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Box v. J.B. Hunt Transport, Inc.

Court of Appeals of Arkansas, Division II

November 8, 2017

DAVID BOX APPELLANT
v.
J.B. HUNT TRANSPORT, INC. APPELLEE

         APPEAL FROM THE BENTON COUNTY CIRCUIT COURT [NO. 04CV-16-1752] HONORABLE BRAD KARREN, JUDGE, REVERSED AND REMANDED

          Friday, Eldredge & Clark, LLP, by: Elizabeth Robben Murphy, H. Wayne Young, and Marshall Ney, for appellant.

          Cullen & Co., PLLC, by: Tim J. Cullen, for appellee.

          KENNETH S. HIXSON, Judge

         Appellant David Box, a former employee of appellee J.B. Hunt Transport (hereinafter "J.B. Hunt"), brings this interlocutory appeal from the trial court's order granting J.B. Hunt's motion for an injunction and temporary restraining order.[1] In the order, the trial court enjoined Box from disclosing confidential information and trade secrets to Hub Group, Inc. (hereinafter "Hub Group"), and from employment with Hub Group for a period of one year from Box's separation from J.B. Hunt. The temporary order was based on three agreements containing confidentiality, noncompete, and restricted stock provisions executed between the parties during Box's employment.

         Box raises six arguments for reversal of the trial court's order. Box argues that (1) the trial court erroneously relied on recitals in the agreements; (2) J.B. Hunt failed to prove a likelihood of success of demonstrating that Box breached any agreement; (3) the trial court's order made no findings that any agreement complied with Arkansas law; (4) the trial court erroneously applied Act 921 of 2015 retroactively; (5) the trial court improperly awarded J.B. Hunt attorney's fees and costs; and (6) the trial court made improper and premature rulings in anticipation of a jury trial. We agree that the trial court erred in granting the preliminary injunction and temporary restraining order because J.B. Hunt failed to demonstrate a likelihood of success on the merits and the trial court made insufficient findings and conclusions to support the injunction and restraining order. Therefore, we reverse and remand.

         As a threshold matter, we address J.B. Hunt's motion to dismiss Box's appeal, which was filed while the appeal was pending and passed until the case was submitted. In its motion to dismiss, J.B. Hunt asserts that it recently exercised its right in the court below to a voluntary dismissal of its underlying complaint against Box under Arkansas Rule of Civil Procedure 41(a). J.B. Hunt further asserts that the trial court entered an order dismissing its complaint without prejudice. J.B. Hunt argues that because its original claims have been dismissed without prejudice, the provisional remedy based on the claims, i.e., the temporary restraining order and preliminary injunction, have been dissolved. That being so, J.B. Hunt contends that this appeal is moot because any decision rendered would have no practical legal effect on an existing legal controversy.

         As a general rule, appellate courts will not review issues that are moot. Allison v. Lee Cnty. Election Comm'n, 359 Ark. 388, 198 S.W.3d 113 (2004). Here, however, we cannot agree that the order of dismissal referenced by J.B. Hunt in its motion to dismiss rendered this appeal moot. At the time the record was filed with our court, there had been no such order of dismissal entered, and it is therefore not part of the record. We will not consider a document not in the record. Potter v. City of Tontitown, 371 Ark. 200, 264 S.W.3d 473 (2007). Therefore, J.B. Hunt's argument that the appeal should be dismissed because it dismissed its action pursuant to Arkansas Rule of Civil Procedure 41(a) is not before us.

         We observe that, as an alternative reason to dismiss the appeal, J.B. Hunt asserts that the temporary restraining order expires by its terms on October 27, 2017, and that this case was submitted to our court with oral arguments scheduled for October 25, 2017, making a decision prior to expiration of the temporary order practically impossible. However, we do not agree that the expiration of the temporary order moots our review of the order. In the order being appealed, the trial court awarded attorney's fees and costs to J.B. Hunt, which is one of the issues Box raises on appeal. In addition, in the temporary restraining order the trial court ordered J.B. Hunt to post security in an amount sufficient to pay the damages sustained by Box should he be found to have been wrongfully enjoined or restrained. This provision in the trial court's order is expressly authorized by Arkansas Rule of Civil Procedure 65(c). See also Ark. Code Ann. § 16-113-405(a)(1) (Repl. 2016). For these reasons, our decision in this case will likely have practical legal effects.

         Finally, even were we to agree that a decision rendered on appeal would not affect the rights of the parties to this appeal, we conclude that this appeal would fall under an exception to the mootness doctrine. One of the recognized exceptions to the mootness doctrine involves issues that are capable of repetition but that evade review. Poland v. Poland, 2017 Ark.App. 178, 518 S.W.3d 98. Any appeal from a temporary order restraining an employee from working for a competitor would likely evade review upon expiration of the temporary order before the appeal could be heard by the appellate court. Furthermore, one of the agreements upon which the trial court based its temporary restraining order and preliminary injunction provides that a violation of the agreement could trigger a two-year remedy and hence, J.B. Hunt could refile its motion and receive another temporary restraining order for another year without review. Therefore, the trial court's action would evade review and the aggrieved party would not receive the appellate review to which it is entitled. For these reasons, we deny J.B. Hunt's motion to dismiss and reach the merits of Box's appeal.

