[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
AUGUST 24, 2007
No. 06-16561
THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 06-01752-CV-AR-S
E. A. RENFROE & COMPANY, INC.,
Plaintiff-Appellee,
versus
CORI RIGSBY MORAN,
KERRI RIGSBY,
Defendants-Appellants,
KERRI MORAN,
Defendant.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(August 24, 2007)
Before BLACK, CARNES and MARCUS, Circuit Judges.
PER CURIAM:
Cori Rigsby Moran and Kerri Rigsby appeal the district court’s grant of a
preliminary injunction ordering them to deliver to their former employer, E.A.
Renfroe & Company, certain documents relating to the work of that company or
its clients involving Hurricane Katrina-related insurance claims. After reviewing
the record, we affirm the district court’s order.
I.
The material facts are undisputed. Renfroe is a corporation headquartered
in Birmingham, Alabama whose business includes supplying insurance companies
with claims adjusters in the aftermath of natural disasters. The Rigsby sisters are
former Renfroe adjusters who began working for the company in 1998. In 2005,
Renfroe deployed the sisters to the Mississippi Gulf Coast as part of a team of
claims adjusters to assist its client State Farm insurance company handle its
Hurricane Katrina-related insurance claims.
While on this assignment for Renfroe, the sisters became convinced that
State Farm was engaging in what they would later describe as “fraudulent and
potentially criminal activities” related to the disposition of the insurance claims.
As a result, the sisters copied some 15,000 State Farm claim-related documents
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and decided to share them. The first recipient of the documents was Mississippi
lawyer Richard Scruggs, who now represents them as their attorney (though not in
this case) and who also (as of July 1, 2006) employs them as consultants. Scruggs
in turn recommended that the sisters share the documents with the Mississippi
Attorney General’s office and the Federal Bureau of Investigation. The Rigsbys
also discussed their find before a national television audience on August 25, 2006
when they appeared in a segment on the ABC News show “20/20” spotlighting the
fraud allegations against State Farm.
After learning of the Rigsbys’ activities, Renfroe sued the sisters on
September 1, 2006, seeking monetary and injunctive relief, alleging that they had
violated their employment contracts with Renfroe (which contained non-disclosure
provisions) and the Alabama Trade Secrets Act. Shortly thereafter, Renfroe also
moved the district court to issue a preliminary injunction commanding the return
of the documents pending a full trial on the merits of their case.
After hearing the evidence, the district court issued Renfroe’s requested
preliminary injunction on December 8, 2006. It forbade the Rigsby sisters “and
other persons in active concert . . . with them” from “further disclos[ing], us[ing]
or misappropriat[ing]” any of the material in question, and also ordered them to:
deliver forthwith to counsel for [Renfroe] all documents, whether
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originals or copies, of each document and tangible thing, in any form
or medium, that either of [the Rigsbys] or anyone acting in
conjunction with . . . them, downloaded, copied, took, or transferred
from . . . Renfroe or . . . any of its clients, including, but not limited to
State Farm Insurance Company and which refer or relate to any
insurance claims involving damages caused or alleged to have been
caused by Hurricane Katrina in the State of Mississippi.
In light of an ongoing criminal investigation by the Mississippi Attorney General’s
office into the fraud allegations against State Farm, the district court exempted
from the scope of the injunction disclosure of the documents to, and their use by,
law enforcement officials. With those exceptions, the injunction ordered
Renfroe’s attorneys to keep all these documents in their possession “under lock
and key.” They were not to disclose any of the material “to any entity, including
[their client] E.A. Renfroe & Company . . . without first obtaining the express
written approval of [the district] court.” They were, however, permitted to use the
documents in this pending lawsuit. If they wished to share the documents with
others, the attorneys were required to obtain written permission from the court
after an in camera inspection by it.
Here we consider the Rigsby sisters’ appeal of the district court’s
preliminary injunction order. We review the issuance of that order only for an
abuse of discretion, see Church v. City of Huntsville, 30 F.3d 1332, 1341 (11th
Cir. 1994); “[h]owever, if the trial court misapplies the law we will review and
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correct the error without deference to that court’s determination.” Id.
II.
