Richard Gehrke and Pacific Companies, Inc. v. Merritt Hawkins and Associates, LLC ( 2018 )

ACCEPTED
05-18-01160-CV
FIFTH COURT OF APPEALS
DALLAS, TEXAS
11/26/2018 12:59 PM
LISA MATZ
CLERK
No. 05-18-01160-CV
_____________________________________________
IN THE COURT OF APPEALS FILED IN
5th COURT OF APPEALS
FOR THE FIFTH DISTRICT OF TEXAS DALLAS, TEXAS
AT DALLAS 11/26/2018 12:59:28 PM
_________________________________________________________________
LISA MATZ
Clerk
Richard Gehrke and Pacific Companies, Inc.
Appellants
v.
Merritt Hawkins and Associates, LLC
Appellee
_________________________________________________________________
APPELLEE’S EMERGENCY MOTION TO ENFORCE
_________________________________________________________________
Thomas M. Melsheimer
Texas Bar No. 13922550
tmelsheimer@winston.com
John C.C. Sanders Jr.
State Bar No. 24057036
jsanders@winston.com
Hayden L. Duffy
Texas Bar No. 24097975
hduffy@winston.com
WINSTON & STRAWN LLP
2121 N. Pearl St.
9th Floor
Dallas, Texas 75201
Telephone: (214) 453-6500
Telecopy: (214) 453-6400
ATTORNEYS FOR APPELLEE
APPELLEE’s EMERGENCY MOTION TO ENFORCE
To the Honorable Court of Appeals:
Pursuant to Texas Rule of Appellate Procedure 29.4, Appellee Merritt
Hawkins and Associates, LLC (“Appellee” or “Merritt Hawkins”) files this
Emergency Motion for Relief, and respectfully shows this Honorable Court as
follows:
I. INTRODUCTION
1. In the trial court, Merritt Hawkins secured a temporary injunction
against its departed employee, Richard Gehrke (“Gehrke”) that prohibited him from
undertaking certain competitive activities pursuant to a non-competition agreement
he had previously entered into with the company. Right before the trial court issued
its temporary injunction, Gehrke filed a frivolous motion to dismiss under the Texas
Anti-SLAPP statute, which immediately stayed discovery and prevented Merritt
Hawkins from monitoring Gehrke’s compliance with the temporary injunction.
Despite Gehrke’s attempts to avoid monitoring, Merritt Hawkins has discovered
evidence demonstrating that Gehrke (1) is soliciting clients that he is barred from
soliciting pursuant to the trial court’s order; and (2) is working within territories that
he is enjoined from working within on behalf of a competitor. The trial court’s
temporary injunction is clear that such actions are prohibited. Accordingly, Gehrke
stands in contempt of the trial court’s temporary injunction order.
2. Merritt Hawkins files this motion requesting the Court initiate an
enforcement proceeding under Rule 29.4 of the Texas Rules of Appellate Procedure,
and refer the proceeding to the trial court with instructions to hold a hearing as soon
as practicable, whereupon Gehrke may show cause as to why he should not be held
in contempt for violating the temporary injunction
II. BACKGROUND
3. This is a non-compete and trade secret misappropriation case. Gehrke
was an executive in Merritt Hawkins’ sales and marketing department. See Exhibit
1, ⁋ 18. Within his position as an executive, Gehrke was given access to Merritt
Hawkins’ pricing and marketing strategies, costs, customer lists, and other internal
information used to compete for business. Id. ⁋ 7.
4. As a condition of his employment, Merritt Hawkins required Gehrke to
enter into a confidentiality agreement that prohibited Gehrke from, among other
restrictions, doing the following: (1) using Merritt Hawkins’ confidential
information for the benefit of a competitor or himself; (2) for eighteen months,
working in any of the geographic territories that he was directly or indirectly
responsible for during the last twelve months of his employment with Merritt
Hawkins; and (3) for eighteen months, soliciting customers that he directly or
indirectly serviced during the last twelve months of his employment with Merritt
Hawkins. Id. ⁋⁋ 8-14.
