                                  NO. COA14-623

                        NORTH CAROLINA COURT OF APPEALS

                           Filed: 31 December 2014

TSG FINISHING, LLC,

    Plaintiff,

    v.                                     Catawba County
                                           No. 14 CVS 104
KEITH BOLLINGER,

    Defendant.


    Appeal by plaintiff from order entered 20 February 2014 by

Judge Calvin E. Murphy in Catawba County Superior Court.              Heard

in the Court of Appeals 3 November 2014.


    Law Offices of Matthew K. Rogers,               PLLC,   by   Matthew   K.
    Rogers, for plaintiff-appellant.

    Patrick, Harper & Dixon, LLP, by Michael P. Thomas, for
    defendant-appellee.


    HUNTER, Robert C., Judge.


    TSG Finishing, LLC (“plaintiff” or “TSG”) appeals from an

order denying its motion for a preliminary injunction aimed at

preventing its former employee, Keith Bollinger (“defendant”),

from breaching a non-competition and confidentiality agreement

(“the non-compete agreement”) and misappropriating TSG’s trade

secrets.      On appeal, plaintiff contends that the trial court

erred    by   denying     its   motion   for   a   preliminary   injunction
                                         -2-
because: (1) it has demonstrated a likelihood of success on the

merits of its claims for breach of contract and misappropriation

of    trade    secrets;     and   (2)   it   would    suffer     irreparable        harm

without issuance of the preliminary injunction.

       After careful review, we reverse the trial court’s order

and     remand     with     instructions        to    issue      the       preliminary

injunction.

                                    Background

       TSG is in the business of fabric finishing.                     It has three

plants    in     Catawba     County,     North       Carolina.         Rather      than

manufacturing fabrics, TSG applies chemical coatings to achieve

whichever result is desired by the customer, such as coloring,

stiffening, deodorizing, and abrasion resistance.

       Defendant began working in the field of fabric finishing

for Geltman Corporation after graduating from high school in

1982.     He has no formal education beyond high school.                            TSG,

Incorporated       (“TSG,     Inc.”)1    acquired      Geltman        in   1992,     and

defendant stayed on to work for TSG, Inc.                  By the late 1990’s,

defendant was promoted to Quality Control Manager.

       Defendant     was     responsible       for    assessing        a   customer’s

finishing needs and developing a finishing protocol for that

1
  As will be discussed             below,      plaintiff   is     a    wholly      owned
subsidiary of TSG, Inc.
                                          -3-
customer.       Defendant also helped in the creation of a “style

data card” for each customer.                  The style data cards contained

information on each step of the finishing process, such as: (1)

the     chemical     finish         compound,    70     percent      of     which     was

proprietary to TSG; (2) “cup weight” density; (3) needle punch

technique;     (4)   type      of    machine    needed      for   the     needle    punch

technique; (5) speed of needle punch; (6) types of needles used;

(7) needle punch depths; (8) method of compound application; (9)

speed    of   compound    application;          (10)   blade      size;    (11)    fabric

tension; and (12) temperature and type of drying required.

       Defendant testified during deposition that some of these

factors required trial and error to achieve a customer’s desired

result.       For example, on one of the style data cards used to

explain defendant’s work-related duties during the deposition,

defendant had marked a number of changes to the various factors

listed and signed his initials to the changes.                            He testified

that    he    changed    the    data     entered       by   the    customer       because

subsequent testing revealed different and more efficient methods

to achieve the result.               He also testified that the results of

the trials he conducted and the knowledge he gained regarding

how to achieve these results were not known outside of TSG.

Michael Goldman, the Director of Operations at TSG, filed an
                                         -4-
affidavit    in    which   he     asserted      that     some    of   the     customer

projects that defendant worked on required over a year’s worth

of trial and error to achieve a customer’s desired result.

      TSG expends great effort to keep its customer and finishing

information confidential.           Specifically, it uses a code system

in its communications with customers that allows the customer to

identify the type of finish it wants, but does not reveal the

chemicals or processes involved in creating that finish.                           TSG

has   confidentiality      agreements          in   place   with      many    of   its

customers.     Third parties must sign confidentiality agreements

and receive a temporary identification badge when visiting TSG’s

facilities.        TSG’s   computers       are      password      protected,       with

additional    passwords     being    required       to    access      the    company’s

production information.

      In   2007,   TSG,    Inc.    and    defendant       entered      into    a   non-

disclosure and non-compete agreement.                In exchange for an annual

increase in compensation of $1,300.00 and a $3,500.00 signing

bonus, defendant agreed not to disclose TSG, Inc.’s confidential

or proprietary trade secrets and further assented to employment

restrictions after his tenure at the company ended.

