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Hood Packaging Corporation v. Steinwagner

United States District Court, D. Minnesota

September 9, 2014

HOOD PACKAGING CORPORATION, Plaintiff,
v.
BRIAN STEINWAGNER, Defendant.

Mary M.L. O'Brien, John E. Radmer and George H. Norris, Meagher & Geer, PLLP, Counsel for Plaintiff.

Timothy D. Kelly, Dykema Gossett, PLLC, Counsel for Defendant.

MEMORANDUM OF LAW & ORDER

MICHAEL J. DAVIS, Chief District Judge.

I. INTRODUCTION

This matter is before the Court on Plaintiff's Motion for a Temporary Restraining Order and Preliminary Injunction. [Docket No. 13] The Court heard oral argument on August 27, 2014. Because of a likelihood that Plaintiff will prevail on its Breach of Contract and Breach of Duty of Loyalty claims, and irreparable harm to Plaintiff is inferred by this Court, the motion is granted, in part.

II. BACKGROUND

A. Factual Background

1. The Parties

Plaintiff Hood Packaging Corporation ("Hood") is a corporation with its principal place of business in Mississippi. Hood designs and manufactures flexible packaging materials, including snack and pet food bags. Some of these products are manufactured at a Hood facility in Arden Hills, Minnesota.

Defendant Brian Steinwagner ("Steinwagner") is a Wisconsin resident. Steinwagner was a Hood employee for approximately eleven years. Most recently, he served as Hood's Northern Region General Manager for plastics packaging. Steinwagner worked from Hood's Arden Hills, Minnesota, facility.

Non-party Morris Packaging, LLC ("Morris Packaging"), is an Illinois-based distributor and manufacturer of packaging material. Steinwagner currently serves as Vice President of Sales at Morris Packaging.

2. Steinwagner's Employment In Packaging Industry

Steinwagner has worked in the flexible packaging materials industry since 1990. Prior to joining Hood, he worked for two other flexible packaging manufacturers, Flexo-Print and Anagram. Hood hired Steinwagner as National Sales Manager in 2004.

3. Steinwagner Signs a Non-compete Agreement with Hood

In October of 2009, Hood General Manager Matt Hegstrom presented to Steinwagner a Confidentiality, Invention, Non-Compete and Non-Solicitation Agreement ("the Agreement"). The Agreement superseded a 2004 agreement. Initially, Steinwagner refused to sign it. Steinwagner was concerned that the non-solicitation clause would place restrictions on his ability to do business with longstanding packaging customers that he brought to Hood from Flexo-Print and Anagram. Hood Vice President of Human Resources, Karen McGlaughlin, approved the crossing-out of the non-solicitation provision. Steinwagner signed the revised 2009 Agreement.

As modified, the Agreement retains confidentiality and non-competition clauses. The confidentiality component obligated Steinwagner to not disclose "at any time during the period of [his] employment... or thereafter... information of a non-public, confidential or proprietary nature (including, without limitation, the Company's Intangible Property) relating to the Company."

The non-compete provision reads,

... I will not, during the term of my employment and, if I resign from my employment, for a period of one year thereafter, anywhere within the Territory:... engage in any business which:
(i)... competes with any business which [Hood Packaging] then carries on or then actively proposes to carry on to my knowledge; and
(ii)... as regards a business activity carried on by me or in which I am engaged at any time during the period of one year after my resignation from my employment as aforesaid competes with any business which [Hood Packaging] was carrying on the date of my resignation.
For the purposes of this section, "Territory" means at any time while I am an employee of the Company any areas of Canada and the United States of America in which the Company is then actively conducting its business and at any time thereafter for a period of one year any areas of Canada and the United States of America in which the Company was actively conducting its business at the date of my resignation;

4. Hood's Relationship to Morris Packaging

Morris Packaging is both a Hood competitor and distributor. To protect its business interests, Hood requires that Morris Packaging sign a Sales Agent Agreement. The Sales Agent Agreement contains confidentiality and non-compete covenants.

Although Morris Packaging manufactures products that compete with Hood's, Morris Packaging also pairs Hood products with customers in need of packaging solutions. For example, Morris Packaging supplied a pet food company named Diamond Pet with Hood packaging products manufactured from the Arden Hills, Minnesota, facility. Steinwagner claims that, over time, Hood proved incapable of producing the volume of packaging product required by Diamond Pet. To remedy the shortfall, Morris Packaging purchased the equipment necessary to manufacture the unsupplied packaging for Diamond Pet in-house. Steinwagner recalls that the Diamond Pet account caused strain in Hood's relationship with Morris Packaging.

5. Steinwagner Searches for New Employment

By April of 2014, Steinwagner's relationship with Hood had begun to deteriorate. He claims that work-related stress caused his mental and physical health to suffer. Steinwagner's superior, Mark Drury ("Drury"), did not award a bonus to him, citing poor performance. Steinwagner applied for a general manager position in an unrelated industry.

6. Steinwagner's Email to Jim Morris

On May 27, 2014, while still employed by Hood, Steinwagner sent an email ("the email") to Jim Morris ("Morris"), of Morris Packaging. Steinwagner sent the email from his wife's personal email account. He explains that he used his wife's account because Hood's Internet server was down. Hood disputes that claim with data that show the server was functioning properly. Steinwagner later attempted to delete the email.

Hood discovered the email "a few weeks after" Steinwagner's June 5, 2014, termination from Hood. The email contains a list of twenty companies and two independent sales representatives. Alongside each company name, the email includes a combination of the company's buying needs, manufacturing ...


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