2
5. The trial court enjoined Gehrke from soliciting clients that he worked
with during the last twelve months of his employment, and a preliminary list of such
customers was submitted to the trial court for purposes of compliance and
enforcement (the “Prohibited Customer List”). See Exhibit 1 § II(1). However,
instead of enjoining Gehrke within the full prohibited territory provided by Gehrke’s
agreement with Merritt Hawkins, the trial court enjoined Gehrke from working
within ten miles of the location of each customer on the Prohibited Customer List.
See Exhibit 1 § II(2).
6. On August 16, 2018, September 12, 2018, and September 13, 2018, the
hearing on Merritt Hawkins’ Application for Temporary Injunction was conducted
before the trial court.
7. On September 21, 2018, Gehrke and Pacific Companies, Inc.
(“Pacific”) filed a motion to dismiss under the Texas Citizens Participation Act. The
filing of the motion to dismiss automatically stayed discovery. See Tex. Civ. Prac.
& Rem. Code § 27.003(c).
8. On September 25, 2018, the Court issued a temporary injunction order,
that, among other things, prevented Gehrke from: (1) soliciting customers on a list
provided to the trial court and Gehrke; and (2) soliciting customers for permanent
healthcare placements and staffing services within a ten-mile radius of customers on
the customer list (the “TI Order”). See Exhibit 1 § II.
3
III. ARGUMENT
A. Gehrke is violating the trial court’s temporary injunction.
9. The TI Order places certain restrictions on Gehrke’s competitive
activities. Specifically, the TI Order provides that Gehrke is enjoined from engaging
in the following acts:
Until January 24, 2020, soliciting, either directly or in concert with
anyone else, any actual or perspective client, customer, or candidate for
placement of Merritt Hawkins with whom Gehrke dealt during the 12
months prior to his separation from Merritt Hawkins; provided
however, for purposes of the scope of the restrictions in this paragraph,
the Court has a customer list it is holding in camera and has provided
to counsel of record for the parties in this matter which shall define
those customers and prospects which are the subject of the prohibitions
contained in this paragraph;
See Exhibit 1 § II(1).
10. The TI Order also prohibits Gehrke from doing the following:
Until January 24, 2020, directly or indirectly, performing any services
of the same, similar, or greater nature to those performed by Gehrke
during his employment at Merritt Hawkins for a competitor of Merritt
Hawkins in the states of Colorado, Kansas, Nebraska, Oklahoma, and
southern California, and within a ten (10) mile radius of the customers
and prospects set forth on the customer list referenced in the preceding
paragraph. For purposes of clarity, the services that Gehrke may not
perform pursuant to this paragraph include recruiting or providing
permanent healthcare placements or staffing services to healthcare
facilities or organizations;
See Exhibit 1 § II(2).
i. Gehrke violated the TI Order by knowingly attending conferences that
had prohibited customers in attendance.
4
11. The declaration of Travis Singleton, attached hereto as Exhibit 2 (the
“Singleton Declaration”), and the evidence that is included with the declaration,
demonstrates that Gehrke violated the TI Order because Gehrke directly and
indirectly solicited prohibited customers.
12. Specifically, Gehrke posted pictures on LinkedIn of himself attending
three different conferences that were also attended by a number of clients on the
Prohibited Customer List. See Exhibit 2 ⁋⁋ 5, 10, 17.
13. For example, Gehrke attended the Missouri Primary Care Association
Conference (the “MPCA Conference”) which had fifteen customers from the
Prohibited Customer List in attendance. Id. ⁋ 9.
14. Gehrke also posted a picture of himself at the Missouri Hospital
Association’s Annual Conference (the “MHA Conference”) which had fifteen
customers from the Prohibited Customer List in attendance. Id. ⁋ 15.
15. Gehrke also went to the Illinois Staff Physician Recruiters Conference
(the “ISPR Conference”) which had two customers from the Prohibited Customer
List in attendance. Id. ⁋ 22.
16. Gehrke’s pictures show him working as a sales representative on
Pacific’s behalf at each of the above-named conferences. Id. ⁋⁋ 5, 10, 17.
17. These conferences are held to educate healthcare providers, healthcare
professionals, and in-house recruiters within health systems, hospitals, and physician
5
organizations. Id. ⁋⁋ 7, 12, 19. In order to help pay for the costs associated with
these conferences, conference organizers allow vendors, such as medical staffing
companies, to pay a fee in exchange for the opportunity to operate a booth at the
conference. Id. At these booths, vendors solicit conference attendees. Id.
