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Cyrus One LLC v. Levinsky

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

September 11, 2019

CYRUS ONE LLC and CYRUSONE, INC.
v.
STUART LEVINSKY and SWITCH, INC.

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE

         Pending before the Court is Plaintiffs' Motion for Preliminary Injunction (Dkt. #16). Having considered the motion and the relevant pleadings, the Court finds that the motion should be granted.

         BACKGROUND

         Plaintiffs CyrusOne LLC and CyrusOne, Inc. (“CyrusOne”) are in the industry of data center colocation operations. CyrusOne designs, builds, and operates data centers, which along with floor space and cooling, offer telecommunications and power connectivity thereby allowing other businesses to rent space to securely house their services and other computing equipment to connect that equipment to the rest of the world. Defendant Stuart Levinsky started employment with CyrusOne in 2011, managing sales and soliciting customers for CyrusOne data centers. He was, for most of his employment, based at a data center in Phoenix, Arizona but he solicited customers to other CyrusOne data centers throughout the country. In 2017, CyrusOne decided to shift its focus to the “cloud” market, and selected Levinsky to lead that effort. Accordingly, Levinsky was promoted to Vice President of Sales for Cloud and Global Accounts and relocated to Seattle, Washington.

         As part of his employment with CyrusOne, Levinsky signed several Employment Agreements all containing non-disclosure (the “Non-Disclosure Agreement”), non-competition (the “Non-Compete Agreement”), and non-solicitation (the “Non-Solicitation Agreement”) provisions. The Non-Compete Agreement states:

Employee recognizes the need of the Company to prevent unfair competition and to protect the Company's legitimate business interests. Therefore, ancillary to the otherwise enforceable agreement set forth in this Agreement, and to avoid the actual or threatened misappropriation of the Information or goodwill, Employee agrees to the restrictive covenants and for a period of one year following Employee's termination or separation (for any reason), Employee will not accept employment or engage in any business activity (whether as a principal, partner, joint venture, agent, employee, salesperson, consultant, independent contractor, director or officer) with a “Competitor” of the Company where such employment would involve Employee:
(i) providing, selling or attempting to sell, or assisting in the sale or attempted sale of, any services or products competitive with or similar to those services or products with which Employee had any involvement, and/or regarding which Employee had any Information, during Employee's employment with the Company during Employee's employment with the Company); or
(ii) providing or performing services that are similar to any services that Employee provided to or performed for the Company during Employee's employment with the Company.
For Purposes of this provision, a “Competitor” is any business or entity that, at any time during the one[-]year period following Employee's termination or separation, provides or seeks to provide, any products or services similar or related to any products sold or any services provided by the Company. “Competitor” includes, without limitation, any company or business that provides data colocation and related services to businesses or entities.
The restrictions set forth in this paragraph will be limited to the geographic areas (i) where Employee performed services for the Company, (ii) where Employee solicited or served the Company's customers or clients, or (iii) otherwise impacted or influenced by Employee's provision of services to the Company.

(Dkt. #16, Exhibit 2 at p. 6). Lewinsky's last day on CyrusOne's payroll was November 9, 2018.

         In October 2018, Defendant Switch, Inc. (“Switch”) gave Levinsky an offer of employment. There is a dispute regarding when that offer was accepted, but Levinsky did accept the offer and now works for Switch.

         Based on this general set of facts, CyrusOne filed suit in the 442nd Judicial District Court, located in Denton County (“the State Court”) on January 14, 2019 (“the State Court Suit”) (Dkt. #2, Exhibit 1 at p. 1). The State Court granted a temporary restraining order against Levinsky in the State Court Suit, enjoining [Levinsky] and his agents, employees, representatives, attorneys, and those in active concert or participation with him:

(a) from providing, selling or attempting to sell, or assisting in the sale or attempted sale of, any services or products competitive with or similar to those services or products with which Levinsky had any involvement, and/or regarding which Levinsky has any CyrusOne Confidential Information, during his employment with CyrusOne (including any products or services being researched or developed by CyrusOne during Levinsky's employment with CyrusOne) anywhere within the United States;
(b) from providing or performing services anywhere within the United States that are similar to any services that Levinsky provided to or performed for [] CyrusOne during his employment;
(c) from continuing with (i) any of the CyrusOne's customers known to Levinsky during his employment with CyrusOne and from which CyrusOne generated revenue during the one-year period proceeding Levinsky's termination or separation for the purpose of doing competitive business, directly or indirectly, through any person or entity, or (ii) any prospective customers known to Levinsky during the one-year period prior to his termination or separation, for the purpose or intention of attempting to sell any of Switch's products or services or attempting to divert business of said customer or prospective customer from Cyrus One to Switch;
(d) from disclosing any Confidential Information regarding CyrusOne, its customers, and its working relationship with its customers to any third party, including to Switch; and
(e) to return to CyrusOne, through delivery to CyrusOne's counsel of record any CyrusOne property in Levinsky's possession, custody, or control and all documents, files, data and electronic transmissions or copies thereof, constituting, containing embodying, or based upon any of CyrusOne's Confidential Information immediately upon notice of the entry of this Order.

(Dkt. #2, Exhibit 1 at pp. 60-61) (“the State Court's TRO”). The State Court entered this order on January 14, 2019 (Dkt. #2, Exhibit 1 at p. 61). On January 17, 2019, Levinsky removed the case to federal court (Dkt. #1). On January 23, 2019, Levinsky and CyrusOne filed an agreed motion to extend the State Court's TRO until the Court could decide whether to issue a preliminary injunction in this matter (Dkt. #4). The Court granted the motion on January 25, 2019 (Dkt. #5). On February 25, 2019, CyrusOne filed the present motion for preliminary injunction (Dkt. #16). On March 5, 2019, Levinsky filed his response (Dkt. #19). CyrusOne filed its reply on March 11, 2019 (Dkt. #21). Additionally, on March 11, 2019, CyrusOne filed two unopposed motions for leave to file supplemental exhibits (Dkt. #22; Dkt. ...


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