United States District Court, E.D. Michigan, Southern Division
ORDER RE: VARIOUS MOTIONS
PAGE HOOD, UNITED STATES DISTRICT JUDGE
filed this action seeking an order enjoining Defendants from
using and disclosing Plaintiffs’ trade secrets and
confidential and proprietary information and competing
against Plaintiffs. Plaintiffs assert Defendant David Luick
(“Luick”) violated express contractual
obligations he made pursuant to an employment agreement
(“Employment Agreement”) he executed as an
employee of Plaintiff Xoran Technologies LLC
(“Xoran”). Defendants counter that Plaintiffs
have not identified any particular piece of information
entitled to trade secret protection, nor have Plaintiffs
demonstrated actual or threatened misappropriation of any
before the Court are the following matters:
A. Plaintiffs’ Objections to the Magistrate
Judge’s November 16, 2018 Bench Order to produce
certain documents and supplemental interrogatory responses.
Dkt. No. 106.
B. Motion to Extend Discovery, filed by Defendants. Dkt. No.
C. Motion to Stay Dkt. No. 102 Pending Ruling on Dkt. Nos.
106 and 108, filed by Plaintiffs. Dkt. No. 119.
D. Motion to Adjourn All Remaining Dates, filed by
Defendants. Dkt. No. 138.
E. Motion for Partial Summary Judgment Regarding Competition,
filed by Plaintiffs. Dkt. No. 141.
F. Motion for Relief per Federal Rule of Civil Procedure
56(d), filed by Plaintiffs. Dkt. No. 152.
G. Motion for Reconsideration of Order Granting
Defendants’ Motion for Partial Summary Judgment, Dkt.
No. 158, filed by Plaintiffs. Dkt. No. 164.
H. Objections to the Magistrate Judge’s May 19, 2019
Order, Dkt. No. 175, filed by Defendants. Dkt. No. 177.
extent permissible, each of the foregoing filings has been
September 2011 through May 2016, Luick was employed by Xoran
Technologies LLC as Director of Sales (he began his
employment in 2007 as Project Manager). Xoran is a research
and development company based in Ann Arbor, Michigan, that
has developed, patented and marketed a line of small,
specialized CT scanners and related products for the United
States and international markets, particularly low-dose
radiation, cone-beam based CT scanners for use in office and
operating rooms. Dkt. No. 1, ¶¶10-11. As Director
of Sales, Luick was required to sign the Employment Agreement
as a condition of his employment, which he did on or about
September 18, 2011. Dkt. No. 1, Ex. 1. The Employment
Agreement signed by Luick sets forth the following relevant
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B. Xoran possesses Confidential Information (hereinafter
defined in Paragraph 6) that is a valuable and unique assets
of Xoran. In connection with Employee’s employment,
Employee holds, or will hold, a position that will provide
Employee with access to and knowledge of Confidential
Information of Xoran and of clients and customers of Xoran.
* * * * *
6. Non-Disclosure of Information. Employee
acknowledges that much, if not all, of the material and
information related to the products, technology, software and
hardware, techniques, and othr business affairs of Xoran and
its affiliates, including without limitation, and and all
Work Product (as defined in Paragraph 5.1 of this Agreement),
discovered or created pursuant to this Agreement, and the
business affairs and information of Xoran and its customers
and clients (including but not limited to, any business
plans, practices and procedures, pricing information, sales
figures, profit or loss figures, information relating to
clients, suppliers, sources of supply and customer lists,
customer identity, pricing information, and business
development plans), which have or will come into
Employee’s possession or knowledge in connection with
Employee’s performance under this Agreement, consists
of confidential and proprietary data of Xoran and its
affiliates (collectively, “Confidential
Information”). . . . Employee further agrees not to
make use of Confidential Information for Employee’s own
benefit, either during the term of Employee’s
employment with Xoran of [sic] after the termination of such
employment. In the event of any breach of this
confidentiality obligation by Employee, Employee acknowledges
that Xoran would have no adequate remedy at law because the
harm caused by such a breach would not be easily measured and
compensated for in the form of damages. Accordingly, Employee
hereby waives his/her right to contest any equitable relief
sought by Xoran, other than Employee’s right to contest
the question of whether a breach has occurred. Employee
hereby waives the requirement of any bond being posted as
security for such equitable relief.
* * * * *
8.1 Term of Non-Competition. The “Term of
NonCompetition” means the period beginning on the date
of this Agreement and continuing for a period of twelve (12)
consecutive, full calendar months following the termination
of Employee’s employment for any reason.
8.2 Prohibited Activities.
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8.2.2 During the Term of Non-Competition, Employee will not
provide directly or indirectly, individually or as a
principal, officer, director, employee, shareholder (other
than a holder of fewer than 5% of the outstanding shares of a
publicly-traded company), consultant, partner, joint
venturer, agent, equity owner or in any other capacity
whatsoever, a “Competing Service” to any entity
regardless of whether it is a sole proprietorship or a
corporation, partnership, business association, or other
entity. The term “Competing Service” includes,
but is not limited to, the design, development, sale,
marketing, or distribution of the same or similar products
and/or services that are provided by Xoran and its
affiliates. If any portion of this Paragraph 8.2.2 is deemed
unenforceable by a court of law or arbitrator, the
parties’ agreement restricting Employee’s ability
to provide Competing Services shall be enforced to the
fullest extent allowed by applicable law.
