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Keurig Dr Pepper Inc. v. Chenier

United States District Court, E.D. Texas, Sherman Division

August 22, 2019

KEURIG DR PEPPER INC. AND DR PEPPER/SEVEN UP, INC.
v.
JOHN CHENIER

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT UNITED STATES DISTRICT JUDGE

         Pending before the Court is Plaintiffs Keurig Dr Pepper Inc. and Dr Pepper/Seven Up, Inc.'s Emergency Motion for Temporary Restraining Order and Preliminary Injunction (Dkt. #8). Plaintiffs ask the Court to temporarily restrain Defendant John Chenier from allegedly continuing to act in contravention of binding restrictive covenants and from misappropriating Plaintiffs' trade secrets and confidential information. The Court, having reviewed Plaintiffs' Application, finds that a temporary restraining order should be issued.

         BACKGROUND

         Plaintiffs Keurig Dr Pepper Inc., through its subsidiaries such as Dr Pepper/Seven Up, Inc., and the American Bottling Company (collectively, “KDP”), is engaged in the business of beverage manufacturing and distribution throughout the United States and the world. A part of KDP's business also entails partnering with emerging brands to distribute beverage on their behalf. KDP employs a series of highly qualified and talented employees to work with varying customers around the world to ensure that KDP's diverse lineup of beverages- as well as those brands with which KDP partners-are stocked within a store and featured in locations in which its products would be more likely to be purchased. Defendant John Chenier has worked in the Consumer Packaged Goods (“CPG”) industry for over thirty years and has been employed by some of the nation's top brands, including Pillsbury Company, The Clorox Company, Danone S.A., Schwans Consumer Brands, ARYZTA, KDP, and, currently, BodyArmor.

         In July 2017, KDP hired Chenier as a Sales Director Bentonville, Arkansas area and with attention to the Wal-Mart/Sam's Club account. On September 1, 2017, KDP presented Chenier with a Grantee Acknowledgement and Agreement, through which he was granted a restricted stock unit award (a “RSU Award”) valued at over $15, 000.00. KDP alleges that in consideration for the RSU Award, Chenier was required to electronically consent to an Omnibus Stock Incentive Plan, the RSU Agreement, Employee Confidentiality and Non-Competition Agreement, and a Mutual Arbitration Agreement. From the initial September 2017 award until March 2019, KDP presented Chenier with a total of four RSU Awards valued over $600, 000.00, which KDP alleges were given in consideration of, and contingent on, Chenier signing and agreeing to be bound by an Employee Confidentiality and Non-Competition Agreement and a Mutual Arbitration Agreement (collectively, the “Agreements”). In November 2018, Chenier was promoted to Vice President, Sales, assigned to Wal-Mart. KDP alleges that during the time Chenier was in its employ, it provided him with bonuses, stock, access to KDP's sensitive confidential and trade secret information, and direct access to Wal-Mart.

         During Chenier's employment, KDP contracted with BodyArmor to distribute BodyArmor's sports drink. Chenier worked directly with BodyArmor to help it promote its brand with Wal-Mart. In August 2018, BodyArmor terminated its distribution relationship with KDP and began a distribution relationship with Coke.

         Chenier contends that after a KDP merger, he became insecure about dissatisfied about his role in the company and contemplated other employment. In Spring 2019, Chenier accepted a job with BodyArmor to serve as its Vice President of Sales for Wal-Mart/Sam's Club. On June 6, 2019, Mr. Chenier notified his supervisor at KDP Sean Cronican of his intent to resign. Cronican advised Chenier that a non-competition agreement prohibited Chenier from working with BodyArmor for one year. Chenier contends that he does not recall signing any noncompetition agreement.

         Upon learning that Chenier took a similar position with BodyArmor, KDP retained an outside expert to forensically image Chenier's KDP-issued computer. KDP alleges that the results of the forensic imaging show the following:

Chenier has misappropriated KDP's trade secrets by: (a) downloading sensitive, trade secret information directly from KDP's server onto external media devices; (b) inserting and retaining at least 19 external media devices; (c) emailing KDP confidential information to his personal email accounts; and (d) connecting to BodyArmor's WiFi network on his KDP-issued laptop on June 3, 2019, and, from there, apparently presenting to BodyArmor a highly confidential KDP pitch proposal that KDP was planning on presenting to Wal-Mart the following week.

(Dkt. #1 at p. 3).

         On July 10, 2019, KDP filed a complaint (Dkt. #1) against Chenier in the United States District Court for the Eastern District of Texas alleging breach of contract and actual and threatened misappropriation of trade secrets under the Texas Uniform Trade Secrets Act (“TUTSA”) and the Defend Trade Secrets Act (“DTSA”). KDP contends that Chenier's employment with BodyArmor, and specifically as it relates his contact with Wal-Mart, is in breach of covenants not to compete and solicit/interfere.

