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XPO Logistics, Inc. v. Northrop

United States District Court, W.D. North Carolina

August 2, 2019

XPO LOGISTICS, INC., Plaintiff,
v.
JESSICA NORTHROP, Defendant.

          ORDER GRANTING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION

          Frank D. Whitney, Chief United States District Judge.

         THIS MATTER is before the Court on the Motion for Preliminary Injunction [Dock. No. 3] filed by Plaintiff XPO Logistics Inc. (“XPO”) pursuant to Federal Rule of Civil Procedure 65 (the “Motion”). In its Motion, XPO seeks to preliminarily enjoin its former employee, Defendant Jessica Northrop (“Northrop”), from violations of her noncompetition, confidentiality and return-of-company property covenants set forth in her agreement with XPO. On July 29, 2019, this Court held a hearing for the presentation of arguments and evidence by the parties. At the conclusion of the hearing, the Court issued an oral ruling that it would grant the motion, with a written order to follow. The Court has reviewed the pleadings, the evidence of record, the arguments presented during the hearing and applicable law. For the reasons set forth below, the Court GRANTS XPO's motion for preliminary injunction as follows:

         I. FINDINGS OF FACT

         1. For purposes of addressing Plaintiff's Motion for Preliminary Injunction, the evidence before the Court thus far shows the following facts.[1]

         2. XPO is a global leader in less-than-truckload (“LTL”) transportation and one of North America's largest LTL providers. XPO's LTL coverage extends to every state, encompassing 99% of all U.S. zip codes, and into Mexico, Puerto Rico, and Canada. (Verified Compl. ¶ 12 [Dock. #1-1].) It operates a transportation network that includes over 75, 000 next-day and two-day lanes and offers multimodal transportation and logistics solutions to its customers through the use of data-driven reporting and custom analytics. (Id. ¶ 13.)

         3. Northrop has worked in the LTL business for XPO or its predecessor since 2009, with access to the company's Confidential Information. (Id. ¶ 21.) In April 2016, Northrop accepted a transfer from her position as Service Center Manager of a smaller facility to a larger XPO facility in Syracuse, New York. In connection with this promotion and transfer, Northrop entered into the Confidential Information Protection Agreement (the “Agreement”), which is attached as Exhibit 1 to the Verified Complaint. (Id.) She also received an annual salary increase of $9, 285.12 as consideration for signing the Agreement. (Id.) Northrop served as the Service Center Manager of the Syracuse Facility from April 2016 until she resigned in June 2019. (Id. ¶¶ 21, 41.)

         4. In Section 1 of the Agreement, Northrop promised to use XPO's Confidential Information only for XPO's benefit and that, other than as required to fulfill her duties for XPO, she would not, at any time, directly or indirectly use, disclose, or copy XPO's Confidential Information or assist any other person or entity to do so. (Id. ¶ 15 and Exhibit 1 [Dock. #1-1].) As defined in the Agreement, “Confidential Information” means information, written (whether generated or stored on magnetic, digital, photographic or other media) or oral, not generally known, or proprietary to XPO about its business, affairs, operations, products, services, client and carrier lists, pricing strategies, operating processes, business methods and procedures, information technology and information-gathering techniques and methods, business plans, financial affairs and all other accumulated data, listings or similar recorded matter useful in the business of the company. (Id. ¶ 17 and Exhibit 1 (Section 20).)

         5. In Section 2 of the Agreement, Northrop promised to return all XPO Confidential Information and company property (tangible or intangible), in her possession or control, including any documents and data, no later than the last day of her employment. (Id. ¶ 16 and Exhibit 1.)

         6. In Section 7 of the Agreement, Northrop agreed that, while employed with XPO and for a period of six months after termination of employment, within the “Restricted Territory, ” she would not “perform any services, whether as an employee, agent or independent contractor for a Competing Business [as defined in Section 7(c) of the Agreement] in an area, division or segment of the Competing Business that competes in any way with any of [XPO's] businesses.” (Id. ¶ 19 and Exhibit 1.)

