Bhb Investment Holdings LLC v. Steven Ogg ( 2017 )

STATE OF MICHIGAN
COURT OF APPEALS
BHB INVESTMENT HOLDINGS, L.L.C., d/b/a UNPUBLISHED
GOLDFISH SWIM SCHOOL OF FARMINGTON February 21, 2017
HILLS,
Plaintiff-Appellant,
v No. 330045
Wayne Circuit Court
STEVEN OGG and AQUA TOTS CANTON, LC No. 15-007333-CB
L.L.C.,
Defendants-Appellees.
Before: GLEICHER, P.J., and MURRAY and FORT HOOD, JJ.
PER CURIAM.
Steven Ogg took a job with Aqua Tots Canton after being terminated by its competitor,
Goldfish Swim School of Farmington Hills. Ogg’s actions breached a noncompetition
agreement he signed with the Goldfish franchisee, BHB Investment Holdings. BHB sought to
preliminarily enjoin Ogg from working with Aqua Tots, but presented no evidence of irreparable
harm. BHB later failed to establish that the agreement protected a legitimate business interest to
support the issuance of a permanent injunction. Nor did BHB substantiate that it suffered any
damages as a result of the breach. We discern no error in the circuit court’s decisions to set aside
the preliminary injunction and to summarily dismiss BHB’s complaint. We affirm.
I
From June 2012 through February 2015, Steven Ogg worked part-time for BHB
Investment Holdings, a partnership that owns and operates Goldfish Swim School of Farmington
Hills.1 Ogg began as a swim instructor earning $10 an hour and was promoted to a deck
supervisor, earning $12.50. When hired, Ogg signed an “Employee Confidentiality, Non-
Disclosure and Non-Compete Agreement,” prohibiting him from working for a competitor
within a 20-mile radius of any Goldfish location for a period of one year after ending Goldfish
1
Goldfish is a growing chain with 65 locations in 17 states, each owned and operated by
franchisees. See (accessed January 13, 2017).
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employment. The agreement precluded Ogg from soliciting any Goldfish employees or
customers for an 18-month period after separation. In relation to confidential information, the
agreement provided:
The Employee acknowledges that in the course of his or her employment
with Goldfish, he or she will be exposed to and will obtain access to materials and
information of Goldfish that constitute confidential and/or proprietary information
of Goldfish, including, without limitation: . . . trade secrets; instructional
materials; descriptions of Goldfish’s products and services; proposed products
and services; . . . identities of . . . customers and prospective customers; [and]
identities of Employees and prospective Employees. . . . The agreement required
Ogg to keep this type of information confidential indefinitely.
For reasons not pertinent to this appeal, BHB terminated Ogg’s employment in February
2015. In April, Aqua Tots Canton hired Ogg as a swim instructor at an hourly wage of $11. It is
undisputed that Aqua Tots Canton is a direct competitor of Goldfish and is located within a 20-
mile radius of more than one Goldfish location. BHB learned of Ogg’s new job when BHB
partner, Katie Lee, visited the Aqua Tots website. BHB mailed Ogg and Aqua Tots two cease-
and-desist letters. Ogg and Aqua Tots ignored these notices and continued their employment
relationship.
On June 3, 2015, BHB filed suit against Ogg and Aqua Tots Canton. BHB alleged that it
“devoted significant resources in training Ogg in understanding and perfecting Goldfish’s swim
techniques and understanding how to properly teach children to swim” and “in all respects of his
job as a swim instructor.” BHB iterated that Ogg had signed a noncompete agreement prior to
his employment. As a result of signing this agreement and accepting employment, Ogg “had
access to Goldfish’s resources and training materials, information regarding swim programs, and
the descriptions of Goldfish’s products and services, which Goldfish devotes significant
resources in developing and protecting.”
BHB raised a breach of contract count against Ogg, complaining that Ogg breached the
terms of his employment agreement by accepting employment with a direct competitor within
two months of leaving Goldfish. Against Ogg and Aqua Tots, BHB raised claims of tortious
interference with contractual relations and unjust enrichment. Specifically, BHB noted that it
apprised Aqua Tots of Goldfish’s contractual relationship with Ogg and Aqua Tots intentionally
interfered with that relationship by refusing to honor the cease-and-desist letter. BHB argued
that both Ogg and Aqua Tots were “unjustly enriched at Goldfish’s expense” and equitably
should not be allowed to retain that benefit. BHB further alleged that it suffered “irreparable
harm” as a result of these actions and therefore sought injunctive relief.
