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Central Transportation Services, Inc. v. Cole

United States District Court, Tenth Circuit

November 13, 2013

CENTRAL TRANSPORTATION SERVICES, INC., Plaintiff,
v.
BENNY COLE, LORI COLE, and BRADY TRUCKING, INC., Defendant.

MEMORANDUM AND ORDER

Monti L. Belot UNITED STATES DISTRICT JUDGE

Before the court are the following:

Brady Trucking, Inc.’s Motion to Dismiss or Transfer (Docs. 13, 14); and Central Transportation Services, Inc.’s Response (Doc. 30).
[No Reply was filed.]

I. Facts

The following facts, which are accepted as true for purposes of the motion to dismiss, are taken from CTS’ verified complaint and from CTS’ response to the motion to dismiss.

Central Transportation Services, Inc. (“CTS”) is a Kansas corporation that provides trucking services. It primarily hauls dry bulk products. It operates throughout the United States.

Benny and Lori Cole, residents of Illinois, operated a trucking business known as Benny Cole Trucking, Inc., out of a terminal in Bloomington, Illinois. Benny managed the business and his wife Lori worked as a secretary.

Brady Trucking, Inc., is a Utah corporation that provides dry bulk trucking services. It is a competitor of CTS’ that operates throughout the United States.

On September 30, 2011, CTS and the Coles entered an “Asset Purchase Agreement” (APA) pursuant to which CTS bought out substantially all of Benny Cole Trucking’s assets in exchange for a payment of $1, 046, 159.00. As part of the agreement the Coles were employed by CTS at an agreed-upon rate of compensation. The APA included a “Covenant-Not-to-Compete” which said that for three years from the date of closing, the Coles will not engage (including as an employee) in any business in competition with CTS within the continental United States. The APA included a “forum selection clause” stating that any action to enforce the APA must be commenced in the District Court of Sedgwick County Kansas or in U.S. District Court for the District of Kansas. In addition to the APA, the Coles entered employment agreements under which they promised not to use or disclose confidential information obtained as a result of their employment with CTS.

Benny and Lori Cole continued to operate the Bloomington terminal as employees of CTS. They largely continued with the same customer base and drivers as Benny Cole Trucking.

About 18 months later, in March of 2013, Benny Cole contacted Brady Trucking to solicit employment.[1] He represented to Brady that “his contract was up” with CTS. Doc. 30, Exh. A. He provided Brady with confidential information including the amount of business CTS was doing with customers from the Bloomington terminal. Benny also represented that if he came to work for Brady he could bring his current customers with him and the CTS truck drivers who were working out of the Bloomington terminal.

Brady Trucking offered to employ Benny and Lori Cole, along with the CTS drivers at the Bloomington terminal. Benny and Lori Cole began working for Brady on May 1, 2013. Benny was initially employed as the Terminal Manager of the Bloomington terminal. CTS had been subleasing the Bloomington terminal from Benny Cole. After Benny and Lori Cole terminated their employment with CTS, Brady took over the sublease of the terminal.

Upon discovering these facts, CTS wrote letters to the Coles and to Brady on May 2, 2013. CTS’ letter notified Brady of the APA and its three-year non-compete covenant. Doc. 30, Exh. G. Brady requested a copy of the APA, which was provided on May 13, 2013. Shortly thereafter Brady changed Benny’s title to ...


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