Court Opinion

ID: 4112130
Source: CourtListenerOpinion
Date Created: 2016-12-29 17:06:48.21998+00
Date Added: 2024-06-11T14:45:31.012874
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),                                 FILED
this Memorandum Decision shall not be                             Dec 29 2016, 8:45 am
regarded as precedent or cited before any
                                                                       CLERK
court except for the purpose of establishing                       Indiana Supreme Court
                                                                      Court of Appeals
the defense of res judicata, collateral                                 and Tax Court

estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT                                  ATTORNEYS FOR APPELLEES
Maggie L. Smith                                          Kathleen A. DeLaney
Amy S. Wilson                                            Christopher S. Stake
Darren A. Craig                                          DeLaney & DeLaney LLC
Jenai M. Brackett                                        Indianapolis, Indiana
Frost Brown Todd LLC
Indianapolis, Indiana

                                          IN THE
    COURT OF APPEALS OF INDIANA

Angie’s List, Inc.,                                      December 29, 2016
Appellant-Plaintiff,                                     Court of Appeals Case No.
                                                         29A02-1605-PL-1061
        v.                                               Appeal from the Hamilton
                                                         Superior Court
Rick Myers, Maggie Leonard,                              The Honorable Daniel J. Pfleging,
and Brock Crabtree,                                      Judge
Appellees-Defendants                                     Trial Court Cause No.
                                                         29D02-1601-PL-588

Baker, Judge.

Court of Appeals of Indiana | Memorandum Decision 29A02-1605-PL-1061 | December 29, 2016   Page 1 of 12
[1]   Angie’s List, Inc. (Angie’s List), appeals the judgment of the trial court, which

      denied Angie’s List’s request for a preliminary injunction against Rick Myers,

      Maggie Leonard, and Brock Crabtree, and which dissolved a previously-issued

      temporary restraining order. The defendants are former employees of Angie’s

      List who, as part of their employment agreement with the company,

      covenanted to return any proprietary information to the company and not to

      solicit company employees after their employment ended. Instead, the

      defendants emailed hundreds of pages of company documents to their personal

      email accounts during their final days with the company, or communicated

      with Angie’s List employees about leaving the company to join a competitor, or

      both. We find that the trial court properly denied Angie’s List’s request to

      enjoin the defendants from working for the competitor, but that the trial court

      improperly declined to enjoin them from any future violations of their

      covenants with Angie’s List. Accordingly, we affirm in part, reverse in part

      with instructions, and remand for further proceedings.

                                                    Facts
[2]   Myers, Leonard, and Crabtree are former employees of Angie’s List. While

      Angie’s List did not ask them to execute a covenant not to compete, they were

      required to execute a confidentiality agreement and to agree to comply with a

      code of ethics. The confidentiality agreement required employees to “hold in

      strictest confidence and . . . not disclose, use, lecture upon or publish any of the

      Company’s Proprietary Information . . . except as . . . may be required in

      connection with [their] work for the Company . . . .” Pl.’s Ex. 1. Employees

      Court of Appeals of Indiana | Memorandum Decision 29A02-1605-PL-1061 | December 29, 2016   Page 2 of 12
      also agreed to the following: “When I leave the employ of the Company . . . I

      will deliver to the Company any and all drawings, notes, memoranda,

      specifications, devices, formulas, and documents, together with all copies

      thereof, and any other material containing or disclosing any Company

      Inventions, Third Party Information or Proprietary Information of the

      Company.” Id. The employees also agreed that, for the period of their

      employment and one year thereafter, they would not “solicit, contact or

      encourage” Angie’s List’s employees to leave the company for another. Id.

[3]   The company’s code of ethics defines confidential proprietary information as

      “all non-public information that might be useful to competitors or that could be

      harmful to the Company, its members or its suppliers if disclosed.” Pl.’s Ex. 3.

      The code also reinforces a promise made in the confidentiality agreement

      regarding proprietary information: “Your obligation to protect the Company’s

      proprietary and confidential information continues even after you leave the

      Company, and you must return all proprietary information in your possession

      upon leaving the Company.” Id.