         The record shows that Box was employed by J.B. Hunt from 2000 until he resigned on October 27, 2016. From 2004 to 2011, Box was a regional operations manager in the intermodal division.[2] From 2011 until his separation from employment on October 27, 2016, Box worked as a director of transportation in J.B. Hunt's integrated capacity solutions division in Memphis, Tennessee. Box's job as a director of transportation was a brokerage position working with customers in a sales capacity. After leaving his employment with J.B. Hunt, Box accepted a position with another transportation company, Hub Group, as a regional vice president of operations in the Memphis region. This position was in Hub Group's intermodal division.

         On November 22, 2016, J.B. Hunt filed a complaint against Box for breach of contract related to the employment, alleging that by accepting employment with Hub Group, Box had violated several agreements executed during his employment with J.B. Hunt. The first of these agreements was a Confidentiality Agreement signed by Box in 2004, which provided in pertinent part:

3.CONFIDENTIAL INFORMATION. Employee recognizes, acknowledges and agrees that Company operates on a nationwide basis, and that, by reason of Employee's employment with Company, Employee will acquire information concerning Company methods, processes, operations, marketing programs, computer programs, future plans and customers, and other proprietary or otherwise sensitive information. This information ("Confidential Information") is a valuable asset of Company and affects the successful operation of Company's business. If known to Company's suppliers, customers or competitors, such Confidential Information would give such parties a competitive advantage.
4. TRADE SECRETS. In general, a Company trade secret is information (including a formula, pattern, compilation, program, device, method, technique or process) that derives independent economic value, actual or potential, from being kept secret.
. . . .
Furthermore, Employee recognizes, acknowledges and agrees that some Confidential Information may be trade secret protected by the Arkansas Trade Secrets Act, codified at Ark. Code Ann § 4-75-601, et seq.
5. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Employee agrees, as a condition of employment and in consideration for continued employment, as well as other consideration conferred on him/her by Company, that, except as necessary to perform Employee's duties and responsibilities to Company, while employed, Employee will not discuss, disclose, describe, reproduce or use in any manner the Company's Confidential Information.
6 OBLIGATIONS OF EMPLOYEE AFTER TERMINATION OF EMPLOYMENT. Employee recognizes, acknowledges and agrees that this provision shall survive the termination whether voluntary or involuntary of Employee's employment. Employee agrees that this Confidentiality Agreement precludes him/her from discussing, disclosing, describing, reproducing or using in any manner the Company's trade secrets after Employee's employment with Company has ended for as long as the information is a trade secret. Employee agrees that this Confidentiality Agreement precludes Employee from discussing, disclosing, describing, reproducing or using in any manner the Company's Confidential Information which is not a trade secret for a period of one (1) year following termination.
7. REMEDIES. It is further understood that a breach of this Agreement shall entitle Company or Employee, in addition to other legal and equitable remedies available, to apply to any court of competent jurisdiction to enjoin any violation of this Agreement. Employee agrees to the entry of a Temporary Restraining Order or a Preliminary Injunction against Employee precluding violation of this provision pending a resolution of any dispute that may arise regarding this Agreement. Employee recognizes, acknowledges and agrees that if Employee's knowledge and skills are inextricably connected to Company's trade secrets and his/her subsequent employment poses a substantial risk that Company's trade secrets will be discussed, disclosed, described, considered, reproduced or otherwise utilized, such inevitable disclosure will justify an injunction against Employee's competitive employment.

         Box also signed a Noncompete and Nonsolicit Agreement in 2013, which provides in pertinent part:

2. DEFINITIONS. As used herein.
. . . .
b. "Competing Services" are understood to be services, as an employee, officer, director, owner, consultant or otherwise: (i) rendered on behalf of a Competing Business that are the same as or substantially similar in purpose or function to the services Employee supervised or provided to the Company in the preceding two years, or (ii) rendered in any position or capacity in which he/she may inevitably disclose, utilize or consider Confidential information gained through his/her employment with Company which would give a Competing Business, customer or other business an unfair competitive advantage.

. . . .

d. "Confidential Information" has the same meaning as it does in the Confidential Information and Proprietary Interests Agreement that Employee has also agreed to and that is ancillary to this Agreement-namely, an item of information or a compilation of information, in any form (tangible or intangible), related to Company's business that the Company has not intentionally made public or authorized public disclosure of and that is not readily available to the public through proper means in the same form or compilation, inclusive of but not limited to trade secrets.
. . . .
4. NONCOMPETE. During employment with the Company and for a period of one (1) year thereafter, Employee will not, directly or indirectly, provide, supervise, or manage Competing Services in a Prohibited Territory without the advance written consent of the Company in order to help ensure that the Company's trade secrets and other interests are adequately protected.

         Finally, Box signed three similar Restricted Stock Agreements in 2013, 2014, and 2015, which provide in pertinent part:

11. PROTECTIVE ...

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