Searching over 5,500,000 cases.

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.

Admor Hvac Products, Inc. v. Lessary

United States District Court, D. Hawaii

June 18, 2019



          Susan Oki Mollway United States District Judge


         Plaintiff Admor HVAC Products, Inc. (“Admor”), seeks a preliminary injunction against its former employee Defendant Robert Sonny Lessary and his company, Defendant Hicoustix LLC (“Hicoustix”) (together, “Defendants”). ECF No. 10. While working as a salesperson for Admor, Lessary allegedly began soliciting business for his own company, Hicoustix, which was in competition with Admor. Admor asserts nine causes of action against Defendants: (1) violation of the Defend Trade Secrets Act, 18 U.S.C. § 1836; (2) violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962; (3) breach of the duty of loyalty; (4) unfair competition under 15 U.S.C. § 1125(a); (5) unfair competition under § 480-2 of Hawaii Revised Statutes; (6) tortious interference with prospective business advantage; (7) tortious interference with business relations; (8) conversion; and (9) unjust enrichment. ECF No. 1.

         Admor's motion seeks an injunction:

1. Preserving the status quo preventing Defendants from servicing any [and] all entities and individuals who were Admor customers and vendors [] as of April 1, 2018.
2. Ordering the in camera production of the customer and vendor lists for Admor as of April 1, 2018 and Defendants as of December 1, 2018 to assist the Court in determining customers and vendors covered by the preliminary injunction.
3. Prohibiting Defendants and anyone acting in concert with them from (i) possessing, using, and/or disclosing Admor's confidential/proprietary/trade secret information; (ii) accounting for and returning any and all confidential/proprietary/trade secret information to Admor; and (iii) otherwise unfairly competing with Admor.

ECF No. 10, PageID # 83.

         The court held an evidentiary hearing on the motion on April 16, 2019. Prior to the hearing, the parties submitted Proposed Findings of Facts and Conclusions of Law (“Proposed FoF/CoL”). ECF Nos. 28, 29. In its Proposed FoF/CoL, Admor appeared to amend the relief sought in its motion, requesting an injunction:[1]

(1) that prevents Defendants from servicing any and all entities and individuals who were Admor customers and vendors as [of] December 19, 201[8], the date of Lessary's termination of employment from Admor;
(2) ordering the in camera production of the customer and vendor lists for Admor from January 1, 2018 to December 19, 2018, and Defendants as of January 1, 2018, to assist the Court in determining customers and vendors covered by the preliminary injunction;
(3) prohibiting Defendants and anyone acting in concert with them from (i) possessing, using, and/or disclosing Admor's confidential/proprietary/trade secret information; (ii) using Admor's name, symbols, and logos; and (iii) otherwise unfairly competing with Admor; and
(4) requiring Defendants to account for and return any and all confidential/proprietary/trade secret information to Admor.

ECF No. 29, PageID # 498 (emphases and spacing added).[2]

         Admor does not show entitlement to either version of requested relief. The court denies Admor's motion for preliminary injunction and enters the following Findings of Fact, Conclusions of Law, and Order.


         Whenever, in the following discussion, this court has mistakenly designated as conclusions of law what are really findings of fact, and vice versa, the court's statements shall have the effect they would have had if properly designated. For ease of reference to particular findings and conclusions in later proceedings, the findings and conclusions are presented in numbered paragraphs. The court does not recite all evidence presented during the evidentiary hearing on April 16, 2019, rather discussing evidence relevant to the court's ruling on Admor's motion for preliminary injunction.

         The evidentiary hearing was conducted in accordance with this court's procedures for civil nonjury trials, which are reproduced, in substantially the same form followed here, in Appendix A to this court's decision in Kuntz v. Sea Eagle Diving Adventures Corp., 199 F.R.D. 665 (D. Haw. 2001). Direct testimony was presented by written declarations, with witnesses then subject to live cross-examination and redirect examination unless waived.

         At the hearing, Admor presented testimony by Andrew Santos, Georgina Fuerte, and Rogen Gaspar. Lessary presented testimony by himself, Anthony Ornellas, Michael Goodnight, Steven Allende, and Mario Geronimo. The parties also submitted “Stipulated Facts For Evidentiary Hearing.” ECF No. 30 (“Stip. Facts”).

         Based on the testimony presented at the hearing, the Stip. Facts, and the exhibits received into evidence, the court finds that the following facts have been established by a preponderance of the evidence.

         Admor's Business in Heating, Ventilation, and Air Conditioning (“HVAC”).

         1. Admor is a Hawaii corporation that has been doing business in Hawaii since at least 1995. Stip. Facts ¶ 1. Admor is a wholesale distributor of HVAC products and accessories. Through its approximately 30 employees, it provides quality HVAC and insulation products, training, and support to contractors, architects, and engineers. Id. ¶¶ 4-6.

