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Hawk Advisers, Inc. v. Gillenwater

United States District Court, W.D. Virginia, Roanoke Division

May 22, 2018

HAWK ADVISERS, INC., Plaintiff,
v.
RYAN E. GILLENWATER, Defendant.

          MEMORANDUM OPINION

          Michael F. Urbanski Chief United States District Judge

         Currently pending before the court are plaintiff Hawk Advisers, Inc.'s ("Hawk") motion to expedite (ECF No. 5) and motion for a preliminary injunction (ECF No. 7). At a hearing held on the motions on May 4, 2018, the court questioned whether an arbitration clause in an employment agreement precluded the court from deciding Hawk's motions. Following the hearing, defendant Ryan E. Gillenwater ("Gillenwater") moved to compel arbitration and stay the proceedings pending arbitration, pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 3-4. ECF No. 25. Hawk opposed the motion and filed a supplemental memorandum in support of its preliminary injunction motion. For the reasons set forth below, the court will GRANT the motion to compel arbitration.

         I.

         In 2009, defendant Gillenwater became an insurance agent for Carlton Wright Insurance Company ("Carlton Wright"), and the two parties entered into an employment agreement (the "Producer Agreement"). Compl. ¶ 7, ECF No. 1; Producer Agreement, ECF No. 23-1. The Producer Agreement prohibited Gillenwater from disclosing Carlton Wright's confidential or trade secret information to third parties and required Gillenwater to return all Carlton Wright business records when his employment ended. Producer Agreement § IX. The Producer Agreement further barred Gillenwater from soliciting Carlton Wright's customers or employees for a period of three years following the termination of his employment. Id. at §§ VIII, XI. In the section on dispute resolution, titled "XIII. Arbitration/Litigation" (the "Arbitration Clause"), the Producer Agreement provides as follows:

Any controversy, claim, or breech [sic] giving rise to a claim for liquidation [sic] or monetary damages arising out of or relating to this Agreement shall be submitted for settlement to an arbitrator agreed upon by both parties hereto. If the parties cannot agree upon an arbitrator, the controversy, claim, or breach shall be referred to the American Arbitration Association with a request that the Association appoint an Arbitrator. Arbitration shall be held in the city of business of the Agency in accordance with the rules and standards of the American Arbitration Association.
In the event any party hereto resorts to either legal action or arbitration as the result of any dispute pertaining to any of the terms of this Agreement, the prevailing party shall be entitled to collect all costs incurred, including but not limited to attorney's fees and other costs.

Id. at § XIII. The parties agreed that Virginia law would govern the interpretation and enforcement of the Producer Agreement. IcL at § XVII.

         During his employment with Carlton Wright, Gillenwater built a book of business in the family entertainment and amusement industry (the "Amusement Book"). Compl. ¶¶ 9-11. The business expanded in 2012, and Carlton Wright began operating the Amusement Book as Keystone Amusement Enterprises ("KAE"). Id. ¶ 12.

         In 2015, Rand Wright ("Wright"), owner of Carlton Wright, and Stephen Hamilton ("Hamilton"), owner of Commercial Insurance Services, Inc., formed Hawk to serve as a holding company. Id. ¶ 13. Wright became the president of the new company, which took control of Carlton Wright's Amusement Book and retained Gillenwater and other Carlton Wright employees. Li ¶¶ 14-16. As part of the transition, in March 2016, Gillenwater signed a nondisclosure and confidentiality provision (the "Confidentiality Agreement") in the Hawk employee handbook. Confidentiality Agreement, ECF No. 23-2.

         In June 2016, Hawk made Gillenwater an officer and vice president of the company. Compl. ¶ 18. By the fall of 2017, however, Wright and Hamilton became concerned about Gillenwater's work performance and confronted Gillenwater about his conduct in late November 2017. Li ¶¶ 21, 26, 36.

         On January 16 and 17, 2018, Gillenwater secretly met with Hawk's competitor, McGowan Insurance ("McGowan"), in Ohio. Id. ¶ 42. Analysis of Gillenwater's work computer revealed that he had compiled information about Hawk's finances and customers on the evening before he travelled to Ohio. ECF No. 23-11 at¶ 11-12. Gillenwater spoke to two other Hawk employees, as well as Wright, about selling the Amusement Book to McGowan and leaving Hawk to work for McGowan. Compl. ¶¶ 42-43. On January 26, 2018, Hawk fired Gillenwater. Id. ¶ 68.

         After leaving Hawk, Gillenwater became a vice president at McGowan. ECF No. 1-6. Hawk believes that Gillenwater is soliciting its customers and continues to have administrator authority and credentials to the KAE Facebook page, as well as access to the "KAE Notebook, " a Cloud system containing information about Hawk's clients. Compl. ¶¶ 88, 96.

         The managing director of McGowan, Lee Stacey, avers that McGowan has not permitted Gillen\vater to violate his employment agreement. ECF No. 23-14 at ¶ 5. Stacey further avers that Gillenwater has not shared any Hawk information with McGowan. Id. ¶ 4. At the preliminary injunction hearing, Hawk admitted that it has not lost any business or employees to McGowan.

         On April 4, 2018, Hawk sued Gillenwater for misappropriation of trade secrets, breach of contract, conversion, violation of the Computer Fraud and Abuse Act, breach of fiduciary duty and the duty of loyalty, violation of the Virginia Business Conspiracy Act, tortious interference, and punitive damages. Hawk now seeks a preliminary injunction prohibiting Gillenwater from writing business for family entertainment centers in the United States, soliciting Hawk clients and employees, or using Hawk's confidential and proprietary information for any purpose during the pendency of this matter. Hawk requests an order requiring Gillenwater to return any confidential Hawk information and to relinquish his passwords and credentials for the KAE Notebook and the KAE Facebook page. Hawk further asks that Gillenwater be required to preserve all Hawk information and provide ...


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