      TSG, Inc. filed for bankruptcy in 2009.                   By a plan approved

by the United States Bankruptcy Court on 1 May 2011, TSG, Inc.
                                      -5-
transferred its interests to plaintiff, a wholly owned operating

subsidy of TSG, Inc., which remained in operation.                According to

defendant, every aspect of his day-to-day job remained the same

after bankruptcy reorganization.

    In July 2013, defendant and a direct competitor of TSG,

American    Custom    Finishing,      LLC    (“ACF”),    began     negotiations

regarding defendant’s potential to leave TSG and work for ACF.

According to TSG, defendant resigned from his position on 21

November 2013 and announced that he was leaving to become plant

manager for ACF at a plant five miles away from TSG.                  Defendant

claims that he gave TSG two weeks’ notice on 21 November 2013

but was terminated immediately and escorted off of the premises.

Defendant began working for ACF the following Monday, on 25

November 2013.       During his deposition, defendant testified that

TSG and ACF shared certain customers, and that defendant is

responsible for performing similar customer evaluations for ACF

as he did at TSG.

    TSG     filed    suit   against    defendant    on    16     January   2014,

alleging    claims    for   breach    of    contract,    misappropriation    of

trade secrets, and unfair and deceptive practices.                    TSG also

moved for a preliminary injunction to prevent defendant from

breaching    the     non-compete     and    misappropriating      TSG’s    trade
                                        -6-
secrets.   A confidential hearing was held on plaintiff’s motion,

and by order entered 20 February 2014, the trial court denied

the motion for preliminary injunction.                 Plaintiff filed timely

notice of appeal.

                        Grounds for Appellate Review

    We     must     first     address     the       interlocutory      nature   of

plaintiff’s   appeal.         Orders    granting      or   denying    preliminary

injunctions       are    “interlocutory         and     thus   generally        not

immediately reviewable.         An appeal may be proper, however, in

cases, including those involving trade secrets and non-compete

agreements,   where     the   denial    of    the     injunction     deprives   the

appellant of a substantial right which he would lose absent

review prior to final determination.”               VisionAIR, Inc. v. James,

167 N.C. App. 504, 507, 606 S.E.2d 359, 361 (2004) (citations

and internal quotation marks omitted).

           [W]here   time    is   of   the   essence,   the
           appellate process is not the procedural
           mechanism best suited for resolving the
           dispute.     The parties would be better
           advised to seek a final determination on the
           merits   at   the    earliest   possible   time.
           Nevertheless, [where a] case presents an
           important question affecting the respective
           rights of employers and employees who choose
           to execute agreements involving covenants
           not to compete, we have determined to
           address the issues.
                                  -7-
A.E.P. Indus., Inc. v. McClure, 308 N.C. 393, 401, 302 S.E.2d

754, 759 (1983).    Citing the rule in A.E.P. Indus., Inc., this

Court has held that “the same reasoning applies to agreements

between an employer and employee regarding protection of the

employer’s alleged trade secrets.”       Horner Intern. Co. v. McKoy,

__ N.C. App. __, __, 754 S.E.2d 852, 855 (2014).           Accordingly,

because both a non-compete and the potential misappropriation of

trade secrets are implicated by this case,             we conclude that

plaintiff has succeeded in demonstrating how a substantial right

may be lost without immediate appellate review;           thus, we will

reach the merits of the appeal.

                             Discussion

                I. Misappropriation of Trade Secrets

    Plaintiff    first   argues   that   the   trial    court   erred   by

concluding that it has not demonstrated a likelihood of success

on the merits of its claim for trade secret misappropriation.

After careful review, we agree.

              As   a   general  rule,  a  preliminary
         injunction is an extraordinary measure taken
         by a court to preserve the status quo of the
         parties during litigation.      It will be
         issued only (1) if a plaintiff is able to
         show likelihood of success on the merits of
         his case and (2) if a plaintiff is likely to
         sustain    irreparable   loss   unless   the
         injunction is issued, or if, in the opinion
         of the Court, issuance is necessary for the
                                             -8-
            protection of a plaintiff’s                          rights    during
            the course of litigation.