         7. “Restricted Territory” is defined in the Agreement as (i) the territory within 100 miles from the principal office at which Northrop was employed by XPO; (ii) the territory within 50 miles from any other XPO offices in the United States, Canada and Mexico; and (iii) any state or province in the United States, Canada and Mexico in which XPO's customers are located or XPO performs services for or on behalf of its customers or carriers. (Id. ¶ 16 and Exhibit 1 (Section 7).)

         8. As the Service Center Manager for the Syracuse Facility, Northrop was responsible for the overall management and performance of the facility and its employees. (Id. ¶ 22.) Her duties included selling XPO's services to businesses and managing the interactions with those customers; resolving customer concerns; and managing all the facility's employees, costs, maintenance, supplies, manpower planning, and customer claims. (Id.) She also was charged with implementing new strategies and initiatives, managing programs and process improvements to ensure continued business growth and long-term relationships with customers. (Byrne Aff. ¶ 3 [Dock. No. 5].) In addition, XPO trains its Service Center Managers to identify opportunities to expand and cross-sell business with customers who may have needs for additional transportation solutions. (Id. ¶ 4.)

         9. Through her employment, Northrop obtained access to a wide array of XPO's proprietary and confidential information regarding XPO's LTL business and customers, including business strategy, pricing, contracts, employee compensation, proprietary management and operational processes, competitive offerings, technology tools related to routing systems, business intelligence systems, and safety systems; confidential freight movements and procedures; and corporate security procedures. (Verified Compl. ¶¶ 24-25 [Dock. #1-1].) These technology tools and information provide XPO with advantages over its competitors in the LTL industry. (Id.)

         10. Through regularly recurring meetings with other managers and members of XPO's leadership team, Northrop also acquired significant Confidential Information about XPO's LTL business outside of the Syracuse Facility. (Id. ¶¶ 26, 27.) For example, in connection with her weekly meeting with other managers in her district-comprised of 20 facilities across seven states-XPO provided Northrop with a confidential “Business Information Report” with detailed data regarding revenue, tonnage, and yield for all the facilities in her district. (Id. ¶ 26.) Northrop also had access to confidential financial and operational data for every LTL terminal in XPO's East region, which is one of XPO's four LTL regions. (Id. ¶ 28.) She also participated in a monthly “manager meeting” at which XPO's executive leadership reviewed the financial performance and goals for XPO's nationwide LTL business. (Id.) Further, she obtained exposure to XPO's pricing and potential business opportunities across XPO's range of transportation solutions. (Byrne Aff. ¶ 4 [Dock. No. 5].)

         11. On May 29, 2019, while working at XPO's Syracuse Facility, Northrop accepted an offer from Saia LTL Freight (“Saia”) to serve as the Terminal Manager for a new terminal it was opening in Syracuse. (Verified Compl. ¶ 32 [Dock. No. 1-1].) Saia is a direct competitor of XPO. According to its public filings, Saia recently initiated a strategy to begin serving new markets in the Northeast by opening new terminals in that region. (Id. ¶ 31.)

         12. The same day she accepted the offer from Saia-and while still employed at XPO- Northrop used her company email account and secretly emailed multiple XPO files containing proprietary management tools and Confidential Information to her personal Yahoo email account. (Id. ¶¶ 1, 33.) The materials that Northrop sent to herself including the following files:

(a) “Third Quarter Update.pptx” (PowerPoint presentation)
(b) “Q4Playbook.xlsx” (Excel spreadsheet)
(c) “Conference Report” form
(d) “SWFL matter.xlsx” (Excel spreadsheet)
(e) “SCM Responsibilities and Expectations.xlsx” (Excel spreadsheet)
(f) “Pre-shift template.xlsx” (Excel spreadsheet)
(g) “Copy of DockXSY.xls” (Excel spreadsheet)
(h) “XSY Employee_Training_Record_Spreadsheet_xlsx” (Excel spreadsheet)

(Id. ¶ 34.)

         13. The documents Northrop sent to herself constituted confidential and proprietary information about XPO's business, including its operations, business strategy, customers, and financial information. (Id. ¶ 35.) For example, the “Third Quarter Update” is a proprietary tool that XPO uses to internally communicate confidential operational and performance information, such as competitively sensitive information about the company's incentive plan for employees. (Id. ¶ 36.) The “Q4 Playbook” is a proprietary management tool that is designed to identify and execute strategies and actions to drive improvements across ...


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