18. Gehrke did not attend these conferences as an attendee, but as an
employee of Pacific, a vendor. Id. Gehrke attended these conferences solely to
advertise Pacific’s services. Id.
19. Indeed, it would have been difficult for Gehrke to avoid clients on the
Prohibited Customer List at these conferences, because these events require
attendees to interact with vendors such as Pacific. Id. ⁋ 27.
20. Gehrke specifically chose to attend these regional conferences, even
though he knew that customers that he is restrained from contacting were likely to
be in attendance. Id. ⁋ 28.
21. The TI Order is clear that Gehrke may not solicit customers on the
Prohibited Customer List for any type of physician recruitment activity, whether it
is for locum tenens or permanent physician placement. Exhibit 1 § II(1).
Accordingly, Gehrke cannot escape responsibility for his attendance at these
conferences by claiming that he was only soliciting clients for Pacific’s locum tenens
services.
22. Indeed, even if Gehrke did try to use such an excuse, it is clearly reputed
6
by the fact that Gehrke worked in front of a large Pacific sign that explicitly
advertises Pacific’s permanent physician staffing services. See Exhibit 2,
attachments A-C.
23. At best, Gehrke’s attendance at the conference and manning a booth
that prominently advertises physician staffing services qualify as indirect
solicitations, which he is barred from doing under the TI Order. See Exhibit 1, §
II(1). For the foregoing reasons, Gehrke’s attendance as a vendor representative at
the MPCA Conference, the MHA Conference, and the ISPR Conference
(collectively, the “Conferences”) demonstrates his violation of the TI Order.
ii. Gehrke violated the TI Order by offering permanent healthcare staffing
and placement services at two conferences within ten miles of
customers on the Prohibited Customer List.
24. As explained above, the TI Order prohibits Gehrke from offering
permanent physician placement and staffing services within ten miles of a customer
on the Prohibited Customer List (the “Prohibited Geography”). Gehrke violated the
trial court’s injunction by soliciting clients within the Prohibited Geography.
25. The MHA Conference that Gehrke attended was within ten miles of the
location of one customer on the Prohibited Customer List, and the ISPR Conference
occurred within ten miles of four such prohibited customers. See Exhibit 2 ⁋⁋ 16,
23-26
26. Gehrke’s photos show him working as Pacific’s representative, in front
7
of a large sign soliciting conference attendees to utilize Pacific’s permanent and
locum tenens services. Id., attachments A-C. The sign unmistakably demonstrates
that Gehrke was not merely soliciting clients for locum tenens services at the
Conferences, but also permanent staffing services. Id.
27. Gehrke violated the TI Order by soliciting clients for permanent
staffing services within the Prohibited Geography while attending the MHA
Conference and the ISPR Conference.
iii. Gehrke violated the TI Order by offering permanent healthcare staffing
and placement services for a facility within ten miles of customers on
the Prohibited Customer List.
28. Through an online posting, Gehrke further violated the TI Order by
offering permanent physician placement and staffing services within the Prohibited
Geography.
29. Gehrke posted an advertisement on LinkedIn for a permanent
gastroenterologist position at a hospital fifteen minutes outside of St. Louis. Id. ⁋
29.
30. This placement is within the Prohibited Geography. Id.
31. For the foregoing reasons, it is clear that Gehrke’s LinkedIn post
advertising a gastroenterologist position located within 15 minutes of St. Louis
violated the TI Order. Furthermore, as described above, Gehrke’s attendance at the
Conferences also violated the trial court’s temporary injunction. Accordingly,
8
Gehrke has repeatedly violated the TI Order, and must be held accountable for his
actions.
B. The temporary injunction remains in effect until this Court rules and the
mandate is issued.
32. Although the temporary injunction at issue is the subject of this appeal,
the TI Order remains effective and enforceable. Texas Rule of Appellate Procedure
18.6 provides that “[t]he appellate court’s judgment on an appeal from an
interlocutory order takes effect when the mandate is issued.” The Court has not even
received the parties’ briefs yet, and the Court certainly has not ruled and issued a
mandate. Accordingly, the trial court’s temporary injunction remains in force, and
Gehrke is actively violating it while this appeal is pending.
