Movement Mortgage LLC v. Summit Funding, Inc. et al

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:23-cv-00633-RJC-DCK
MOVEMENT MORTGAGE LLC,
Plaintiff,
v.
SUMMIT FUNDING, INC., et al.
Defendants.
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ORDER
THIS MATTER is before the Court on a renewed motion for preliminary
injunction and request for a finding of contempt. (Doc. No. 28). On November 3, 2023,
this Court entered a stipulated preliminary injunction in the instant action after
Movement moved for emergency injunctive relief to recover confidential information
and stop Summit from soliciting Movement employees in certain ways. (Doc. No. 23).
That injunction provided for, among other things, a process by which Movement could
retrieve any information taken by Summit or the individual defendants and
prohibitions on Summit soliciting Movement employees in some circumstances. (Id.).
Movement now moves for additional injunctive relief and for a finding of contempt,
arguing that Summit violated this Court’s earlier order and offering new evidence of
Summit’s alleged wrongdoing. Because Movement demonstrates a likelihood of
success on its claims against Summit, additional injunctive relief is proper.
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I. BACKGROUND
Movement offers three new bases for preliminary relief: (1) evidence of
Summit’s continued solicitation of Movement employees; (2) evidence of an alleged
deceptive scheme by Summit to divert Movement loan customers; and (3) evidence
tying Summit to the theft and use of Movement’s confidential information.
This Court’s November 3 injunction prohibits Summit from soliciting
Movement employees “If Defendants have already solicited that individual since June
1, 2023; and/or [i]f Defendants are directly or indirectly using any confidential or
proprietary information obtained from Movement to aid or facilitate such
solicitation.” (Doc. No. 23). Before the Court entered that injunction, however,
Summit recruited Movement employees heavily.
Two Movement employees who later moved to Summit, Bart Evans and Chris
McCabe, were responsible for much of that early recruitment. According to
Movement, Evans and McCabe visited Movement employees in Austin, Texas to
solicit their moves to Summit. Following that visit, according to Movement,
Movement employees “expressed concerns that Movement intended to reduce loan
officer compensation by 75%, decrease market leader compensation and lay-off loan
officer assistants.” (Doc. No. 28). Summit then made offers to “an estimated twenty
to twenty-five employees” in Evans’ former Movement region, and on November 3,
Evans resigned from Movement to join Summit. (Id.).
The solicitation did not stop on November 3, however. According to Michael
Davis, Movement employee Chris McCabe solicited him not only in the fall of 2023
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up to November 3, but also “almost every day” from November 3 to November 10,
when McCabe himself resigned to join Summit.
Movement also alleges that Summit devised a scheme to steal potential
customers from Movement before they closed their loans. According to Movement,
Summit created a “Portfolio Retention Loan Officer” position for this purpose. In
Movement’s narrative, a Movement employee planning to leave Movement would
gather details from a prospective client then, at the last minute, transfer the
information to Summit’s “Portfolio Retention Loan Officer,” who would move forward
with the customer at Summit. Movement provides an email chain from October 2,
2023, showing what it claims is such a transaction. In that chain, a Movement
employee encourages a client to “hold[] off on locking.” (Doc. No. 28-5). The employee
then recommends, however, that “we go ahead and get you applied with our sister
company and if rates drop, we’ll lock you in there.” (Id.). The Movement employee
then forwarded the client’s information to Summit.
Finally, Movement offers new evidence tying Summit to the theft and use of
Movement’s confidential information. Specifically, Movement provides emails, text
messages, and other documents that indicate Summit’s CEO, Todd Scrima, directed
Linda Plymale to access, download, and steal Movement’s confidential information
and bring that information to Summit. Moreover, Movement offers evidence that
Scrima sought other confidential information presented in Movement’s Profit and
Loss Statement – though he knew it was confidential – and directed his team to
“dissect” and use that information in order to gain a competitive edge against
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Summit. Not only did Summit claim it was uninterested in such information during
earlier briefing, but this Court’s November 3 order requires Summit to return it.
II. STANDARD OF REVIEW
Temporary restraining orders and preliminary injunctions are extraordinary
remedies “that may only be awarded upon a clear showing that the plaintiff is entitled
to such relief” and may never be awarded “as of right.” SVB Sec. Holdings LLC v.