Within the week, BHB filed a motion for a preliminary injunction pursuant to MCR
3.310. BHB contended that a preliminary injunction forcing Ogg to sever his business
relationship with Aqua Tots was necessary because “[t]hrough Ogg’s employment with Aqua
Tots, Ogg will be using Goldfish’s confidential information to compete directly with Goldfish.”
There was no manner by which Ogg could “prevent . . . his knowledge of Goldfish’s confidential
information from showing up in his work at Aqua Tots.” BHB further contended that it would
ultimately prevail on the merits because Ogg was in direct contravention of a reasonable
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noncompete clause. Moreover, BHB argued, absent injunctive relief it would suffer irreparable
harm. Ogg took a swim instructor position with a direct competitor in close proximity to
Goldfish Farmington Hills, “causing Goldfish to lose customer goodwill and suffer unfair
competition.” Ogg could lure customers to his new location and then use his Goldfish-provided
training to improve processes at Aqua Tots.
Defendants denied that a preliminary injunction was warranted. Although Goldfish and
Aqua Tots were both in the business of providing swim lessons for young children, “[t]o
distinguish themselves in the marketplace, both corporate franchises use vastly different
philosophies on teaching children how to swim Specifically, defendants described:
[O]ne of the key methods and techniques Aqua Tots uses is a submersion swim
method with a focus on safety. Aqua Tots then teaches a progression based swim
program that is distinctly different from Goldfish who relies more on a float roller
over [sic] method and techniques for competitive swimming.
The two companies also track student progress differently, with Aqua Tots providing weekly
reports and Goldfish quarterly
Defendants acknowledged that Ogg signed a noncompetition agreement. But in his role
as swim instructor, Ogg’s access to confidential information and material was limited. At most,
Ogg learned the Goldfish teaching method. When Ogg moved to Aqua Tots, Aqua Tots taught
him the distinct Aqua Tot teaching method and precluded Ogg from using previously learned
techniques. Moreover, Ogg took no materials with him upon his exit from Goldfish, confidential
or otherwise. He has had no contact with any Goldfish customer, let alone had he tried to solicit
their business, defendants asserted. Just as at Goldfish, Ogg is a low-level employee at Aqua
Tots with no access to highly confidential material and no role in business planning.
Defendants also challenged BHB’s asserted grounds for preliminary injunctive relief.
First, they contended that Goldfish’s noncompetition agreement was overly broad and
unreasonable, especially given Ogg’s low-level position. Defendants further noted BHB’s lack
of evidence that it would suffer irreparable harm absent an injunction. Aqua Tots had
information that Goldfish had decided not enforce its noncompete agreement in the past and had
suffered no great harm as a result of its employees’ transfers to competitors. And even now,
BHB raised only theoretical and speculative damages with no concrete example of how
defendants were harming Goldfish. There simply was no evidence that Ogg had used Goldfish
methods or stolen Goldfish customers or employees. Granting an injunction would cause
significant harm to Ogg, on the other hand. Ogg was a competitive swimmer before taking
employment with Goldfish. Denying this type of employment would cause him substantial
economic hardship.
A hearing was conducted before Wayne Circuit Judge Daniel P. Ryan on June 23, 2015.
The parties reiterated their arguments for the court. Defense counsel emphasized that “[t]here’s
a lot of fallback backlash to have entry level employees sign restrictive covenants because it
doesn’t protect any reasonable competitive interest because we’re not soliciting. We have a
different model.” The court ultimately granted the preliminary injunction, noting that Ogg
clearly breached his contract. Moreover, “[p]art of the reason that they may have included this is
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because they know where ever the instructor goes, the students goes [sic]. Not only do coaches
go but the students may follow.” The court later clarified:
The finding of irreparable harm is that Mr. Ogg signed an agreement. He
was an instructor for Gold Fish [sic] Swim Club. And the expressed terms of the
agreement indicate that he is not to leave and go to another club. By going to
another club, that also opens the door for students from Gold Fish [sic] to go to
the other club and follow their former instructor. The potential for harm as a
result of that is a basis of not only for the covenant not to compete but a basis for
preliminary injunction.
