Flexpak, LLC v. Scharrer et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Charlotte N. Sweeney
Civil Action No. 1:25-cv-02439-CNS-STV
FLEXPAK, LLC,
Plaintiff,
v.
PHILIP SCHARRER,
JULIE GROTLUSCHEN, and
ALTITUDE PACKAGING, LLC,
Defendants.
ORDER
Before 	the 	Court 	is 	Plaintiff 	Flexpak, 	LLC’s 	(Flexpak’s) 	fully 	briefed 	and
supplemented Motion for Preliminary Injunction. See, e.g., ECF No. 14. For the following
reasons, it’s DENIED.
I. 	BACKGROUND
This case’s background is drawn from witness testimony, exhibits presented during
the January 23, 2026, preliminary injunction hearing, the parties’ evidentiary submissions
attendant to their preliminary injunction briefing, and unofficial hearing transcripts. See,
e.g., Dole v. Greene, No. 1:21–cv–03047–CNS–GPG, 2022 WL 5192890, at *1 n.1, n.4
(D. Colo. Oct. 5, 2022); Denver Homeless Out Loud v. Denver, Colorado, 514 F. Supp.
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3d 1278, 1284 n.5 (D. Colo. 2021), vacated and remanded on other grounds, 32 F.4th
1259 (10th Cir. 2022).
A brief summary of this case’s factual background, with which the Court presumes
familiarity, 	suffices. 	Flexpak 	is 	a company that 	provides packing solutions for 	its
customers. See, e.g., ECF No. 14 at 5. In February 2023, it acquired Preferred Packaging
Products, Inc. (Preferred Packaging). See, e.g., id. At Preferred Packaging, Defendant
Scharrer 	signed 	an 	“Affiliate 	Agreement,” 	which 	contained 	a 	“covenant 	to 	retain
confidences.” 	See, 	e.g., 	JX012 	(capitalization 	omitted).1 Defendants 	Scharrer 	and
Grotluschen were longtime Preferred Packaging employees who then came to work for
Flexpak as salespeople.
In April 2025, Defendants Scharrer and Grotluschen left Flexpak to start their own
company, Altitude Packaging, LLC (Altitude). Flexpak then sent Defendants a series of
cease-and-desist 	letters, 	see, 	e.g., 	JX049, 	contending, 	among 	other 	things, 	that
Defendants Scharrer and Grotluschen had breached their Affiliate Agreements by taking
Flexpak trade secrets upon leaving Flexpak to start Altitude. This lawsuit followed.
II. 	LEGAL STANDARD
A movant must satisfy four factors to secure a preliminary injunction, including that
the movant will suffer “irreparable harm” without preliminary relief. See, e.g., Mahmoud v.
Taylor, 606 U.S. 522, 546 (2025). “An injunction can issue only if each factor is
1 There appears to be a factual dispute as to whether Defendant Grotluschen actually signed her Preferred
Packaging Affiliate Agreement. For instance, Flexpak Chief Executive Officer Brian Kellen testified that
Defendant Grotluschen’s “cover letter” showed it was “checked off” that she signed Preferred Packaging
Affiliate Agreement. And Defendant Grotluschen testified that she never signed such an Affiliate Agreement.
See also JX049. Regardless, as explained further below, the Court need not resolve this apparent factual
dispute in order to conclude that preliminary injunctive relief is unwarranted.
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established.” Denver Homeless Out Loud v. Denver, Colorado, 32 F.4th 1259, 1277 (10th
Cir. 2022) (citation modified).
III. 	ANALYSIS
Explained further below, because Flexpak hasn’t carried its irreparable harm
burden, it hasn’t established entitlement to preliminary injunctive relief. See, e.g., id; First
W. Cap. Mgmt. Co. v. Malamed, 874 F.3d 1136, 1143 (10th Cir. 2017) (“Without showing
irreparable harm, [a movant] cannot obtain a preliminary injunction.” (citation modified)).
“Demonstrating irreparable harm is not an easy burden to fulfill.” DTC Energy Grp.,
Inc. v. Hirschfeld, 912 F.3d 1263, 1270 (10th Cir. 2018) (citation modified). To do so, a
movant “must demonstrate a significant risk that he or she will experience harm that
cannot be compensated after the fact by money damages.” Id. (citation modified); see
also Port City Props. v. Union Pac. R. Co., 518 F.3d 1186, 1190 (10th Cir. 2008)
(“Economic loss usually does not, in and of itself, constitute irreparable harm.” (citation
modified)).