Before exercising its discretion to issue a preliminary injunction, the district
court was required to satisfy itself that Renfroe had demonstrated four things: (1)
that Renfroe had a substantial likelihood of succeeding on the merits of its
underlying lawsuit against the Rigsbys; (2) that Renfroe faced a substantial threat
of irreparable injury if the injunction were not granted; (3) that the threatened
injury to Renfroe outweighed the harm the injunction would cause the Rigsbys;
and (4) that granting the injunction would not disserve the public interest. Id.; see
also Ferrero v. Associated Materials, Inc., 923 F.2d 1441, 1448 (11th Cir. 1991)
(reviewing the issuance of a preliminary injunction in a diversity case under the
federal standard for injunctive relief). The district court found that Renfroe had
established each of these prerequisites, and the Rigsbys now challenge the court’s
findings on a number of grounds.
A.
The Rigsbys first challenge the district court’s finding that Renfroe was
substantially likely to prevail on the merits of its claim that the Rigsbys violated
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the confidentiality provisions in their employment contracts.1
One way they do this is by arguing (without citing any authority) that
Renfroe “lack[ed] standing to seek an injunction whose result would be the return
of documents that never belonged to Renfroe.” By this, we think the sisters mean
that Renfroe hasn’t suffered any “injury in fact,” which is one of the three
constitutionally-required prerequisites for standing. See Koziara v. City of
Casselberry, 392 F.3d 1302, 1304–05 (11th Cir. 2004). The problem with this
argument is that the breach of a contract has long been held to be among the types
of injuries that confer standing to sue. See, e.g., Tenn. Elec. Power Co. v. Tenn.
Valley Auth., 306 U.S. 118, 137–38, 59 S. Ct. 366, 369 (1939) (standing is
available where “the right invaded is a legal right,—one of property, one arising
out of a contract, one protected against tortious invasion, or one founded on a
statute which confers a privilege” (emphasis added)). By pleading the breach of a
contractual provision, Renfroe asserted a sufficient “injury in fact” for standing.
Another argument the Rigsby sisters make is that they were not bound by
any written employment contract by the time they were working on the Hurricane
Katrina-related claims. They ask us to compare the four employment agreements
1
The preliminary injunction was premised solely on the district court’s view that
Renfroe was substantially likely to prevail on the breach-of-contract claims. It did not reach
Renfroe’s claim under the Alabama Trade Secrets Act, and we have no occasion to do so either.
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they signed in July 1998, September 1999, February 2000, and May 2004, with a
fifth agreement they signed in June 2004 just before they began working on claims
related to Hurricane Charley.
Paragraph 2(a) of all five of the employment agreements the sisters have put
forward provides for an employment relationship maintained either on an “at-will”
basis or “for an indefinite period.” Paragraph 2(a) of the fifth agreement, signed in
June 2004, contains an additional sentence not found in any of the first four
agreements. That paragraph, in its entirety, reads:
RENFROE engages the Employee to perform assignments
which will vary in work type, length and location, according to the
needs of our business. Employee will be employed by RENFROE
from the time he is checked in at the assignment location until the
time he is checked out at the assignment location. It is further
understood that employment is at-will, the Employee accepts such
employment on the terms and conditions set forth in this Agreement,
and either party may terminate such employment at any time for any
reason. Throughout employment, Employee will faithfully exercise
such authority and perform such duties as are assigned from time to
time by RENFROE.
(Emphasis added.) The underscored sentence is the one that was not in that
paragraph in the earlier employment agreements. According to the sisters, this
new sentence means that all of their contractual obligations “expired” when they
checked out of their assignment location at the conclusion of their Hurricane
Charley-related work in 2004. And, they argue, their Katrina-related work in 2005
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was not subject to any contract, not that one or any one. If so, the confidentiality
agreement contained in all the contracts, including the fifth and last one that they
signed, does not apply to them.
We disagree. The sisters’ singular focus on the sentence in paragraph 2(a)
limiting the duration of their employment with Renfroe to the time between check-
in and check-out at an assignment location ignores the other sentences in that same
paragraph which contemplate an employment arrangement that will span multiple
assignments and be governed by the same contract. For example, the first
sentence of paragraph 2(a) explains that “RENFROE engages the Employee to
perform assignments [in the plural] which will vary in work type, length and
location, according to the needs of [its] business.” And if that isn’t clear enough,
the sisters agreed in the final sentence of paragraph 2(a) to “faithfully exercise
such authority and perform such duties as are assigned from time to time [as
opposed to just once] by RENFROE.” Reading the entire provision in context, we
have no difficulty concluding that the language the Rigsbys rely on does not mean
what they say it means. The June 2004 agreement, which is the fifth and last one,
and the non-disclosure provision within it, covered the sisters’ Katrina-related
work. That work was one of those assignments that they received “from time to
time.”