[4]   Leonard was hired by Angie’s List in October 2013, and she quickly became a

      top sales representative at the company. Angie’s List allowed and encouraged

      her to use her personal email account for business purposes so that she could

      make sales calls from her home. She informed her manager on December 28,

      2015, that she was planning to resign by the end of that month so that she could

      work for HomeAdvisor, a competitor of Angie’s List. According to Leonard,

      her manager warned her that the company would force her to leave that day

      Court of Appeals of Indiana | Memorandum Decision 29A02-1605-PL-1061 | December 29, 2016   Page 3 of 12
      and would fire her boyfriend, who also worked at the company, in retaliation.

      As the manager left to go to a meeting, Leonard began emailing herself

      hundreds of pages of documents; she later testified that she had personal

      information on the computer, and to preserve this information she began

      emailing the contents of her computer to her personal email account, planning

      to sort through it later.1 She also put the entire contents of her desk into a bag,

      which she took to her car. Her manager saw her emailing a document and told

      her to stop, but told her that she could email herself an Excel spreadsheet that

      she had created to monitor her sales.

[5]   Myers began working at Angie’s List in March 2013. His job involved closing

      sales to service providers. Like Leonard, he decided to move to HomeAdvisor,

      and he told Angie’s List that his last day would be December 18, 2015. Also

      like Leonard, he began emailing hundreds of pages of documents to his

      personal email account.2 In addition, according to the testimony of fellow

      Angie’s List employee Melissa Card-Kraus, Myers began encouraging her to

      leave the company for HomeAdvisor. Even though they worked in the same

      vicinity and had work phones, Myers would call Card-Kraus on his cell phone

      and say, “I’m going to HomeAdvisor. I’m working with the top guy. I’m

      1
       Among the information Leonard took were documents relating to different zoning schemes Angie’s List
      used to target customers, consumer profiles and reviews, demographic data, advertising schemes, documents
      with “internal use only” printed as a watermark, a list of the top sellers from the company, and a spreadsheet
      of her team’s sales statistics.
      2
       The documents Myers took mainly related to Angie’s List’s future business strategies, plans to improve
      customer relations, and several documents watermarked “internal use only.”

      Court of Appeals of Indiana | Memorandum Decision 29A02-1605-PL-1061 | December 29, 2016          Page 4 of 12
      building a team. You’re at the top of my list.” Tr. p. 255. 3 The day after he left

      Angie’s List, he went to a business meeting with HomeAdvisor and sent the

      following text message to several Angie’s List employees: “Brock [Crabtree]

      and I are on a flight from Chicago to Kansas City. We are going to be

      leveraging AL and HA positions to get what everyone deserves. You will be

      happy but remember to keep your poker face on.” Pl. Ex. 8.

[6]   Crabtree began working at Angie’s List in February 2013, but was fired in

      August 2015. While Leonard was still working there, Crabtree sent her the

      contact information for HomeAdvisor. As mentioned above, he was also part

      of the group text regarding leveraging Angie’s List employees’ skills to obtain

      positions at HomeAdvisor.

[7]   After Leonard and Myers left Angie’s List, the company reviewed their email

      accounts and found that they had been emailing themselves company

      documents. The company sent the three employees cease and desist letters, and

      on January 22, 2016, filed a complaint and a request for a temporary restraining

      order (TRO), seeking “to enjoin Employee Defendants from using or disclosing

      Angie’s List’s confidential business information and trade secrets, and to

      compel Defendants to return the confidential information and trade secrets

      Myers and Leonard and any other Defendants took.” Appellant’s App. p. 37.

      It also requested that the court enjoin Myers and Leonard from working for

      3
          Myers testified that, while these interactions took place, it was Card-Kraus who initiated the conversations.

      Court of Appeals of Indiana | Memorandum Decision 29A02-1605-PL-1061 | December 29, 2016             Page 5 of 12
      HomeAdvisor until they could prove that they no longer possessed confidential

      information. After a January 25, 2016, hearing, a magistrate judge granted the

      TRO in part, ordering the employees to return any documents they took from

      Angie’s List, to refrain from sharing the confidential information, and to refrain

      from soliciting any other Angie’s List employees to leave their jobs. The trial

      court did not grant Angie’s List’s request that the defendants be prevented from

      working for HomeAdvisor.

[8]   On February 5, 2016, Angie’s List filed a motion for preliminary injunction.

      After a March 2, 2016, hearing, the trial court on April 13, 2016, denied

      Angie’s List’s motion and dissolved the previously-issued TRO. Angie’s List

      now appeals.