The court noted that the parties needed to schedule a hearing “on whether to make [the
injunction] permanent” within 14 days. The judge was retiring, however, so the matter would be
reassigned and heard by his successor. The preliminary injunction entered June 24, 2015. And
“[a] hearing regarding the entry of a permanent injunction” was scheduled for “July 7, 2015 at
9:00 a.m. before the Honorable Maria L. Oxholm
Defendants quickly filed a motion to set aside the preliminary injunction. Defendants
stated their understanding that the July 7 hearing was intended to discuss whether the injunction
should be “continued” not whether it should be made permanent. They also reasserted their
challenge on the merits.
The hearing before Judge Oxholm was adjourned to a later date. Only then did
defendants file their answer denying BHB’s allegations. In their affirmative defenses,
defendants asserted that the noncompete agreement was unconscionable and imposed an undue
hardship on Ogg and therefore was void.
Defendants then filed a legal memorandum opposing the preliminary injunction. In the
interim, the parties had conducted discovery, including taking the depositions of Lee and Ogg.
Lee admitted that BHB “has not met the standard for injunctive relief.” Specifically, Lee could
name no Goldfish customer who followed Ogg to Aqua Tots. If any customers did leave to
follow Ogg, that lost business could be reduced to economic damages and a financial judgment
could issue. Moreover, defendants contended, a permanent injunction was premature as it would
grant the ultimate relief requested in this case. Given the lack of evidence of any damages, BHB
was not likely to prevail on the merits and there was no danger of irreparable harm.
BHB retorted that Ogg clearly violated his noncompete agreement by accepting
employment with a direct competitor in close proximity to Goldfish locations, supporting its
request for a permanent injunction. This contractual breach demonstrated that BHB would likely
prevail on the merits. Contrary to defendants’ contentions, BHB argued, the noncompete
agreement was reasonable and was narrowly tailored to protect Goldfish’s business interests.
BHB also challenged defendants’ confusion regarding the purpose of the upcoming hearing as
“feign[ed].” And absent a permanent injunction, BHB insisted, it would suffer irreparable harm
by the loss of customers and the sharing of Goldfish’s proprietary information.
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Judge Oxholm heard the parties’ arguments on July 21, 2015. Apparently, the parties
met with the judge in chambers a week earlier to catch her up on the proceedings and attempt to
reach a settlement. Judge Oxholm noted, “[I]t is not very clear to the Court what it was that
happened at the last hearing date in front of Judge Ryan. For that reason, I’m going to set it all
aside and this is going to be your hearing because I do not see where Judge Ryan went through
the factors for TRO [sic], and I just want to make sure everything is established properly to do
that.”
In support of its request for a preliminary injunction to enforce the noncompete
agreement, BHB emphasized the important role played by its swim instructors:
[S]chool instructors at the swim schools are the face of the organization. They
interact with the families. They interact with students, the children, the bread and
butter of the business. And so when they’re in the pool training these folks, and
Judge Ryan mentioned it on the record at the last hearing, they develop
relationships with those families.
Yet, BHB counsel conceded that he knew of no family that had left Goldfish to follow Ogg.
BHB continued that Ogg had access during the course of his employment to “the
confidential Operations Manual by which teaches [sic] the Goldfish students, that proprietary to
Goldfish.” And Ogg admitted at his deposition that he accidentally used “the terminology and
the training system that Goldfish uses” when he began training at Aqua Tots.
Defendants retorted that when they deposed Lee, she described “[t]hat the irreparable
harm is nowhere close to what [BHB’s counsel] just tried to testify to.” Lee made “fatal
admissions,” which defendants asserted justified dismissal.
Lee testified at the hearing. She described that “swim instructors are our bread and
butter. They see the children on a weekly basis. And they go through a rigorous training process
to get in front of the swimmers and then effectively make them safe in the water.” “They’re the
face of our business.” Goldfish requires all swim instructors to sign the noncompete agreement,
Lee averred, “[b]ecause children and their families become attached to these teachers and they
will follow them in some cases to where they’re going to.” Lee provided the example of another
former instructor, “Brad,” who began teaching swim lessons for the city of Livonia after his
Goldfish departure. Two Goldfish families reported Brad’s new employment. However, Lee
never claimed these families followed Brad to the civic program.