In both its preliminary injunction motion and supplement, Flexpak argues that
because Defendants have “harmed Flexpak by using its trade secrets to form a competing
business and lure away customers” in violation of the Affiliate Agreements, ECF No. 14
at 17, that Flexpak has and will continue to suffer irreparable harm. See also ECF No. 66
at 28 (explaining irreparable harm if Defendants “are permitted to continue misusing
Flexpak’s confidential information to convert Flexpak’s customers”). But Flexpak has
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offered no evidence showing that it faces irreparable harm considering Defendants’
purported conduct.2
First, simply because “trade secrets” are involved does not automatically establish
Flexpak has been, or will be, irreparably harmed absent preliminary injunctive relief.
Compare ECF No. 14 at 17; and ECF No. 66 at 27, with DTC Energy, 912 F.3d at 1271
(“But not all plaintiffs who have already suffered lost customers, stolen trade secrets, or
intangible injury can show a sufficient probability of future irreparable harm to warrant a
preliminary injunction.”).
Second, and similarly, that Defendants have formed a “competing business” and
taken on former Flexpak customers does not mean Flexpak has suffered irreparable
harm. Compare ECF No. 14 at 17, with DTC Energy, 912 F.3d at 1271. Indeed, testimony
and evidence from the preliminary injunction hearing actually undercuts this argument
and Flexpak’s contention it has suffered irreparable harm. For instance, and contrary to
Flexpak’s argument in its supplement that absent preliminary relief its “competitive
advantage” will be “irreparably damaged,” Flexpak’s Chief Financial Officer Jamie Howe
testified that he did not think Defendants’ of taking Flexpak’s customers had harmed
Flexpak’s reputation in the industry. Cf. Schrier v. Univ. Of Co., 427 F.3d 1253, 1267 (10th
Cir. 2005) (affirming district court’s determination that plaintiff failed to show irreparable
2 Because the Court need only address whether Flexpak has met its irreparable harm burden, it need not—
and does not—address the likelihood of success on the merits of Flexpak’s claims, or the two remaining
preliminary injunction factors. Cf. Denver Homeless, 32 F.4th at 1277; Griffith v. El Paso Cnty., Colorado,
129 F.4th 790, 813 (10th Cir. 2025) (“If it is not necessary to decide more, it is necessary not to decide
more.” (citation modified)). Yet even assuming—again, without deciding—that Flexpak has carried its
likelihood of success burden, Flexpak fails to carry its irreparable harm burden.
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harm where he “made no attempt to apprise [the] court of any evidence in the record
showing actual or significant risk of loss of prestige, academic reputation or professional
opportunities that cannot be remedied by money damages” (citation modified)). Mr.
Howe’s testimony that Flexpak has not suffered reputational harm from Defendants’
conduct undercuts its argument that it has suffered irreparable harm from that same
conduct. See Keybank Nat’l Ass’n v. Williams, No. 20-1384, 2022 WL 402379, at *4 (10th
Cir. Feb. 10, 2022) (affirming district court’s irreparable harm conclusion where court
“found no evidence that [defendants] [were] using [plaintiff’s] confidential information to
solicit its customers and divert business [or] that [plaintiff] has suffered or will suffer lost
goodwill or competitive standing” (citation modified)).
Third, 	and 	most 	fundamentally, 	Flexpak’s 	injuries 	can 	be 	quantified 	and
subsequently cured by money damages. Cf. Spice Merchants Entities Corp. v. Pretty
Colorado, LLC, No. 24–cv–00371–RMR–NRN, 2024 WL 4277917, at *5–6 (D. Colo. Sept.
24, 2024) (“[O]ne only gets a preliminary injunction when an award of money after the
fact cannot cure the injury.” (citation modified)). Hearing testimony demonstrates that the
nature of Flexpak’s injuries are commercial, economic, and quantifiable. For instance,
Brian Kellen, Flexpak’s Chief Executive Officer, testified that due to Defendants’ conduct
Flexpak had lost approximately twenty to thirty accounts of the over approximately 4,000
accounts Flexpak maintains. This is consistent with Mr. Howe’s testimony, in which Mr.
Howe estimated that Flexpak lost between twenty to forty customers within a “short period
of time.” Loss of customers, and those customers’ business, are paradigmatic economic
injuries that fail to show irreparable harm—particularly where Flexpak’s own Chief
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Financial Officer testified that Defendants’ competing business hasn’t harmed Flexpak’s
industry reputation. This conclusion is underscored by Mr. Kellen’s own deposition
testimony, in which he stated that he attributed “hundreds of thousands of dollars” of
Flexpak revenue decline to Defendants’ purported trade secret misappropriation. ECF
No. 67-5 at 8. And as Defendants argue, ECF No. 36 at 19, Flexpak’s initial disclosures
“further suggest that some damages . . . can be calculated,” DTC Energy, 912 F.3d at
1272 (citation modified), underscoring that Flexpak’s harm is not irreparable. See also
ECF No. 36-4 at 4 (“Plaintiff’s damages will be calculated based on lost revenue and
profit, including future earnings and business value that was lost as a result of Defendants’
breaches . . . .”).3
To be sure, Mr. Howe testified that any businesses losses are just “estimates,” and
that Flexpak does not know the precise percentage of the “business” it has lost in some
situations. But this does not mean Flexpak’s losses cannot be ultimately quantified,
particularly where the amount of business that Flexpak has lost is economic harm, and
an award of money damages could make Flexpak whole for the loss of that business.