         2. At all relevant times, Admor was involved in interstate commerce; its business regularly required the shipment of products across state lines. Indeed, most of Admor's regular vendors were and are located outside of Hawaii. Id. ¶¶ 11, 50.

         3. Admor's revenue is driven by two groups: the contractors and subcontractors that make up most of its customers, and its vendors. Id. ¶¶ 5, 9.

         4. Admor's salespeople meet with customers, discuss product lines required for customers' projects, and provide customers with quotes for those products. The salespeople then coordinate with Admor's vendors and execute sales orders for the customers' requested products. The products are shipped to a customer's job site, either from the vendor directly or from Admor's warehouse, where it keeps “stock” equipment and products. Id. ¶ 10.

         5. To sell products, salespeople need extensive training so that they know how the products work and can explain to customers why certain products should be used on certain projects. Some vendors impose minimum training requirements on salespeople who sell their products. Id. ¶¶ 12-13.

         Lessary's Employment as an Admor Salesperson.

         6. Lessary is a resident of and domiciled in Hawaii. Id. ¶ 2. From 2005 until May 2009, he worked as a sales representative for G.W. Killebrew Co., Inc. (“Killebrew”), where he sold drywall products and acoustical paneling and ceilings to drywall contractors. ECF No. 49: Amended Declaration of Robert Sonny Lessary (“Lessary Decl.”) ¶¶ 19, 21, 22. Lessary was employed by Admor as a salesperson from February 2010 until December 2018. Stip. Facts ¶ 7.

         7. Several contractors who worked with Lessary at Killebrew followed him to Admor because of the relationships they had with him. See ECF No. 47: Amended Declaration of Anthony Ornellas (“Ornellas Decl.”) ¶¶ 1-5; ECF No. 41: Declaration of Michael Goodnight (“Goodnight Decl.”) ¶¶ 1-4; ECF No. 48: Amended Declaration of Steven Allende (“Allende Decl.”) ¶¶ 1-5; ECF No. 39: Declaration of Mario C. Geronimo (“Geronomio Decl.”) ¶¶ 1-5; Lessary Decl. ¶¶ 25-26.

         8. Lessary had no noncompete agreement, nonsolicitation agreement, confidentiality contract, or nonacceptance-of-business agreement with Admor. Stip. Facts ¶¶ 17-19.

         9. While employed by Admor, Lessary received a salary plus commissions and was reimbursed for his cellphone and car-related expenses. Id. ¶¶ 7, 8. Admor also provided Lessary with training in several product lines. Id. ¶ 15; ECF No. 63: Amended Declaration of Andrew Santos (“Santos Decl.”) ¶ 39; Exhibit Nos. P-51, P-53, P-53, P-54.

         10. For a period of time during his employment with Admor, Lessary paid the salary of his two administrative assistants, Raena and Moi. Stip. Facts ¶ 21. In addition, Lessary relied on the support staff in several Admor departments, including the accounting, warehouse, credit, collections, order processing, and delivery departments. Santos Decl. ¶ 47.

         11. Lessary was Admor's primary “insulation guy, ” managing the customer and vendor sides of Admor's insulation business. He was trusted and given discretion in his job responsibilities. Stip. Facts ¶¶ 20, 35, 36. He managed two separate divisions at Admor: one in which he sold insulation and acoustical ceilings to drywall subcontractors, and another in which he sold insulation and sheet metal products and accessories to HVAC sheet metal and mechanical contractors. Lessary Decl. ¶ 28.

         12. Rockfon, F-Sorb, and Service Partners became Admor vendors during Lessary's employment. Lessary was the principal and only contact at Admor for these vendors. Stip. Facts ¶¶ 32, 54. Rockfon, F-Sorb, and Service Partners generated $2, 105.799.13 in gross sales for Admor in 2018. Santos Decl. ¶ 45. Lessary was the only Admor salesperson with the requisite training to sell Rockfon, and he knew the Rockfon product better than Admor's other salespeople. Stip. Facts ¶ 33. He was also the salesperson at Admor who knew the F-Sorb product best. Id. ¶ 34.

         13. Lessary was also the salesperson at Admor closest to CD Builders, BEK, PMJ Builders, JDH, Protech Roofing, and Haas Insulation, all of which were contractors who were among Admor's customers. He was the primary contact at Admor for these contractors, though in some cases they also communicated with his administrative assistants and Admor's accounting department. ECF No. 31-1: Deposition of Andrew Santos taken March 12, 2019 (“Santos Depo.”) at 64:22-65:4, 70:5-11, 75:24-76:4, 87:12-88:4, 89:20-90:2, 90:22-91:4.

         Admor's Protection of Customer and Vendor Information.

