CDI Energy Services, Inc. v. West River Pumps, Inc.

CDI Energy Services, Inc. (CDI) (plaintiff) sold and serviced equipment that was used in the oilfield industry. In 2000, CDI hired John Martinson and Dale Roller (defendants) to open a CDI field office in Dickinson, North Dakota. Martinson and Roller had been working for a competitor of CDI, were experienced in the industry, and had client contacts in the locale. Roller brought a significant client with him to CDI. In 2007, Martinson hired Kent Heinle (defendant) to work as a service technician for CDI. Thereafter, while still employed for CDI, the three employees formed West River Pumps, Inc. (West River) (defendant) and asked CDI’s clients to do business with West River. Other than Martinson, Roller, and Heinle, the Dickinson office of CDI had no other employees. In October 2007, the three men resigned from CDI, leaving CDI with no presence in the local market. CDI sued West River, Martinson, Roller, and Heinle, alleging state-law claims of trade-secret misappropriation and breach of loyalty. CDI claimed that the company’s trade-secret customer information was misappropriated, while the three former employees countered that the information was openly available, they took few records with them when they left CDI, and no substantial efforts were made to keep the customer information confidential. The district court granted an ex parte temporary restraining order in CDI’s favor. However, following a hearing, the court denied CDI’s motion for preliminary injunction despite finding that CDI was likely to prevail on its breach-of-loyalty claim. CDI appealed.