Bendinger v. Marshalltown Trowel Co.

Fred S. Bendinger (defendant) worked as an industrial engineer for Marshalltown Trowel Co. (Marshalltown) (plaintiff), a company that produced trowels. Marshalltown had Bendinger sign a restrictive covenant prohibiting Bendinger from using or disclosing confidential information learned by Bendinger through his employment with Marshalltown to anyone during or subsequent to his employment with Marshalltown. The restrictive covenant also contained a noncompetition agreement prohibiting Bendinger from working for a competitor for two years after the end of his employment with Marshalltown. Bendinger resigned from Marshalltown and was hired as a plant manager for Kraft Tool Company of Kansas (Kraft), a competitor of Marshalltown. Marshalltown sued Bendinger in Arkansas court for violation of the noncompetition agreement and the Arkansas Trade Secrets Act (the act). Marshalltown provided evidence at trial that Bendinger gained knowledge of Marshalltown’s sales information and manufacturing processes during his employment, which he would inevitably rely on during his employment with Kraft. Bendinger testified at trial that he only had a general knowledge of Marshalltown’s processes and did not have access to Marshalltown’s customer lists, blueprints, or other secret materials. The trial court enforced the two-year noncompetition agreement but declined to permanently enjoin Bendinger from working for Kraft under the act, finding that Bendinger had minimal knowledge of Marshalltown’s trade secrets. Both parties appealed. Bendinger argued on appeal that the noncompetition agreement was unenforceable because there was no threat of misappropriation of trade secrets and that the noncompetition agreement was overly broad because it did not include a geographic limitation. Marshalltown argued that the court erred in denying a permanent injunction under the act because misappropriation of trade secrets was inevitable if Bendinger worked for Kraft.