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The Rigsby sisters offer a number of fallback arguments concerning
Renfroe’s likelihood of ultimate success, but none of them have any merit either.
For example, the sisters assert that “Renfroe has presented no evidence that the
Rigsbys copied any documents that would fall within the confidentiality
provisions of the employment agreements.” But the confidentiality provisions at
issue in this case apply very broadly, and under them, confidential information
includes all:
data and information relating to the business of RENFROE and its
clients which is or has been disclosed to the Employee or which the
Employee became aware as a consequence of or through employment
with RENFROE and which has value to RENFROE or its clients but
is not generally known to the public.
The Rigsbys admit in their answer that they provided some 15,000 pages of claims
information to their lawyer, the FBI, and the Mississippi Attorney General. There
is no suggestion that all those documents relating to Hurricane Katrina matters fell
from the sky into their hands.
Another fallback argument is the sisters’ assertion that Renfroe “has failed
to prove that it has suffered any damages as a result of the Rigsbys’ alleged breach
of contract.” This, however, ignores the fact that the Rigsbys actually
acknowledged in their employment agreements that Renfroe would suffer
“immediate and irreparable damage and loss” upon the breach of the non-
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disclosure provision, which is why the provision was included to begin with.
Finally, the Rigsbys say that the public policy concern of ferreting out
corporate wrongdoing justifies their breach of the contractual duty under the
confidentiality provision and counsels against enforcement of it. But that concern
is one that is adequately covered by disclosure of the alleged wrongdoing to state
and federal law enforcement agencies. As Renfroe put it in its brief, “Renfroe
makes no complaint about the Rigsbys’ participation in any investigation by a
governmental law enforcement agency. The fact that the Rigsbys gave copies of
documents to the Mississippi Attorney General and [federal law enforcement] is
not at issue in this litigation.” As we explained earlier, the preliminary injunction,
which is all that we have before us, permits disclosure to and use by law
enforcement agencies.
For these reasons, we agree with the district court that Renfroe has
demonstrated a substantial likelihood of succeeding on the merits of its claim that
the Rigsby sisters violated their contractual duty to keep the claims files
confidential.
B.
Having concluded that Renfroe is substantially likely to prevail on its
breach-of-contract claim, we turn briefly to the three remaining preliminary
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injunction requirements of irreparable injury, balancing the hardships, and
consistency with the public interest.
Regarding the irreparable injury requirement, the Rigsbys have given us no
reason to doubt the district court’s conclusion that “[m]onetary damages are
woefully inadequate as a means of addressing” the sisters’ continued ability to
“engage in public criticism of Renfroe’s most important client” absent the
injunction. The sisters do point out that State Farm has continued to use Renfroe’s
adjustment services since the Rigsbys’ wholesale disclosure of the confidential
information, and that at the November 14, 2006 preliminary injunction hearing,
Renfroe’s secretary-treasurer “could not name a single adjustor who had
terminated their employment with Renfroe as a result of the Rigsbys’ actions.”
However, neither of these facts calls into question the existence of the claimed
injury to Renfroe’s goodwill and reputation—which, as the district court noted, is
“difficult to prove.” See Ferrero, 923 F.2d at 1449 (noting that loss of goodwill
can be an irreparable injury). Moreover, as the district court mentioned in its
opinion, both sisters “expressly acknowledged in writing the virtual impossibility
of quantifying the damages that would be caused by a breach of confidentiality,
and expressly . . . authorized the remedy of a preliminary injunction as
appropriate.” We agree with the district court that Renfroe established the threat
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of irreparable injury.
Finally, we also agree with the district court that Renfroe carried its burden
on the balance-of-hardships and public interest requirements, the discussion of
which the Rigsbys combine. They assert that the injunction is against public
policy because it affords “the targets of criminal investigations [such as Renfroe’s
client, State Farm] the opportunity to access” the claims documents in question.
This argument is illogical. If there is too much disclosure, the remedy is not total
disclosure. The situation that the Rigsby sisters seek, the absence of any restraints
on disclosure, would make all of the documents freely available to the world
including any and all targets of any and all criminal investigations.
The sisters also argue that the injunction exposes them to criminal liability
in Mississippi for violating subpoenas they have received requiring them to
produce documents to a grand jury there. No, it doesn’t. As we have said twice,
the injunction specifically allows disclosure of the documents to “law enforcement
officials.”
AFFIRMED.
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