Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Array Technologies, Inc. v. Mitchell

United States District Court, D. New Mexico

January 22, 2018

ARRAY TECHNOLOGIES, INC., Plaintiff,
v.
COLIN MITCHELL, NEXTRACKER, MARCO GARCIA, DANIEL S. SHUGAR, SCOTT GRAYBEAL, FLEXTRONICS INTERNATIONAL USA, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

         Defendants Colin Mitchell (Mitchell), NEXTracker (NX), Marco Garcia (Garcia), Daniel S. Shugar (Shugar), Scott Graybeal (Graybeal), and Flextronics International USA, Inc. (Flextronics) ask the Court to dismiss Counts Three through Ten of Plaintiff Array Technologies, Inc.'s (ATI's) AMENDED COMPLAINT (Doc. No. 52).[1] The Court will refer to NX, Garcia, Shugar, Graybeal, and Flextronics as “the NX/Flextronics Defendants.” The Court will refer to Mitchell and the NX/Flextronics Defendants as “Defendants.” The Court will dismiss the claim against Mitchell in Count Eight for unjust enrichment, and the Court will dismiss the claim against Defendants in Count Ten under the New Mexico Unfair Practices Act (NMUPA). The Court will deny the Motion as to Counts Three through Seven, Count Eight as to the NX/Flextronics Defendants, and Count Nine.

         I. STANDARD OF REVIEW

         In ruling on the Motion, the Court must “assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted.” Brokers' Choice of America, Inc. v. NBC Universal, Inc., 757 F.3d 1125, 1135 (10th Cir. 2014) (citation omitted). In evaluating a Rule 12(b)(6) motion, the Court must “accept as true all well-pleaded facts, as distinguished from conclusory allegations, and view the facts in the light most favorable to the nonmoving party.” Maher v. Durango Metals, Inc., 144 F.3d 1302, 1304 (10th Cir. 1998). However, the Court is under no obligation to accept bare conclusory allegations, Hall v. Belmon, 935 F.2d 1106, 1110 (10th Cir. 1991) or to accept legal assertions without factual support. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). In sum, to survive the Motion, the Amended Complaint must contain sufficient factual allegations “to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true....” Twombly, 550 U.S. at 555.

         II. BACKGROUND

         Since 1989 ATI has designed, manufactured, and sold solar tracking equipment, related technologies, and support services to customers in the United States and abroad. (Am. Compl. ¶ 2.) ATI's solar trackers allow solar panels to move with the sun, which increases the panels' direct exposure to the sun and the amount of energy generated. (Id. ¶ 16.) ATI has pioneered significant innovations in ground-mounted solar tracking systems. (Id. ¶ 18.)

         A. Mitchell's Employment at ATI

         On May 3, 2013, ATI hired Mitchell as a Business Development Manager responsible for “all aspects of sales from identifying sales opportunities to closing the sale, including: identifying, contracting and/or qualifying potential customers and presenting solar tracking systems to same; articulating ATI products with appropriate product positioning to ATI's customers; and, bid preparation.” (Am. Compl. ¶¶ 1, 27.) Mitchell executed a NONDISCLOSURE, NON-SOLICITATION AND NON-COMPETITION AGREEMENT (NDA). (Id. ¶ 28, Ex. 1.) Mitchell agreed that, during his employment and for one year thereafter, he would not to work for or assist an ATI competitor:

During the period of [Mitchell's] employment with [ATI], and for one year after the termination of such employment for whatever reason, with or without cause, [Mitchell] shall not, directly or indirectly engage in the ownership or operation of a business which designs and/or manufactures solar tracking equipment or systems, whether as an officer, director, partner, proprietor, investor, associate, employee, consultant, independent contractor or in any other capacity relating to such a business.

(NDA ¶ 4.) Mitchell also agreed to

(i) protect, safeguard and keep secret any Confidential Information (as defined below); (ii) only use or disclose Confidential Information as necessary in connection with [Mitchell's] work for [ATI]; (iii) refrain from using Confidential information for [Mitchell's] benefit or the benefit of any third party or in any manner adverse to [ATI's] interests; and (iv) upon the termination of [Mitchell's] employment with [ATI], or at any other time upon [ATI's] request, return or destroy all Confidential Information which is in [Mitchell's] possession or control, including all originals and copies thereof, whether maintained in physical or electronic format.

(NDA ¶ 2(a).) “Confidential Information” is defined as

any and all information concerning the business and affairs of [ATI], whether or not separately identified as “confidential” or “proprietary;” provided, however, that information will not be considered Confidential Information if it is or becomes generally available to the public other than through a breach of this Agreement. Without limiting the scope of the foregoing, Confidential Information includes nonpublic information about [ATI's] marketing, business or development plans, financial data, customer or vendor lists, tax records, and personnel files or histories.

