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Isco Industries, Inc. v. Shugart

United States District Court, W.D. Kentucky, Louisville Division

May 28, 2014



THOMAS B. RUSSELL, District Judge.

This matter is before the Court upon Defendant Charles Shugart's Motion to Dismiss. (Docket No. 9.) Plaintiff ISCO Industries, Inc. has responded. (Docket No. 10.) Defendant Shugart has replied. (Docket No. 18.) This matter is now fully briefed and ripe for adjudication. For the following reasons, the Court will DENY Defendant Charles Shugart's Motion to Dismiss. (Docket No. 9.)


Plaintiff ISCO Industries, Inc. is a piping solutions provider based out of Louisville, Kentucky, which sells/provides various piping products and solutions through the United States and internationally. (Docket No. 1, at 2.) ISCO employs salespersons to market and sell its product and provides these salespersons certain business information, such as ISCO's prices, fabrication capabilities, supply chain management, and customer lists. ( Id. )

Previously, Defendant Charles Shugart was hired by Plaintiff ISCO Industries as a salesman and began working on March 5, 2007. ( Id. ) Shugart signed a non-compete, nonsolicitation agreement (the "NCA Agreement"), (Docket No. 9-2), on February 15, 2008. (Docket No. 1, at 3.) Shugart worked for ISCO for approximately six years as a salesman before leaving on December 2, 2013. ( Id. at ΒΆ 32.) Subsequently, Shugart began working for Gajeske, Inc., as a salesperson. ( Id. ) Gajeske is a distributor of polyethylene pipe, pumps, valves, fittings, fabrications, and fusion equipment. ( Id. )

On December 13, 2013, ISCO issued Shugart a cease and desist letter alleging a breach of the NCA Agreement. Specifically, this letter alleged "ISCO has direct evidence that you have been contacting customers of ISCO to solicit the very business that ISCO provided to these customers while you were employed with ISCO." (Docket No. 1-3, at 2.)

On March 13, 2014, ISCO filed a Complaint seeking enforcement of the NCA Agreement and recovery of monetary damages. (Docket No. 1.) ISCO asserts claims for breach of contract, specific performance, and unjust enrichment against Shugart. ( Id. ) Shugart argues the NCA Agreement is unenforceable under Kentucky law and, therefore, ISCO fails to state a claim.


The Federal Rules of Civil Procedure require that pleadings, including complaints, contain a "short plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a)(2). A defendant may move to dismiss a claim or case because the complaint fails to "state a claim upon which relief can be granted." FED. R. CIV. P. 12(b). When considering a Rule 12(b)(6) motion to dismiss, the court must presume all of the factual allegations in the complaint are true and draw all reasonable inferences in favor of the nonmoving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citing Great Lakes Steel v. Deggendorf, 716 F.2d 1101, 1105 (6th Cir. 1983)). "The court need not, however, accept unwarranted factual inferences." Id. (citing Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)).

Even though a "complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). Instead, the plaintiff's "[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (citations omitted). A complaint should contain enough facts "to state a claim to relief that is plausible on its face." Id. at 570. A claim becomes plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). If, from the well-pleaded facts, the court cannot "infer more than the mere possibility of misconduct, the complaint has alleged-but has not show[n]'-that the pleader is entitled to relief.'" Id. at 1950 (citing FED. R. CIV. P. 8(a)(2)). "Only a complaint that states a plausible claim for relief survives a motion to dismiss." Id.


The NCA Agreement provides, in relevant part, that:

6. Covenants of Employee. (a) During employee's term of service with the Company, and for a period of three (3) years thereafter Employee shall not directly or indirectly engage in any activity or business in competition with any aspect of the business of the Company at the time of Employee's termination by soliciting, contacting or otherwise dealing with any customer of the Company, or other people that Employee sought to make a customer of the Company within three (3) years of the termination hereof ...

(Docket No. 9-2, at 3) (emphasis added.) Shugart points out that, while this section contains a temporal limitation of three years, ...

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