A.E.P.    Indus.,    Inc.,         308   N.C.    at        401,    302    S.E.2d    at   759-60

(citations and internal quotation marks omitted).                               The standard

of    review   from       a    denial      of      a       preliminary         injunction      is

“essentially de novo,” VisionAIR, Inc., 167 N.C. App. at 507,

606   S.E.2d   at    362,      wherein       this      Court       is    not   bound     by   the

factual findings of the trial court, but may review and weigh

the evidence and find facts for itself, A.E.P. Indus., Inc., 308

N.C. at 402, 302 S.E.2d at 760.                              “Nevertheless[,] a trial

court’s     ruling    on       a    motion      for        preliminary         injunction      is

presumed to be correct, and the party challenging the ruling

bears the burden of showing it was erroneous.”                             VisionAIR, Inc.,

167 N.C. App. at 507, 606 S.E.2d at 362.

      The   Trade     Secrets        Protection            Act    (“TSPA”)     allows    for    a

private     cause    of       action     where         a    plaintiff        can   prove      the

“acquisition, disclosure, or use of a trade secret of another

without express or implied authority or consent, unless such

trade secret was arrived at by independent development, reverse

engineering, or was obtained from another person with a right to

disclose the trade secret.”                N.C. Gen. Stat. §§ 66-152(1), -153

(2013).

            “Trade secret” means business or technical
                                  -9-
          information, including but not limited to a
          formula,     pattern,     program,   device,
          compilation     of    information,   method,
          technique, or process that:

          a. Derives independent actual or potential
          commercial value from not being generally
          known   or  readily    ascertainable    through
          independent     development      or     reverse
          engineering  by    persons   who    can  obtain
          economic value from its disclosure or use;
          and

          b. Is the subject of            efforts that    are
          reasonable   under   the        circumstances    to
          maintain its secrecy.

N.C.   Gen.   Stat.   §   66-152(3)     (2013).   To   determine   what

information should be treated as a trade secret for the purposes

of protection under the TSPA, the Court should consider the

following factors:

          (1) the extent to which the information is
          known outside the business;

          (2) the extent      to which it is       known to
          employees and       others  involved      in  the
          business;

          (3) the extent of measures taken to guard
          secrecy of the information;

          (4) the value of the information to business
          and its competitors;

          (5) the amount of effort or money expended
          in developing the information; and

          (6) the ease or difficulty with which the
          information could properly be acquired or
          duplicated by others.
                                       -10-


Area Landscaping, L.L.C. v. Glaxo-Wellcome, Inc., 160 N.C. App.

520, 525, 586 S.E.2d 507, 511 (2003).

      “[A]ctual or threatened misappropriation of a trade secret

may be preliminarily enjoined during the pendency of the action

and   shall     be    permanently      enjoined    upon       judgment    finding

misappropriation[.]”        N.C. Gen. Stat. § 66-154(a) (2013).

              Misappropriation of a trade secret is prima
              facie established by the introduction of
              substantial evidence that the person against
              whom relief is sought both:

              (1) Knows or should have known of the trade
              secret; and

              (2) Has had a specific opportunity to
              acquire it for disclosure or use or has
              acquired, disclosed, or used it without the
              express or implied consent or authority of
              the owner.

N.C. Gen. Stat. § 66-155 (2013).

      Here, the trial court determined that plaintiff failed to

demonstrate      likelihood    of     success     on    the     merits    of   its

misappropriation       of   trade     secrets   claim     for    the     following

reasons: (1) plaintiff asserted that its finishing process “as a

whole” was the trade secret for which it sought protection, and

under the holding of Analog Devices, Inc. v. Michalski, 157 N.C.

App. 462, 468, 579 S.E.2d 449, 453 (2003), general processes are

too   vague    to    receive   TSPA    protection;      and     (2)    defendant’s
                                           -11-
familiarity with customer preferences was “more akin to general

knowledge and skill acquired on the job than any trade secret

maintained      by   [p]laintiff.”           For    the    following     reasons,    we

disagree with the trial court’s conclusions.

       First,   contrary        to   the   trial    court’s     assessment    of    the

preliminary injunction hearing, plaintiff did not “continually

assert” that it was the “combination of [the] components,” or

the    “process      as    a    whole,”    for    which    it   sought    protection.

Although     TSG’s         Chief     Executive       Officer      Jack     Rosenstein

(“Rosenstein”) did say that the entire equation of processes was

a trade secret in and of itself, he also testified that the

particular steps in the process were also trade secrets.                          As an

example, Rosenstein highlighted the needle punch technique on a

style data card that defendant had worked on during his time at

TSG.    The customer initially requested that the fabric be put

through the needle punch machine one time at a specific setting.

Through    trial          and    error,    defendant        discovered     that     the

customer’s desired result could not be accomplished by running

the needle punch machine one time at this setting, so he changed

the    process       after       experimenting        with      varying     settings.