(NDA ¶ 2(b).)

         As mentioned, the non-disclosure provisions of the NDA survived Mitchell's resignation:

(c) [Mitchell] agrees that all right, title and interest in any Confidential Information is and shall remain the exclusive property of [ATI], and that the nondisclosure obligation described herein shall survive the termination of [Mitchell's] employment with [ATI] for whatever reason, with or without cause.

(NDA ¶ 2(c).) The NDA provided for injunctive relief in the event of a breach:

[Mitchell] understands and agrees that [ATI] shall suffer irreparable harm in the event that [Mitchell] breaches any of [Mitchell's] obligations hereunder and that monetary damages will be inadequate to compensate [ATI] for such breach. Accordingly, [Mitchell] agrees that, in the event of a breach or threatened breach by [Mitchell] of any of the provisions of this Agreement, [ATI], in addition to any other rights, remedies or damages available to [ATI] at law or in equity, shall be entitled to a temporary restraining order, preliminary injunction and permanent injunction in order to prevent or to restrain any such breach by [Mitchell], or by any other person acting for, on behalf of, or with [Mitchell].

(NDA ¶ 6.)

         ATI uses “an intricate bid preparation and contract procurement model” that allows ATI to offer solar tracking equipment to customers at competitive prices. (Id. ¶ 20.) ATI's bid proposals are tailored to specific customers' needs based on proprietary research. (Id.) ATI's bid preparation and contract procurement information-including pricing, profit margins, costs of production, operations and maintenance costs (O&M costs), pricing concessions, promotional discounts, advertising allowances, volume rebates, marketing concessions, payment terms, and rebate incentives-have independent economic value because the information gives ATI an advantage over competitors. (Id.) Because a competitor could use this information to undercut ATI's bid prices, the information is an ATI trade secret. (Id. ¶¶ 21-22.) In addition to having employees sign the NDA, ATI limits employee access to its electronic data. (Id. ¶¶ 24-25.)

         B. Mitchell's Contacts with ATI's Competitors

         ATI alleges that Mitchell violated the NDA while he was employed at ATI and after he resigned on July 8, 2016. (Id. ¶ 31.) On May 25, 2016, Mitchell wrote an email to Ms. Cristina Clavijo, the head of Strategic Business Development for Grupo Clavijo (Grupo), an ATI competitor. (Id.) Mitchell said, “I really want to thank you for this opportunity” and “I believe I can be successful in helping you grow your brand and footprint here in the U.S. in a sustainable manner.” (Id. ¶ 32.) Mitchell described certain challenges that Grupo faced in the United States market noting that Grupo's cost to install its systems was higher than ATI's cost. (Id.) Mitchell recommended ways that Grupo could increase its presence in the United States. (Id.)

         NX is ATI's largest competitor in the market for solar tracking equipment. (Id. ¶ 33.) NX is a wholly-owned subsidiary of Flextronics. (Id.)[2] On June 1, 2016, NX employees Garcia and Shugar exchanged emails. (Id. ¶ 34.) Garcia's first email was entitled “Re Colin Mitchell, 97% of ATI sales.” (Id.) Garcia informed Shugar that Mitchell earned $300, 000 at ATI and that NX should offer Mitchell a salary of $340, 000. (Id.) Garcia asserted “We will cripple our top USA competitor ... we will dominate the USA tracker market and keep out our Euro competitors.” (Id.) In response, Shugar told Garcia that he should hire Mitchell and that Garcia and Shugar “needed to get Flextronics on board.” (Id.) The person at Flextronics that they needed to get “on board” was Graybeal, Flextronics' Senior Vice President, Energy Segment. (Id.)

         In a June 3, 2016 email, Garcia told Shugar that he had talked to Mitchell and thought he could hire him for $320, 000. (Id. ¶ 35.) In addition, Garcia stated that Mitchell had a “non-compete” with ATI and that Mitchell was having it reviewed by a lawyer. (Id.) On June 10, 2016, Mitchell informed Garcia that Mitchell's attorney determined the NDA was enforceable under New Mexico law. (Id. ¶ 36.) Mitchell attached an electronic copy of the NDA to the June 10, 2016 email. (Id.) Garcia emailed Shugar informing him about the enforceability of the NDA and outlining a plan to have “Mitchell inform Ron (CEO of ATI) that he would be taking a leave of absence and then join NX one month later.” (Id. ¶ 37.) (Id.) Garcia informed Shugar that Mitchell had requested “support from NX for his legal defense.” (Id.)