         On July 16, 2019, KDP filed an Emergency Motion for Temporary Restraining Order and Preliminary Injunction (Dkt. #8) asking that the Court enter an Order providing the following relief:

A. Temporarily and preliminarily enjoin Chenier from directly or indirectly providing Competitive Services in the Restricted Area for BodyArmor;
B. Temporarily and preliminarily enjoining Chenier from interfering, soliciting, servicing, or making proposals to Walmart;
C. Temporarily and preliminarily enjoin Chenier and all parties in active concert or participation with him or receiving notice of any injunction, from using or disclosing any of KDP's confidential or trade secret information;
D. Order Chenier and all parties in active concert or participation with them or receiving notice of any injunction, to return to KDP all originals and copies of all files, devices and/or documents that contain or relate to KDP's confidential or trade secret information, including without limitation, all computers, electronic media, PDA's, and electronic storage devices;
E. Award KDP such other relief as the Court may deem just and proper;
F. Set a date for a Preliminary Injunction Hearing.

(Dkt. #8 at p. 15). On July 23, 2019, Chenier filed a response (Dkt. #15). On July 24, 2019, KDP filed a reply (Dkt. #16).

         On July 25, 2019, the Court held a hearing on KDP requests for a temporary restraining order. As set herein, the Court considers whether to temporarily restrain Chenier in the manner proscribed above until the evidentiary hearing on KDP's request for a preliminary injunction, which is currently set for September 16-17, 2019.

         LEGAL STANDARD

         Under Rule 65 of the Federal Rules of Civil Procedure, “[e]very order granting an injunction and every restraining order must: (a) state the reasons why it issued; (b) state its terms specifically; and describe in reasonable detail . . . the act or acts restrained or required.” Fed.R.Civ.P. 65(d). A plaintiff seeking a temporary restraining order must show: (1) a substantial likelihood of success on the merits; (2) a substantial threat that plaintiff will suffer irreparable harm if the injunction is not granted; (3) the threatened injury outweighs any damage that the injunction might cause the defendant; and (4) the injunction will not disserve the public interest. Nichols v. Alcatel USA, Inc., 532 F.3d 364, 372 (5th Cir. 2008).

         ANALYSIS I.

         Likelihood of Success on the Merits

          KDP asserts claims for misappropriation of trade secrets under the TUTSA and DTSA and a breach of contract-specifically, a non-compete provision and non-solicitation/interfernce provision. For the Court to grant a temporary restraining order, KDP must first demonstrate a substantial likelihood of success on the merits. This requires a movant to present a prima facie case. Daniels Health Scis., LLC v. Vascular Health Scis., 710 F.3d 579, 582 (5th Cir. 2013) (citing Janvey v. Alguire, 647 F.3d 585, 595-96 (5th Cir. 2011)). A prima face case does not mean KDP must prove that it is entitled to summary judgment. See Byrum v. Landreth, 566 F.3d 442, 446 (5th Cir. 2009)

         A. Misappropriation of Trade Secrets Claims

          KDP alleges that Chenier unlawfully downloaded KDP's trade secrets, sent them to his personal email address, improperly used KDP trade secrets to solicit Wal-Mart on behalf of BodyArmor, and presented a KDP pitch presentation to Wal-Mart. Further, KDP argues that because Chenier holds a substantially similar position with BodyArmor that he did with KDP, Chenier has used and will continue to use KDP confidential information.

         Chenier argues that KDP has failed to identify a trade secret or other piece of confidential information misused or misappropriated. That is, Chenier avers, KDP has simply forwarded a theory of misappropriation that is based on speculation, conjecture, misleading due to a false nefarious spin on innocuous actions. Further, Chenier contends that KDP falsely dressing up documents that are not confidential trade secrets to its detriment and to the benefit of BodyArmor.

         To prevail on a trade secret misappropriation claim under Texas law, “a plaintiff must show: ‘(1) a trade secret existed, (2) the trade secret was acquired through a breach of a confidential relationship or discovered by improper means, and (3) the defendant used the trade secret without authorization from the plaintiff.'”CQ, Inc. v. TXU Min. Co., L.P., 565 F.3d 268, 273 (5th Cir. 2009) (quoting Gaia Techs. Inc. v. Recycled Prods. Corp., 175 F.3d 365, 376 (5th Cir. 1999)).

         1. KDP has made a Prima Facie Case that a Trade Secret Existed

         KDP alleges that Chenier, without authorization, downloaded its trade secret on multiple thumb drives. Specifically, KDP alleges that Chenier inserted, and currently retains information from, nineteen thumb drives, which include information pertaining to

KDP's national account information for Walmart and Sam's Club, for all KDP product offerings, whether such products are manufactured by KDP or distributed by it, including volume of product in stores as well as projected volume, revenue and projected revenue, and sales income earned after discounts applied and projected sales income earned after discounts applied; (ii) Walmart and Sam's Club sales across the all drink segment categories, current through May 19, 2019; (iii) information that KDP purchases at significant cost from a third-party vendor, identifying all beverage product lines sold at Walmart, including KDP and other competitors, including sales trends and data, current through May 26, 2019.

(Dkt. #8).

         Chenier argues that KDP fails to identify any trade secret information that was allegedly misappropriated. TUTSA defines a trade secret as

all forms and types of information, including business, scientific, technical, economic, or engineering information, and any formula, design, prototype, pattern, plan, compilation, program device, program, code, device, method, technique, process, procedure, financial data, or list of actual or potential customers or suppliers, whether tangible or intangible and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if:
(A) the owner of the trade secret has taken reasonable measures under the circumstances to keep the 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 ...

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