Rosenstein testified the needle punch research for this client,

in addition to the similar types of                       experimentation    done to
                                        -12-
various    processes    throughout        the   finish   equation,     were   trade

secrets.    Specifically, he testified as follows:

            [ROSENSTEIN]: That’s all part of the trade
            secrets.      That’s   all   part of   what
            [defendant], in his own mind when he’s
            looking at a new fabric, needs to determine
            – which Latex should be used, what density
            needs to be used, whether it needs to be
            needle punched or not and then within that
            which – which needle punch, what depth of
            penetration – exactly what the parameters
            are. Then he needs to determine what range
            it needs to go on, what speed needs to be
            run, what the finish is. . . .

            Q: And so each one of those variables
            impacts the other variables in the equation?

            [ROSENSTEIN]: Yes.

Therefore, it was not just the process as a whole, but the

specific knowledge defendant gained as to each discrete step in

the process, that TSG sought to protect.

       Based on Analog Devices, Inc., the trial court concluded

that   plaintiff    had    failed      to   “put    forward   enough    facts   to

support trade secret protection over the process as a whole or

any particular component such that the [trial court] would be

justified    in   granting      the    injunction    sought.”      However,     the

Analog Devices, Inc. Court upheld the denial of a preliminary

injunction    in    part        because     the    differences     between      the

defendant’s    former     and    new   employers     “render[ed]     the   alleged
                                        -13-
trade secrets largely non-transferable.”                   Analog Devices, Inc.,

157 N.C. App. at 467, 579 S.E.2d at 453.                   Furthermore, the Court

determined    that    the     plaintiff    did      not    carry   its    burden   of

producing evidence specifically identifying the trade secrets it

sought to protect.          Id. at 469, 579 S.E.2d at 454.              The evidence

before the Court showed that some of the plaintiff’s production

techniques were “easily and readily reverse engineered,” while

others were “either generally known in the industry, are process

dependent so as to preclude misappropriation, or are readily

ascertainable by reverse engineering.”                    Id. at 470, 579 S.E.2d

at 454.    Finally, regarding the processes used by the plaintiff,

the Court found that there was substantial differences between

the   products   of    the     two   companies      that     would      “require   new

experimentation       and    development       of   new     ways   to    effectively

identify efforts that will lead to successful development.”                        Id.

Thus,   the   Court    affirmed      the    trial     court’s      denial    of    the

preliminary injunction.         Id. at 472, 579 S.E.2d at 455.

      The facts of this case are readily distinguishable from

Analog Devices, Inc., and they demonstrate that TSG would likely

prevail on the merits of its claim for misappropriation of trade

secrets.      Using    the    factors     enunciated       by   Area    Landscaping,

L.L.C., 160 N.C. App. at 525, 586 S.E.2d at 511, TSG presented
                                                   -14-
sufficient evidence on its specific trade secrets to warrant

protection.       First, Rosenstein testified that the company spends

$500,000.00 per year on research and development in order to

create    unique        finishes      and          applications        for    his     customers.

Defendant testified that the results of his experimentation at

TSG    regarding         specific        process           refinements       were    not    known

outside of TSG.           Rosenstein also testified that defendant’s work

was not something that anyone else in the industry would know

without years of trial and error by experienced technicians.

Security    measures           were      in        place     such    that     only     top-level

employees        were     familiar            with        the     proprietary        information

defendant     was        in     charge        of     developing.            The     trial   court

acknowledged        in        its   order          that     TSG     “maintains       significant

security measures over its finishing process.”                               Indeed, TSG made

its      employees,            customers,            and        facility      visitors       sign

confidentiality               forms       to          protect          this         information.

Additionally, Rosenstein testified that defendant’s disclosure

of the trade secrets would give ACF the opportunity to save

“untold amounts of hours, days, weeks, and months to come up

with     these     finishes         and       these        applications.”             Rosenstein

testified that defendant could help ACF achieve their customers’

desired results, which they sometimes shared with TSG, without
                                              -15-
spending      the     money       on     research       and      development        that    TSG

invested.         Defendant admitted as much in his deposition when he

testified that he performs many of the same duties for ACF for

some   of    the    same    customers         that    he    formerly       served    at    TSG.

Therefore, unlike in Analog Devices, Inc., there was significant

evidence showing that TSG’s trade secrets were transferrable to

ACF.        Over    the    past    two       decades,      TSG   invested     millions       of

dollars      to     develop       and     protect       the      information        defendant

compiled      through      his     years      of   employment.         The    director       of

operations at TSG testified in deposition that defendant would

sometimes work for more than a year on a process in order to

achieve a desired result.                There is no indication in the record

that these process are able to be “reverse engineered” like

those in Analog Devices, Inc., and it is undisputed that they

are not generally known throughout the industry.