         In a June 11, 2016 email, Garcia told Mitchell that Shugar had spoken to Flextronics and that they were willing to “take on a portion of [Mitchell's] legal defense costs, and [Garcia] asked Mitchell for his proposed start date at Flex.” (Id. ¶ 38.) On June 13, 2016, Mitchell sent an email telling Garcia his attorney's name and thanking Garcia for the offer to pay part of his legal expenses. (Id. ¶ 39.) In the June 13, 2016 email, Mitchell accepted Garcia's offer of employment. (Id.)

         On June 21, 2016, for about three hours, Mitchell downloaded approximately 7, 000 electronic files from ATI's hard drive and transferred the files to his personal hard drive without ATI's permission. (Id. ¶ 40.) The electronic files contained “extensive confidential information and trade secrets belonging to ATI[.]” (Id.)

         On July 8, 2016, Mitchell resigned his employment at ATI. (Id. ¶ 41.)

         On August 17, 2016, Mirza Baig, Flextronic's Talent Acquisition Coordinator, emailed Mitchell asking him to fill out Flextronic employment documents. (Id. ¶ 42.) On that date, Garcia sent Mitchell a written job offer from Flextronics for the position of “Senior Director, Business Development” at a salary of $160, 000 plus a $160, 000 bonus if Mitchell met a performance target. (Id.) Garcia stated that Mitchell was to report directly to Graybeal. (Id.) On August 23, 2016, Mitchell accepted a written offer from Flextronics, and Mitchell began his new employment in September 2016. (Id.)

         C. Mitchell's Employment with NX/Flextronics

         ATI alleges that Flextronics “inserted Mitchell into a competition for the job of Senior Director Business Development with a number of other candidates trying to create the impression that Mitchell had won a job competition.” (Am. Compl. ¶ 42.) ATI maintains that the NX/Flextronics Defendants concealed Mitchell's employment with NX by giving the impression that Mitchell was an employee of Flextronics, which is not a direct competitor of ATI. (Id. ¶ 43.) For example, Flextronics' job requisition records “falsely” stated that Graybeal was Mitchell's hiring manager “when in fact it was Marco Garcia and Dan Shugar of NEXTracker.” (Id.) The records also falsely represented that Flextronics began recruiting Mitchell on August 17, 2016; but instead, NX began recruiting Mitchell in early June 2016, as indicated by the Garcia/Shugar emails. (Id.) Flextronics' hiring records described Mitchell's position: “Mitchell will utilize ‘a NetSuite CRM system to track and forecast sales support, Operations, Supply Chain and Engineering teams to ensure that NX is consistently exceeding customer expectations while ensuring that NX sales maintain maximum positive contribution margin.'” (Id. ¶ 43.) Mitchell's job description included responsibility for “working to ‘form excellent working relationships with NEXTracker departments, including operations, supply chain, cost accounting, logistics and engineering to ensure on-time delivery and best in class quality of all NEXTracker products.'” (Id.) The records indicated that Mitchell would ‘“hire a qualified sales analysist/business analysist [sic] who will work side by side with ... [Mitchell] to prepare cost estimators and sales proposals.'” (Id.) On Mitchell's W-2 Wage and Tax Statement, NX is named as Mitchell's employer. (Id. ¶ 44.)

         On September 13, 2016, Ron Corio (Corio), the CEO of ATI, attended the “Solar Power International” trade convention. (Id. ¶ 45.) Mitchell visited ATI's exhibit booth and told Corio that he was working for Flextronics. (Id.) Corio responded, “You mean NEXTracker?” (Id.) Mitchell stated, “Oh, no, they are keeping me far away from them[, ]” and Mitchell represented that he was “selling modules” for Flextronics. (Id.)

         D. Mitchell's Contribution to NX Sales

         On October 9, 2016, Mitchell emailed Garcia, Shugar, and others regarding the “AES Solar” account. (Id. ¶ 46.) Mitchell stated that “AES wanted a quote on the 70 megawatt DC project and that he would love to take over the AES account.” (Id.) On that date, Shugar responded to Mitchell, Garcia, and others: “The account is YOURS: Please bring some Tracker biz .... Please bring home some Tracker bacon. THX Shug.” (Id.) Mitchell responded, “I'm on it Dan. Thanks guys.” (Id.)

         On October 11, 2016, Mitchell informed Graybeal that Mitchell “was asked to take over the AES Solar Account on the NX side.” (Id. ¶ 47.) ATI alleges that emails to Graybeal show that Graybeal joined in Garcia's and Shugar's plan to conceal Mitchell's position with NX and to violate the NDA. (Id.)

         On October 17, 2016, Mitchell sent an email to Shugar, Garcia and others containing an update on the AES account and describing two NX bids on a project in Kauai, Hawaii. (Id. ¶ 48.)

