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Inc. v. Steinke

United States District Court, E.D. Virginia, Alexandria Division

October 23, 2019

P5 SOLUTIONS, INC., Plaintiff,
v.
CHRISTOPHER STEINKE Defendant.

          MEMORANDUM OPINION

          CLAUDE M. HILTON, UNITED STATES DISTRICT JUDGE

         THIS MATTER comes before the Court on Plaintiff and Defendant's Motions for Summary Judgment pursuant to Federal Rule of Civil Procedure 56.

         Plaintiff P5 Solutions, Inc. ("P5") is a Virginia business that supports information technology services and provides support for customers that utilize the "ServiceNow Performance Analytics" platform. Defendant Christopher Steinke was a part-time P5 employee from approximately June 2016 until January 8, 2018, when he was offered and accepted full-time employment with P5.

         On the commencement of his full-time employment on January 15, 2018, Steinke and P5 executed an "At Will Employment Agreement" (the "Employment Contract"). Steinke's new title was "Director of Performance and Transformation," and his duties generally included working on client projects and marketing P5's business. Throughout Steinke's employment, Steinke periodically copied his P5 work e-mails and their attachments to his personal Dropbox account. In total, Steinke copied approximately 22, 000 electronic documents. Steinke contends that he stored his company e-mails on his cloud-based Dropbox account because it allowed him to collaborate with his coworkers and because it would serve as a back-up in the event of loss or damage to his work computer. The approximately 22, 000 documents retained by Steinke contained a variety of P5 business information, including client pricing information, client presentation materials, and "rate cards" breaking down P5's rates based on services provided.

         Steinke was terminated by P5 on April 17, 2018. When Steinke was terminated, he returned his work laptop but did not return any of the approximately 22, 000 copied documents. On May 1, 2018, following his termination, Steinke's counsel sent P5 a letter alleging that P5 failed to pay certain wages and compensation owed to Steinke. In the May 1, 2018 letter Steinke made references to some of the copied documents, but P5 did not request that he return any of those referenced documents in response to his letter.

         On June 21, 2018, Steinke filed suit in the Superior Court for the District of Columbia alleging that P5 failed to pay him certain wages and compensation (the "DC Litigation"). Steinke produced many of the copied documents in the DC Litigation, and P5 has paid significant legal fees defending that matter.

         As relevant to the present motions, the Employment Contract contains provisions requiring the return company property upon termination (paragraph four), that Steinke refrain from disclosing confidential company information (paragraph five), and a damages clause (paragraph seven). Paragraph four of the Employment Contract states that, upon termination, "[Steinke] will immediately deliver to Employer all data, manuals, specifications, lists, notes, writings, customer and product lists, photocopies, microfilm, tape recordings, computer disks, patterns, art work, and all other documents or tangible materials whatsoever, including all copies or duplicates, concerning any part of Employer's activities or concerning any part of [Steinke's] activities as an employee."

         Paragraph five of the Employment Contract, "Confidentiality," forbids Steinke from using, publishing, disclosing, appropriating or communicating, directly or indirectly, any marketing, sales, service, costs, business method, formula, product specifications, planning, engineering, technical information relating to P5, as well as any customer lists and/or any other information "which could give any third party an opportunity to obtain advantage over competitors who did not know such information[.]"

         Paragraph seven of the Employment Contract states that if Steinke breaches paragraphs three, four, five, or six of the Employment Contract and "[P]5 determines that actual damages resulting from [Steinke]'s violation cannot reasonably be ascertained, [P5] may elect, at its sole discretion, to recover liquidated damages in the amount of $100, 000 plus court costs, litigation expenses, and actual and reasonable attorneys' fees."

         In its amended complaint, P5 alleges one count of breach of the Employment Contract. In support of its motion for summary judgment, P5 argues that Steinke's retention of the approximately 22, 000 documents breached paragraphs four and five of the Employment Contract. Relying on paragraph seven of the Employment Contract, P5 seeks $100, 000 in damages and the return of the documents. In support of Steinke's motion for summary judgment, Steinke argues that he did not breach the Employment Contract and that even if he did, P5 has not suffered any damage resulting from the breach.

         Under Federal Rule of Civil Procedure 56, a court should grant summary judgment if the pleadings and evidence show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In reviewing a motion for summary judgment, the court views the facts in the light most favorable to the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Once a motion for summary judgment is properly made, the opposing party has the burden to show that a genuine dispute of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). This Court finds this case is ripe for summary judgment.

         "The elements of a breach of contract action are (1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant's violation or breach of that obligation; and (3) injury or damage to the plaintiff caused by the breach of obligation." Filak v. George, 594 S.E.2d 610, 614 (Va. 2004). As with any cause of action, damage to a plaintiff is an essential element and "[i]n the absence of injury or damage to a plaintiff or his property, he has no cause of action and no right of action can accrue to him." Fried v. Smith, 421 S.E.2d 437, 439 (Va. 1992); Sunrise Continuing Care, LLC v. Wright, 671 S.E.2d 132, 136 (Va. 2009) ("Proof of damages is an essential element of a breach of contract claim, and failure to prove that element warrants dismissal of the claim.").

         P5 first argues that Steinke had a legally enforceable obligation to return the approximately 22, 000 documents upon termination of his employment with P5. The Court agrees. Paragraph four of the Employment Contract makes clear that Steinke must, upon termination, "immediately deliver to [P5] all data . including copies or duplicates, concerning any part of [P5's] activities or concerning any part of [Steinke's] activities as an employee." There is no genuine dispute of fact that the approximately 22, 000 documents retained by Steinke belong or otherwise "concern" P5's activities as an employer of Steinke.

         Next, P5 argues that Steinke has materially breached paragraph four by failing to return the approximately 22, 000 documents when he was terminated on April 17, 2018. In response, Steinke argues that the issue of whether he breached paragraph four depends on whether it required Steinke to "do something more than simply ensure that P5 was in possession of all documents in his personal Dropbox such that P5 would not be deprived of the use of such documents." Contending that paragraph four does not require Steinke to do anything beyond ensure that P5 had access to the original copies of the electronic documents, Steinke argues that he was not required to return their copies. Conspicuously absent from Steinke's argument is any recognition that paragraph four explicitly requires Steinke to return "all copies or duplicates" of documents belonging to P5, not simply ensure that P5 has access to the original copies of messages. Steinke's proffered reading of paragraph four would run afoul of established Virginia rules of contract interpretation. Brooks v. Bankson, 445 S.E.2d 473, 477 (Va. 1994} ("A contract must be construed as a whole to determine the parties' intent with respect to specific provisions."). To accept Steinke's argument ...


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