       In    sum,    each     of       the    factors       identified       by     the    Area

Landscaping, L.L.C. Court weigh in plaintiff’s favor.                               Plaintiff

specifically        identified         the    production         factors    for     which    it

claims trade secret protection.                      Defendant acknowledged during

his deposition that he performed research and development for

these factors during his time at TSG and was responsible for

keeping      customer-      and     fabric-specific           proprietary         information
                                                 -16-
regarding these processes on the style data cards.                                       Therefore,

we conclude that plaintiff has carried its burden of presenting

evidence      sufficient           to    identify          the    specific      trade       secrets

protected by the TSPA.

    Additionally, we hold that plaintiff presented prima facie

evidence      of    misappropriation             of     its      trade   secrets.           “Direct

evidence      .    .     .   is    not    necessary         to      establish    a       claim   for

misappropriation of trade secrets; rather, such a claim may be

proven     through           circumstantial           evidence.”             Medical       Staffing

Network, Inc. v. Ridgway, 194 N.C. App. 649, 658, 670 S.E.2d

321, 329 (2009).               Defendant testified that he is being asked to

perform similar duties for ACF that he did at TSG, including

evaluating customer needs and organizing production processes.

Defendant acknowledged that TSG and ACF share customers and that

he is currently working with multiple customers for ACF that he

served   at       TSG.         Specifically,          he    admitted     that       he    had    done

independent research and experimentation for TSG on the needle

punch, finish, and heating processes for one specific customer

that he now serves at ACF, and that he talks about the various

components         of    the      TSG    style    data      cards     with     ACF       management

personnel.              This       is     precisely           the     type     of        threatened

misappropriation, if not actual misappropriation, that the TSPA
                                            -17-
aims to prevent through issuance of a preliminary injunction.

See N.C. Gen. Stat. § 66-154(a) (2013) (“[A]ctual or threatened

misappropriation of a trade secret may be preliminarily enjoined

during   the     pendency       of   the    action      and   shall      be     permanently

enjoined upon judgment finding misappropriation . . . .”); see

also Horner Intern. Co., __ N.C. App. at __, 754 S.E.2d at 859

(“Courts have upheld grants of a preliminary injunction where

plaintiffs have presented some evidence that former employees

have or necessarily will use trade secrets.”).

    Based        on     the     foregoing,         we   conclude         that     plaintiff

demonstrated a likelihood of success on the merits of his claim

for trade secret misappropriation.

                               II. Breach of Contract

    Plaintiff          next     argues     that     the   trial         court    erred    by

concluding that it failed to present a likelihood of success on

the merits of its claim for breach of the non-compete.                                    We

agree.

    Due     to    a     choice       of    law     provision       in    the    agreement,

Pennsylvania          law     governs      enforcement        of    the        non-compete.

“[R]estrictive         covenants     are    not     favored    in       Pennsylvania     and

have been historically viewed as a trade restraint that prevents

a former employee from earning a living.”                      Hess v. Gebhard & Co.
                                               -18-
Inc.,    808    A.2d   912,         917    (Pa.      2002).      However,     “restrictive

covenants are enforceable if they are incident to an employment

relationship between the parties; the restrictions imposed by

the covenant are reasonably necessary for the protection of the

employer; and the restrictions imposed are reasonably limited in

duration       and   geographic           extent.”       Id.      Thus,       in   assessing

whether    to    enforce        a    non-compete        agreement,      Pennsylvania       law

requires       the   court          to    balance      “the    employer’s      protectable

business       interests     against           the    interest    of    the   employee      in

earning    a    living     in       his   or    her    chosen    profession,       trade    or

occupation, and then balance[e] the result against the interest

of the public.”        Id. at 920.

      Here, the trial court rejected plaintiff’s argument that

the   non-compete        was        enforceable        for    three    reasons:     (1)    the

agreement does not contain an explicit “assignability” clause

that would allow defendant to be bound to the contract after

bankruptcy reorganization, wherein all of the company’s assets

and     contracts      were          transferred        from     TSG,     Inc.      to     its

subsidiaries; (2) even if there were an assignability clause,

there is no indication in the record that the non-compete was

actually assigned from TSG, Inc. to plaintiff; and (3) even if

the court concluded that there was an effective assignment, the
                                            -19-
balancing of the equities would require the trial court to find

the non-compete unenforceable.