Drendel, No. 322CV00457RJCDCK, 2022 WL 4369991, at *3 (W.D.N.C. Sept. 21,
2022) (quoting Winter v. Nat’l Res. Def. Council, Inc., 555 U.S. 7 (2008)). The standard
for granting either a TRO or a preliminary injunction is the same and is well
established. Id. The party seeking the preliminary injunction must demonstrate all
of the following: (1) it is likely to succeed on the merits, (2) it is likely to suffer
irreparable harm in the absence of preliminary relief, (3) the balance of equities tips
in its favor, and (4) an injunction is in the public interest. Winter, 555 U.S. at 20;
Mountain Valley Pipeline, LLC v. W. Pocahontas Properties Ltd. P’ship, 918 F.3d 353,
366 (4th Cir. 2019). “An injunction is an exercise of a court’s equitable authority, to
be ordered only after taking into account all of the circumstances that bear on the
need for prospective relief.” Salazar v. Buono, 559 U.S. 700, 714 (2010).
III. DISCUSSION
Based on updated allegations, Movement requests the following relief:
A. Enjoining Summit, and all other persons or entities acting in concert
with them or on its behalf, whether employed at Summit or otherwise,
from directly or indirectly soliciting Movement’s employees;
B. Enjoining Summit, and all other persons or entities acting in concert
with them or on its behalf, whether employed at Summit or otherwise,
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from directly or indirectly soliciting, transferring and/or diverting
customers applying for loans with Movement;
C. Enjoining Summit, and all other person persons or entities acting in
concert with them or on its behalf, whether employed at Summit or
otherwise, from directly or indirectly taking disseminating or utilizing
any confidential or proprietary information obtained from Movement;
D. An Order finding Summit in civil contempt for violating the Stipulated
Preliminary Injunction;
E. Attorneys’ fees and costs associated with brining the instant motion; and
F. Granting Movement such other and further relief as the Court may
deem just, equitable, and proper.
Injunctions must be specific. Federal Rule of Civil Procedure 65(d) provides
that every injunction must “state its terms specifically” and “describe in reasonable
detail—and not by referring to the complaint or other document—the act or acts
restrained or required.” Rule 65’s provisions “are not mere technical requirements,”
but were “designed to prevent uncertainty and confusion on the part of those faced
with injunctive orders, and to avoid the possible founding of a contempt citation on a
decree too vague to be understood.” CPC International, Inc. v. Skippy Inc., 214 F.3d
456, 461 (4th Cir. 2000) (quoting Schmidt v. Lessard, 414 U.S. 473, 476 (1974)). “Basic
fairness requires that those enjoined receive explicit notice of precisely what conduct
is outlawed.” Schmidt, 414 U.S. at 476.
A. Movement Demonstrates a Likelihood of Success Sufficient to
Warrant New Injunctive Relief
Movement asserts an Unfair and Deceptive Trade Practices Act claim against
all defendants but focuses its updated briefing on Summit’s conduct. Under North
Carolina law, Movement must show (1) the defendant committed an unfair or
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deceptive act or practice, (2) the action in question was in or affecting commerce, and
(3) the act proximately caused injury to the plaintiff. See Hester v. Hubert Vester Ford,
Inc., 239 N.C. App. 22, 26, 767 S.E.2d 129, 134 (2015).
In the employment context, North Carolina courts have applied the UDTPA
when the allegations (1) involve egregious activities outside the scope of an
employee’s assigned employment duties, and (2) otherwise qualified as unfair or
deceptive practices that were in or affecting commerce. See, e.g., Dalton, 353 N.C. at
656, 548 S.E.2d at 710–11. Under N.C.G.S. § 75–1.1, a jury decides whether
defendants committed the alleged acts, and then court will decide, as a matter of law,
“whether these proven facts constitute an unfair or deceptive trade practice.” United
Labs., Inc. v. Kuykendall, 335 N.C. 183, 187 n. 2, 437 S.E.2d 374, 377 n. 2 (1993).
In Sunbelt Rentals, Inc. v. Head & Engquist Equip., L.L.C., 174 N.C. App. 49,
620 S.E.2d 222 (2005), the North Carolina Court of Appeals affirmed a bench trial
verdict (afforded the same deference as a jury verdict, see id. at 52, 620 S.E.2d at 225)
that found the “[t]he surreptitious and intentional use of [plaintiff’s] employees to
solicit other key employees while both the soliciting and solicited employees were still
employed by [plaintiff] is an unfair trade practice.” Id. at 59, 620 S.E.2d at 230.