Lee also feared Ogg “could share our techniques and ways in which we do things in our
curriculum.” She described:
We have certain ways we do floating techniques. We have a certain way
to teach a child how to float on their backs. We have a certain way or making
sure that they can get to rotary breathing in a certain way. To us it’s proprietary.
We know that this is the way we teach children to swim. I don’t know how Aqua
Tots [does it]. I’m not privy to their information. But I know the way Goldfish
teaches it and we did it internally so much that we believe it’s very much a
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proprietary [sic] to why we are successful at making children safe in the water,
and some continue on to be competitive swimmers.
The proprietary nature of the curriculum also came from the sequence in which Goldfish teaches
different techniques, Lee testified. For example, Goldfish begins by teaching children to float as
this is a lifesaving measure. Lee believed her fears had come to fruition as Ogg testified at his
deposition that he accidentally used Goldfish terminology while working at Aqua Tots, although
he claimed he only did this twice. Lee admitted on the stand, however, “at the moment” she had
“no knowledge of any irreparable harm suffered by Goldfish.” All the damages claimed were
“merely hypothetical.”
At the conclusion of the hearing, Judge Oxholm noted, “Judge Ryan did not have the
benefit of the witness that I did today and based on the record, counsel, I do not find that you
have met your burden with regard to showing irreparable harm.” The judge acknowledged that
Lee testified to “two bas[e]s” for establishing this harm, but found them “very speculative.” The
breach of contract, standing alone, was insufficient to meet this element. Moreover, Lee
admitted that “[t]here has been no harm to date.” Accordingly, Judge Oxholm denied BHB’s
request for a preliminary injunction and set aside the June 24 amended preliminary injunction.
Defendants then sought summary disposition of BHB’s claims pursuant to MCR
2.116(C)(8) and (10). Defendants contended that the noncompete agreement was defective for
lack of mutuality. Ogg testified at his deposition that he signed the agreement without reading it
because he was told he would not be hired otherwise. Ogg also signed on both the employee and
employer signature lines and no BHB or Goldfish representative countersigned. And defendants
asserted that BHB waived the agreement by failing to enforce it in the past. In this respect,
defendants cited Ogg’s testimony that other former employees told him that BHB did not enforce
the agreement when they left for other similar employment.
Defendants further argued that the noncompete agreement was unenforceable because it
was unreasonable. The “hypothetical loss of customers, or the mere possibility Ogg could share
[Goldfish’s] teaching methods” did not amount to legitimate interests to be protected by a
noncompete, in defendants’ estimation. Defendants continued that caselaw supported treating
entry-level employees differently from high-level employees under noncompetition agreements.
In this regard, noncompete agreements could be used to prevent a former employee from giving
a new employer an unfair advantage, but not to prevent a former employee “from using general
knowledge or skill.” Ogg was a low-level employee with general knowledge and skills in
swimming and swim instruction. He had no valuable insider information that could be used for
corporate espionage. Accordingly, preventing Ogg from working in his field was unreasonable.
Defendants contended that BHB’s unjust enrichment claim was also meritless. BHB
described no benefit gained by defendants at BHB’s expense. Rather, the evidence showed that
“Aqua Tots gained nothing from Ogg having previously worked for Goldfish.” Ogg’s previous
Goldfish training was of no use at Aqua Tots as Aqua Tots required its instructors to use Aqua
Tots-specific training techniques and terminology.
BHB’s tortious interference with contractual relations claim also must fail, defendants
asserted, because the noncompete agreement was defective and unreasonable and no potential
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interference caused BHB harm. Moreover, Aqua Tots had no knowledge of the noncompete
agreement and therefore could not have intentionally interfered with that contract. Ultimately, as
none of BHB’s claims bore merit, defendants contended that injunctive relief preventing Ogg’s
employment at Aqua Tots for a one-year period was not appropriate
BHB replied by again quoting the language of the noncompete agreement and
emphasizing Ogg’s breach by taking employment with a direct competitor. BHB argued that
although Ogg was a low-level employee, he had access to the most valuable of Goldfish’s
proprietary information—the swim training curriculum, which he had memorized. BHB insisted
that it had a legitimate interest in preventing the use of its unique teaching techniques by
competitors. Moreover, the noncompete did not seek to prevent entry-level employees from
using their general skill and knowledge at other places of employ; it sought to protect the
investment into training employees to use the Goldfish-specific teaching methods. These
methods were not a generalized skill, but required 40-hours of intensive training to learn.
