Court Opinion

ID: 54765
Source: CourtListenerOpinion
Date Created: 2010-04-26 01:35:33+00
Date Added: 2024-06-11T14:57:41.046336
License: Public Domain

[DO NOT PUBLISH]

           IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT                   FILED
                     ________________________         U.S. COURT OF APPEALS
                                                        ELEVENTH CIRCUIT
                                                           AUGUST 24, 2007
                            No. 06-16561
                                                         THOMAS K. KAHN
                        Non-Argument Calendar                 CLERK
                      ________________________

                  D. C. Docket No. 06-01752-CV-AR-S

E. A. RENFROE & COMPANY, INC.,

                                                          Plaintiff-Appellee,

                                 versus

CORI RIGSBY MORAN,
KERRI RIGSBY,

                                                     Defendants-Appellants,

KERRI MORAN,

                                                                 Defendant.

                      ________________________

               Appeal from the United States District Court
                  for the Northern District of Alabama
                     _________________________

                           (August 24, 2007)
Before BLACK, CARNES and MARCUS, Circuit Judges.

PER CURIAM:

      Cori Rigsby Moran and Kerri Rigsby appeal the district court’s grant of a

preliminary injunction ordering them to deliver to their former employer, E.A.

Renfroe & Company, certain documents relating to the work of that company or

its clients involving Hurricane Katrina-related insurance claims. After reviewing

the record, we affirm the district court’s order.

                                           I.

      The material facts are undisputed. Renfroe is a corporation headquartered

in Birmingham, Alabama whose business includes supplying insurance companies

with claims adjusters in the aftermath of natural disasters. The Rigsby sisters are

former Renfroe adjusters who began working for the company in 1998. In 2005,

Renfroe deployed the sisters to the Mississippi Gulf Coast as part of a team of

claims adjusters to assist its client State Farm insurance company handle its

Hurricane Katrina-related insurance claims.

      While on this assignment for Renfroe, the sisters became convinced that

State Farm was engaging in what they would later describe as “fraudulent and

potentially criminal activities” related to the disposition of the insurance claims.

As a result, the sisters copied some 15,000 State Farm claim-related documents

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and decided to share them. The first recipient of the documents was Mississippi

lawyer Richard Scruggs, who now represents them as their attorney (though not in

this case) and who also (as of July 1, 2006) employs them as consultants. Scruggs

in turn recommended that the sisters share the documents with the Mississippi

Attorney General’s office and the Federal Bureau of Investigation. The Rigsbys

also discussed their find before a national television audience on August 25, 2006

when they appeared in a segment on the ABC News show “20/20” spotlighting the

fraud allegations against State Farm.

      After learning of the Rigsbys’ activities, Renfroe sued the sisters on

September 1, 2006, seeking monetary and injunctive relief, alleging that they had

violated their employment contracts with Renfroe (which contained non-disclosure

provisions) and the Alabama Trade Secrets Act. Shortly thereafter, Renfroe also

moved the district court to issue a preliminary injunction commanding the return

of the documents pending a full trial on the merits of their case.

      After hearing the evidence, the district court issued Renfroe’s requested

preliminary injunction on December 8, 2006. It forbade the Rigsby sisters “and

other persons in active concert . . . with them” from “further disclos[ing], us[ing]

or misappropriat[ing]” any of the material in question, and also ordered them to:

      deliver forthwith to counsel for [Renfroe] all documents, whether

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      originals or copies, of each document and tangible thing, in any form
      or medium, that either of [the Rigsbys] or anyone acting in
      conjunction with . . . them, downloaded, copied, took, or transferred
      from . . . Renfroe or . . . any of its clients, including, but not limited to
      State Farm Insurance Company and which refer or relate to any
      insurance claims involving damages caused or alleged to have been
      caused by Hurricane Katrina in the State of Mississippi.

In light of an ongoing criminal investigation by the Mississippi Attorney General’s

office into the fraud allegations against State Farm, the district court exempted

from the scope of the injunction disclosure of the documents to, and their use by,

law enforcement officials. With those exceptions, the injunction ordered

Renfroe’s attorneys to keep all these documents in their possession “under lock

and key.” They were not to disclose any of the material “to any entity, including

[their client] E.A. Renfroe & Company . . . without first obtaining the express

written approval of [the district] court.” They were, however, permitted to use the

documents in this pending lawsuit. If they wished to share the documents with

others, the attorneys were required to obtain written permission from the court

after an in camera inspection by it.

      Here we consider the Rigsby sisters’ appeal of the district court’s

preliminary injunction order. We review the issuance of that order only for an

abuse of discretion, see Church v. City of Huntsville, 30 F.3d 1332, 1341 (11th

Cir. 1994); “[h]owever, if the trial court misapplies the law we will review and

                                            4
correct the error without deference to that court’s determination.” Id.

