United States District Court, D. South Dakota, Southern Division
ORDER GRANTING MOTION FOR A TEMPORARY RESTRAINING
ORDER AND PRELIMINARY INJUNCTION AS TO BILLIE JO
E. SCHREIER, UNITED STATES DISTRICT JUDGE
Sterling Computers Corporation, moves for a temporary
restraining order or preliminary injunction enjoining
defendants, Billie Jo Fling and Kelyn Technologies, LLC, from
engaging in a number of activities that allow Kelyn to
benefit from confidential customer information Fling gained
during her employment with Sterling. Docket 7 at 2-3. Kelyn
filed a motion to dismiss based on lack of personal
jurisdiction. Docket 18. The parties are doing limited
jurisdictional discovery on this issue and the court reserves
ruling on the motion for temporary restraining order and
preliminary injunction with regard to Kelyn until the motion
to dismiss is resolved. Fling filed an answer to
Sterling's complaint and a response in opposition to the
temporary restraining order and preliminary injunction.
Dockets 26, 27. For the following reasons, the motion for a
temporary restraining order and preliminary injunction is
granted as to Fling.
is an information technology solutions company based in North
Sioux City, South Dakota. Docket 8 at 1. Its clients include
the federal government, state and local governments, private
corporations, and education entities. Id. at 1-2. It
holds several federal contracts across defense, civilian, and
intelligence sectors, and has obtained awards,
certifications, and security clearances to service these
contracts. Id. at 2. Because of Sterling's
relationship with numerous agencies, it can provide efficient
services and is “uniquely position[ed] . . . to provide
its clients with comprehensive solutions at an industry-best
value.” Id. Sterling uses its long-standing
relationships as a competitive advantage in its field.
holds confidential information about its clients, their
contracts, and its sales solutions. Id. at 3. Its
sales representatives access this confidential information
via Sterling's Salesforce account, an online database
that holds customer data. Id. Sterling's
Salesforce database is accessible online from anywhere its
salespeople work. Id. The database holds
“crucial information regarding Sterling's trade
secrets.” Id. Sterling takes pains to keep
this confidential information secret. Id. The
database is only accessible to designated current employees
who must have a unique username and password to access it.
Id. at 4. When a Sterling employee is terminated,
his or her access to Salesforce is immediately terminated as
began working as an account manager at Sterling on April 25,
2011. Docket 1 ¶ 36. As a member of Sterling's sale
team, Fling had access to its Salesforce database.
Id. ¶ 37. She worked closely with key Sterling
customers, including the Missile Defense Agency, Red Hat,
Inc., Jacobs Technology, and other defense agencies during
her employment. Id. ¶ 47. She had access to
confidential and proprietary information about these
clients' profiles, preferences, and specifications via
the Salesforce database. Id. According to Sterling,
Fling admitted that information contained in the Salesforce
database “absolutely belongs to Sterling.”
Id. ¶ 49.
2012, Fling signed and acknowledged receipt of Sterling's
employee handbook. Id. ¶ 38; Docket 1-1 at 3.
The handbook contained a non-disclosure policy stating that
Sterling “must protect confidential business
information and trade secrets.” Docket 1 ¶ 40;
Docket 1-1 at 4. It also contained a confidential information
policy stating that Sterling employees must handle
confidential information with great care, and that
termination of employment does not change this obligation.
Docket 1 ¶ 41. It named several examples of confidential
business information and trade secrets, including customer
lists, customer preferences, marketing strategies, and
pending projects and proposals. Docket 1-1 at 4.
also signed an employment agreement containing a covenant not
to compete. Docket 1 ¶ 45. The covenant placed certain
restrictions on Fling for one year following the end of her
employment. Docket 1-2 at 6. The restrictions included
prohibitions on Fling soliciting business from or performing
services for any customers of Sterling with whom Fling had
contact as a Sterling employee. Id. The agreement,
which Fling signed for a second time on June 16, 2015, also
contained a confidentiality provision requiring Fling to
return any confidential Sterling information when her
employment was terminated. Docket 1 ¶ 44.
18, 2018, Fling sent an email from her Sterling email to
“email@example.com, ” an email on record at
Sterling as Fling's personal account. Hearing Exhibit 6.
The email contained reports generated from Sterling's
Salesforce database listing contacts, sales numbers, and
pipeline information. Id. On September 10, 2018,
Fling sent an email to the same Yahoo account containing a
Salesforce report listing activity by sales representative
and customer. Id. On November 15, 2018, Fling
requested a copy of the signed handbook and covenant not to
compete from Sterling's director of human resources.
