The North Carolina Business Court issued a ruling May 2 in favor of Sunbelt Rentals over Head & Engquist Equipment and certain individual defendants. The ruling awards Sunbelt $15 million in damages resulting from litigation around Sunbelt’s 2000 acquisition of BET USA.
The court found defendants violated the North Carolina Unfair and Deceptive Trade Practices Act, misappropriated trade secrets, and committed civil conspiracy in their efforts to develop their aerial work platform business by raiding more than 100 staff members from the BPS division of BET. The individual defendants are Robert Hepler, president of H&E’s Hi-Lift Division; Douglas Kline, vice president and chief financial officer; Michael Quinn, product manager and eastern region vice president; Gregg Christensen, western division vice president and Brian Piersall, Charlotte, N.C., branch manager. The court found that the staff raid included two former BPS regional managers, six branch managers, and other staff members, and that H&E used this staff to open competing aerial work platform rental centers in key markets served by Sunbelt, including Atlanta, Charlotte, Tampa-Fort Myers and Orlando, Fla., Dallas and Houston.
The court ruled that Hepler, Kline, Quinn, Christiansen and Piersall all had served in similar capacities at BPS before going to H&E to help that company develop its aerial work platform business in the same market areas they had developed for BPS. The court found that Hepler and Kline intended to compete with the former BPS branches by hiring key BPS personnel who would bring the information necessary to develop greenfield startups more quickly, plus key relationships with customers in the area.
The court found that H&E used customer information brought to it by the BPS employees it brought on board immediately – including pricing, customer and credit information and information related to prospective and upcoming jobs – in order to solicit and secure jobs. It also ruled that the departure of numerous employees hurt BPS, making it “unable to get equipment out to customers on a timely basis because of lack of trained personnel, including mechanics and drivers.”
The court noted that none of the employees hired by H&E, including Hepler and Kline, had any form of contract containing a restrictive covenant or covenant not to compete with BPS, now owned by Sunbelt. The court did not rule that H&E could not hire BPS employees, but that the defendants committed deliberate acts of disruption and manipulated employee departures in the form of mass resignations in a manner “calculated to handicap BPS in such a way that Hi-Lift could take competitive advantage of the situation it had unfairly created.”
In its counterclaim, H&E said that Sunbelt “resented H&E’s lawful success” and “wanted to avoid having to compete with H&E for employees and customers”. It added that Sunbelt, by filing a lawsuit, “unlawfully sought to intimidate, harass and scare smaller H&E into wasting its resources and ceasing to lawfully recruit and hire Sunbelt’s employees, pursue customers and otherwise compete with Sunbelt.”
The court did not accept H&E’s claims. H&E has the right to appeal the court’s decision.