                                          II.

      Before exercising its discretion to issue a preliminary injunction, the district

court was required to satisfy itself that Renfroe had demonstrated four things: (1)

that Renfroe had a substantial likelihood of succeeding on the merits of its

underlying lawsuit against the Rigsbys; (2) that Renfroe faced a substantial threat

of irreparable injury if the injunction were not granted; (3) that the threatened

injury to Renfroe outweighed the harm the injunction would cause the Rigsbys;

and (4) that granting the injunction would not disserve the public interest. Id.; see

also Ferrero v. Associated Materials, Inc., 923 F.2d 1441, 1448 (11th Cir. 1991)

(reviewing the issuance of a preliminary injunction in a diversity case under the

federal standard for injunctive relief). The district court found that Renfroe had

established each of these prerequisites, and the Rigsbys now challenge the court’s

findings on a number of grounds.

                                          A.

      The Rigsbys first challenge the district court’s finding that Renfroe was

substantially likely to prevail on the merits of its claim that the Rigsbys violated

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the confidentiality provisions in their employment contracts.1

       One way they do this is by arguing (without citing any authority) that

Renfroe “lack[ed] standing to seek an injunction whose result would be the return

of documents that never belonged to Renfroe.” By this, we think the sisters mean

that Renfroe hasn’t suffered any “injury in fact,” which is one of the three

constitutionally-required prerequisites for standing. See Koziara v. City of

Casselberry, 392 F.3d 1302, 1304–05 (11th Cir. 2004). The problem with this

argument is that the breach of a contract has long been held to be among the types

of injuries that confer standing to sue. See, e.g., Tenn. Elec. Power Co. v. Tenn.

Valley Auth., 306 U.S. 118, 137–38, 59 S. Ct. 366, 369 (1939) (standing is

available where “the right invaded is a legal right,—one of property, one arising

out of a contract, one protected against tortious invasion, or one founded on a

statute which confers a privilege” (emphasis added)). By pleading the breach of a

contractual provision, Renfroe asserted a sufficient “injury in fact” for standing.

       Another argument the Rigsby sisters make is that they were not bound by

any written employment contract by the time they were working on the Hurricane

Katrina-related claims. They ask us to compare the four employment agreements

       1
         The preliminary injunction was premised solely on the district court’s view that
Renfroe was substantially likely to prevail on the breach-of-contract claims. It did not reach
Renfroe’s claim under the Alabama Trade Secrets Act, and we have no occasion to do so either.

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they signed in July 1998, September 1999, February 2000, and May 2004, with a

fifth agreement they signed in June 2004 just before they began working on claims

related to Hurricane Charley.

      Paragraph 2(a) of all five of the employment agreements the sisters have put

forward provides for an employment relationship maintained either on an “at-will”

basis or “for an indefinite period.” Paragraph 2(a) of the fifth agreement, signed in

June 2004, contains an additional sentence not found in any of the first four

agreements. That paragraph, in its entirety, reads:

            RENFROE engages the Employee to perform assignments
      which will vary in work type, length and location, according to the
      needs of our business. Employee will be employed by RENFROE
      from the time he is checked in at the assignment location until the
      time he is checked out at the assignment location. It is further
      understood that employment is at-will, the Employee accepts such
      employment on the terms and conditions set forth in this Agreement,
      and either party may terminate such employment at any time for any
      reason. Throughout employment, Employee will faithfully exercise
      such authority and perform such duties as are assigned from time to
      time by RENFROE.

(Emphasis added.) The underscored sentence is the one that was not in that

paragraph in the earlier employment agreements. According to the sisters, this

new sentence means that all of their contractual obligations “expired” when they

checked out of their assignment location at the conclusion of their Hurricane

Charley-related work in 2004. And, they argue, their Katrina-related work in 2005

                                         7
was not subject to any contract, not that one or any one. If so, the confidentiality

agreement contained in all the contracts, including the fifth and last one that they

signed, does not apply to them.

         We disagree. The sisters’ singular focus on the sentence in paragraph 2(a)

limiting the duration of their employment with Renfroe to the time between check-

in and check-out at an assignment location ignores the other sentences in that same

paragraph which contemplate an employment arrangement that will span multiple

assignments and be governed by the same contract. For example, the first

sentence of paragraph 2(a) explains that “RENFROE engages the Employee to

perform assignments [in the plural] which will vary in work type, length and

location, according to the needs of [its] business.” And if that isn’t clear enough,

the sisters agreed in the final sentence of paragraph 2(a) to “faithfully exercise

such authority and perform such duties as are assigned from time to time [as

opposed to just once] by RENFROE.” Reading the entire provision in context, we

have no difficulty concluding that the language the Rigsbys rely on does not mean

what they say it means. The June 2004 agreement, which is the fifth and last one,

and the non-disclosure provision within it, covered the sisters’ Katrina-related

work. That work was one of those assignments that they received “from time to

time.”

