H2I Group, Inc. v. Miller

Background

H2I Group, Inc. sued its former employee Shaun Miller, Brian Durant, and Durant’s sole proprietorship, All Seasons Sports. H2I alleged that Miller breached a noncompetition and nonsolicitation agreement and a separation agreement, and also asserted claims for tortious interference, unjust enrichment, and breach of the duty of loyalty. H2I moved for a preliminary injunction against the defendants. The defendants moved to dismiss for lack of personal jurisdiction, meaning that they argued the Minnesota federal court could not exercise authority over them.

Miller signed the noncompetition agreement when he accepted employment with H2I’s predecessor in 2014. The agreement restricted certain activities for twelve months after employment ended and applied within a 150-mile radius of the company’s main or relevant field office. Miller resigned in August 2019 and began working for All Seasons. The opinion describes Miller as having worked on projects in Texas, Arkansas, and Oklahoma during his employment. Durant formed All Seasons in late 2018 to bid for and perform sports-equipment installation projects, and Miller later helped manage All Seasons’ installation schedule.

Personal Jurisdiction Over Miller

The court applied the Due Process Clause’s minimum-contacts test for specific personal jurisdiction. It considered the nature and quality of the defendants’ contacts with Minnesota, the number of those contacts, whether the claims arose from those contacts, Minnesota’s interest in providing a forum, and the parties’ convenience.

The court concluded that Miller had sufficient contacts with Minnesota. It relied on the purpose of the noncompetition agreement, which was intended to protect H2I, a Minnesota corporation; the separation agreement’s provision applying Minnesota law; Miller’s five-year employment relationship with H2I; and Minnesota-directed actions Miller took during his employment. The court therefore denied the motion to dismiss as to Miller.

Personal Jurisdiction Over Durant and All Seasons

H2I did not identify a contractual basis for exercising jurisdiction over Durant or All Seasons. Instead, it relied on an intentional-tort theory under which jurisdiction may exist when a defendant intentionally causes harm known to be centered in the forum state.

The court found that H2I had not shown that Durant knew about Miller’s noncompetition agreement or knew that his conduct would cause the main injury in Minnesota. The court also noted that Durant had never traveled to Minnesota in connection with his subcontractor relationship with H2I and that All Seasons had never performed subcontracting work for H2I in Minnesota. The fact that All Seasons paid a Minnesota resident to work on its website did not establish the required connection to H2I’s alleged intentional torts. The court therefore granted the motion to dismiss as to Durant and All Seasons.

Preliminary Injunction

A preliminary injunction is a temporary court order issued before final judgment. The court considered whether H2I showed likely irreparable harm, whether the balance of harms favored an injunction, whether H2I was likely to succeed on its claims, and whether an injunction would serve the public interest.

The court held that H2I had not shown likely irreparable harm. It found that H2I had not alleged that Miller possessed proprietary or specialized knowledge that would irreparably damage its ability to compete, nor had it shown the conversion of customer goodwill or specific misuse of confidential information. The court concluded that money damages could sufficiently compensate H2I for any harm if H2I ultimately prevailed.

The court also found that H2I had not shown a sufficient likelihood of success at that stage. Disputed facts made it unclear whether Miller’s work for All Seasons competed with H2I’s business. H2I presented no concrete evidence that Miller was using confidential information. The court further explained that Miller could not tortiously interfere with his own agreements because a violation by him would be a breach of contract, and H2I had not adequately identified a reasonable expected economic advantage or facts showing independently wrongful interference. H2I’s unjust-enrichment and duty-of-loyalty claims also could not support an injunction because they did not concern prospective harm.

Disposition

Judge John R. Tunheim ordered that the defendants’ motion to dismiss for lack of personal jurisdiction was granted in part and denied in part: it was granted as to Durant and All Seasons and denied as to Miller. The court denied H2I’s motion for a preliminary injunction.