BHB denied that the noncompete was defective. Ogg’s failure to read the document was
irrelevant and requiring an employee to sign a noncompete agreement as a condition of
employment does not render the document unenforceable. There was mutual assent as BHB
proposed the agreement as a condition of employment and Ogg accepted. Further, BHB denied
that it waived the right to enforce the agreement. The rumor cited by Ogg was insufficient to
establish waiver. Lee emphatically denied that BHB ever failed to enforce the noncompete.
Rather, BHB had never been required to resort to legal action because prior situations had been
resolved by the breaching employee separating from the successor employer.
In relation to its unjust enrichment claim, BHB denied that it was required to show lost
business as a result of Ogg’s exodus to Aqua Tots. Ogg’s teaching skills were enhanced by
intensive training provided by Goldfish and both he and Aqua Tots benefited from that training
at BHB’s expense.
BHB further contended that its tortious interference claim could not be summarily
dismissed. Even if Ogg did not inform Aqua Tots of the noncompete, Aqua Tots may still have
been aware of it. “For example, Aqua Tots may have general knowledge that all Goldfish
employees are required to sign a noncompete agreement.”
Ultimately, BHB argued, injunctive relief would be required and appropriate. BHB
sought to protect Goldfish’s confidential trade secrets. Allowing employees to share those
secrets with competitors would damage the entire company in ways that could not be measured
financially. Goldfish and BHB also would be irreparably harmed by the loss of its sole use of its
unique program.
The matter had again been reassigned and Judge Lita M. Popke heard defendants’
summary disposition motion. Defense counsel summarized for the court, “The issue here at
heart is [BHB is] seeking to enforce a restrictive covenant, namely a broad noncompete over a
minimum wage employee restricting that young man from engaging in what his only skill is
being a lifelong swimmer and that’s teaching children how to swim.” Defendants contended,
“There’s nothing proprietary about teaching children how to swim, there is no legitimate interest
[BHB has] in preventing this young man from being able to work at basically a minimum wage
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job.” This rendered the noncompete agreement “unenforceable as a matter of law.” Defendants
further asserted that BHB made “fatal admissions” that it had suffered no damages and had “no
knowledge any proprietary information” had been used to enrich defendants.
BHB countered that summary disposition was premature because discovery was ongoing
and it had noticed the depositions of two Aqua Tots managers involved in the facility’s day-to-
day operations who could provide relevant information whether Ogg was using his Goldfish-
learned methods to Aqua Tots’ advantage.2 The court rejected BHB’s contention that its swim-
teaching methods were proprietary. The court noted that Goldfish placed its methods in the
public domain because this was a public building and the students’ parents, as well as any
member of the public, could watch the lessons and glean the methods. When BHB continued to
argue the point, the court reiterated that BHB only argued that “the sequencing and teaching”
were proprietary and that information could be observed by the general public during lessons.
“You didn’t keep your technique secret or process secret, you taught it. So by its very nature
you’ve made it, you taught that to the world, you put it into the public domain by teaching it to
the world.” There was no evidence that Ogg had a copy of the 40-page curriculum document
that he snuck away to a competitor. The court further asserted that rather than BHB giving Ogg
expertise, Ogg brought expertise to BHB; after all, BHB desired to hire Ogg because he was a
competitive swimmer.
The court concluded that BHB failed to establish or even allege the specific factors to
establish that its teaching curriculum was a trade secret or proprietary information, instead
relying on “general conclusory statements.” Accordingly, BHB could not establish a legitimate
business interest it needed to protect through the noncompete agreement. BHB failed to show
that Ogg “took anything with him” that could give Aqua Tots an unfair advantage. It failed to
demonstrate any damage, such as through lost customers or transfer of confidential information.
