AUGUST MACK ENVIRONMENTAL, INC. v. TRESCHOW

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

AUGUST MACK ENVIRONMENTAL, )

INC., )

)

Plaintiff, )

)

v. ) No. 1:23-cv-01054-JRS-MKK

)

STEVEN TRESCHOW, )

)

Defendant. )

Order on Motion for Preliminary Injunction

This case concerns a customer non-solicitation agreement between environmental

consulting firm August Mack Environmental ("AME") and its former employee

Steven Treschow. AME alleges Treschow violated the agreement when he took AME

clients with him to a new firm. Now before the Court is AME's Motion for Preliminary

Injunction, (ECF No. 4), and AME's Motion for an Evidentiary Hearing, (ECF No.

21), on the preliminary injunction motion. Treschow has not timely responded to

either motion.

I. Legal Standard

The Court, here sitting in diversity jurisdiction, applies "state substantive law and

federal procedural law." Turnell v. CentiMark Corp., 796 F.3d 656, 661 (7th Cir.

2015) (quoting Hanna v. Plumer, 380 U.S. 460, 465 (1965)).

The standard for a preliminary injunction is federal: "A plaintiff seeking a

preliminary injunction must establish that he is likely to succeed on the merits, that

he is likely to suffer irreparable harm in the absence of preliminary relief, that the

balance of equities tips in his favor, and that an injunction is in the public interest."

Illinois Republican Party v. Pritzker, 973 F.3d 760, 762 (7th Cir. 2020) (quoting

Winter v. Natural Resources Defense Council, 555 U.S. 7, 20 (2008)). And "[a]

preliminary injunction is 'an exercise of a very far-reaching power, never to be

indulged in except in a case clearly demanding it.'" Cassell v. Snyders, 990 F.3d 539,

544 (7th Cir. 2021) (quoting Orr v. Shicker, 953 F.3d 490, 501 (7th Cir. 2020)).

The Court would apply Indiana substantive law in assessing likelihood of success

on the merits. (See Contract ¶ 12, ECF No. 17-9 (Indiana choice-of-law provision).)

II. Discussion

The allegations are straightforward. And, because the Court is willing to accept

them as true for the purposes of the preliminary injunction motion, AME's Motion for

an Evidentiary Hearing, (ECF No. 21), is denied. Treschow worked for AME as an

environmental consultant, helping AME clients with such things as site assessment

and remediation of leaking underground storage tanks. (E.g., Email Correspondence

7, ECF 17-6.) The environmental consulting business is characterized by

longstanding client relationships between specific consultants and relatively few,

high-value clients. (Pl.'s Br. Supp. 2–3, ECF No. 18.) AME, then, had as a matter of

course client non-solicitation agreements with its employees. Treschow's contract

with AME prohibits him for two years from "directly or indirectly . . . sell[ing] . . . any

product or service that is similar to or competitive with . . . [AME] . . . to" company

clients he had worked with in the past 18 months. (Contract ¶ 5a., ECF No. 17-9.)

Treschow also agreed not to use AME's confidential information or property for his

own purposes. (Id. ¶¶ 2, 4.) In May 2023, Treschow left AME for another

environmental consulting firm. Over the next few weeks, four of Treschow's AME

clients left AME, apparently to follow Treschow to his new firm. (Pl.'s Br. Supp. 6–7,

ECF No. 18.) The clients were forwarded their files to be used with the new firm.

(Id.)

AME argues, and the Court agrees, that the alleged facts amount to a clear

violation of Treschow's non-solicitation agreement. AME then argues that its non-

solicitation agreement is valid under Indiana law so it will likely succeed on the

merits; that the harms to its business are incalculable and therefore "irreparable";

and that the equities favor an injunction.

The Court need not walk through every element in the preliminary injunction

analysis when one is dispositive. See, e.g., Halczenko v. Ascension Health, Inc., 37

F.4th 1321, 1326 (7th Cir. 2022) (citing Winter, 555 U.S. at 31–33).

Here, there is no irreparable harm in the absence of a preliminary injunction.

Turnell v. CentiMark Corp., 796 F.3d 656, 662 (7th Cir. 2015) (party seeking an

injunction "must make a threshold showing that . . . absent preliminary injunctive

relief, [it] will suffer irreparable harm in the interim prior to a final resolution")

(emphasis added). The Court is faced with a done deal: Treschow left; he took four

clients; otherwise business goes on as before. There is no suggestion that anything

else is going to happen: the clients who wanted to leave with Treschow left; the ones

who stayed, stayed. It is unlikely at this point any more clients will defect. And

because the transfer of client files is routine, Treschow has at his new firm whatever

client information he had at AME. So what is an injunction going to do? The Court

cannot make the clients return to AME. And if AME eventually prevails on the

merits, it will be entitled to the lost profits on the four identifiable clients that

Treschow took with him. That should be easy enough to measure. And if Treschow

does manage to take more clients, those, too, will be identifiable and the resultant

losses calculable.

The Court here follows the Seventh Circuit's teaching in DM Trans, LLC v. Scott,

38 F.4th 608 (7th Cir. 2022). There, eleven customers switched companies because

of employees' solicitation in violation of a non-solicitation agreement. Id. at 618–19.

The Seventh Circuit upheld the district court's denial of a preliminary injunction

because there was no "irreparable harm." Id. In so holding, the court rejected the

idea that "employees' violations of restrictive covenants[] invariably qualify as

irreparable harm to the former employer." Id. at 618. Instead, the court reasoned

"harm stemming from lost customers or contracts may be quantifiable if the lost

customers or contracts are identifiable." Id. (quoting Life Spine, Inc. v. Aegis Spine,

Inc., 8 F.4th 531, 546 (7th Cir. 2021)). The court thought that where the eleven lost

customers were identifiable, there was no reason to suspect the losses from those

customers would be incalculable. Id. at 618–19. The court extended that analysis to

the use of confidential information. Because the use of confidential information is

only harmful insofar as it leads to profits, and because the lost profits concerned the

eleven identifiable customers, use of confidential information was not a separate

"irreparable harm. Id. at 621. Ultimately, the court pronounced the general rule

that "[a] district court is within its discretion to find an adequate remedy at law, and

thus no irreparable harm, where the corporation seeking injunctive relief can

reasonably estimate the value of its lost profits." Jd. at 620 (citing Lawson Prod., Inc.

v. Aunet, Inc., 782 F.2d 1429, 1440 (7th Cir. 1986)).

III. Conclusion

This is a routine business dispute; nothing here calls for the "extraordinary and

drastic remedy" of a preliminary injunction. Mazurek v. Armstrong, 520 U.S. 968,

972 (1997). AME, should it prevail on the merits, will be able to prove up its damages

from losing four clients (and from Treschow's use of confidential information as well).

A monetary award suffices for monetary losses. AME's Motion for Preliminary

Injunction, (ECF No. 4), and its Motion for an Evidentiary Hearing, (ECF No. 21), are

both denied.

SO ORDERED.

Date: 08/14/2023

JAMES R. SWEENEY II, JUDGE

United States District Court

Southern District of Indiana

Distribution:

By CM/ECF to registered counsel of record.

By U.S. Mail to:

STEVEN TRESCHOW

145 Mulligan Drive,

Hollidaysburg, PA 16648