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Riddle v. Geckobyte.Com, Inc.

United States District Court, D. Minnesota

June 22, 2018

Jeffrey Riddle and RTM Marketing Group, Inc., Plaintiffs,
v.
Geckobyte.com, Inc. and R. Tiegen Fryberger, Defendants.

          MEMORANDUM AND ORDER

          PAUL A. MAGNUSON UNITED STATES DISTRICT COURT JUDGE

         This matter is before the Court on Plaintiffs' Motion for Summary Judgment on Defendants' Counterclaims and Defendants' Motion for Summary Judgment on Plaintiffs' Claims. For the following reasons, Plaintiffs' Motion is granted and Defendants' Motion is denied.

         BACKGROUND

         Plaintiff Jeffrey Riddle is a computer programmer who operated Plaintiff RTM Marketing Group, Inc., a business that provides data and consulting services for the tire and automotive industry.

         In November 2010, Defendant R. Tiegen Fryberger, controlling principal of Defendant Geckobyte.com, Inc., contacted Riddle about purchasing RTM. The two businesses offered similar services and had common customers, and Fryberger was primarily interested buying RTM so he could expand Geckobyte's business with a particular client, who worked with both businesses but did more business with RTM. (See Morris Aff. (Docket No. 69-1) Ex. 1 (Fryberger Dep.) at 42.)

         Negotiations ensued and Riddle ultimately agreed to sell RTM to Geckobyte. The parties memorialized that agreement in two separate contracts: the Asset Purchase Agreement (APA) and the Employment Agreement (EA). In the APA, Geckobyte agreed to pay RTM a $100, 000 down payment, $6, 605.84 in monthly installments for five years, and an annual earn-out payment equivalent to 35% of RTM's gross receipts. (Riddle Aff. (Docket No. 68-1) Ex. 1 (APA) ¶¶ 2-3.) In the EA, Geckobyte agreed to pay Riddle $150, 000 per year until December 31, 2020. (Riddle Aff. (Docket No. 68-2) Ex. 2 (EA).)

         Riddle began working for Geckobyte in January 2011, and Fryberger and Riddle developed a process to handle payments under the APA and the EA. The relationship between Fryberger and Riddle eventually deteriorated, and in 2013, Fryberger terminated Riddle. Fryberger did not document any particular problems with Riddle's employment; he simply felt that Riddle did not “fit within the culture very well” and believed that “it was time for a change.” (Fryberger Dep. at 122-23.) Fryberger gave Riddle $2, 500 in severance and stopped all payments under the APA and EA. (Id. at 130, 136.) Following his termination, Riddle allegedly began communicating with Geckobyte's clients.

         The Amended Complaint claims that Defendants breached the APA and the EA, and also includes causes of action for unjust enrichment, quantum meruit, conversion, and misrepresentation. (Am. Compl. (Docket No. 40).) Defendants counterclaimed that Plaintiffs breached the EA, violated the Uniform Trade Secrets Act, and tortiously interfered with a contractual relationship and with Defendants' prospective advantage. (Answer & Countercl. (Docket No. 15).) Plaintiffs now move for summary judgment on Defendants' counterclaims, and Defendants move for summary judgment on Plaintiffs' claims.

         Defendants contend that the EA established Riddle as an at-will employee who could be fired without cause, that Riddle agreed to forfeit his right to payments under the APA if he was terminated, and that Riddle violated the EA's non-compete provision. Plaintiffs argue that Riddle was not an at-will employee, the non-compete provision is unenforceable, and the remainder of Defendants' counterclaims are meritless.

         DISCUSSION

         A. Standard of Review

         Summary judgment is proper if there are no disputed issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The Court must view the evidence and inferences that “may be reasonably drawn from the evidence in the light most favorable to the nonmoving party.” Enter. Bank v. Magna Bank of Mo., 92 F.3d 743, 747 (8th Cir. 1996). The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials, but must set forth specific facts in the record showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).

         A. Plaintiffs' Motion

         1. Breach of EA

         Defendants allege that Riddle breached the EA's non-compete provision by communicating with Geckobyte customers and prospective customers after he was terminated. Plaintiffs argue that the non-compete is not enforceable because it does not protect any legitimate business interest, it is overbroad and unreasonable, and ...


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