A North Carolina state court judge has denied a stock car racing organization’s bid for a temporary restraining order, which would have kept one of its former race engineers from working for another team.
The plaintiff in the case was Richard Childress Racing (RCR), a stock car racing organization that competes in professional events, including those managed by NASCAR.
The defendant, Matt McCall, was employed by the plaintiff from December 13, 2010 until November 16, 2014, first as a race engineer on one of the plaintiff’s NASCAR Camping World Truck Series teams and later as a race engineer on the plaintiff’s #31 NASCAR Sprint Cup Series team.
On November 30, 2012, in consideration of the defendant’s promotion to the #31 team, the parties executed an employment contract, which provided for an employment term through and including December 31, 2015, and stated, in pertinent part, as follows:
“In the event [Defendant] resigns employment during the term of this contract, [Defendant] shall, for a period of 12 months following his last day of employment with [Plaintiff], not be employed, or serve as consultant or independent contractor, in any capacity identical or similar to that in which he participated while employed by [Plaintiff], by or for a ‘Competitor’ of [Plaintiff] where such Competitor participates or intends to participate in the NASCAR Sprint Cup Circuit during that 12-month period. ‘Competitor’ shall be defined as any person or entity who shall prepare racing cars for entry in races in which NASCAR Sprint Cup points are awarded, as well as special events such as the Budweiser Shootout, or Sprint Open races; provided, however, that ‘Competitor’ shall not include any person or entity which shall prepare racing vehicles only for ARCA, Nationwide, or any racing series other than NASCAR Sprint Cup and the special events described above, and which does not compete in the NASCAR Sprint Cup series or other defined special events directly or through a parent, subsidiary, affiliate, or other business combination.”
The contract also contained two clauses requiring that the defendant not “reveal or disclose nothing of the operation, methods, techniques, technology, or policies of Plaintiff to any third person . . .” and preventing the defendant from “revealing, disclosing, using, or otherwise misappropriating the plaintiff’s trade secret and/or proprietary information.”
According to the complaint, the defendant indicated to the plaintiff that he wished to work as a crew chief for a Sprint Cup team several times during the 2014 racing season. Late in the season, the plaintiff informed the defendant that he would be promoted to crew chief for one of the plaintiff’s NASCAR Nationwide Series teams for the 2015 season.
The defendant informed RCR on November 3, 2014, however, that he intended to terminate his employment at the end of the 2014 racing season and seek employment with another NASCAR team, according to the plaintiff.
On November 18, 2014, the defendant informed RCR that he had accepted a position as crew chief with Chip Ganassi Racing with Felix Sabates, Inc.’s (Ganassi) #1 NASCAR Sprint Cup Series team. Ganassi is a direct competitor of the plaintiff in the NASCAR Sprint Cup Series and was listed as a “Competitor” in the defendant’s employment contract, according to the complaint.
RCR sued, alleging claims against the defendant for breach of contract and misappropriation of trade secrets, and the restraining order that would prevent the defendant from taking the job.
“The crew chief and race engineers function as a single unit that is responsible for preparation for races and maximizing car performance,” RCR argued in its complaint.
The court disagreed, finding that the defendant’s new position does not meet RCR’s definition in the non-compete clause, which was one of the defendant’s key arguments. Specifically, he claimed that “the crew chief role requires significant supervisory responsibilities, public appearances, media obligations, substantial decision-making responsibilities and the burden of discipline for NASCAR rules infractions.”
Furthermore, “covenants not to compete between an employer and employee are not viewed favorably in modern law,” according to the court. “To be valid, the restrictions on the employee’s future employability by others must be no wider in scope than is necessary to protect the business of the employer. If a non-compete covenant is too broad to be a reasonable protection to the employer’s business it will not be enforced. The courts will not rewrite a contract if it is too broad.”
Similarly, the court was unpersuaded that there had been a misappropriation of trade secrets, since the plaintiff “has identified its claimed trade secrets with sufficient particularity to warrant the extraordinary relief requested.”
In addition to finding that the plaintiff “has not shown a likelihood of success on the merits of either of its claims,” the court also found that a denial of a temporary restraining order will not result in “irreparable harm.”
RCR Enterprises, LLC v. Matthew McCall; N.C. Super. Ct.; 14 CVS 3342 , 2014 NCBC 68; 2014 NCBC LEXIS 69; 12/19/14
Attorneys of Record: (for plaintiff) Womble Carlyle Sandridge & Rice, PLLC, John F. Morrow, Jr. and David Boaz. (for defendant) Poyner Spruill LLP, Lee A. Spinks and Joshua B. Durham.
