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Viking Group, Inc. v. Pickvet

United States District Court, W.D. Michigan, Southern Division

May 3, 2017

Viking Group, Inc. and Supply Network Inc., Plaintiffs,
v.
Terry Pickvet, Defendant. and Terry Pickvet, Plaintiff,
v.
Viking Group, Inc., and Supply Network, Inc. Defendants.

          OPINION AND ORDER GRANTING IN PART VIKING GROUP'S MOTION FOR A PRELIMINARY INJUNCTION AND DENYING PICKVET'S MOTION FOR A PRELIMINARY INJUNCTION

          Paul L. Maloney United States District Judge

         Before this Court are two cases involving identical parties. In both cases, the parties raise claims arising from a noncompete agreement. Both parties have filed motions for a preliminary injunction. As the plaintiff, Viking Group wants the Court to enforce portions of a noncompete agreement. As the plaintiff, Terry Pickvet wants the Court to prevent Viking Group from enforcing the noncompete agreement. The resolution of the competing motions turns on whether Michigan law applies or whether Georgia law applies. The Court concludes that Michigan law applies to the noncompete agreement and will grant, in part, Viking Group's motion.

         I.

         Terry Pickvet worked for a subsidiary of Viking Group from late 2009 until January 23, 2017, when he submitted his resignation. Pickvet applied for a position with Atlanta Winsupply, a competitor of Viking Group, and received an offer from them.

         The same day he resigned from Viking Group, Pickvet filed a lawsuit against his former employer in the Fulton County Superior Court for Fulton County, Georgia. Pickvet sought a declaration that the Noncompete Agreement was unenforceable. Viking Group removed the lawsuit to the United States District Court for Northern District of Georgia. On February 3, 2017, Judge William Duffy granted Viking Group's motion to transfer venue and transferred the lawsuit to this district. Currently pending in the Pickvet case, Pickvet v. Viking Group, No. 1:17-cv-116 (W.D. Mich.) (Pickvet) is Pickvet's motion for injunctive relief (ECF No. 2).

         On January 26, 2017, the day that Viking Group was served with the complaint and summons from Pickvet's Georgia lawsuit, Viking Group filed its own lawsuit against Pickvet in the Kent County Circuit Court for Kent County, Michigan. Pickvet removed the lawsuit to this Court on January 30, 2017. Currently pending in the Viking Group case, Viking Group v. Pickvet, No. 1:17-cv-103 (W.D. Mich.) (Viking Group) is Viking Group's motion for a preliminary injunction. (ECF No. 4.)

         The parties generally agree on the relevant facts. Pickvet received and signed an offer of employment from Viking SupplyNet on October 30, 2009.[1] (Viking Group ECF No. 5-1 PageID.50-52.) As a condition of employment, Pickvet was required to sign a noncompete and confidentiality agreement. (Id. PageID.51.) Pickvet signed the agreement on October 30, 2009. (Id. PageID.53-55.)

         The Noncompete Agreement is broad in scope. The agreement was between Pickvet and the Viking Group (Viking Group ECF No. 5-1 PageID.53), which included all parent, subsidiary, and affiliated corporations, as well as any joint ventures, partnerships or other business entities in which the parent, subsidiaries, and affiliates participate or own, and their successors and assigns (PageID.55). The agreement generally prohibits Pickvet from “competing in any way” with Viking Group. (Id. PageID.53.) The prohibition precludes Pickvet from working “with, for, or hav[ing] any interest in, any organization that competes with” Viking Group. (Id.) The agreement not to compete extends for two years after Pickvet's employment ends. (PageID.53.) The agreement applies to the Southeastern U.S. Sales Region, which is defined as North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana, Arkansas, Tennessee, and Texas. (Id.)

         The Noncompete Agreement contains both a forum selection clause and a choice of law provision. The choice of law provision specifies that Michigan law governs the agreement. (Viking Group ECF No. 5-1 PageID.53.) The document specifies that disputes arising under the agreement “shall be filed, heard and decided in either Kent County Circuit Court or the U.S. District Court for the Western District of Michigan.” (Id.)

         Pickvet sold fire suppression products and related services. According to Pickvet, his sales territory included all of Georgia, the southern-half of Alabama, the panhandle region of Florida, and the Chattanooga and Cleveland areas of Tennessee. (Pickvet ECF No. 1-1 Affidavit PageID.44.) Pickvet also had one account in Lucedale, Mississippi. (Id.) Pickvet received an offer to work for Atlanta Winsupply selling similar products and services.