The court acknowledged that Ogg breached his contract, but noted the lack of any evidence that
BHB was actually harmed by that breach. Accordingly, the court granted summary disposition
in defendants’ favor and dismissed BHB’s claims. BHB now appeals.
II
BHB first contends that Judge Oxholm lacked authority to reconsider and set aside the
preliminary injunction at the July 21, 2015 hearing. BHB’s position would improperly limit
circuit courts from handling matters before them.
Judge Ryan entered a preliminary injunction following the initial June 23 hearing as
permitted by MCR 3.310(A)(1). Judge Ryan ordered a follow-up hearing to consider whether
the injunction should be made permanent. This was permitted by MCR 3.310(A)(2): “Before or
after the commencement of the hearing on a motion for a preliminary injunction, the court may
order the trial of the action on the merits to be advanced and consolidated with the hearing on the
motion.”
2
BHB had previously deposed Aqua Tots co-owner Brian Tomina. Tomina took no interest in
the daily operations of the business and could answer no questions relevant to this case.
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The hearing ordered by Judge Ryan was briefly delayed because of his retirement and the
reassignment of the matter. The delay allowed the parties time to conduct some discovery and
depose Ogg and Lee. It also afforded defendants an opportunity to more thoroughly challenge
the preliminary injunction. Contrary to BHB’s position, defendants were permitted to seek relief
on the merits. See MCR 2.119(F); MCR 2.612. Judge Oxholm, as the newly assigned judge
presiding over the matter, was within her right to correct any error she perceived in the
proceedings. MCR 2.6013(B).
Given that defendants opposed the preliminary injunction on the merits and sought to set
it aside (albeit on a limited basis) and BHB responded, BHB was on notice that vacation of the
injunction would likely be considered at the second hearing, either concurrently with or before
considering whether to make the injunction permanent. At the outset of the hearing, Judge
Oxholm aptly noted that Judge Ryan failed to consider on the record several necessary factors
before entering the injunction. This was an omission that Judge Oxholm was empowered to
remedy before making any decision. See MCR 2.603(B). And Judge Oxholm heard from both
sides and took witness testimony before making a decision. There was no procedural error
demanding relief.
III
BHB further challenges the substantive orders entered by the circuit court denying its
request for a preliminary injunction (or setting it aside) and then summarily dismissing the
permanent injunction action.
Injunctions “should issue only in extraordinary circumstances.” State Employees Ass’n v
Dep’t of Mental Health, 421 Mich. 152, 166; 365 NW2d 93 (1985). Before entering a
preliminary injunction, a trial court is required to consider certain factors. These include:
harm to the public interest if an injunction issues; whether harm to the applicant in
the absence of a stay outweighs the harm to the opposing party if a stay is granted;
the strength of the applicant’s demonstration that the applicant is likely to prevail
on the merits; and demonstration that the applicant will suffer irreparable injury if
a preliminary injunction is not granted. [Id. at 157-158.]
Before issuing a permanent injunction a court must consider:
“(a) the nature of the interest to be protected,
(b) the relative adequacy to the plaintiff of injunction and of other remedies,
(c) any unreasonable delay by the plaintiff in bringing suit,
(d) any related misconduct on the part of the plaintiff,
(e) the relative hardship likely to result to defendant if an injunction is granted and
to plaintiff if it is denied,
(f) the interests of third persons and of the public, and
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(g) the practicability of framing and enforcing the order or judgment.” [Kernen v
Homestead Development Co, 232 Mich. App. 503, 514-515; 591 NW2d 369
(1998), quoting 4 Restatement Torts, 2d, § 9.36, pp 565-566.]
We discern no abuse of discretion in Judge Oxholm’s decision to deny BHB’s
preliminary injunction motion. See Pontiac Fire Fighters Union Local 376 v City of Pontiac,
482 Mich. 1, 8; 753 NW2d 595 (2008). As noted by Judge Oxholm, BHB failed to demonstrate
that it would suffer irreparable harm if a preliminary injunction did not enter. “[A] particularized
showing of irreparable harm . . . is . . . an indispensable requirement to obtain a preliminary
injunction. The mere apprehension of future injury or damage cannot be the basis for injunctive
relief.” Id. at 9 (quotation marks and citation omitted, ellipses in original). At the July 21
hearing, Judge Oxholm had the benefit of Lee’s deposition and live testimony, as well as Ogg’s
deposition. This evidence revealed no current danger of irreparable harm, only a speculation of
future harm.