See, e.g., Port City, 518 F.3d at 1190 (“Economic loss usually does not, in and of itself,
constitute irreparable harm.” (citation modified)); Keybank, 2022 WL 402379, at *4 (“The
insistence that [defendants’] past conduct and continued possession of the [reports]
necessarily cost it future business and goodwill that cannot be measured is insufficient to
establish the requisite irreparable harm.”); First Western, 874 F.3d at 1144. In this way
3 Moreover, in arguing it is likely to succeed on the merits of its trade secret claims, Flexpak represents that
“Defendants’ actions have injured Flexpak, as Defendants have used the information to take Flexpak’s
customers and business, causing negative financial impact and lost customer and business relationships.”
ECF No. 66 at 23 (emphases added).
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Mr. Howe’s testimony does little to help Flexpak meet its irreparable harm burden. And in
direct contradiction to it, as noted above Mr. Kellen provided testimony in his deposition
indicating that Flexpak’s damages could be quantified, underscoring not only that
Flexpak’s harm is not irreparable, but moreover that an award of money could cure its
injury. See, e.g., Spice Merchants, 2024 WL 4277917, at *5; First Western, 874 F.3d at
1144.
* * *
The Court makes one last observation. It denies Flexpak’s motion because it has
not met its irreparable harm burden. See, e.g., First Western, 874 F.3d at 1143. And the
Court, as indicated above, reaches no conclusion as to whether Flexpak has met its
likelihood of success on the merits burdens.
But notably Mr. Howe testified that Flexpak does not contend that Defendants are
subject to non-competition or non-solicitation agreements. Nor could he, as the Affiliate
Agreement’s confidentiality provision does not contain a competition or solicitation
restriction. And so, to the extent any Flexpak argument at this stage, or any stage moving
forward, relies on the notion that Defendants have improperly competed against Flexpak
in contravention of the Affiliate Agreement, such argument is ill-taken. Compare ECF No.
66 at 20 (“Defendants have used this information, which they learned through their
employment with Flexpak, to jumpstart Altitude and divert business away from Flexpak.”
(emphasis added)), with ECF No. 78 at 11 (arguing the “[c]ovenant . . . prohibits
Defendants 	from 	using 	or 	disclosing 	Flexpak’s 	confidential 	information, 	not 	from
competing with Flexpak in a lawful manner”). Thus, Mr. Kellen’s express desire that this
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Court order Defendants not to compete, offered at the end of his cross-examination, is
misguided.
Finally, in his testimony Mr. Kellen expressed dismay that he “didn’t see [it] coming”
that Defendants Scharrer and Grotluschen were leaving Flexpak. They were under no
obligation to notify him of the same. Nor were they under any obligation to discuss their
“future plans” with Mr. Kellen or anyone else at Flexpak. Any contrary suggestion or
argument from Mr. Kellen or Flexpak is wrong—then, now, and in the future. The Affiliate
Agreement contemplates no such obligation. Law and common sense have that in
common. See, e.g., Allied Supply Co. v. Brown, 585 So. 2d 33, 35 (Ala. 1991) (“[I]t is not
a violation of an employee’s fiduciary duty to prepare to enter into competition with his
employer without providing prior notice.” (citation modified)); Bolsa Res., Inc. v. Martin
Res., Inc., No. 11–cv–01293–MSK–KMT, 2014 WL 4882132, at *8 (D. Colo. Aug. 28,
2014), report and recommendation adopted sub nom. Bolsa Res., Inc. v. Salzburg
Holdings, LLC, 2014 WL 4980045 (D. Colo. Sept. 30, 2014) (“While a former employee
may be contractually obligated to avoid disclosing confidential information relating to his
former employer, there is no precedent for imposing a duty of disclosure on an employee
to its former employer.” (citation modified)); Restatement (Third) Of Agency § 8.04 (2006)
(“In general, an employee or other agent who plans to compete with the principal does
not have a duty to disclose this fact to the principal . . . . In this respect, the social benefits
of furthering competition outweigh the principal's interest in full disclosure by its agents.”).
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IV. 	CONCLUSION
Consistent with the above analysis, Flexpak’s Motion for Preliminary Injunction,
ECF No. 14, is DENIED.
DATED this 29th day of January 2026.
BY THE COURT:
________________________________
Charlotte N. Sweeney
United States District Judge
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