United States District Court, E.D. North Carolina, Southern Division
DENTAL CARE LEASING, LLC and STEPHANIE G. HACKNEY, D.D.S. II, PLLC d/b/a ASAP URGENT DENTAL CARE, Plaintiffs,
KARL W. MILLER and EXPRESS URGENT DENTAL CARE LLC d/b/a EXPRESS URGENT DENTAL CARE, Defendants.
TERRENCE W. BOYLE CHIEF UNITED STATES DISTRICT JUDGE.
matter is before the Court on defendants' motions to
dismiss [DE 22, 32] and plaintiffs' motions for default
judgment [DE 18] and a preliminary injunction [DE 19]. The
motions have been fully briefed and are ripe for disposition.
For the reasons that follow, defendants' first motion to
dismiss [DE 22] is denied as moot, plaintiffs' motion for
default judgment [DE 18] is denied as moot, defendants'
second motion to dismiss [DE 32] is denied, and
plaintiffs' motion for a preliminary injunction [DE 19]
October 2017, Dr. Stephanie G. Hackney, a licensed dentist,
and defendant Karl W. Miller organized plaintiff Dental Care
Leasing, LLC ("DCL"), under the laws of North
Carolina. [DE 1, ¶ 16]. DCL was incorporated "to
manage and support the 'ASAP Urgent Dental Care'
brand and business model." Id. More
specifically, DCL was formed to "provide certain
management, administrative, leasing, and other contractual
services" for ASAP and to "maintain propriety
ownership and management of any intellectual property"
related to ASAP's practices. Id. ¶ 17.
Plaintiff ASAP Urgent Dental Care ("ASAP") is an
urgent dental care clinic that Dr. Hackney established,
hoping to provide urgent dental services to "underserved
areas across the United States, starting with the flagship
practice located in Wilmington, North Carolina."
Id. ¶ 11-12.
September 2017, Dr. Hackney filed two intent-to-use trademark
applications to cover "ASAP URGENT DENTAL CARE" as
a service mark and logo for "urgent dental care center
services." Id. ¶ 26. By December 2017,
ASAP had created a "confidential, proprietary business
manual," outlining ASAP's business model, which
plaintiffs allege "represented a paradigm shift in the
provision of urgent dental care and encompassed valuable
trade secrets." Id. ¶ 13. Plaintiffs
contend that the trade secrets included "the study of
market demographics, the development of market strategies,
the use of industry partners and technology, the provision of
unique delivery platforms and revenue models, and other
proprietary and confidential information." Id.
Plaintiff DCL owned all of these alleged trade secrets and
took reasonable steps to maintain their confidentiality.
Id. ¶ 14-15. Around the same time, December
2017, Dr. Hackney incorporated ASAP as a professional limited
liability company, with Dr. Hackney as its sole member and
manager. Id. ¶¶ 33-35.
alleges that, at the time DCL was incorporated, defendant
Miller was the company's sole member. Id. ¶
20. At some point thereafter, Mr. Miller transferred all of
his rights and interest in DCL to Dr. Hackney and the Jack
Preston Miller Irrevocable Trust ("Miller Trust").
Id. ¶ 21. In March 2018, Dr. Hackney and the
Miller Trust entered into an operating agreement that gave
Dr. Hackney a 75% interest in DCL and gave the Miller Trust a
25% interest. Id. ¶¶ 22-23. Pursuant to
the agreement, Mr. Miller was appointed as DCL's manager.
Id. ¶ 24. Importantly, Mr. Miller is not a
dentist or healthcare provider. Id. ¶ 25. ASAP
then established its first, and to date only, urgent care
facility in Wilmington, North Carolina. Id. ¶
2018, registration of ASAP's trademarks, Nos. 5, 493, 947
and 5, 493, 948, became effective. Id. ¶ 28.
Dr. Hackney assigned all of her rights and interests in the
trademarks to DCL. Id. ¶ 29. The trademarks
remain in force under DCL's ownership. Id.
