Worker barred by noncompete challenges Commercial Court constitutionality

September 25, 2017

One of the first Indiana Commercial Court cases argued on appeal opened with a hearing-day motion filed Monday in the Indiana Court of Appeals challenging the constitutionality of the state’s year-old pilot docket.

A panel of the COA heard the appeal of Craig Vickery, a former employee of Ardagh Glass Inc., who was barred from taking a position with rival glassmaker Owens-Illinois due to the enforcement of a noncompete agreement he signed in 2004.

Plaintiff’s attorney Kevin Betz argued Vickery’s case on several fronts — that the noncompete was void because it could only be enforced by a predecessor company that no longer exists; that Vickery was denied due process because he wasn’t provided notice of a hearing where a temporary restraining order was issued; and that the noncompete agreement itself was overbroad and disfavored under Indiana law.

“It is an abuse of process and a malicious prosecution” of the noncompete, Betz told the panel, calling Ardagh’s suit seeking to enforce the noncompete “frivolous.” Indiana Commercial Court Judge Heather Welch issued several ex parte orders in Marion Superior Court — including a temporary restraining order barring Vickery from taking a new job at the competing company — before Betz argued Vickery had been properly served notice.

Ice Miller LLP partner Adam Arceneaux said Vickery, who lived in Randolph County at the time, was notified of litigation against him in an email sent to him the day before Welch’s TRO was issued without a hearing in her Indianapolis court.

“Ardagh paid Mr. Vickery to work with and entrusted him with many trade secrets and confidential information,” Arceneaux said. He told the judges Vickery was a mold engineer and one of a handful of company employees with access to information and processes that could be valuable to a competitor.    

“The court found no fewer than 16 categories of trade secrets,” he said.

But judges on the panel hit Arceneaux with questions regarding the sufficiency of notice to Vickery ahead of Welch-s ex parte issuance of a restraining order that barred Vickery from working at a new job in Ohio. Presiding Judge John Baker asked Arceneaux whether anything in the establishment of commercial courts “said we’re going to do away with the trial rules.”

“No,” Arceneaux said.

“Tell me all the efforts to comply with this book to give notice to Mr. Vickery,” Baker said, holding aloft a copy of the Indiana Trial Rules.

Arceneaux responded that emailed notices had been sent to the defendant the morning before the suit was filed, informing him that Ardagh would be seeking a TRO in Commercial Court in Indianapolis. He told the panel that the remedy Ardagh received aligned with those envisioned under the Indiana Trade Secrets Act. Arceneaux noted the commercial court focused on the potential misappropriation of trade secrets.

But Judge Mark Bailey also seemed dubious that the notice provided to Vickery complied with the requirements of Trial Rule 65. “Is that a new way of providing service? Email?” Bailey said. “If you holler at him walking down the street, do you consider that notice?”

“He received no notice, and he received no hearing,” Betz said, calling the lack of notice and of a hearing prior to the issuance of a TRO a violation not just of Trial Rule 65, but of Vickery’s state and federal constitutional rights to due process.

But Arceneaux said Ardagh had a right under the law governing the noncompete to enforce it because the company had purchased predecessor Saint-Gobain Containers Inc., the employer with whom Vickery had signed the agreement.

Asked by Judge Robert Altice why Vickery couldn’t simply sign a document pledging not to reveal trade secrets or confidential information, Arceneaux said that was a question for Vickery, prompting a rebuttal from Betz.

“Mr. Vickery did offer to keep all those secrets,” he said. Betz told the panel that Vickery’s former supervisors at Ardagh had stipulated they would testify for him. “They said they trusted Mr. Vickery not to blab because he was nothing but an excellent employee.”

Nevertheless, Betz argued the order applied to Vickery meant he “cannot even clean the toilets at Owens-Illinois.” He said the noncompete was “overly broad and doesn’t even involve the competitive aspects of the business. … It’s beyond anything that’s ever been enforced by this court.”

Bailey questioned the scope and duration of the noncompete, the value of the alleged trade secrets involved, and whether it was interfering with Vickery’s right to pursue his livelihood. “So, we’re going to burn up this guy’s life,” Bailey said, returning repeatedly to court “to make certain he’s not revealing any trade secrets, whether or not they have value?”

Noncompete agreements are generally disfavored in Indiana and strictly construed, themes Betz returned to often during oral arguments.

But he also alerted the court at the outset that he would use Vickery’s case to challenge the constitutionality of Indiana’s commercial courts, which were established in six venues around that state as a pilot project in July 2016.

Neither Betz nor Arceneaux argued the constitutional challenge that Betz filed and notified the panel about Monday. The challenge is contained in a motion to dismiss the case for lack of jurisdiction.

“The Indiana Commercial Court violates the federal and Indiana guarantees of due process by permitting long-distance forum-shopping,” the motion says. The motion also argues the courts violate the Indiana Constitution because they were created “by judicial fiat rather than by legislative enactment,” because they may create hardships by compelling defendants to litigate in distant venues, and because they make “business entities a special class of litigants with rights above and beyond everyday Hoosiers.”

The case in the Court of Appeals is Craig Vickery v. Ardagh Glass Inc., 49A02-1702-PL-00330.



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