      First, defendant relies on Hess for the proposition that an

explicit     assignability         clause    was      necessary    for      plaintiff     to

enforce the non-compete. In Hess, the Pennsylvania Supreme Court

determined      that      employment        contracts      are    “personal        to    the

performance of both the employer and the employee.”                              Hess, 808

A.2d at 922.        Thus, if an employer with a valid non-compete in

an employment contract is later acquired by a separate entity,

it   does    not   necessarily       follow        that   “the    employee       would    be

willing to suffer a restraint on his employment for the benefit

of a stranger to the original undertaking.”                      Id.     Thus, the Hess

Court    held      that     “a    restrictive         covenant     not      to    compete,

contained in an employment agreement, is not assignable to the

purchasing      business         entity,    in     the    absence      of    a    specific

assignability provision, where the covenant is included in a

sale of assets.”          Id.

      The situation in this case is not one where plaintiff was a

“stranger to the original undertaking.”                          Unlike the sale of

assets      between       two    companies       at      arms’    length,        like    the

transaction that took place in Hess, the assignment in this case

took place in the context of a bankruptcy reorganization, where
                                         -20-
the    same     company     policies      and    management          were    retained.

Plaintiff is a wholly owned subsidiary of TSG, Inc., with whom

defendant entered into the non-compete.                 As Rosenstein testified

at the hearing, “[i]t’s not a new entity. . . .                       it’s basically

the same company it was.”             According to defendant, every aspect

of his job remained unchanged after the assignment.                          Therefore,

the    facts    here    are    more    analogous       to     those     cases     where

Pennsylvania      courts      have     declined        to     make     assignability

provisions a requirement, such as with a stock sale or merger,

because the contract rights are not given to a completely new

entity.       See J.C. Ehrlich Co., Inc. v. Martin, 979 A.2d 862,

865-66 (Pa. 2009) (holding that where an employee’s obligations

and duties did not change in any material way after a stock

purchase, a non-compete agreement was enforceable by the company

with    whom     the      agreement      was    made        without     an     explicit

assignability clause).         Accordingly, we reject the trial court’s

conclusion that the non-compete is unenforceable because it did

not contain a specific assignability provision.

       Second, we find that the trial court erred by concluding

that    there    is    insufficient      evidence      in     the     record    of   an

assignment      between    TSG,   Inc.    and   plaintiff.            The    Bankruptcy

Court order makes implicit mention of plaintiff as an “operating
                                        -21-
subsidiary” and of the assignability of the non-compete as an

“executory     contract.”        Specifically,        the    order      contains    the

following:

           As of the Effective Date, all Executory
           Contracts that are not designated to be
           rejected   by   the   Debtor    in   the   Plan
           Supplement shall be deemed assumed.         Any
           assumed Executory Contract to which the
           Debtor is a party shall be, as of the
           Effective   Date,   deemed   assumed   by   the
           Reorganized Debtor and assigned to the TSG
           Real Estate Subsidiary or the TSG Operating
           Subsidiary, as the case may be.       Entry of
           this Order shall constitute, pursuant to
           Section 365 of the Bankruptcy Code, approval
           of the assumptions and assignments described
           herein as of the Effective Date. The Debtor
           shall not be required to obtain any third
           party consents to affect such assignment.

At the hearing, Rosenstein specifically testified that the non-

compete    between       TSG,   Inc.     and   defendant          was   assigned     to

plaintiff.       We conclude that Rosenstein’s testimony, in addition

to the Bankruptcy Court’s approval of the executory contract

assignments in its order, was sufficient to find that the non-

compete    was      assigned    to     plaintiff      in    the     course   of     the

bankruptcy reorganization.

    Additionally, we believe that the restrictions imposed in

the non-compete are reasonable.                Under Pennsylvania law, the

burden    is   on      the   employee    to    show    how    a     non-compete      is

unreasonable      in    order   to   prevent    its    enforcement.          John    G.
                                        -22-
Bryant Co., Inc. v. Sling Testing & Repair, Inc., 369 A.2d 1164,

1169    (Pa.    1977).          The     non-compete   provided       that   upon

termination, defendant would be prevented from participating in

the field of “textile finishing” for two years in the prohibited

territory, which was defined, in part, as all of North America.

Specifically, the non-compete prevents defendant from:

           [E]ngaging, as an employee or contractor, in
           the   performance   of   Textile   Finishing,
           engaging in the manufacture of Textile
           Finishing machinery or equipment, including
           but not limited to a jobber, reseller, or
           dealers   of   used  textile   machinery   or
           equipment or engaging in sales, marketing or
           managerial services for any individual or
           entity that competes with TSG directly or
           indirectly within the Prohibited Territory.

In contrast to unenforceable non-competes restricting “any work”

competitive     to     the      employer,      Zimmerman     v.    Unemployment

Compensation Bd. Of Review, 836 A.2d 1074, 1081 (2003), the non-

compete here permissibly restricts defendant from engaging in

the specific industrial practices that could harm the legitimate

business interests TSG seeks to protect.