8.2.3 During the Term of Non-Competition, Employee will not,
directly or indirectly, individually or on behalf of or in
connection with any other person, entity or organization: (a)
cause, encourage, direct, solicit, induce or attempt to
induce any person who is or has been employed or retained by
Xoran to leave the employ or services of Xoran, or in any way
interfere with the relationship between Xoran and any
employee or consultant thereof; and/or (b) call on, solicit,
have contact with, or service any customer, prospective
customer, consultant, strategic partner, funding source, or
other business relation of Xoran in order to (i) solicit
business of the type provided by Xoran, (ii) induce or
attempt to induce such person or entity to cease doing
business with, or reduce the amount of business conducted
with, Xoran, or (iii) in any way to interfere with the
relationship between any such person or entity and Xoran.
8.3 Remedies. In addition to exercising any remedies
for a breach of this Paragraph 8 available to Xoran at law or
in equity, if during any calendar month within the Term of
Non-Competition, Employee is not in compliance with the terms
of this Paragraph 8, Xoran shall be entitled to seek
compliance by Employee with the terms of this Paragraph 8 for
an additional number of full, calendar months equal to the
number of calendar months during which such noncompliance
occurred. The “Term of Non-Competition” shall
also include this additional period.
* * * * *
11.10 Survival. Employee hereby acknowledges that
the rights and obligations of Employee and Xoran under all
subparagraphs of Paragraphs 5, 6, 7, 8, 9, and 11 of this
Agreement shall survive the termination of this Agreement.
Employee acknowledges and agrees that: . . . (iv) Xoran will
be entitled to enforce this Agreement through a temporary
restraining order, an injunction and/or other equitable
remedies in the event of a breach, in addition to any other
remedies available to Xoran (including, without limitation,
monetary damages), without the requirement for posting a bond
or security for such injunctive relief; and (v) injunctive
relief will not deprive Employee of an ability to earn a
living because he/she is qualified for many positions which
do not otherwise necessitate the breach of any provision of
to Plaintiffs, Luick resigned from Xoran in May 2016.
Defendants contend that Luick was wrongfully fired in May
2016, a termination that Defendants claim was the result of
Luick reporting misconduct by Xoran’s Chief Executive
Officer, Miodrag Rakic, to Xoran’s Human Resources
administrator. Xoran later discovered that Plaintiff had
filed incorporation papers on June 29, 2016 for a new entity,
Tungsten Medical Network, LLC (“Tungsten”), that
Luick operated out of his home. Dkt. No. 1, Ex. 2. When Xoran
learned that Defendants might be using Confidential
Information (as defined in Section 6 of the Employment
Agreement) to compete with Xoran, Xoran tried to address the
issue with Luick without resorting to litigation, including
sending a letter from counsel reminding him of his
obligations. Dkt. No. 11, Ex. 3. Luick assured Xoran
personnel that he was not using Confidential Information or
competing with Xoran.
September 2016, Xoran’s President, Dr. David Sarment,
saw Defendant Luick talking with representatives from
Xoran’s largest competitor at an industry conference.
When Dr. Sarment approached Luick, Luick indicated that he
was not competing with Xoran. Dkt. No. 11, Ex. 4 at ¶ 5.
Luick stated that he had looked into other positions, but
none of those options could “meet his salary
expectations.” Id. at ¶ 7.
October 18, 2016, Plaintiffs filed a Complaint with the
following five counts: (1) Misappropriation of Trade Secrets
under the Defend Trade Secrets Act, 18 U.S.C. § 1836
(“DTSA”); (2) Injunctive Relief; (3)
Misappropriation of Trade Secrets under the Michigan Uniform
Trade Secrets Act, M.C.L. 445.1901 et seq.; (4)
Breach of Contract (Luick only); and (5) Tortious
Interference with a Contractual Relationship. Defendants
filed an answer to the Complaint and Counterclaim on November
1, 2016. On November 1, 2016, Defendants filed a Counterclaim
for wrongful termination against Plaintiffs.
after filing this action, Plaintiffs filed a Motion for
Temporary Restraining Order and an Emergency Motion for
Preliminary Injunction against Defendants. At the time
Plaintiffs’ filed their motion for temporary
restraining order, Tungsten’s website indicated that it
is “experienced with these brands” and displayed
the names “Xoran, ” “Morita, ” and
“Carestream, ” a competitor of Xoran’s.
Carestream is the same competitor that Dr. Sarment had seen
Luick speaking with at the conference. Contrary to
Plaintiffs’ statements, there did not appear to be any
other reference to Carestream on Tungsten’s website
(and not anything that stated Tungsten had a relationship
with Carestream). Xoran also believed that Defendants were
using a claimed (but nonexistent) business relationship with
Xoran to get access to Xoran’s customers and then
attempt to steer those customers away from Xoran by providing
false information about Xoran’s business. Dkt. No. 11,
Ex. 3 at ¶¶ 18-21.
to the scheduled hearing, the parties entered into a
Stipulated Order on November 4, 2016 (“Stipulated
Order”). Dkt. No. 14. The Stipulated Order provided, in
part, as follows:
WHEREAS, The Employment Agreement contained certain
non-compete provisions which are at issue in the current
litigation, and which restricted Defendant Luick from certain
activities Xoran for a period of 12 months from the date of
termination (“non-compete period”); and
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IT IS HEREBY ORDERED AS FOLLOWS:
1. Defendants will not use any work product derived in whole
or in part from work product Luick or any other Xoran
employee produced while working at Xoran ...