Lee admitted at deposition that she did not know whether Ogg had shared Goldfish’s
curriculum with Aqua Tots, but was only “fearful that he might.” Lee conceded that no Goldfish
franchisee could unilaterally change its curriculum even if it had access to the unique training
methods employed by a competitor. Although Lee acknowledged that Aqua Tots is also a
national corporation that likely had a nationwide-mandated curriculum of its own, she
sidestepped questions whether a local Aqua Tots franchisee could alter its curriculum based on
leaked information of competitor methods. At his deposition, Ogg merely described that he had
accidentally used Goldfish terminology a couple of times early in his employment at Aqua Tots.
Ogg asserted that his Aqua Tots supervisor had reminded him of the proper Aqua Tots method at
that time and Ogg quickly learned to remove Goldfish techniques from his teaching.
Lee had not investigated whether Ogg took any client contact information with him when
he was terminated by Goldfish. Lee had “no knowledge of any actual financial harm to Goldfish
caused by either Aqua Tots or Ogg” and had “no evidence that . . . Ogg ha[d] taken any clients.”
She conceded that “to [her] knowledge,” Goldfish had not “suffered any great injury as a result
of” Ogg’s new employment. And at the hearing, Lee admitted that she had “no knowledge of
any irreparable harm suffered by Goldfish.” Ogg noted that certain families he encountered at
Aqua Tots informed him that they were former Goldfish customers, but none were solicited by
Ogg or even remembered Ogg from their time at Goldfish. Moreover, Ogg insisted that he never
solicited any Goldfish customer to move to Aqua Tots.
Lee’s fears that Ogg might impart information about Goldfish teaching methods or solicit
Goldfish customers was insufficient to support a preliminary injunction. As BHB presented no
evidence to make “a particularized showing of irreparable harm,” Judge Oxholm properly denied
preliminary relief to BHB.
Similarly, Judge Popke properly dismissed BHB’s request for a permanent injunction. In
the interim, BHB gathered no evidence that Ogg had provided confidential information to Aqua
Tots or that Ogg had wooed customers to his new employer. BHB contends that summary
disposition was premature because discovery was still open and it had sought information to
determine whether any Goldfish customers had moved to Aqua Tots. Even if Aqua Tots’ records
revealed that certain Goldfish students had transferred to Aqua Tots, there would be no evidence
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that Ogg played any role in their decision. Accordingly, BHB failed to establish “the relative
hardship likely to result . . . to plaintiff if [the injunction] is denied.” Absent any evidence of
injury during the six months Ogg had been employed by Aqua Tots, a permanent injunction
would be improper.
IV
We further discern no error in the dismissal of BHB’s remaining claims. We review de
novo a lower court’s resolution of a summary disposition motion. Odom v Wayne Co, 482 Mich.
459, 466; 760 NW2d 217 (2008).
A motion under MCR 2.116(C)(10) “tests the factual support of a
plaintiff’s claim.” Walsh v Taylor, 263 Mich. App. 618, 621; 689 NW2d 506
(2004). “Summary disposition is appropriate under MCR 2.116(C)(10) if there is
no genuine issue regarding any material fact and the moving party is entitled to
judgment as a matter of law.” West v Gen Motors Corp, 469 Mich. 177, 183; 665
NW2d 468 (2003). “In reviewing a motion under MCR 2.116(C)(10), this Court
considers the pleadings, admissions, affidavits, and other relevant documentary
evidence of record in the light most favorable to the nonmoving party to
determine whether any genuine issue of material fact exists to warrant a trial.”
Walsh, 263 Mich. App. at 621. “A genuine issue of material fact exists when the
record, giving the benefit of reasonable doubt to the opposing party, leaves open
an issue upon which reasonable minds might differ.” West, 469 Mich. at 183.
[Zaher v Miotke, 300 Mich. App. 132, 139-140; 832 NW2d 266 (2013).]