         In its motion, Viking Group seeks to enforce several provisions of the Noncompete Agreement. Viking Group asks the Court to enter an injunction to prevent Pickvet from using or disclosing Viking Group's confidential information and also to prevent Pickvet from soliciting customers. Viking offers the following proposed injunction:

Until further Order of this Court, Pickvet is prohibited from:
A. Within the states of North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana, Arkansas, Tennessee, and Texas:
1) attempting to persuade any customer, supplier, or potential customer or supplier of Viking that they should not do business with Viking, should reduce their purchases of Viking's products or services, or should do business with a competitor of Viking;
2) selling or aiding in the sale of any products or services that are competitive with any services or products of Viking to any customer or potential customer of Viking;
3) soliciting, encouraging or persuading any employee of Viking to terminate their employment with Viking or to take any action that adversely affects their ability to carry out their employment duties with Viking.
B. Retaining, disclosing to any person or entity, or using for any purpose any confidential information concerning Viking's customers, marketing strategy, product cost, pricing information, or other business information which he obtained in the course of his employment with Viking.

(Viking Group ECF No. 5-9 PageID.89.)

         In his proposed order attached to his motion, Pickvet ask the Court to enjoin Viking Group from “taking any steps to enforce the 2009 Agreement between the parties until the present litigation is resolved between the parties.” (Pickvet ECF No. 2 PageID.76.)

         II.

         These lawsuits come to federal court under the diversity statute. See 28 U.S.C. § 1132. The parties are from different states and the amount in controversy exceeds $75, 000. Viking Group is a Michigan corporation. Pickvet is a citizen and resident of Georgia. In the Pickvet case, Viking Group states, in its notice of removal, that the value of its interest in enforcing the noncompete agreement exceeds $75, 000. (Pickvet ECF No. 1 PageID.3) In the Viking Group case, Pickvet relies on Viking Group's own valuation of its interest in his notice of removal. (Viking Group ECF No. 1 PageID.3.)

         In diversity suits, federal courts apply the substantive law of the forum state. CenTra, Inc. v. Estrin, 538 F.3d 402, 409 (6th Cir. 2008) (citing Himmel v. Ford Motor Co., 342 F.3d 593, 598 (6th Cir. 2003)). When applying state law to a diversity action, the federal court “must follow the decisions of the state's highest court when that court has addressed the relevant issue.” Talley, 223 F.3d at 326. Where the state's supreme court has not weighed in on the issue, federal courts must anticipate how the state's supreme court would rule by considering “all available data, including the decisional law of the state's lower courts.” Ziegler v. IBP Hog Mkt., Inc., 249 F.3d 509, 517 (6th Cir. 2001). “'Where a state's highest court has not spoken on a precise issue, a federal court may not disregard a decision of the state appellate court on point, unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.' This rule applies regardless of whether the appellate court decision is published or unpublished.” Id. (citations omitted).

         III.

         The parties disagree about which state's law should govern this matter. Pickvet insists that Georgia laws should govern. In his motion for injunctive relief, Pickvet relies on Georgia law, including an analysis of Georgia's choice of law rules. Viking Group contends that Michigan law applies.

         At the outset, this Court must apply Michigan's conflict of law rules to the choice of law provision in the Noncompete Agreement. As a federal court in the State of Michigan, this Court applies Michigan law to state law claims brought in diversity cases, including the state's conflict of law rules. See Security Ins. Co. v. Kevin Tucker & Assoc., 64 F.3d 1001, 1005 (6th Cir. 1995); see also Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941) (“The conflict of laws rules to be applied by the federal court in Delaware must conform to those prevailing in Delaware's state courts.”). Also, through the forum selection clause, the parties agreed that “any dispute” arising from the Agreement must be filed, heard and decided by a Michigan court. (Viking Group ECF No. 5-1 PageID.55.)

         Michigan applies Section 187 of the Restatement 2d of Conflict of Laws when considering which state's law to apply to a contract. Mill's Pride, Inc. v. Cont'l Ins. Co., 300 F.3d 701, 705 (6th Cir. 2002); Chrysler Corp. v. Skyline Indus. Servs., Inc., 528 N.W.2d 698, 703 (Mich. 1995). Initially, the parties must have selected a state to supply the governing law. Kipin Indus., Inc. v. Van Deilen Int'l, Inc., 182 F.3d 490, 493 (6th Cir. 1999). Michigan conflict of law rules require courts “to balance the expectations of the parties to a contract with the interests of the states involved to determine which state's law to apply.” Equitable Life Assurance Soc'y of the United States v. Poe, 143 F.3d 1013, 1016 (6th Cir. 1998) (citing Chrysler Corp., 528 N.W.2d at 703). Section 187 provides

(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.
(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either
(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis ...

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