Hearing Exhibit 3. She stated that she had accidentally
shredded her own copy. Id.
around November 20, 2018, Fling terminated her employment
with Sterling. Docket 1 ¶ 50. At the time of
termination, Fling “expressly or impliedly agreed not
to use any Sterling confidential information for her own
benefit or for any improper purpose, including . . . to
benefit a subsequent employer.” Id. ¶ 51.
Fling acknowledged the existence and enforceability of the
non-compete provision in her employment contract at the time
of termination. Id. ¶ 52. She attempted to
negotiate a release of her obligations under the provision,
but Sterling did not agree to the release. Id.
Rather, Sterling reminded Fling of her obligation under the
contract via a letter dated December 3, 2018. Id.
¶ 53. Sterling's president and CEO, Brad Moore, told
Fling via email on December 26, 2018, that he expected her to
honor the agreements. Hearing Exhibit 4.
around January 2019, before the expiration of the noncompete
agreement, Fling began working at Kelyn. Docket 1 ¶ 54.
Kelyn is a competitor of Sterling. Id. On May 22,
2019, Sterling received an email inadvertently sent to
Fling's former Sterling email account. Id.
¶ 55. Through the email, Sterling learned that Fling was
working with Sterling customers while employed by Kelyn.
Id. These customers included Red Hat, Jacobs
Technology, and the Missile Defense Agency. Id.
Sterling alleges that Fling is using its confidential
information to improperly solicit these and other Sterling
customers. Id. The information Fling is allegedly
using is not “publicly available or readily
ascertainable.” Id. ¶ 57.
around May 30, 2019, Sterling reminded Fling of her
obligations under the employee handbook and non-compete
agreement. Id. ¶ 60. Fling did not respond.
Id. ¶ 63. Sterling states that its “trade
secrets, confidential information, and goodwill are at
risk” because Fling is using Sterling's
confidential information to Kelyn's and her own benefit.
Id. ¶ 65. It further states that it is at risk
of irreparable harm because of Fling's continued use of
Sterling's confidential information and violation of the
non-compete agreement. Docket 8 at 14-17.
filed its complaint on August 6, 2019, and its motion for
temporary restraining order and preliminary and permanent
injunction on August 22, 2019. Dockets 1, 7. The complaint
alleged breach of contract with regards to both the
confidential information provision and non-compete provision,
misappropriation of trade secrets in violation of South
Dakota state law, unfair competition, and tortious
interference with a business expectancy against Fling. Docket
1 ¶¶ 72-127. The temporary restraining order and
preliminary injunction motion sought to (1) enjoin Fling from
her continued employment with Kelyn, or in the alternative,
enjoin Fling from, directly or indirectly, working with
Sterling clients or customers with whom she had actual
contact while employed with Sterling for a period of one year
from November 20, 2018; (2) enjoin Fling from directly or
indirectly engaging in, assisting, or working for any person,
activity, business, concern, interest, or venture in
competition with Sterling other than Kelyn for one year from
November 20, 2018; (3) enjoin Fling from accepting employment
or acting as a consultant for any Sterling client or customer
with whom Fling had actual contact while employed with
Sterling for a period of one year from November 20, 2018; (4)
compel Fling and Kelyn to return all Sterling confidential or
proprietary information, property, or trade secrets in their
custody, possession, or control; (5) enjoin Fling from
disclosing any Sterling confidential trade secrets to which
she became privy during her employment; (6) order Fling and
Kelyn to cease use of any and all Sterling confidential or
proprietary information or trade secrets in their possession;
(7) enjoin Fling and Kelyn from soliciting or rendering
marketing or sales to any Sterling customers with whom Fling
had actual contact while employed with Sterling; (8) enjoin
Fling from encouraging, recommending, or suggesting to any
employee, contractor, vendor, or customer to end or reduce
its relationship with Sterling. Docket 7 at 2-3.
September 17, 2019, Fling's counsel sent an email to
Sterling's counsel offering to stipulate to all but the
final two of the eight requested forms of relief. Docket
27-1. For the seventh and eighth requests, Fling's
counsel offered to stipulate to the terms if Sterling was
willing to make the requests contingent on the same date
restriction used in the other requests, one year from
November 20, 2018. Id. at 4. Sterling rejected the
proposed stipulation. Id. at 1. Sterling then filed
a reply to Fling's opposition and a motion to strike
evidence of the email offer to stipulate to the requested
preliminary relief. Dockets 37, 38.