Judge Susan C. Rodriguez of the Western District of North Carolina heard arguments from all parties involved in the Joe Gibbs Racing vs Chris Gabehart and Spire Motorsports case on Thursday but ultimately did not render a preliminary injunction ruling.
Specifically, Joe Gibbs Racing is seeking an injunction from the court that would prevent Gabehart from working for Spire in any function similar to the one he had as JGR competition director while also forcing him to comply with a court order to not share any proprietary information from his previous employer.
Overall, it was a lengthy day in court.
The proceedings began at 9:15 a.m. with Joe Gibbs Racing making its argument to Judge Rodriguez through attorney Tom Melsheimer. That took 70 minutes. There was a brief 15-minute break before another 70-minute argument from Spire in the form of attorneys Lawrence Cameron and Joshua Davey alongside Gabehart attorney Cary B. Davis.
Much of the argument was a rehash of the legal filings put into the record on Wednesday night but there continues to be a tremendous amount of disagreement over when exactly Gabehart was no longer working at Joe Gibbs Racing. There are two key dates:
There is November 11, when Gabehart ceased performing duties for JGR and February 9, when JGR sent Gabehart a letter saying he was terminated. It’s complicated because Gabehart claims JGR violated its contract with him whilst the team has two rebuttals to that.
1) That Gabehart was potentially misappropriating their trade secrets, a violation
2) That Joe Gibbs Racing contractually had 60 days to cure or remedy whatever issue Gabehart had with his duties
“I’m perplexed we’re even still talking about this or that they think it gets them out of this,” said Melsheimer on behalf of Joe Gibbs Racing.
This is the alleged violation of the non-compete provision in the Gabehart-JGR contract.
As far as Gabehart and Spire are concerned, Davis said Joe Gibbs Racing doesn’t ‘get to terminate Gabehart twice’ and ‘you don’t get two bites at the apple’ in terms of extending the non-compete or ensuring they get the non-compete provision it specifically wants.
“They need to show the court cause for the 18 month non-compete,” Davis said representing Gabehart.
That cause, according to Melsheimer and Gibbs, is the imminent harm that Gabehart represents through the alleged misappropriation and possible implementation of proprietary JGR processes and information.
Joe Gibbs Racing was granted last week a degree of expedited discovery on Gabehart and that produced, in part, a spreadsheet that appears replicated from the former for use by the latter at Spire.
Most curious to JGR, and the judge had some questions about this too, is that it appears that Gabehart created a Excel spreadsheet that for Spire that appears identical to one used by Joe Gibbs Racing.
This spreadsheet was created in on January 28, even though Spire says Gabehart did not start working until February 17 and even earlier than email exchanges that suggest Gabehart may have been informally working there by early February.
“Keep in mind the context, on January 28, what was happening,” Melsheimer said. “He was six weeks into a cease and desist. You have to stop violating the law and your contractual agreement but this gentleman was continuing to replicate this really important document.”
There was also a ‘focus plan’ created by Gabehart and both of these documents are under seal from the public. The attorneys broadly described these and Melsheimer said its suspicious because both documents make use of Spire vector logo files and the official company letterhead that reads ‘RESPECT.’
“It’s ironic,” said Melsheimer. “It’s the complete opposite of respect when you steal something from a competitor.”
For their part, Davis said Gabehart used information that anyone could find on NASCAR.com to populate the tabs.
The judge wanted to know more about this spreadsheet and asked Davis about it.
“The first answer I would give you is this is just Chris’ know-how and there’s nothing wrong with that,” he said.
Davis also said that the document that Gibbs says Gabehart basically replicated was one that Gabehart created for them in the first place. It featured Gibbs’ stylistic approach because it was the one he created for them.
The judge then immediately came back with a tough question:
“If Mr. Gabehart is not doing the same thing for Spire that he was doing at Joe Gibbs Racing then why is he creating the same spreadsheet?”
Davis speculated that his client was merely making a spreadsheet for his personal use to keep track of things regarding his next job. ‘This is what he does. It’s part of his tool kit.’ Davis said these were not trade secrets.
The judge responded that ‘the jury is still out’ on that. Judge Rodriguez said she generally agrees with Davis that there is nothing wrong with Gabehart creating a business plan for himself at Spire but that the document appears to be a complete replication of one used by Gibbs was ‘curious and alarming.’
Gabehart continues to have to answer for the Joe Gibbs Racing documents and files that he downloaded to his personal Google drive, and the photos he took of others on his phone, that he since says has been deleted or turned over to Gibbs.
Davey, arguing on behalf of Spire, had to address that point again to the judge.
"He screwed up. He did,” Davey said of Gabehart acquiring those files in the fashion he did. “But it's not because he was conspiring with Spire or that we wanted it. We don't want it. We don't need it."
It is the continued stance of Spire that they are not using any Joe Gibbs Racing trade secrets upon the hiring or negotiations with Gabehart.
But then there is the matter of the deleted text messages that Joe Gibbs Racing said they were unable to get Gabehart to produce in discovery. On one hand, there is no proof from JGR that Gabehart provided any trade secrets to Spire and JGR continues to admit that in court.
However, there was a text conversation between Gabehart and Spire co-owner Jeff Dickerson prior to November 15 that could not be reproduced at this time. They were deleted because Gabehart says there was no belief that this matter could become the subject of litigation.
This text conversation came a week after the alleged misappropriation of JGR trade secrets began. And by November 18, Dickerson and Gabehart were having text conversations about the possibility of litigation.
The judge finds that alarming.
“I do think the timeline is very problematic for defendant Gabehart,” said Judge Rodriguez.
With that said, the matter will be taken up at a later date and could be lumped into regular discovery procedures.
What's next?
Judge Rodriguez took 45 minutes in her chambers to decide whether or not she was going to issue a ruling on the preliminary injunction motion.
She returned to court at the end of the day to decide to put some more time into it.
“I want a little more time,” Rodriguez said. “…There are some issues I need to dig my teeth into and get this right. There is livelihoods and business on the line.”
As a result, the temporary restraining order preventing Gabehart from working in the same capacity at Spire as he was with Joe Gibbs Racing has been extended to April 9. However, a decision, which could still come any day, could render that TRO a moot point.
The court will take up a motion from JGR on April 8 over third-party expedited discovery issues and the response to that from Spire and Gibbs will be due on April 11. The reply to the response from JGR will be due on April 13.
Attorney statements outside court
Speaking on the court steps, Lawrence Cameron representing Spire said it’s been ‘disappointing’ hearing ‘these extreme allegations without backing it up with any evidence.’
“At the beginning of this case, if you remember,” Cameron said. “JGR alleged that we had stolen their secret sauce, right. They specifically said Spire knew of or encouraged the stealing of the secret sauce. What’s been discussed today and in court filings is essentially a spread sheet with publicly available data. There’s just no evidence to support those allegations against Spire.”
With all of that said, in the mind of Melsheimer, why is this case important to Joe Gibbs Racing.
“It’s a good question, but it’s important because it’s our property and trade secrets, our confidential information,” Melsheimer said. “That’s all we’re trying to protect. The promise Mr. Gabehart made to us, we’re trying to protect our information.”