                                   Discussion and Decision
[9]   When reviewing findings of fact and conclusions of law entered upon the denial

      of a motion for preliminary injunction pursuant to Trial Rule 52(A)(1), we must

      determine if the trial court’s findings support its judgment and will reverse the

      judgment only when clearly erroneous. M.K. Plastics Corp. v. Rossi, 838 N.E.2d

      1068, 1074 (Ind. Ct. App. 2005). Findings of fact are clearly erroneous only

      when the record lacks any evidence or reasonable inferences therefrom to

      support them. Id. The trial court’s judgment is clearly erroneous only if it is

      unsupported by the findings and the conclusions that rely upon those findings.

      Id. We will neither reweigh the evidence nor reassess witness credibility. Id.

      We will reverse only if the trial court’s decision is against the logic and effect of

      Court of Appeals of Indiana | Memorandum Decision 29A02-1605-PL-1061 | December 29, 2016   Page 6 of 12
       the facts and circumstances before the trial court or when the trial court

       misinterprets the law. Richie v. Cmty. Howard Reg’l Health, 51 N.E.3d 1212, 1216

       (Ind. Ct. App. 2016).

[10]   In seeking a preliminary injunction, Angie’s List had the burden of establishing:

       (1) that its remedies at law are inadequate, causing irreparable harm pending

       resolution of its lawsuit; (2) that it has at least a reasonable likelihood of success

       on the merits at trial; (3) that the threatened injury to Angie’s List outweighs the

       potential harm to the defendants resulting from the proposed injunction; and (4)

       that the public interest would not be disserved by the granting of injunctive

       relief. M.K. Plastics, 838 N.E.2d at 1075. An injunction is an extraordinary

       remedy that should be granted only in rare instances where the law and facts

       are clearly within the moving party’s favor. Id.

[11]   We first find that the trial court’s judgment was not clearly erroneous insofar as

       it declined to enjoin the defendants from working for HomeAdvisor. Angie’s

       List had the burden of proving that the threatened injury to Angie’s List from

       these employees working for HomeAdvisor outweighed the potential harm to

       the employees of not being able to work. As HomeAdvisor is now the main

       source of income for the defendants, the trial court did not err by finding that

       the potential harm of an injunction against working and earning income

       outweighed the threatened injury to Angie’s List.

[12]   The other aspects of the trial court’s decision, however, are not as clearly

       supported by the record or the law. We note that, while the trial court’s order

       Court of Appeals of Indiana | Memorandum Decision 29A02-1605-PL-1061 | December 29, 2016   Page 7 of 12
       analyzes Angie’s List’s claims under the Indiana Uniform Trade Secrets Act, 4 it

       never once mentions or analyzes the confidentiality agreement the defendants

       signed as employees of Angie’s List. The existence of these covenants was

       uncontroverted, and while trial courts have broad discretion to weigh evidence

       as they see fit, they “cannot ignore competent, uncontradicted evidence.”

       Steenhoven v. College Life Ins. Co. of America, 458 N.E.2d 661, 666 n.13 (Ind. Ct.

       App. 1984).

[13]   In finding that Angie’s List did not have protectable trade secrets, the trial court

       also made several errors of law. Indiana Code section 24-2-3-2(1) defines a

       trade secret as information that “derives independent economic value, actual or

       potential, from not being generally known to, and not being readily

       ascertainable by proper means by other persons who can obtain economic value

       from its disclosure or use.” Rather than go through all eighty-nine findings of

       fact and law, we will note four types of error that run through the trial court’s

       order.

[14]   First, the trial court emphasized that Angie’s List employees were allowed to

       take documents home so that they could make sales calls outside of the office.

       The trial court concluded that, therefore, this information was not secret and

       that Angie’s List did not take the proper steps to secure it. But this conclusion

       ignores the confidentiality agreement whereby the employees promised to

       4
           Ind. Code § 24-2-3-1, et seq.

       Court of Appeals of Indiana | Memorandum Decision 29A02-1605-PL-1061 | December 29, 2016   Page 8 of 12
       refrain from sharing the information with others who might obtain economic

       value from the information. And it ignores the company’s code of ethics,

       which mandated that the employees “return all proprietary information in your

       possession upon leaving the Company.” Pl.’s Ex. 3 (emphasis added).