                                           8
      The Rigsby sisters offer a number of fallback arguments concerning

Renfroe’s likelihood of ultimate success, but none of them have any merit either.

For example, the sisters assert that “Renfroe has presented no evidence that the

Rigsbys copied any documents that would fall within the confidentiality

provisions of the employment agreements.” But the confidentiality provisions at

issue in this case apply very broadly, and under them, confidential information

includes all:

      data and information relating to the business of RENFROE and its
      clients which is or has been disclosed to the Employee or which the
      Employee became aware as a consequence of or through employment
      with RENFROE and which has value to RENFROE or its clients but
      is not generally known to the public.

The Rigsbys admit in their answer that they provided some 15,000 pages of claims

information to their lawyer, the FBI, and the Mississippi Attorney General. There

is no suggestion that all those documents relating to Hurricane Katrina matters fell

from the sky into their hands.

      Another fallback argument is the sisters’ assertion that Renfroe “has failed

to prove that it has suffered any damages as a result of the Rigsbys’ alleged breach

of contract.” This, however, ignores the fact that the Rigsbys actually

acknowledged in their employment agreements that Renfroe would suffer

“immediate and irreparable damage and loss” upon the breach of the non-

                                         9
disclosure provision, which is why the provision was included to begin with.

      Finally, the Rigsbys say that the public policy concern of ferreting out

corporate wrongdoing justifies their breach of the contractual duty under the

confidentiality provision and counsels against enforcement of it. But that concern

is one that is adequately covered by disclosure of the alleged wrongdoing to state

and federal law enforcement agencies. As Renfroe put it in its brief, “Renfroe

makes no complaint about the Rigsbys’ participation in any investigation by a

governmental law enforcement agency. The fact that the Rigsbys gave copies of

documents to the Mississippi Attorney General and [federal law enforcement] is

not at issue in this litigation.” As we explained earlier, the preliminary injunction,

which is all that we have before us, permits disclosure to and use by law

enforcement agencies.

      For these reasons, we agree with the district court that Renfroe has

demonstrated a substantial likelihood of succeeding on the merits of its claim that

the Rigsby sisters violated their contractual duty to keep the claims files

confidential.

                                          B.

      Having concluded that Renfroe is substantially likely to prevail on its

breach-of-contract claim, we turn briefly to the three remaining preliminary

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injunction requirements of irreparable injury, balancing the hardships, and

consistency with the public interest.

      Regarding the irreparable injury requirement, the Rigsbys have given us no

reason to doubt the district court’s conclusion that “[m]onetary damages are

woefully inadequate as a means of addressing” the sisters’ continued ability to

“engage in public criticism of Renfroe’s most important client” absent the

injunction. The sisters do point out that State Farm has continued to use Renfroe’s

adjustment services since the Rigsbys’ wholesale disclosure of the confidential

information, and that at the November 14, 2006 preliminary injunction hearing,

Renfroe’s secretary-treasurer “could not name a single adjustor who had

terminated their employment with Renfroe as a result of the Rigsbys’ actions.”

However, neither of these facts calls into question the existence of the claimed

injury to Renfroe’s goodwill and reputation—which, as the district court noted, is

“difficult to prove.” See Ferrero, 923 F.2d at 1449 (noting that loss of goodwill

can be an irreparable injury). Moreover, as the district court mentioned in its

opinion, both sisters “expressly acknowledged in writing the virtual impossibility

of quantifying the damages that would be caused by a breach of confidentiality,

and expressly . . . authorized the remedy of a preliminary injunction as

appropriate.” We agree with the district court that Renfroe established the threat

                                         11
of irreparable injury.

       Finally, we also agree with the district court that Renfroe carried its burden

on the balance-of-hardships and public interest requirements, the discussion of

which the Rigsbys combine. They assert that the injunction is against public

policy because it affords “the targets of criminal investigations [such as Renfroe’s

client, State Farm] the opportunity to access” the claims documents in question.

This argument is illogical. If there is too much disclosure, the remedy is not total

disclosure. The situation that the Rigsby sisters seek, the absence of any restraints

on disclosure, would make all of the documents freely available to the world

including any and all targets of any and all criminal investigations.

       The sisters also argue that the injunction exposes them to criminal liability

in Mississippi for violating subpoenas they have received requiring them to

produce documents to a grand jury there. No, it doesn’t. As we have said twice,

the injunction specifically allows disclosure of the documents to “law enforcement

officials.”

       AFFIRMED.

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