C. It falls to this Court to preserve the parties’ rights and enforce the
temporary injunction pending the appeal.
33. Gehrke’s actions violate the still in-force temporary injunction, but they
also undermine this Court’s power of review. This Court should not tolerate such
contempt, and Rule 29 of the Texas Rules of Appellate Procedure was adopted
precisely to prevent such tactics to evade the judicial process.
34. Rule 29.3 provides that during the pendency of an appeal of an
interlocutory order, the appellate court “may make any temporary orders necessary
to preserve the parties’ rights until disposition of the appeal.” TEX. R. APP. P. 29.3.
Further, in order for the appellate court to enforce the order being reviewed, it “may
9
refer any enforcement proceeding to the trial court with instructions to: (a) hear
evidence and grant appropriate relief; or (b) make findings and recommendations
and report them to the appellate court.” Id. at 29.4.
35. With the appeal still pending, it is within the purview of the appellate
court to preserve the parties’ rights and enforce the interlocutory order until the
appeal is finally disposed of. To preserve Appellees’ rights under the appeal, this
Court should: (1) initiate an enforcement proceeding under Rule 29.4; and (2) refer
the proceeding to the trial court with instructions to hold a hearing as soon as
practicable, whereupon Gehrke may show cause as to why he should not be held in
contempt for violating the temporary injunction.
IV. PRAYER
Merritt Hawkins requests that the Court initiate an enforcement proceeding under
Rule 29.4 of the Texas Rules of Appellate Procedure, and refer the proceeding to the
trial court with instructions to hold a hearing as soon as practicable, whereupon
Gehrke may show cause as to why he should not be held in contempt for violating
the temporary injunction.
10
Dated: November 26, 2018 Respectfully submitted,
By: /s/ John C.C. Sanders, Jr.
Thomas M. Melsheimer
Texas Bar No. 13922550
tmelsheimer@winston.com
John C.C. Sanders Jr.
State Bar No. 24057036
jsanders@winston.com
Hayden L. Duffy
Texas Bar No. 24097975
hduffy@winston.com
WINSTON & STRAWN LLP
2121 N. Pearl St.
9th Floor
Dallas, Texas 75201
Telephone: (214) 453-6500
Telecopy: (214) 453-6400
ATTORNEYS FOR APPELLEE
MERRITT HAWKINS &
ASSOCIATES
11
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the foregoing notice is being
served upon the following counsel via the Court’s e-filing system on November 26,
2018:
John Barber (Motion for Admission Pro Hac Vice Pending)
Elisaveta Dolghih
State Bar Number: 24043355
Jason A. Powers
State Bar Number: 24027745
LEWIS, BRISBOIS, BISGAARD &SMITH, LLP
2100 Ross Ave., Suite 2000
Dallas, Texas 75201
Telephone: (214) 722-7108
Facsimile: (214) 722-7111
John.Barber@lewisbrisbois.com
Leiza.Dolghih@lewisbrisbois.com
Jason.Powers@lewisbrisbois.com
ATTORNEY FOR DEFENDANT
RICHARD GEHRKE AND
PACIFIC COMPANIES, INC.
/s/ John C.C. Sanders, Jr.
John C.C. Sanders, Jr.
12
EXHIBIT 1
CAUSE NO. DC-18-09562
MERRITT HA WK.INS & IN THE DISTRICT COURT
§
ASSOCIATES, LLC
§
§
Plaintiff,
§
§ 298TH JUDICIAL DISTRICT
v.
§
§
RICHARD GEHRKE & PACIFIC
§
COMPANIES, INC.
§
§ DALLAS COUNTY, TEXAS
§
Defendant.