[15]   Second, the trial court emphasized that there were no exit interviews, that no

       one specifically asked the defendants not to take documents, and that no one

       asked the defendants to return documents they may have taken. But these

       factual findings are irrelevant to the case; the defendants promised to return all

       confidential information to Angie’s List and Angie’s List was under no

       obligation to remind the defendants of this promise in order to enforce it.

[16]   Third, the trial court emphasized that Angie’s List could not prove that the

       information had been shared. Again, the defendants did not only agree to

       refrain from dispersing company documents; they agreed to return all

       confidential information, but did the opposite by emailing hundreds of pages to

       their personal email accounts.

[17]   And fourth, the trial court emphasized the defendants’ testimony that they did

       not take confidential documents for a malicious purpose. For instance,

       Leonard admitted that she emailed herself a list of the top salespersons at

       Angie’s List, which could easily be used by HomeAdvisor to solicit the most

       productive workers from Angie’s List, but she testified that she only wanted the

       list because she was proud that she was a top earner. But the confidentiality

       agreement does not include an exception for company documents to which an

       Court of Appeals of Indiana | Memorandum Decision 29A02-1605-PL-1061 | December 29, 2016   Page 9 of 12
       employee has a sentimental attachment; it requires that the documents be

       returned, regardless of the intent behind taking them.

[18]   In short, the defendants’ confidentiality agreements obligated them to return

       Angie’s List documents. Regardless of their intent, or the lack of reminder, or

       the permitted access during their employment, or the absence of sharing those

       documents with third parties, the defendants emailed themselves hundreds of

       pages of confidential information and did not return the information upon

       leaving the company. The trial court’s decision to deny a preliminary

       injunction against sharing this information and dissolve the TRO prohibiting

       the defendants from sharing any confidential information they may still possess

       was against the logic and effect of the facts before the trial court.

[19]   As we turn to the employees’ covenant not to solicit employees away from

       Angie’s List, we note that the one-year period of non-solicitation has already

       expired for Crabtree, who was fired from Angie’s List in August 2015.

       Whether Crabtree should have been enjoined from soliciting employees is

       therefore moot, and we will not address the issue.5

[20]   As for Myers, the trial court made a factual finding that “Myers has not

       solicited, contacted, or encouraged employees of Angie’s List to end their

       5
         We also note that the issue will be moot for Myers in December 2016, but as of the date of writing, the issue
       is still in controversy.

       Court of Appeals of Indiana | Memorandum Decision 29A02-1605-PL-1061 | December 29, 2016         Page 10 of 12
       employment at Angie’s List, and/or join HomeAdvisor.” Appellant’s App. p.

       21.

[21]   The trial court does not mention Myers’s text message, sent to several then-

       current Angie’s List employees, that he and Crabtree were “going to be

       leveraging AL and HA positions to get what everyone deserves. You will be

       happy but remember to keep your poker face on.” Pl.’s Ex. 8. At the least, this

       message was contacting and encouraging Angie’s List employees to leave their

       jobs. The trial court’s finding to the contrary is simply against the logic and

       effect of the facts before it. We find the trial court’s decision to decline to

       enjoin Myers from engaging in this behavior for the remaining months of his

       covenant to be error.

[22]   In summary, the trial court properly found that an injunction against working

       for HomeAdvisor would unduly burden the employees, and it properly ruled in

       the employees’ favor on that issue. But the evidence unambiguously shows that

       Leonard and Myers, at the very least, took and failed to return proprietary

       information. And the evidence unambiguously shows that Myers, at the very

       least, contacted and encouraged Angie’s List employees to leave their jobs to

       join HomeAdvisor. As the employees covenanted not to take company

       documents and not to solicit employees away from the company, the trial court

       should have granted Angie’s List’s request for a preliminary injunction on these

       matters.

       Court of Appeals of Indiana | Memorandum Decision 29A02-1605-PL-1061 | December 29, 2016   Page 11 of 12
[23]   The judgment of the trial court is affirmed in part, reversed in part, and

       remanded with instructions to enter a preliminary injunction against the

       defendants to act in accord with their covenants.

       Mathias, J., and Pyle, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 29A02-1605-PL-1061 | December 29, 2016   Page 12 of 12