages, $98,000 in attorney fees, and costs. Caribe cross appealed, maintaining that the trial court erred in awarding it only nominal damages for Romano's breach of contract and in reducing the enforceability of the noncompetition and nonsolicitation provisions from five years to three years.
Finding dispositive the issue whether the trial court erred in holding that Caribe had a protectable interest that allowed it to enforce the noncompetition and nonsolicitation provisions of the employment agreement, the Court of Civil Appeals, by an opinion issued June 28, 1996, held that the trial court misapplied the law to the facts before it when it held that Caribe had a protectable interest in its pricing information; its customers' history of shipments, shipment quantities, and destinations; and its customer lists, and that the trial court abused its discretion in entering the permanent injunction. Therefore, the Court of Civil Appeals vacated the injunction and reversed the judgment of the trial court. Caribe applied for a rehearing of the order vacating the injunction. Romano also applied for a rehearing, asking the Court of Civil Appeals to consider whether the injunction was wrongly issued and, therefore, whether he was entitled to costs, damages, and attorney fees. On August 23, 1996, the Court of Civil Appeals withdrew its original opinion and substituted a new opinion; the new opinion was identical to the original opinion holding that the injunction had been wrongly issued, except that the substituted opinion, in addition to holding that the injunction had been wrongfully issued, also held that Romano was entitled to whatever costs, damages, and attorney fees he was able to prove to the trial court. The Court of Civil Appeals wrote:
"`DeVoe v. Cheatham, 413 So. 2d  at 1142.'
"`"In order to have a protectable interest the employer must possess a `substantial right in its business sufficiently unique to warrant the type of protection contemplated by [a] noncompetition agreement.'" Id. at 1142, citing Cullman Broadcasting Co. v. Bosley, 373 So. 2d 830, 836 (Ala. 1979). In the case of a "post-employment restraint," ... justification, according to the Restatement (Second) of Contracts § 188, Comment B (1979), generally must be "on the ground that the employer has a legitimate interest in restraining the employee from appropriating valuable trade information and customer relationships to which he has had access in the course of his employment." ... "[I]f an employee is in a position to gain confidential information, access to secret lists, or to develop a close relationship with clients, the employer may have a protectable interest." DeVoe v. Cheatham, 413 So. 2d  at 1143.'
"Moore v. McNider, 551 So. 2d 1028, 1029-30 (Ala.1989) (quoting McInnis v. Lay, 533 So. 2d 581, 582 (Ala.1988)).
Romano v. Caribe, U.S.A., Inc., 702 So. 2d 1230, 1232-34 (Ala.Civ.App.1996). Caribe petitioned for certiorari review, which we granted to determine whether the trial court erred in holding that Caribe had a protectable *1241 interest that allowed it to enforce the noncompetition and nonsolicitation provisions of the agreement.
Caribe argues that the Court of Civil Appeals disregarded what Caribe calls the trial court's express and correct findings of fact that Caribe's hiring Romano as a salesman and placing him in a position to develop current and potential customer contacts and relationships supported a finding of a protectable interest. Caribe argues that the Court of Civil Appeals thus incorrectly substituted its own judgment of the evidence and ignored the ore tenus rule in concluding that the trial court erred in finding that Caribe possessed a protectable interest. We agree.
When a trial court hears ore tenus testimony, its findings based upon that testimony are presumed correct and its judgment based on those findings will not be disturbed unless, after consideration of all the evidence and all reasonable inferences to be drawn therefrom, the judgment is found to be plainly and palpably wrong, manifestly unjust, or without supporting evidence. See Marvin's, Inc. v. Robertson, 608 So. 2d 391 (Ala.1992).
From a thorough review of the record, we find sufficient evidence to support the trial court's findings that the information at issue was confidential, proprietary, and protectable. There was sufficient evidence for the trial court to find that in the course of his six weeks with Caribe, where Romano worked as general manager of export operations, he was in a position where he had access to confidential and proprietary information, i.e., highly beneficial business information about Caribe's customers, such as customer lists, which included names of contact persons and their telephone numbers; that he was in a position where he could develop close personal relationships with customers of Caribe and generate business and customers for Caribe's benefit; that, as a salesman for Caribe, Romano solicited customers with which he had had no familiarity or contact before working with Caribe; that the break bulk cargo liner service business is highly competitive and the acquisition and protection of customer lists, pricing lists, trade routes, and a regular clientele are of crucial importance; that the information and documentation obtained by Romano, or to which he had access, while employed by Caribe was sufficiently "substantial or unique"; that although some of the information about Caribe's customers that was provided to Romano, e.g., pricing information, shipment quantities and destinations, receivers' names, shippers' names, and cargo weight, was available to the public by the required filing of tariffs pursuant to Federal regulations and through a reporting service published by the Journal of Commerce, and, therefore, could not be considered "top-secret," that information was not easily obtainable, but rather was publicly available, if at all, only through expertise, purchase, investigation, or extensive research; that Caribe treated all aspects of its business, including, but not limited to, the customer lists, pricing lists, voyage histories, deck plans, tariffs, and the like in a confidential manner; and that Romano, in executing the employment agreement acknowledged that the information and documentation received by him, including information concerning Caribe customers, were confidential business and financial information.
The trial court would have erroneously applied the law to the facts before it only if there were no dispute in the facts and the facts were the way the Court of Civil Appeals found them to be. However, the facts were in dispute; and, after considering all the evidence and all reasonable inferences to be drawn therefrom, we conclude that the trial court's findings of fact were not plainly and palpably wrong. Therefore, the trial court did not erroneously apply the law to the facts before it. The Court of Civil Appeals found the facts anew, in violation of the ore tenus standard of review.
The trial court properly recognized that Caribe had a protectable interest and properly issued the permanent injunction. The judgment of the Court of Civil Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
HOOPER, C.J., and MADDOX, SHORES, KENNEDY, COOK, BUTTS, and SEE, JJ., concur.
[1]  G & B had not operated a break bulk cargo liner service business before it hired Romano.