MCL 445.774a governs an employer’s ability to execute a noncompetition agreement
with its employees. It provides:
An employer may obtain from an employee an agreement or covenant
which protects an employer’s reasonable competitive business interests and
expressly prohibits an employee from engaging in employment or a line of
business after termination of employment if the agreement or covenant is
reasonable as to its duration, geographical area, and the type of employment or
line of business. To the extent any such agreement or covenant is found to be
unreasonable in any respect, a court may limit the agreement to render it
reasonable in light of the circumstances in which it was made and specifically
enforce the agreement as limited. [MCL 445.774a(1).]
Judge Popke found the current agreement unreasonable as a matter of law. We review
that ruling de novo. Coates v Bastian Bros, Inc, 276 Mich. App. 498, 506; 741 NW2d 539 (2007).
We generally presume that contracts are legal, valid, and enforceable. Noncompetition
agreements, however, “are disfavored as restraints on commerce and are enforceable only to the
extent they are reasonable.” Id. at 507. BHB bore the burden of establishing the contract’s
enforceability. Id. at 508.
The current covenant executed with an entry-level employee did not protect a “reasonable
competitive business interest.” The interest cited by BHB was to maintain the confidentiality of
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Goldfish’s swim instruction method. BHB related its instructional methods to a trade secret and
described them as “proprietary.”
A “trade secret” is something that “[i]s the subject of efforts . . . to maintain its secrecy.”
MCL 445.1902(d)(ii). BHB and other Goldfish franchisees display the Goldfish instructional
method in front of hundreds of people daily. The instructors use the instructional techniques and
employ Goldfish-specific terminology to teach students under the observation of the students’
family members. Any member of the public can enter the facility and watch the lessons as well.
A “proprietary interest,” in this context, is simply “information in which the owner has a
protectable interest.” Black’s Law Dictionary (6th ed), p 1219. As the subject information is
revealed to the public on a daily basis, it cannot be deemed a trade secret or proprietary.
While it was reasonable to prevent Ogg from using specific Goldfish methods for a one-
year period, the only evidence in this regard was that Ogg accidentally used Goldfish
terminology on two occasions. The breach did not continue. Aqua Tots required Ogg to use
Aqua Tots terminology and instructional methods and corrected Ogg’s lapse. Therefore, BHB
could establish no harm as a result of Ogg’s breach of contract or Aqua Tots’ possible
contractual interference in this regard, warranting summary disposition. See Miller-Davis Co v
Ahrens Constr, Inc, 495 Mch 161, 178; 848 NW2d 95 (2014).
The noncompetition agreement’s prohibition on soliciting Goldfish clients, on the other
hand, was reasonable. Follmer, Rudzewicz & Co, PC v Kosco, 420 Mich. 394, 402; 362 NW2d
676 (1984). See also Rooyakker & Sitz, PLLC v Plante & Moran, PLLC, 276 Mich. App. 146,
158; 742 NW2d 409 (2007). However, the circuit court properly dismissed BHB’s claims that
Ogg breached his noncompetition agreement, and that Aqua Tots interfered with the contract, in
this regard. Even by the time of the summary disposition hearing, BHB had no evidence that
Ogg had solicited any Goldfish client to follow him to Aqua Tots. No discovery still pending
could establish that Ogg played a role in soliciting any transferring customers. Absent damages,
BHB could merit no relief.
Finally, the circuit court summarily dismissed BHB’s claim that Ogg and Aqua Tots were
unjustly enriched by the training investment BHB made with Ogg. “Unjust enrichment is
defined as the unjust retention of money or benefits which in justice and equity belong to
another. No person is unjustly enriched unless the retention of the benefit would be unjust.”
Tkachik v Mandeville, 487 Mich. 38, 47-48; 790 NW2d 260 (2010). Although an express
contract exists in this case—the employment contract and noncompete agreement between BHB
and Ogg—this does not prevent the use of the equitable remedy of unjust enrichment in this case;
the contract does not cover the provision and worth of training Ogg. See Barber v SMH (US),
Inc, 202 Mich. App. 366, 375; 509 NW2d 791 (1993).
We affirm. Defendants, as the prevailing parties, may tax costs. MCR 7.219.
/s/ Elizabeth L. Gleicher
/s/ Christopher M. Murray
/s/ Karen M. Fort Hood
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