§
TEMPORARY INJUNCTION
On July 25, 2018 Plaintiff Merritt Hawkins & Associates LLC ("Merritt Hawkins") filed
an Amended Original Verified Petition, against Defendant Richard Gehrke ("Gehrke") and
Application for Temporary Injunction and Temporary and Permanent Injunctions against
Gehrke. On August 30, 2018, Merritt Hawkins filed its Third Amended Verified Petition against
Gehrke and Defendant Pacific Companies, Inc. ("Pacific") (collectively, "Defendants") and
Application for Temporary Restraining Order and Temporary and Permanent Injunctions against
Gehrke. On July 25, 2018, the Court GRANTED the Temporary Restraining Order and
ORDERED that Merritt Hawkins submit a bond in the amount of$10,000.00. On August 10,
2018, the Court GRANTED the parties' Agreed Amended Temporary Restraining .Order. On
August 17, 2018, the court GRANTED the Proposed Order Extending Temporary Restraining
Order and ORDERED that Merritt Hawkins submit an additional bond in the amount of $15,000.
On August 16, 2018, September 12, 2018, and September 13, 2018, the Court conducted
.
a hearing, received evidence, and heard argument of counsel on Plaintiffs Application for a
Temporary Injunction. The parties appeared in person and were represented by their attorneys of .
record., After considering the pleadings, the evidence and the arguments of counsel, the Court
holds as follows:
I. FINDINGS OF FACT/CONCLUSIONS OF LAW
1. The Court finds that Merritt Hawkins was formed in 1987 as a physician
recruitment firm with just six employees. Since that time, the company has expanded to become
one of the nations' preeminent physician recruiting and placement firms with approximately 120
employees in Dallas County.
2. The Court further finds that Merritt Hawkins developed business plans;
customer lists and information; marketing and pz1.cing strategies; information concerning its
customers and their needs; opportunities and plans; information concerning key staff; sales plans;
development efforts and strategies; and relationships with customers.
3. The Court further finds that Merritt Hawkins has expended significant
.
time, effort, and money to develop and protect information related to its clients, client database,
pricing structure, and business and marketing plans; to develop and protect customer
relationships and contacts; to develop and protect its goodwill; and to develop its offices and
client base.
4. The Court further finds that this information is a valuable asset of Merritt
Hawkins and derives independent economic value, actual and potential, from not being generally
known to and not being readily ascertainable by other persons who could obtain economic value
from this information. If this information were disclosed to a competitor, it would provide a
competitive advantage to that competitor or the opportunity to obtain a competitive advantage
over Merritt Hawkins.
5. The Court further finds that Merritt Hawkins has taken reasonable steps to
protect its customer lists, trade secrets and proprietary information, including, but not limited to,
requiring employees with access to these materials to sign a confidentiality agreement, having
policies regarding the use and non-disclosure of confidential information, restricting access to
locations where the same is stored, restricting access to confidential information, maintaining a
secure computer network, and limiting access to its network on a password-protected basis.
6. The Court also finds that the proprietary and confidential information
described above constitute trade secrets within the meaning of applicable law.
7. The Court further finds that on or around April 1, 2013, Gehrke began his
employment with Merritt Hawk.ins in Dallas, TX. During and throughout his employment with
Merritt Hawkins, Gehrke had access to and knowledge of marketing and business development
plans of Merritt Hawkins, pricing and marketing strategies, costs, customer lists, and other
internal information used to compete for business. Merritt Hawk.ins securely protects its
business plans, customer lists, sales data, marketing strategies, pricing, costs, and margin
information.
8. The Court further finds that, because Merritt Hawkins needed to provide
Gehrke access to such information so that he could properly do his job, Merritt Hawkins, as a
condition of employment, required Gehrke to enter into a confidentiality agreement, (the
"Confidentiality Agreement") which specifically provides that Gehrke would have access to
confidential information. Specifically, the Confidentiality Agreement states:
Employee understands and acknowledges that, in the course of Employee's
employment, Employee will have access to, be entrusted or become acquainted
with, and may acquire knowledge of information about the Company and the
Company's·Affiliates and their respective businesses that is not generally known
outside of the Company and the Company's Affiliates (hereinafter referred to as
"Confidential Business Information").
Confidentiality Agreement § 1.
9. The court also finds that the Confidentiality Agreement also provides that
the protected confidential information is valuable.
Employee acknowledges and agrees that the Confidential Business Information is
a special and unique asset of the Company and derives independent economic
value, actual ·or potential, from not being generally known by the public or by
other persons or entities who can obtain economic value from its disclosure.