         14. Admor's Employee Handbook refers to information about customers as protected information. Stip. Facts ¶ 25. On December 14, 2010, Lessary signed a “Receipt and Acknowledgment of Admor Group, Inc's Employee Handbook, ” which states, “I have received and read a copy of Admor Group, Inc's Employee Handbook. I understand that the policies and benefits described in it are subject to change at the sole discretion of Admor Group Inc. at any time.” Id. ¶ 26; Exhibit No. P-1 at 1.

         15. Lessary received a copy of the 2015 version of the Admor Employee Handbook. Stip. Facts ¶ 27. That version includes a clause stating:

Employees are expected not to disclose to persons outside the Company any business information which is confidential or proprietary in nature. Employees must maintain the confidentiality of the Company's business information, including but not limited to, business plans and strategies, business opportunities, company financial information (e.g., profit and loss statement, investment returns, accounts receivable), information regarding company purchases and sales, customer lists, customer contact information, and manufacturing methods and processes. If you are in doubt as to whether particular internal business information is confidential or proprietary, you should consult with your supervisor before disclosing such information to third parties.

         Exhibit No. P-2 at 40.

         16. Admor has a customer and vendor database that includes information such as names, phone numbers, email addresses, payment history, purchase orders, and history of purchase orders. Stip. Facts ¶ 22. It has taken Admor 25 years to compile this information. Santos Decl. ¶ 53.

         17. Not all of the information in the database is kept confidential. Admor advertises vendor product lines on its business line card. ECF No. 53, PageID # 807 (Santos testimony during cross examination). However, the combination of all information in the database is not publicly available. Id. at # 847 (Santos testimony during re-direct).

         18. In the database, Admor employees and salespeople can create sales orders and access certain information about customers, including order history and trends. The only people at Admor who can change customer information are Georgina Fuerte (Admor's Finance Manager, Secretary, Treasurer, and Director) and Admor's accountants. Only Andrew Santos, Admor's President, and the accountants can open or close a customer account. ECF No. 35: Declaration of Georgina Fuerte (“Fuerte Decl.”) ¶ 6. The database is secured with a 4-digit security password. Stip. Facts ¶ 23. Only current employees have access to the database. Fuerte Decl. ¶ 7. The database includes 2, 042 customers and 423 vendors. Stip. Facts ¶¶ 28, 30. That number includes past or inactive customers and vendors, but Admor's active customers number 211, and its active vendors number 199. Fuerte Decl. ¶ 4; ECF No. 53, PageID #s 803-04 (Santos testimony during cross examination).

         19. Admor has security cameras in its warehouse and administrative business space. Stip. Facts ¶ 24.

         20. Lessary had access to the customer and vendor database while employed at Admor. Fuerte Decl. ¶¶ 7, 10, 13. Admor's best estimate is that Lessary worked with approximately 100 customers and 23 vendors while employed by Admor. Stip. Facts ¶¶ 29, 31.

         21. Admor has no evidence that Lessary has lists of Admor's customers or vendors, or that he took such lists with him when he left Admor. Santos Depo. at 20:19-21:13. Nor does Admor have evidence that Lessary took pricing or costing information when he left Admor. Id. at 43:6-44:25.

         Lessary's Formation and Running of Hicoustix While Employed by Admor.

         22. In or possibly before April 2018, while employed by Admor, Lessary began a business called Hicoustix that competed with Admor. Stip. Facts ¶ 37.

         23. Hicoustix is a Hawaii limited liability company that provides insulation and other product lines to consumers/contractors. Such products are regularly shipped across state lines to Hawaii. Id. ¶¶ 3, 39, 51.

         24. On August 2, 2018, Hicoustix was registered to do business in Hawaii as a member-managed company with Lessary as the sole member. Hicoustix acts through Lessary. Id. ¶¶ 38, 49.

         25. While employed by Admor, Lessary sent carbon copies of emails to his Admor email address when doing business from his Hicoustix email address, and vice versa. Id. ¶ 52; see, e.g., Exhibit Nos. P-3, P-4, P-6, P-7, P-10, P-11, P-22. In some of his emails, Lessary included pricing information for certain products. Exhibit No. P-20 at 128-29; Exhibit No. P-30; see also ECF No. 53, PageID #s 949-50, 957 (Lessary testimony during cross examination). When communicating with clients and vendors from his Admor email address, Lessary referred to a partnership between Admor and Hicoustix and/or to an arrangement in which Hicoustix received a commission for Admor sales. See Exhibit P-9 at 77 (email correspondence with Bill Devin of Regupol America dated February 20, 2018, in which Lessary stated that “you'd just have to collect from ADMOR and pay out a commission check to HICOUSTIX”); Exhibit No. P-12 (email correspondence with Dennis Wakaluk of Rockfon dated May 2, 2018, in which Lessary stated that “I feel the ADMORᲀ蹑Ⓢ partnership has helped to keep a project”); Exhibit No. P-23 (email correspondence with Kerrie Duncan of Soundseal ...

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.