Maven Advantage, Inc. and Square One Storm Restoration, LLC are competing roofing businesses. Maven alleged that two employees (Couch and Daniels) stole Maven’s trade secrets (customer lists) and then quit to work for Square One. According to Maven, Couch and Daniels used Maven’s customer lists and unlawful tactics to steer customers away from Maven and toward Square One.
This longer-than-normal post discusses two early rulings in defendants’ favor: the denial of plaintiff’s request for a preliminary injunction and partial grant of defendants’ motion to dismiss. The takeaways are both obvious and subtle. Judge Davis makes clear that “customer lists” might be confidential but are not always trade secrets. Good to know. And when it comes to employment agreements, good drafting can make a big difference. As important, however, is the whisper in these rulings about the need to strike the right balance between credibility and advocacy.
Background. As plaintiff, Maven rolled in hot. It filed a verified complaint (captioned, Maven Advantage, Inc. v. Square One Storm Restoration, LLC, et al., 24CV036621-910) alleging wrongdoing and an assortment of claims. Before reaching the Business Court, Maven obtained an ex parte TRO prohibiting defendants from using Maven’s customer lists or contacting Maven’s customers. The case was then designated to the Business Court and ultimately assigned to Judge Davis. Judge Davis ordered briefing on the preliminary injunction. Defendants’ motion to dismiss was filed with its opposition to Maven’s request for a preliminary injunction.
Allegations, arguments, and evidence. Maven claims Couch and Daniels took customer lists and used them to siphon Maven’s customers and prospective customers to their new employer, Square One. This, Maven claimed, constituted misappropriation of trade secrets, unfair and deceptive trade practices, and breach of their employment agreements. In opposition to the preliminary injunction (and in their motion to dismiss, filed the same day), defendants argued that when describing its “customer list,” Maven did not identify a protectible trade secret and that they did not, in fact, lure away any of Maven’s customers. Defendants also argued that the non-competition and non-solicitation provisions in the employment agreements were overbroad and unenforceable.
Judge Davis heard evidence and decided the preliminary injunction motion before the motion to dismiss. To begin, Judge Davis commented on the stark conflicts in the testimony about the same events. Troubled by this, Judge Davis mentioned that the conflict raised the “specter of false testimony being deliberately given.” Maven’s evidence, by way of affidavits, was that one of the defendants took Maven customer lists and used them to lure certain Maven customers over to Square One. Maven also claimed that defendants implemented a scheme to try to direct Maven prospects to a fake Maven call center, again with the aim of diverting customers to Square One.
In response, defendants offered evidence “meticulously rebutting” each of these allegations. Via affidavit, defendants denied taking anything that could be fairly characterized as a customer list. The supposed “customer lists” were just screenshots of completed jobs and commissions earned by defendants which did not even include any customer contact information. At the hearing, Maven’s counsel apparently conceded that information about earned commissions would not, by itself, constitute a trade secret.
Regarding stolen customers, defendants submitted affidavits from almost all of the Mavin customers Couch and Daniels supposedly brought over to Square One. These customers testified that they simply called the cell numbers Couch and Daniels had given them while still at Maven only to learn that Couch and Daniels now worked for Square One. Each of them decided they wanted to do business with Couch and Daniels and moved their business to Square One. There was no wrongful solicitation by Couch and Daniels. This is consistent with the affidavit testimony of Couch and Daniels who both testified that they never solicited or initiated contact with any Maven customers.
Preliminary Injunction Denied. Judge Davis commented on the mismatch in Maven’s allegations and injunction evidence. Maven alleged that approximately 100 customers left Maven for Square One, but it’s evidence identified only five such customers. Defendants submitted affidavits from each of the customers that were, alleged to have been lured away, and these customers refuted Maven’s account. As for the supposed fake call center, the Court found Maven’s evidence neither credible nor plausible. Due to questions regarding the credibility of Maven’s evidence, among other reasons, Judge Davis concluded that Maven failed to demonstrate a likelihood of success on the merits, denied Maven’s motion for preliminary injunction, and dissolved the TRO. 2025 NCBC Order 10.