There, the defendant used confidential information to poach plaintiff’s
employees, severely “crippling” plaintiff “to the point [plaintiff’s] opportunity and
ability to compete for key employees on a level playing field was completely
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eliminated.” Id. at 60, 620 S.E.2d at 230. Through deceptive conduct,1 the defendant
recruited entire branches of plaintiff’s employees, which “devastated, rather than
competed with, plaintiff’s existing … business.” Id. at 61, 620 S.E.2d at 230.
While Sunbelt does not establish a per se rule on surreptitious solicitation, see
Austin Maint. & Const., Inc. v. Crowder Const. Co., 224 N.C. App. 401, 421, 742 S.E.2d
535, 548 (2012), Movement demonstrates a likelihood of success on its Unfair and
Deceptive Trade Practices Act claims. Movement alleges two actions distinct from its
earlier motion and stipulated injunction: (1) that Summit expanded its solicitation
after November 3, and (2) that Summit created a “Portfolio Retention” position to
transfer Movement customers to Summit. It also ties Summit – through its CEO,
Todd Scrima – to other unfair and deceptive trade practices discussed in briefing and
orders related to the first preliminary injunction in this action.
As to its expanded solicitation claims, Movement notes that “approximately
twenty-two employees have been lured to Summit since the Stipulated Preliminary
Injunction was entered by this Court,” and it identifies eleven of these employees by
name. (Doc. No. 38) (emphasis in original). Movement relies upon the affidavit of
Brady Yeager, who alleges that Bart Evans shared confidential information with
1 As summarized by the Middle District of North Carolina: “defendants were found to
have told customers that plaintiff’s company name had changed to that of their new
venture, to have used plaintiff’s lease contracts and pricing information for their own
benefit, to have inserted defendants’ company name on plaintiff’s documents, and to
have deleted plaintiff’s job information and forwarded plaintiff’s phones to defendant
upon leaving plaintiff's employment.” Champion Pro Consulting Grp., LLC v. Impact
Sports Football, LLC, 116 F. Supp. 3d 644, 658 n.7 (M.D.N.C. 2015), aff’d sub nom.
Champion Pro Consulting Grp., Inc. v. Impact Sports Football, LLC, 845 F.3d 104
(4th Cir. 2016) (distinguishing Sunbelt).
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Movement employees during a trip to Texas, which led to those employees’
resignations. (Doc. No. 28-3). But Yeager was not on the trip, Evans denies even
visiting Texas during the relevant time period, and, in any event, Evans testified that
the relevant information was not confidential. (Doc. No. 36-2). Yeager also alleges
that Evans “initiated the lay-off of Elise Clemmons,” the daughter of an employee
who later moved to Summit, and “communicated that lay-off on behalf of Movement”
to generate discontent. (Doc. No. 28-3). Yeager, for his part, denies terminating Elise
Clemmons – “[s]he was still employed with Movement when I resigned,” he notes.
(Doc. No. 36-2). These allegations, contradicted as they are by the parties involved,
are insufficient to support additional injunctive relief.
Movement’s allegations directed to Chris McCabe constitutes a different story.
Through the affidavit of Michael Davis, a current Movement employee, Movement
presents a compelling narrative of Summit’s illicit behavior. This Court’s November
3 order imposed narrow guardrails on Summit’s solicitation: it prohibits Summit from
soliciting Movement employees only if Summit had already solicited that employee
since June 1, 2023, or if Summit used Movement’s confidential or proprietary
information in its solicitation. (Doc. No. 23).
Chris McCabe’s solicitation of Michael Davis steers outside the first of the
above guardrails. (Doc. No. 23 at ¶ 8a). Davis alleges that in fall of 2023 – a few
months after McCabe recruited Davis to Movement – McCabe began to suggest that
“things were falling apart at Movement” and, thus, that Davis should “consider
jumping ship.” (Doc. No. 38-8). In October, McCabe was more straightforward – he
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implied he and Evans would be moving to Summit, and he suggested that Davis join.
(Id.). Without any injunction in place at the time, such solicitation was permissible.
What followed was not. Evans resigned from Movement on November 3, 2023,
the day that this Court entered its first injunction. “From that point,” Davis alleges,
“Mr. McCabe began soliciting me almost every day, essentially promising me
anything if I would leave Movement to join Summit.” (Id.). McCabe did not act alone.
Indeed, according to Davis, McCabe – still a Movement employee on paper – promised
Davis greater pay at Summit and even indicated that Evans, now at Summit, “had
already approved the financial package that Mr. McCabe was offering.” (Id.). McCabe
“continued to make overtures” to convince Davis to leave Movement “until his last
day at Movement, which was November 10, 2023.” (Id.).