       Furthermore, defendant has failed to carry his burden of

demonstrating    that     the    time    and   geographic    restrictions    are

unreasonable     and      render        the    non-compete        unenforceable.

Pennsylvania     courts      have     consistently    enforced      non-compete

agreements restricting employment for two or more years.                     See
                                              -23-
John G. Bryant Co., Inc., 369 A.2d at 1170 (holding that a

three-year       restriction           was     reasonably        necessary      for    the

protection of the employers to strengthen customer contact after

a   principal         sales        representative       stopped       working   for    the

employer).       Additionally, Pennsylvania courts have established a

correlation between reasonableness of a geographic restriction

and the employer's verifiable market.                      See Volunteer Firemen’s

Ins. Servs., Inc. v. CIGNA Prop. & Cas. Ins. Agency, 693 A.2d

1330,     1338    (Pa.    Super.        1997).       Specifically,         Pennsylvania

federal    courts       have       upheld     covenants    restricting       competition

nationwide       or   throughout        the    region     of   North    America,      where

appropriate.          See Quaker Chem. Corp. v. Varga, 509 F.Supp.2d

469, 476 (E.D.Pa. 2007).                TSG presented evidence that it serves

customers throughout at least 38 states, in addition to Canada

and Mexico.       Defendant claims that TSG failed to explain how the

geographic restrictions are reasonable, and also argues that the

cases     TSG    cites        in     support    of   the       time    restriction      are

inapposite.       However, the burden is not on TSG to establish that

the restrictions in the non-compete are reasonable; rather, the

burden rests with defendant to show that they are unreasonable

and that the contract he signed is unenforceable.                           See John G.
                                             -24-
Bryant Co., Inc., 369 A.2d at 1169.                           Defendant has failed to

carry that burden here.

      Finally, we turn to the trial court’s determination that

the     equities        weighed       against         enforcing        the    non-compete.

“Fundamental       .    .    .   to   any    enforcement            determination    is    the

threshold assessment that there is a legitimate interest of the

employer    to     be       protected       as   a    condition        precedent     to    the

validity of a covenant not to compete.”                         Hess, 808 A.2d at 920.

“Generally, interests that can be protected through covenants

include trade secrets, confidential information, good will, and

unique     or    extraordinary          skills.”              Id.       “[T]he     issue    of

enforceability is one to be determined on a case-by-case basis,”

Missett v. Hub Intern. Pennsylvania, LLC, 6 A.3d 530, 539 (Pa.

Super. 2010), wherein the Court is to consider all relevant

facts    and     circumstances,             Insulation         Corp.     of      America    v.

Brobston, 667 A.2d 729, 734 (Pa. Super. 1995) (also noting that

“[a] restrictive covenant found to be reasonable in one case may

be unreasonable in others”).

      Among      the        important       factors      that        Pennsylvania     courts

consider in assessing the enforceability of a non-compete are:

(1) the circumstance under which the employment relationship was

terminated;      (2)     the     employee’s          skills    and     capacity;    (3)    the
                                            -25-
length     of    time    of   the     previous     employment;      (4)    the   type   of

consideration paid to the employee; (5) the effect of restraint

on   the        employee’s       life;      and    (6)    circumstantial         economic

conditions.        See Brobston, 667 A.2d at 737.

                It bears noting that there is a significant
                factual distinction between the hardship
                imposed by the enforcement of a restrictive
                covenant on an employee who voluntarily
                leaves his employer and that imposed upon an
                employee who is terminated for failing to do
                his job.    The salesman discharged for poor
                sales   performance   cannot  reasonably  be
                perceived to pose the same competitive
                threat to his employer’s business interests
                as the salesman whose performance is not
                questioned, but who voluntarily resigns to
                join another business in direct competition
                with the employer. . . .     [O]nly when the
                novice has developed a certain expertise,
                which could possibly injure the employer if
                unleashed competitively, will the employer
                begin to think in terms of a restrictive
                covenant[.]

Id. at 735-36 (citation and quotation marks omitted).

     Based        on    the   record     before     us,   we    believe     that    these

notions     weigh       in    favor    of    enforcement       of   the    non-compete.