Employee further agrees that the disclosure of any Confidential Business
Information to competitors of the Company (or the Company's Affiliates), both
during and after Employee's employment or use of any Confidential Business
Information for Employee's own benefit would constitute misappropriation of the
Confidential Business Information.
Confidentiality Agreement § 2.
10. The Court further finds that the Confidentiality Agreement contains
language that describes the categories of confidential information that Merritt Hawkins protects.
Specifically, the Confidentiality Agreement defines "Confidential Business Information" as
including, but not limited to, the following examples:
(a) marketing, advertising, public relations and/or promotional strategies,
programs, plans and methods; (b) pricing policies, methods and concepts,
product and services strategies, training programs, and methods of operation
and other business methods; (c) mailing lists and lists of and info~ation
relating to current, former and prospective clients and accounts of the
Company or the Company's Affiliates; (d) lists of and information relating to
healthcare professionals, prospective healthcare professionals and other
candidates for placement, including positions held, salaries and benefits
received and other personal information concerning and/or provided by
healthcare professionals, prospective healthcare professionals and other
candidates for placement; (e) tlie personnel needs of current, former and/or
prospective clients and accounts of the Company or the Company's
Affiliates; (f) terms of service contracts between the Company (or the
Company' s Affiliates) and its clients, accounts, vendors and/or suppliers; (g)
business plans, expansion plans, management policies and other business
policies and strategies; (h) business and sales forecasts, market analyses,
costs, sales and revenue reports, budgets, other financial data that relates to
the management and operation of the Company (or the Company's Affiliates)
and its products and services, and other analyses not publicly disclosed; (i)
the Company's competitors; G) employment lists, and salary, compensation
and other information regarding employees, agents, independent contractors,
consultants and representatives of the Company or the Company's Affiliates;
(k) internally developed computer programs and software and specialized
computer programs; (1) internal procedures, programs, reports and forms of
the Company or the Company's Affiliates; and (m) other confidential, trade
secret and/or proprietary information that allows the Company to compete
successfully.
Confidentiality Agreement § 1.
11. The Court further finds that Gehrke also agreed not to use such
information to compete with Merritt Hawkins. The Confidentiality Agreement provides that:
Employee agrees that this covenant not to compete is reasonable and necessary to
protect the Company's legitimate business interests, including, without limitation)
the confidential and professional information and trade secrets of the Company,
the substantial relationships between the Company and its customers, clients and
candidates for placement, and the goodwill of the Company. Employee also
agrees that the 18-month duration of this covenant not to compete is reasonable.
Confidentiality Agreement § 5.
12. The Court finds that Gehrke also agreed not to compete with Merritt
Hawkins within a distinct geographic territory. Specifically, Gehrke agreed not to compete by
doing the following:
directly or indirectly, whether as an employee, employer, officer, director,
operator, agent, independent contractor, consultant, stockholder, partner, owner,
investor, advisor, joint venturer or otherwise, (A) within the Restricted Territory
(as defined below) perform services of the same, similar or greater nature to those
performed by Employee for the Company (collectively, 'Services') for any
person, entity or venture that competes with the business of the Company
('Company Competitor'), which business includes without limitation recruiting
and providing temporary and permanent healthcare professionals, placements and
other staffing seryices to healthcare facilities and other healthcare organizations,
or (B) to the extent Employee's position with the Company entailed responsibility
for one or more geographic territories within the United States, to perform any
Services for any Company Competitor anywhere in the United States if the
Services to be provided to the Company Competitor involve all or a portion of the
geographic territories for which Employee had direct or indirect responsibility
during the 12 months prior to Employee's termination of employment. For
purposes of this covenant, the Restricted Territory is defined as Dallas County
and Tarrant County, Texas, and all counties adjacent to Dallas County and Tarrant
County, including the counties of Collin, Denton, Ellis, Hunt, Johnson, Kaufman,
and Rockwall.
See Confidentiality Agreement § 5.