September 2018, Dr. Hackney, Mr. Miller, and the Miller trust
"terminated their business relationship."
Id. ¶ 38. They executed a redemption agreement
in which the Miller Trust transferred its 25% interest in DCL
back to DCL. Id. ¶ 39. Mr. Miller
simultaneously resigned as manager of DCL, agreed to transfer
and assign his rights and interests in certain assets to DCL,
took title of a vehicle used by DCL, and agreed to a
non-compete provision. Id. ¶¶ 40-45. The
non-compete required Mr. Miller, during the restricted period
and within the restricted territory, to refrain, either
"directly or by assisting others," from
"perform[ing] services of the type conducted,
authorized, offered, or provided by Miller in his capacity
as" DCL's manager. Id. ¶ 42-43. The
restricted period was defined as 36 months from the effective
date of the redemption agreement and the restricted territory
was defined as "(a) the United States of America; (b)
the States east of the Mississippi River; (c) the State of
North Carolina" and various counties in North Carolina.
months later, in December 2018, plaintiffs allege that Mr.
Miller "took steps to start a competing urgent dental
care practice." Id. ¶ 46. Specifically,
plaintiffs allege that Mr. Miller established defendant
Express Urgent Dental Care ("Express") in Metairie,
Louisiana, and then applied to trademark a logo containing
that trade name and a logo similar to ASAP's.
Id. ¶¶ 46-50. Mr. Miller registered
Express as a Delaware limited-liability company in December
2018 and created a website and various social media accounts
to promote the company. Id. ¶¶ 51-53. In
February 2019, Express was registered to do business in
Louisiana. Id. ¶ 54.
initiated this action in March 2019. [DE 1]. Plaintiffs, DLC
and ASAP, bring nine causes of action against Mr. Miller and
Express. Plaintiffs bring claims for (1) breach of the
redemption agreement's non-compete, (2) breach of the
redemption agreement's provisions regarding Mr. Miller
taking title of a DCL vehicle, (3) trademark infringement
under the Lanham Act, (4) trade dress infringement under the
Lanham Act, (5) trademark infringement under N.C. Gen. Stat.
§ 80-11, (6) misappropriation of trade secrets under 18
U.S.C. §§ 1836 and 1839, (7) misappropriation of
trade secrets under N.C. Gen. Stat. § 66-153 and common
law, (8) unfair competition in violation of 15 U.S.C. §
1125 and North Carolina law, and (9) violation of North
Carolina's Unfair and Deceptive Trade Practices Act, N.C.
Gen. Stat. § 75-1.1. [DE 1, ¶¶ 60-146].
2019, plaintiffs moved for entry of a preliminary injunction,
seeking to enforce the non-compete against Mr. Miller and
prevent defendants from "engaging in ongoing
infringement of Plaintiffs' protectable marks and unfair
competition. [DE 20; 21, p. 29]. At that same time,
plaintiffs moved for entry of default judgment against
Express. [DE 18]. The following month, Express moved to
dismiss plaintiffs' claims against it under Rule 12(b)(2)
of the Federal Rules of Civil Procedure for lack of personal
jurisdiction. [DE 22]. Ultimately, in July, plaintiffs filed
notice of their voluntary dismissal, without prejudice, of
Express. [DE 39].
2019, defendant Miller moved to dismiss plaintiffs'
claims against him under Rule 12(b)(6) for failure to state a
claim upon which relief can be granted. [DE 32]. Mr. Miller
argues that the non-compete is facially overboard and
unenforceable, that plaintiffs have failed to adequately
plead damages for Mr. Miller's alleged breach regarding
the vehicle title, that the trademark claims fail because the
two dental clinics operate in remote markets, and that the
trade secrets claims fail because plaintiffs have not
identified actionable trade secrets. [DE 33]. Plaintiffs have
responded in opposition to the motion to dismiss. [DE 38].
outset, because plaintiffs have given notice of their
voluntary dismissal of defendant Express Urgent Dental Care,
plaintiffs' motion for default judgment against Express
and Express's motion to ...