         On November 17, 2016, Peter Wheale, NX Vice President of Sales in Australia, sent an email asking Mitchell, Garcia, and Ryan Boothe to help him respond to ATI's “pitches” on “O&M[3] and LCOE”[4] stating that “we cannot let ATI in the door any further” and noting that “a portfolio of jobs just went to ATI.” (Id. ¶ 49.) Later that day, Garcia responded to Wheale, Mitchell, Shugar, and five other NX employees stating, “Wheale's issue was discussed at an Executive offsite today.” (Id.) Garcia then emailed Mitchell:

Colin really need your help here. ATI is kicking our ass with the O&M pitch that you helped create. What are the real O&M weaknesses of ATI? Please reply all. This is unacceptable to lose business to ATI when we have lower Capex[5] and they win on lower O&M and lower LCOE. We are being out maneuvered. All hands on deck. Thank you.

(Id.)

         On November 18, 2016, Garcia mistakenly sent a text message to Mitchell's old ATI cellphone, which had been reassigned to another ATI employee: “Hey Colin, you are cc d on an email about ATI winning 130 MW in AU using an argument of lower O&M costs vs NX. Pete is now going after another 130 MW. Can you please respond with you [sic] knowledge of ATI O&M costs and issues?” (Id. ¶ 50.)[6] ATI alleges that the text message to Mitchell's ATI cell phone referred to a successful ATI proposal to supply solar tracking equipment for four projects in Australia totaling 130 megawatts.[7] (Id. ¶ 51.) NX had submitted unsuccessful bids for those projects. (Id.) On November 18, 2016, Mitchell emailed in response to Garcia's text and email requests: “ATI's sales presentation consists of an excel spreadsheet that calculates component costs for NEXTracker batteries, controllers, Zigbee, [8] motors, etc. and tries to make a comparison between the ATI electronics and the NEXTracker electronics.” (Id. ¶ 52.) Mitchell also stated that the ATI summary estimates a net present value of a 30-year O&M for the NEXTracker system “as coming to somewhere close to .01-.015/watts DC.”[9] (Id.) Mitchell stated that “a lot of ATI's focus (O&M deficiencies) is on batteries and tracker controllers.” (Id.) On that date, Mitchell also responded to a question from NX's Mike Mehawich on “whether removal of vegetation and tracker costs could save money during bidding.” (Id. ¶ 53.)

         On November 28, 2016, Wheale sent Mitchell another email recounting ATI's successful bids on several Australian contracts and noting that high winds were an issue related to those contracts. Mitchell emailed Wheale in response:

My understanding to Peter's point is that the ATI off the shelf V3 design is capable of withstanding 135 mph wind speed. ... The ATI system uses a torque limiting gear box at the center of each row that allows each row to decouple from the driveline at around 50-60 mph, in order for each row to find a position of lower resistance. If the row is pushed all the way to the mechanical stops at 52 degrees then there are mechanical stops at each foundation AND at the center of the row at the gear rack, which resists the wind forces. They claim that this design reduces the torque in the torque tube, because the forces are transferred and spread out through all of the foundations and into the ground. Whereas in our system, in my understanding, the slewing gear drive has to hold the entire row during a high wind event with some perimeter help from dampers.

(Id. ¶ 54.) ATI alleges these messages illustrate that Mitchell provided detailed information about ATI's costs and equipment design to NX employees, Shugar, Garcia, and Wheale. (Id.) For example, the information Mitchell provided to Garcia and Wheale about ATI's sales presentation techniques appeared to be aimed at enabling NX to underbid ATI on a subsequent Australian project. (Id. ¶ 55.) ATI alleged that Mitchell was well aware that ATI's cost information and sales presentation techniques were confidential and that he was prohibited from disclosing that information. (Id. ¶ 60.)

         ATI asserts that the text message and emails further illustrate that NX and Flextronics induced Mitchell to breach the NDA. (Id. ¶ 65.) ATI contends that the text message and corresponding emails “illustrate why Mitchell's position with NX makes it inevitable that Mitchell will disclose ATI's confidential data and trade secrets (assuming he has not already). Given the work Mitchell performed for ATI, his work for NX will inevitably call upon him to use and disclose ATI's confidential information and trade secrets in violation of the NDA.” (Id. ¶ 66.) According to ATI, these allegations support its claim for injunctive relief to prevent further irreparable harm to ATI. (Id. ΒΆ 69.) ATI argues that the circumstances surrounding Mitchell's resignation from ATI, two weeks after accepting employment with NX and after downloading ATI's confidential electronic files, when added to allegations that Mitchell concealed ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.