Such action not only violates this Court’s first injunction but also serves as a
basis for Movement’s success on its Unfair and Deceptive Trade Practices Act claim
against Summit. Summit, through Chris McCabe, solicited Michael Davis after June
1, 2023, and after November 3, 2023. Because the “surreptitious and intentional use
of [a plaintiff’s] employees to solicit other key employees while both the soliciting and
solicited employees were still employed by [the plaintiff]” can constitute an unfair
and deceptive trade practice in North Carolina, see Sunbelt, 174 N.C. App. at 59, 620
S.E.2d at 230, Movement demonstrates a likelihood of success on this claim.
In response, Summit argues that Movement’s requested injunction amounts to
an illegal restraint of trade. See, e.g., United States v. Patel, No. 3:21-CR-220 (VAB),
2022 WL 17404509, at *11 (D. Conn. Dec. 2, 2022) (finding a no-poach agreement, “as
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alleged, operates as ‘an agreement between competitors at the same level of the
market structure to allocate’ the labor market ‘in order to minimize competition’”)
(quoting United States v. Topco Assocs., Inc., 405 U.S. 596, 608 (1972)). While a no-
poach agreement between Summit and Movement to minimize competition or limit
the hiring of certain employees could constitute an illegal restraint of trade,
Movement seeks to prevent Summit from soliciting its employees, not to prevent
Summit from hiring willing workers or to prevent those workers from moving to
Summit. Such a request is appropriate here.
In its second new allegation, Movement alleges a scheme by Summit to poach
Movement customers through a fake “Portfolio Retention” position. Movement
provides an email chain in which a Movement employee, Tyler Henry, suggests that
a loan customer apply with “our sister company,” Summit, rather than Movement:
As I mentioned, I recommend holding off on locking, however we can go
ahead and get you applied with our sister company and if rates drop,
we’ll lock you in there. The only issue with this plan is transferring the
appraisal. John Felix, with Summit Funding, will be reaching out
shortly with the lin[k] to apply.
(Doc. No. 28-5). Summit is, of course, no “sister company” to Movement. Summit
offers a tepid response, noting “the loan did not close with Summit.” (Doc. No. 36).
“[T]he fair or unfair nature of particular conduct is to be judged by viewing it
against the backdrop of actual human experience and by determining its intended
and actual effects upon others.” United Lab., Inc. v. Kuykendall, 102 N.C. App. 484,
491 (1991) (aff’d 335 N.C. 183, 437 S.E.2d 374 (1993). The “Portfolio Retention” officer
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scheme echoes the deceptive practices at issue in Sunbelt, and Movement
demonstrates a likelihood of success on its UDTPA claim through these allegations.
Movement’s requested relief is not narrowly tailored to these allegations,
however. See CPC International, Inc. v. Skippy Inc., 214 F.3d 456, 461 (4th Cir. 2000)
(“Injunctions must be narrowly tailored and should prohibit only unlawful conduct.
‘An order must be tailored as precisely as possible to the exact needs of the case.’”)
(quoting Carroll v. President and Comm’rs of Princess Anne, 393 U.S. 175, 184
(1968)). Summit notes that it is free to solicit customers that may also be “mortgage
shopping” with Movement and argues it would be unable to comply with the vague
request even if entered: “How can Summit know who has applied for a loan with
Movement? Summit does attempt to avoid taking loans that belong elsewhere, but if
Movement does not pull credit [for a customer], … then there is no way for Summit
to know whether the customer has applied for a loan with Movement.” (Doc. No. 36).
To address these concerns, the Court will enter a narrow injunction to prohibit
Summit from knowingly diverting Movement customers, either through the “Portfolio
Retention” scheme outlined in Movement’s briefing or through any other practice,
deceptive or otherwise.
Finally, Movement brings additional evidence tying Summit to the general
stream of other unfair and deceptive trade practices alleged in its first request for
injunctive relief. Specifically, Movement offers evidence that Summit directed the
diversion and use of Movement’s confidential information, both through Linda
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Plymale’s theft of information and through actions regarding Movement’s profit and
loss statement (“P&L”).
While Movement suspected much of the activity at issue, Movement now
supports its allegations with evidence.2 For example, Movement presumed that
Summit directed or encouraged Linda Plymale to access, download, and steal certain
Movement information before Plymale resigned. New evidence of communication
between Linda Plymale and Summit’s CEO, Todd Scrima, now offers a clearer
window into Summit’s actions – according to Movement’s evidence, Scrima contacted
Plymale immediately before Plymale accessed, downloaded, and stole the information
at issue and brought it to Summit.
