Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Servi-Tech, Inc. v. Olson

United States District Court, D. Kansas

September 1, 2017

SERVI-TECH, INC., Plaintiff,
v.
DILLAN OLSON, Defendant.

          MEMORANDUM AND ORDER

          ERIC F. MELGREN UNITED STATES DISTRICT JUDGE

         Plaintiff Servi-Tech, Inc. requested that the Court enter a preliminary injunction to prevent alleged violations of the restrictive covenants contained in Defendant Dillan Olson's employment agreement with Servi-Tech pending resolution of this suit. The Court held a hearing on the motion on August 17, 2017. After reviewing the parties' arguments and the evidence, the Court grants Servi-Tech's Motion for Preliminary Injunction (Doc. 6) to the extent set forth below.

         I. Facts and Procedural Background

         Servi-Tech hired Olson on August 21, 2014. As a condition of employment, Servi-Tech and Olson entered into an employment agreement that contained a number of restrictive covenants and related provisions. The relevant provisions read as follows:

5. No competition. During his employment, EMPLOYEE shall not directly or indirectly compete, or assist any person who competes, or participates in the ownership, management or operation of any partnership, corporation or other entity operating a business that directly or incidentally provides any crop consulting, laboratory testing or related services similar to those provided by SERVI-TECH. EMPLOYEE agrees that for a period of twenty-four (24) months after the termination of employment with SERVI-TECH, EMPLOYEE will not, directly or indirectly, engage in, or in any manner be connected with or employed by any person, firm, corporation, or other entity that directly or incidentally provides any crop consulting, laboratory testing or related services similar to those provided by SERVI-TECH within a 50 mile radius from the location of any customer with whom EMPLOYEE had “personal contact” within two (2) years prior to EMPLOYEE's termination of employment with SERVI-TECH. For purposes of this Agreement, “personal contact” is defined to include any and all forms of personal interaction or communication, including face-to-face, telephone, correspondence, electronic communication (i.e. email, social media, etc.) or other means by which information is conveyed or exchanged between EMPLOYEE and an actual or prospective customer.
6. No solicitation. EMPLOYEE agrees that for a period of twenty-four (24) months after the termination of his employment with SERVI-TECH, EMPLOYEE will not . . . call on any of the customers of SERVI-TECH with whom EMPLOYEE had personal contact within two (2) years prior to EMPLOYEE's termination of employment with SERVI-TECH, for the purpose of soliciting or providing any agricultural crop consulting, laboratory testing or related services, nor will he in any way, directly or indirectly, for himself or on behalf of any other person, firm, corporation or other entity, solicit, divert or take away any such customers of SERVI-TECH.
7. Extension of Restrictive Period. EMPLOYEE acknowledges that the purposes of this agreement would be frustrated by measuring the period of restriction from the date of termination of employment in the event EMPLOYEE fails to honor the agreement until directed to do so by court order, or for any other reason. Therefore, should SERVI-TECH be required to bring legal proceedings against EMPLOYEE to enforce this agreement, the period of restriction under Sections 5 and 6 shall be deemed to begin running on the date of the entry of the court order granting SERVI-TECH injunctive relief. This period shall be tolled during any time EMPLOYEE violates this provision or violates any court order granting injunctive relief.
8. Confidential information. EMPLOYEE agrees that he will not communicate to any person, firm, corporation or other entity any information relating to trade secrets, customer lists, prices, advertising, business practices or any other knowledge or information that EMPLOYEE may from time to time acquire with respect to the business of SERVI-TECH. All such information or knowledge shall be kept confidential by EMPLOYEE. Upon termination of employment, EMPLOYEE shall immediately turn over to SERVI-TECH all documents, papers, customers lists, memoranda, computer programs, computer files, any electronic or digital media, and any other material containing information relating to SERVI-TECH'S business.

         When Olson started working, he had approximately 10 clients assigned to him by Servi-Tech. His role in servicing these clients included facilitating soil sampling, visiting the clients' crop fields, making herbicide and chemical application recommendations, making recommendations on what to plant and when, and scouting the clients' fields during the growing season on a weekly basis to check for crop disease and insect issues (collectively referred to as “crop consulting services”). During his employment, Olson's client list grew to a total of 18. Of these eight new clients, five came to Servi-Tech because they were family, friends, acquaintances or business contacts of Olson. These clients are: (1) Myles Berthlesen; (2) Matthew Grosshans; (3) Barry and Gabe Dietrich of Dietrich Farms; (4) Curren Vetter; and (5) Sam Anderson (collectively referred to as “Olson's five prior contacts”).

         Servi-Tech terminated Olson's employment on September 30, 2016. Shortly thereafter, Olson commenced employment with Diamond Ag, one of Servi-Tech's customers. Because Diamond Ag provides different services than Servi-Tech does, Servi-Tech has stated that Olson's employment with Diamond Ag is not currently in violation of his employee agreement. However, in mid-November, Olson began performing crop consulting services on his own through an entity he established known as Platinum Agronomy Solutions, LLC (“Platinum”). Olson's five prior contacts then left Servi-Tech and became clients of Platinum.

         Servi-Tech sent Olson a demand letter on November 23, 2016, and again on December 2, demanding his compliance with his non-compete and non-solicitation obligations. Apparently unsatisfied with Olson's response to the demand letters, Servi-Tech filed this current action against Olson on June 22, 2017. On July 24, Servi-Tech filed this present motion seeking a preliminary injunction to prevent Olson from continuing the activities that allegedly violate the contractual restrictions.

         II. Legal Standard

         “As a preliminary injunction is an extraordinary remedy, the right to relief must be clear and unequivocal.”[1] The purpose of a preliminary injunction is “to preserve the status quo pending the outcome of the case.”[2] Whether to grant or deny a preliminary injunction rests within the discretion of the district court.[3]

         To be entitled to a preliminary injunction, the moving party must demonstrate: (1) that the movant will suffer irreparable injury unless the injunction issues; (2) that the threatened injury to the movant outweighs whatever damages the proposed injunction may cause the opposing parties; (3) that the injunction, if issued, would not be adverse to the public interest; and (4) that there is a substantial likelihood that the movant will eventually prevail on the merits.[4]

         III. Discussion

         As an initial matter, Olson argues that Servi-Tech does not have a substantial likelihood of success on the merits because the non-compete and non-solicitation provisions are unenforceable under Nebraska law. In making this argument, Olson points out that in diversity cases, district courts generally apply the substantive law, including the choice-of-law rules, of the forum state. “Under Kansas choice-of-law rules, the lex loci contractus doctrine requires the Court to apply the law of the state where the contract is made.”[5] In this case, the contract was made in Nebraska, so Olson asserts that Nebraska law should apply.

         However, lex loci contractus is not the sole Kansas choice-of-law rule. When a contract incorporates a choice of law provision, Kansas courts effectuate the law chosen by the parties to control the agreement.[6] Here, the employment agreement contained a choice of law provision indicating that the parties agreed to apply Kansas law. Accordingly, Kansas law will govern this dispute.

         A. Irreparable ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.