13. The Court finds that Gehrke also agreed not to solicit Merritt Hawkins
employees according to the terms of the Confidentiality Agreement. The Confidentiality
Agreement provides that:
During Employee's employment and for a period of 30 months after the
termination of Employee's employment for any reason, Employee shall not,
directly or indirectly, himself/herself or through any individual or entity, (i)
solicit, hire, retain, engage, induce or attempt to induce away, or aid, assist or abet
any other person or entity in soliciting, hiring, retaining, engaging, inducing or
attempting to induce away from his or her employment or association with the
Company or any Company Affiliate any of their respective then current officers,
directors, employees, independent contractors, consultants, agents, or other
personnel or representatives of the Company or the Company's Affiliates, or (ii)
otherwise disrupt, impair, damage or interfere with any relationship between the
Company or any of the Company's Affiliates and any of their respective then
current officers, directors, employees, independent contractors, consultants,
agents, or other personnel or representatives.
Confidentiality Agreement § 6.
14. The Court further finds that Gehrke agreed not to solicit Merritt Hawkins'
customers or clients pursuant to the following provision within the Confidentiality Agreement:
During Employee's employment with the Company and for a period of 18 months
following the termination of Employee's employment with the Company for any
reason, Employee agrees not to, either individually or jointly, directly or
indirectly, either as an employee~ employer, operator, agent, independent
contractor, owner, consultant, partner, investor or otherwise, solicit or provide any
products or services that compete with the products and services offered by the
Company to any actual or prospective client, customer or candidate for placement
of the Company and who was serviced, directly or indirectly, by Employee or
with whom Employee otherwise dealt, directly or indirectly, including
management or supervision of others who serviced or dealt with such client,
customer or candidate, during the 12-month period prior to Employee's separation
from the Company.
Confidentiality Agreement§ 7.
15. The Court finds that the Confidentiality Agreement is supported by and
protects legitimate business interests-including, but not limited to, Merritt Hawkins'
confidential and/or trade secret information, substantial customer relationships, and interest in
maintaining a competent and specialized workforce.
16. The Court finds that certain of the restrictions contained m the
Confidentiality Agreement are reasonably necessary for the protection of the business and
goodwill developed and owned by Merritt Hawkins, and Merritt Hawkins would sustain great
and irreparable loss and damage if Gehrke continues to violate the covenants set forth herein.
17. The Court also finds that after he signed the Confidentiality Agreement,
Gehrke gained access to and learned of Merritt Hawkins' confidential business information and
other proprietary and trade-secret information, such as its business plans, customer lists,
marketing and sales strategies, margins, prices, and costs.
18. The Court finds that Gehrke was an executive in Merritt Hawkins sales
and marketing department and, therefore, had direct contacts and developed substantial
relationships with Merritt Hawkins' clients and key client contacts. Gehrke was also a vice
president, which enabled him to learn about Merritt Hawkins' business development strategies,
among other important and confidential information related to Merritt Hawkins' healthcare
professional recruiting and placement business.
19. The Court further finds that during the twelve months pnor to his
termination, Gehrke was worked in and was responsible for the following territories: Missouri,
Illinois, Arkansas, Colorado, and southern California (the ''Territories").
20. The Court also finds that in fulfilling his duties, Gehrke learned
confidential information about Merritt Hawkins' clients, contracts, pricing, and business plans
and strategies in the Territories. Gehrke acquired sensitive information about the costumers that
he dealt with directly, as well as the customers of his subordinates.
21. The Court finds that Gehkre has no objection to being restricted from
calling on customers in Colorado, Kansas, Nebraska, Oklahoma and southern California.
22. The Court finds that' Gehrke's employment with Merritt Hawkins was
terminated on May 1, 2018. Before he was terminated, Gehrke sent confidential information to
his personal email account. When he exited, Gehrke was reminded of his continuing obligations
to Merritt Hawkins and his post-employment restrictive covenants pursuant to the
Confidentiality Agreement.
23. The Court finds that beginning on June 18, 2018, Gehrke began working
for the Pacific Companies ("Pacific"). Pacific engages in physician recruitment and placement
like Merritt Hawkins and is a competitor of Merritt Hawkins.