Movement also offers evidence that Summit knowingly possessed and utilized
Movement’s confidential information in order to unfairly compete with Movement. In
one text message now before the Court, (Doc. No. 38-3), Todd Scrima asks a Summit
employee if Summit had secured Movement’s P&L. “Requested it twice from Deran
[Pennington], not received,” he answered. “I think we need to go directly to Matt
[Schoolfield],” he suggested, because he was unsure “what access [D]eran has
anymore.” But that employee also followed up with a stark warning to Scrima: “are
2 Though Summit may later object on hearsay grounds to some of the evidence
Movement presents, the Court finds that such evidence is appropriate at this stage
without finding that the evidence is or is not hearsay. See G. G. v. Gloucester Cty.
Sch. Bd., 822 F.3d 709, 725-26 (4th Cir. 2016), vacated and remanded on other
grounds, 580 U.S. 1168 (2017) (“Because preliminary injunction proceedings are
informal ones designed to prevent irreparable harm before a later trial governed by
the full rigor of usual evidentiary standards, district courts may look to, and indeed
in appropriate circumstances rely on, hearsay or other inadmissible evidence when
deciding whether a preliminary injunction is warranted.”).
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you sure you want movement p&ls’s (their proprietary/confidential docs) on summit
servers?” (Id.). “Not on our servers,” Scrima responded. (Id.). “Can u maybe set up
misc whatsapp account and have them texted there?” (Id.).
Once Summit did secure the P&L, (Doc. No. 38-9), and other information in
June 2023, including every Movement employee’s wage information and income
information, as well as all loan information on borrowers, loan details, and margin
information, Scrima directed his team to “dissect” it. (Doc. No. 38-2). Summit,
meanwhile, represented to Movement and this Court in October 2023 that it was
uninterested in Movement’s confidential information and agreed to return any stolen
data. (Doc. No. 7 (“Summit and Pennington have no interest in documents that came
from Movement and wish to cooperate to return such files.”)).
After entry of the initial injunction in this action, Summit’s apparent
impropriety was not lost on Summit’s more scrupulous employees. In fact, on
November 8, 2023, five days after entry of the stipulated injunction, Summit’s Chief
Growth Officer expressed serious misgivings about “dissect[ing]” Movement’s
information in an email to Scrima and other Summit employees:
So you are aware, the attached document sent by Deran to Todd
contains, and the reason for my email tonight, is because of the legal
agreements agreed to by Summit in the filings and injunction agreement
with MM last week, which I have determined to be not in any way
accurate by our organization. I have a moral issue with our position of
what appears to be, at the minimum, an omission, or most likely a willful
obstruction. I’m not sure of which yet and I am bringing this to your
attention now and seeking your advice. This document, which was sent
to me by Todd Scrima, and at his direction “please dissect this,” is actual
proprietary information owned by Movement Mortgage. This is not a
proforma, but actual consolidated Movement Mortgage results. It
includes without limitation, every employees wage information, their
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income information, as well as all loan information on borrowers, loan
details, margin information, basically “the whole enchilada” as we would
say in Texas. I have had this information in my possession for months
and I have lost countless hours of sleep over this. I cannot let another
single day go by without getting this out in the open
(Doc. No. 38-2). Through this new evidence, Movement demonstrates a likelihood of
success sufficient to warrant new injunctive relief against Summit. Summit agreed
to return any confidential information, but no information has yet been returned. The
parties quibble over where to lie the blame for that inaction, but in light of Summit’s
alleged past misconduct now supported by evidence in the record, the Court finds that
an injunction to prohibit Summit from continuing to use Movement’s proprietary and
confidential information is necessary.
Movement demonstrates a likelihood of success on its trade secret
misappropriation and tortious interference claims against Summit through the same
allegations outlined above. Trade secrets are protected under federal and state law.
See Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836 et seq.; North Carolina
Trade Secrets Protection Act (“NCTSPA”), N.C. Gen. Stat. § 66-152 et seq. To prevail
on a trade secret claim under the DTSA, Movement must establish “(1) the existence
of a trade secret, (2) the trade secret’s misappropriation, and (3) that the trade secret
implicates interstate or foreign commerce.” dmarcian, Inc. v. dmarcian Europe BV,
60 F.4th 119, 141 (4th Cir. 2023).
Under the DTSA, a trade secret includes “all forms and types of financial,
business, scientific, technical, economic, or engineering information, … whether
tangible or intangible, and whether or how stored, compiled, or memorialized
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physically, electronically, graphically, photographically, or in writing if (A) the owner
thereof has taken reasonable measures to keep such information secret; and (B) the
information derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable through proper means by,
another person who can obtain economic value from the disclosure or use of the
information.” 18 U.S.C. § 1839(3).