Motion to Dismiss Granted (in part). Days later, Judge Davis turned to defendants’ partial motion to dismiss. In this MTD Opinion, 2025 NCBC 14, Judge Davis granted in part defendants’ motion, dismissing the claim for misappropriation of trade secrets claim with prejudice. He also pared the breach of contract claim.
On the trade secret claim, Judge Davis concluded there was only one alleged trade secret at issue, the “customer list,” and Maven’s allegations were too general and conclusory to state a claim for misappropriation. The relevant allegation is below.
Judge Davis explained that these allegations are no different than conclusory allegations about vaguely identified “customer lists, customer contract information, pricing information, and product information” that are too sweeping and conclusory to identify a protectible trade secret. Interestingly (to this practitioner), Judge Davis dismissed the trade secret claim with prejudice. One can speculate over whether the earlier preliminary injunction proceedings informed whether to allow Maven to try to amend to add detail and avoid dismissal of this claim. Notably, however, the customer list was still alleged confidential information that was taken in breach of the non-disclosure provisions in the employee agreement.
Judge Davis then turned to defendants’ argument that the employment agreement’s non-compete and non-solicit provisions were overbroad and unenforceable. Maven conceded that the non-compete provision that was part of is claim, as written, was overbroad and unenforceable. With that concession, Judge Davis dismissed the claim for breach of the non-competition provision with prejudice. The balance of the analysis focused on a three-part non-solicit, with Judge Davis providing a thorough assessment of North Carolina “blue pencil” law.
Blue Pencil Limitations. In a nutshell, Judge Davis explained that North Carolina Courts have adopted a “strict blue pencil doctrine” that allows selective enforcement of portions of a non-solicitation provision, but only where the provisions are “distinctly separable.” In other words, modification and rewriting is not allowed; but excising distinct provisions is.
The employment agreements included three prohibitions: (1) no soliciting customers with whom employee had personal contact and with whom Maven actually did business with for the purpose of competing with Maven; (2) no advising or recommending others to do (1); (3) no soliciting Maven employees.
First, Judge Davis assessed whether these provisions were “distinctly separable.” Each of these provisions was separated by a period (not a comma or semicolon) without any disjunctive or conjunctive connectors (i.e., no “and,” “or,” or “and/or”). The agreements also had a “blue pencil” paragraph acknowledging that each of these provisions is distinct, and if one was found to be invalid, the others were still valid. Judge Davis concluded that, in combination, these drafting details made each of the prohibitions “distinctly separable.” Maven conceded that (3) was overbroad, but argued that it could be blue penciled out of the agreements. The Court agreed, and (3) was excised.
Judge Davis then turned to (1) and (2), with defendants arguing both provisions were overbroad. Judge Davis disagreed, explaining that they were narrower than they might appear. They did not prohibit solicitation of every Maven customer or contact, only those with whom the employees had actual personal contact and with whom Maven actually did business. And the prohibition applied only if the solicitation was to obtain business in competition with Maven. These narrowing nuances, Judge Davis concluded, were enough to make the first two parts of the non-solicitation enforceable. Judge Davis denied the motion to dismiss the breach claims based on two these provisions.
Takeaways:
Trade secret pleading requires particularity, particularly when describing customer lists. We’ll never know whether a few more words (e.g., more specific identification of the database and data, elimination of vague catch-alls) might have pushed Maven’s customer lists into the trade secret realm. But we do know that this description was not enough: “detailed lists of customers that include inspection dates, assigned sales representatives, contract amounts, dates of contact, deal stage information, and other valuable information…”
Well drafted employment agreements make a difference. Things like punctuation and conjunctions decided whether this non-solicit was enforceable. Thoughtful drafting made the difference.
Credibility trumps advocacy, every time. The verified pleading justified an ex parte TRO, but when it came time to prove things up for a preliminary injunction, defendants’ evidence was (much) more credible. Did Maven overstate its claims? Hard to tell, but Judge Davis saw fit to comment on the difference between the (verified) pleading and Maven’s injunction evidence, overall credibility, and the specter of false testimony. And, of course, he denied the preliminary injunction and then dismissed several of Maven’s claims (with prejudice).
[View source.]