24. The Court finds that since beginning his employment at Pacific, Gehkre
has contacted numerous Merritt Hawkins' customers with whom he previously worked while at
Merritt Hawkins, including customers in the Territories. The Court also finds that Gehrke has
successfully obtained business for Pacific from clients that Gehrke was contractually prohibited
from soliciting. The Court also finds that Gehrke used and disclosed Merritt Hawkins's
confidential information in performing his duties on behalf of Pacific. The evidence also
demonstrated that Gehrke plans to (1) continue soliciting customers with whom he worked at
Merritt Hawkins; (2) continue working in the Territories for a competitor; and (3) continue using
and disclosing Merritt Hawkins' confidential information unless enjoined.
25. The Court finds that Gehrke's conduct is in direct violation of the
Confidentiality Agreement, in exchange for which Gehrke received employment and promotions,
in addition to access to confidential information.
26. The Court further finds . that Gehrke acquired trade secret information
pursuant to the Confidentiality Agreement and his use and disclosure of the trade secret
information was in violatien thereof.
27. The Court further finds that Gehrke did not have permission to use or
share Merritt Hawkins' trade secrets or confidential information.
28.
29.
•
The Court finds that some of the restrictions contained within the
Confidentiality Agreement concerning the time, geography, and scope are reasonable and
· narrowly tailored to protect the consideration underlying the Agreement, which includes the
protection of confidential information and trade secrets, highly specialized training, and
goodwill.
30.
31.
--
32.
• II. RELIEF GRANTED
Accordingly, it is hereby ORDERED that, Defendant Gehrke and his collective and
respective agents, and those persons in active concert or participation with Gehrke, are
temporarily enjoined from engaging in the following acts:
1. Until January 24, 2020, soliciting, either directly or in concert with anyone else, any
actual or perspective client, customer, or candidate fo! placement of Merritt Hawkins
with whom Gehrke dealt during the 12 months prior to his separation from Merritt
Hawkins; provided however, for purposes of the scope of the restrictions in this
paragraph, the Court has a customer list it is holding in camera and has provided to
counsel of record for the parties in this matter which shall define those customers and
prospects which are the subject of the prohibitions contained in this paragraph;
2. Until January 24, 2020, directly or indirectly, performing any services of the same,
similar, or greater nature to those performed by Gehrke during his employment a.t
Merritt Hawkins for a competitor of Merritt Hawkins in the states of Colorado,
Kansas, Nebraska, Oklahoma, and southern California, and within a ten (10) mile
radius of the customers and prospects set forth on the customer list referenced in the
preceding paragraph.. For purposes of clarity, the services that Gehrke may not
perform pursuant to this paragraph include recruiting or providing permanent
healthcare placements or staffing services to healthcare facilities or organizations;
3. Until January 24, 2021, soliciting, either directly or in concert with anyone else, any
employee of Merritt Hawkins;
4. Using, disclosing, or transferring any of Merritt Hawkins' trade secrets or
confidential or proprietary business information, including, but not limited to, prices
and costs, margins and suggested margins, business plans, customer lists and
information, marketing and pricing strategies, information concerning Merritt
Hawkins' customers and their needs, opportunities and plans, information concerning
key staff, sales plans, development efforts and strategies, or any other information
which is regularly used in the operation of Merritt Hawkins' business;
5. Destroying, concealing, or disposing of any documents, paper, or electronic files, or
other materials obtained from or belonging to Merritt Hawkins, or containing Merritt
Hawkins' trade secrets or confidential or proprietary business information;
6. Altering, deleting, removing, or writing over in any respect any documents, computer
files (including, but not limited to, e-mails, hard drives, disc drives, zip drives), data,
drafts or other things relating in any way to Merritt Hawkins, including information
regarding Merritt Hawkins' clients, employees, property, or business information,
until such time as those materials may be turned over in discovery or until further
order of the Court; and
7. Destroying, concealing, or disposing of any documents, paper, electronic files, or
other materials relating to Defendant's actual or potential employment by Pacific or
any other competitor of Merritt Hawkins.
The Court finds that the bonds previously paid in the amount of $10,000 and $15,000
currently held by the Dallas County District Clerk are sufficient for the issuance of this
Temporary Injunction Order.
It is further ORDERED that the Clerk shall issue a Writ of Injunction incorporating this
Temporary Injunction Order.
' ·" /.
SIGNED at If ·~~o'clock _Am. on the ~-" day of September 2018.
EXHIBIT 2
Exhibit A
Exhibit B
Exhibit C