Movement claims that its proprietary information, including “training
materials, lead lists and leads, nonpublic borrower financial and personal
information[,] and pipeline reports,” (Doc. No. 5), as well as its P&L, which includes
wage and income information, loan information on borrowers, loan details, and
margin information, (Doc. No. 38-2), could constitute trade secrets under the DTSA.
Movement is correct. Movement notes that it derives independent, actual commercial
value from the information it compiles on prospective and actual customers, and
through its unique loan strategies and processes. Similar information has been
protected under the DTSA. See, e.g., Prysmian Cables & Sys. USA, LLC v. Szymanski,
573 F. Supp. 3d 1021, 1042 (D.S.C. 2021) (collecting cases).
Movement also demonstrates that Summit (through Scrima and Plymale)
misappropriated that information. Under the DTSA, misappropriation is the
“disclosure or use of a trade secret ... without express or implied consent,” where the
defendant either “used improper means to acquire the knowledge of the trade secret,”
or “at the time of disclosure or use, knew ... the knowledge of the trade secret was ...
acquired under circumstances giving rise to a duty to maintain the secrecy ... or limit
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the use of the trade secret.” 18 U.S.C. § 1839(5)(A)–(B). Movement does not
specifically allege that the trade secret implicates foreign or interstate commerce, but
as Movement and Summit are both national businesses, Movement is likely to
succeed on that prong, too.
Movement also demonstrates a likelihood of success under North Carolina law.
“To make a prima facie case of trade secret misappropriation, a plaintiff must show
that a defendant: ‘(1) [k]nows or should have known of the trade secret; and (2) [h]as
had a specific opportunity to acquire it for disclosure or use or has acquired, disclosed,
or used it without the express or implied consent or authority of the owner.’” GE Betz,
Inc. v. Conrad, 231 N.C. App. 214, 233, 752 S.E.2d 634, 649 (2013) (quoting N.C. Gen.
Stat. § 66-155). North Carolina law defines trade secret as “business or technical
information, including but not limited to a formula, pattern, program, device,
compilation of information, method, technique, or process that: (a) Derives
independent actual or potential commercial value from not being generally known or
readily ascertainable through independent development or reverse engineering by
persons who can obtain economic value from its disclosure or use; and (b) Is the
subject of efforts that are reasonable under the circumstances to maintain its
secrecy.” N.C. Gen. Stat. § 66-152(3).
In applying the NCTPSA, North Carolina courts consider “(1) The extent to
which the information is known outside the business; (2) the extent to which it is
known to employees and others involved in the business; (3) the extent of measures
taken to guard secrecy of the information; (4) the value of information to the business
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and its competitors; (5) the amount of effort or money expended in developing the
information; and (6) the ease or difficulty with which the information could properly
be acquired or duplicated by others.” Wells Fargo Ins. Servs. USA, Inc. v. Link, 372
N.C. 260, 278, 827 S.E.2d 458, 473 (2019) (quoting Wilmington Star-News, Inc. v. New
Hanover Reg’l Med. Ctr., Inc., 125 N.C. App. 174, 180–81, 480 S.E.2d 53, 56 (1997)
(cleaned up). Operation and pricing data, cost history records, and customer lists can
all qualify as trade secrets in North Carolina under these six factors. See GE Betz,
Inc. v. Conrad, 231 N.C. App. 214, 233, 752 S.E.2d 634, 649 (2013); Byrd’s Lawn &
Landscaping, Inc. v. Smith, 142 N.C. App. 371, 375 (2001).
Movement also sufficiently demonstrates misappropriation under North
Carlina law, as discussed above. Movement alleges that Plymale, under Scrima’s
direction, took trade secrets from Movement and that Summit now uses those trade
secrets without Movement’s consent.
For purposes of its tortious interference with contract claim, Movement shows
a likelihood of success on two of its contract claims: (1) breach of the non-disclosure
agreement against Plymale and (2) breach of the non-solicitation agreement against
Schoolfield.3 Movement also claims that all Defendants induced other Movement
3 Individual defendants Shelton, Pymale, Frye, and Covett signed an identical (for
these purposes) 2013 or 2016 version of Movement’s Employment Agreement, while
Schoolfield signed an updated 2018 version. Each agreement includes a non-
solicitation provision. The 2013 and 2016 versions are likely overbroad and
unenforceable because they restrict the employee from employing, soliciting,
recruiting, contracting with, influencing, or advising any other employee “for any
reason.” See Power Home Solar, LLC v. Sigora Solar, LLC, No. 20 CVS 7165, 2021
WL 2530984, at *10 (N.C. Super. June 18, 2021) (striking non-solicit because “[t]he
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employees to terminate their own at-will employment contracts. To prove tortious
interference, Movement must show: (1) a valid contract between Movement and a
third person which conferred upon Movement a contractual right against a third
person; (2) the defendant knew of the contract; (3) the defendant intentionally
induced the third person not to perform the contract; (4) and in doing so acts without
justification; (5) resulting in actual damage to Movement. See United Laboratories,
Inc. v. Kuykendall, 322 N.C. 643, 661, 370 S.E.2d 375, 387 (1988).
With its new evidence, Movement shows that Summit, through Scrima,
induced Plymale to breach her confidentiality agreement. Movement also shows that
Summit induced Movement employees to breach their non-solicit agreements and
terminate their employment contracts. Though “[g]enerally speaking, interference
with contract is justified if it is motivated by a legitimate business purpose,” Embree
Const. Grp., Inc. v. Rafcor, Inc., 330 N.C. 487, 498, 411 S.E.2d 916, 924 (1992),
Summit’s interference here was unjustified after the November 3 injunction. That
interference has damaged Movement through loss of employees and customers, and
without further injunctive relief, Movement will suffer further damage.
Employment Agreement does not limit those ‘employees’ that he is prohibited from
soliciting.”); Nouveau Riche Corp. v. Tree, No. CV08-1627-PHX-JAT, 2008 WL
5381513, at *9 (D. Ariz. Dec. 23, 2008) (striking non-solicit because “the prohibition
on solicitation as drafted seeks to restrict Defendants from soliciting these
individuals to join any club or organization—even those of a recreational or non-
business nature such as a book club.”).
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Thus, Movement demonstrates a likelihood of success against Summit on its
Unfair and Deceptive Trade Practices claim, its misappropriation of trade secrets
claim, and its tortious interference claim sufficient to warrant new injunctive relief.
B. Movement Will Suffer Irreparable Harm in the Absence of a New
Injunction
Movement bears the burden of demonstrating irreparable harm in the absence
of a new injunction. See Winter, 555 U.S. at 20. It does so through its updated claims
and attendant evidence. See Willis Towers Watson Se., Inc. v. Alliant Ins. Servs., Inc.,
No. 322CV00277FDWDCK, 2022 WL 2555108, at *23 (W.D.N.C. July 7, 2022)
(Whitney, J.) (“[T]he continued solicitation of … employees will also cause
immeasurable and irrevocable harm to [plaintiff], as the training, experience, and
knowledge employees possess, for which [plaintiff] has provided and paid over the
course of their employment, is invaluable to [plaintiff’s] ability to remain viable as a
business.”); see also Superior Performers, Inc. v. Meaike, No. 1:13CV1149, 2014 WL
12603107, at *1 (M.D.N.C. Feb. 20, 2014) (“Plaintiff is likely to suffer irreparable
harm in the absence of a TRO, because, Defendants’ actions have likely damaged, and
will continue to damage Plaintiffs relationship with their current employees and
clients.”); Lake House Acad. for Girls LLC v. Jennings, No. 11 CVS 1666, 2011 WL
4862987, at *10 (N.C. Super. Oct. 13, 2011) (finding irreparable harm and issuing
injunction where an individual defendant “actively solicited [plaintiff’s] employees to
terminate their employment and work for [another business].”).
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C. The Balance of Equities and the Public Interest Support an
Injunction
To warrant new injunctive relief, Movement also carries the burden of showing
that the balance of equities tips in its favor and that injunctive relief is in the public
interest. Winter, 555 U.S. at 20. Movement incorporates its earlier arguments on both
points, (Doc. No. 5), and those arguments are persuasive. Movement seeks to prevent
Summit from using Movement’s confidential information and to prevent Summit
from illicitly recruiting Movement employees.
The balance of equities weighs in favor of injunctive relief. See Title Trading
Servs. USA, Inc. v. Kundu, No. 3:14-CV-225-RJC-DCK, 2016 WL 608193, at *8
(W.D.N.C. Jan. 5, 2016) (Conrad, J.) (“The injunction sought by [plaintiff] would not
cause hardship to [defendant], since he has no legitimate rights to the trade secrets
and property taken from [plaintiff]. [Defendant] can continue to trade and work in
any lawful manner with his own assets. Hence, there can be no injury to him at all—
and certainly no irreparable injury—if he is simply restrained and enjoined from
using [plaintiff’s] assets.”); Willis Towers Watson Se., 2022 WL 2555108, at *25
(finding the equities tipped in favor of plaintiff seeking to enjoin solicitation).
The public interest also supports an injunction. Both the United States
Congress and the North Carolina legislature have designed statutes to protect
against the very actions Movement alleges here, and Summit continues to engage in
unfair and deceptive behavior even in the face of an injunction from this Court. See
Title Trading Servs., 2016 WL 608193, at *8 (“The public has no interest in allowing
perpetrators of a trade secret misappropriation to benefit or profit from those acts.”);
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Forestry Sys., Inc. v. Coyner, No. 1:11-CV-295, 2011 WL 1457707, at *2 (M.D.N.C.
Apr. 15, 2011) (“Put simply, the public interest favors protection of trade secrets.”);
ABT, Inc. v. Juszczyk, No. 5:09CV119-RLV, 2010 WL 3156542, at *9 (W.D.N.C. Aug.
10, 2010) (“Public interest favors the protection of confidential business information
and the enforcement of valid contracts”).
D. Summit is Held in Civil Contempt
“To establish civil contempt, the moving party must show by clear and
convincing evidence ‘(1) the existence of a valid decree of which the alleged contemnor
had actual or constructive knowledge; (2) that the decree was in the movant’s favor;
(3) that the alleged contemnor by its conduct violated the terms of the decree, and
had knowledge (at least constructive knowledge) of such violations; and (4) that the
movant suffered harm as a result.’” dmarcian, Inc. v. dmarcian Eur. BV, 60 F.4th
119, 145 (4th Cir. 2023) (quoting Fed. Trade Comm'n v. Pukke, 53 F.4th 80, 101 (4th
Cir. 2022)). Before finding a party in contempt, a district court must also provide the
alleged contemnor notice and opportunity for a hearing. Int’l Union, United Mine
Workers of Am. v. Bagwell, 512 U.S. 821, 826–27 (1994).
The Court provided Summit such an opportunity during a hearing on
December 7, 2023, and Movement establishes these prongs by clear and convincing
evidence. Movement’s contempt arguments are based on the November 3 injunction,
which was in Movement’s favor and of which Summit had actual knowledge; indeed,
Summit agreed to the entry of that injunction. (Doc. No. 23). Through Summit’s
solicitation of Michael Davis, Movement shows by clear and convincing evidence that
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Summit knowingly violated the terms of the injunction. Finally, Movement
sufficiently demonstrates the harm that it has suffered from the loss of its employees
and confidential information. Accordingly, the Court finds Summit in contempt of
Court. While the Court has inherent authority to impose sanctions upon Summit for
such contempt, Int’l Union, United Mine Workers of Am., 512 U.S. at 828, the
expanded injunctive relief requested by Movement and granted by the Court –
including attorneys’ fees associated with the instant motion – is sufficient to
encourage Summit’s compliance.
IV. CONCLUSION
IT IS, THEREFORE, ORDERED that the Court orders new injunctive relief
as follows:
A. Summit, and all other persons or entities acting in concert with it or on
its behalf, whether employed at Summit or otherwise, are prohibited
from directly or indirectly soliciting Movement’s employees;
B. Summit, and all other persons or entities acting in concert with it or on
its behalf, whether employed at Summit or otherwise, are prohibited
from knowingly soliciting, transferring, or diverting customers engaged
in the loan application process with Movement;
C. Summit, and all other person persons or entities acting in concert with
it or on its behalf, whether employed at Summit or otherwise, are
prohibited from directly or indirectly taking, disseminating, using, or
utilizing any confidential or proprietary information obtained from
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Movement, specifically including Movement’s Profit and Loss statement
at issue in this litigation;
D. Summit shall bear Movement’s attorneys’ fees and costs associated with
bringing the instant motion, (Doc. Nos. 28 and 38 and attendant
exhibits); and
E. The Court finds Summit in civil contempt.
Signed: January 3, 2024
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