Defendant worked at TSG for 27 years and became one of its most

trusted     and        skilled    managers.          Throughout      his     tenure     he

developed valuable expertise in the field of textile finishing

through trial-and-error and industrial experimentation that was

highly guarded by TSG and not known throughout the industry.                            In
                                             -26-
exchange    for        his    assent   to     the     non-compete,            defendant        was

offered an annual increase of $1,300.00 to his regular salary

and a signing bonus of $3,500.00; defendant considered TSG’s

offer for at least two weeks before eventually agreeing to the

non-compete and accepting this increase in compensation.                                   Rather

than being terminated for poor work, defendant was specifically

recruited     and       voluntarily         left    TSG       to    work      for    a     direct

competitor    at       a     plant   five    miles    away         without     giving       prior

notice or asking for a raise from TSG.                              ACF did not require

defendant to provide a resume or interview for the position;

defendant was hired after meeting with an ACF representative one

time.     Given that defendant possessed advanced expertise in the

field of textile finishing and abruptly and voluntarily left his

position at TSG after 27 years of service to work for a direct

competitor,       we    find    that   he     poses       a   significant           competitive

threat to TSG’s legitimate business interests should the non-

compete be unenforceable.

    Despite        these       factors,      defendant        argues,      and       the    trial

court agreed, that enforcement of the non-compete essentially

renders    him     unemployable        for     two    years        because      he       has   “no

experience outside of textile finishing, rudimentary computer

skills,     and     no       college   education.”                 We   are     unpersuaded.
                                           -27-
Defendant     argued      in     his    brief    that       ACF   hired    him     for    “his

management     skills       in   dealing       with    employees,      human      resources

issues, equipment dealers, customer complaints and suppliers,

not   for    any    trade      secrets    or    other       confidential        information

which   he    might       know    from    his     time       at   TSG[.]”         Skill    in

management and human resources is desirable in many fields, not

just textile finishing.                Although the non-compete does restrict

defendant     from    working       as    an    employee      for   any        company    that

competes with TSG “in sales, marketing or managerial services,”

TSG’s competitors only comprise a small subset of companies and

industries where such skills are valuable.                          Defendant admitted

that before leaving TSG for ACF, he did not look for other

employment.         TSG presented evidence of multiple job openings

within 25 miles of Hickory, N.C., that were not competitive to

TSG and listed experience in plant management and manufacturing

as desirable traits.                Therefore, we disagree with the trial

court’s     conclusion       that      enforcement      of    the   non-compete          would

effectively prevent defendant from attaining employment anywhere

in North America.

      We     also    find        TSG’s    policy        arguments         in     this     case

persuasive.         TSG     employs      around       160    people.           According    to

Rosenstein, the customers that defendant now serves at ACF could
                                         -28-
account for up to forty percent of TSG’s business, and some of

the customer relationships that TSG has had for many years are

now “strained” due to defendant’s transition from TSG to ACF.

In   weighing    the      equities,    we   are    permitted      to    consider     the

effect that breach of a non-compete may have on an employer’s

protectable business interests.              Hess, 808 A.2d at 920.                 Among

these,   we     consider      the     potential    harm     done       to   other    TSG

employees should defendant be permitted to retain employment at

ACF in contravention of the non-compete.                    The significant risk

that   defendant’s        actions    pose   to    TSG’s    competitive       advantage

indirectly threaten the job security of many others who work for

TSG.     Thus,       in   balance,     we   find    that    the    equities         favor

enforcement of the non-compete.

       In sum, we hold that the non-compete was validly assigned

to plaintiff through bankruptcy reorganization, the non-compete

itself   is     reasonable      to     protect     TSG’s    legitimate        business

interests, and the equities weigh in favor of enforcement under

these facts.         Therefore, because it is undisputed that defendant

is in breach of the non-compete by working for ACF, a direct

competitor      of     TSG,   we     hold   that    TSG     has    demonstrated        a

likelihood of success on the merits of its claim for breach of

contract.
                                             -29-
                                III. Irreparable Loss

       Having set out that TSG has demonstrated a likelihood of

success on the merits of its claims, we must now turn to whether

it has shown irreparable loss should the injunction fail to

issue.     See A.E.P. Indus., Inc., 308 N.C. at 401, 302 S.E.2d at

759-60.     This Court has recognized that “[i]ntimate knowledge of

the business operations or personal association with customers

provides an opportunity to [a] . . . former employee . . . to

injure the business of the covenantee.”                      QSP, Inc. v. Hair, 152

N.C.   App.      174,    178,    566       S.E.2d    851,        854   (2002)     (internal

quotation marks omitted).               Both the QSP, Inc. and A.E.P. Indus.,

Inc. Courts have “emphasized that this potential harm warrants

injunctive relief,” Id.                Specifically, in QSP, Inc., the Court

held     that     the     plaintiff         company        was     likely    to       sustain

irreparable       loss    unless       a   preliminary       injunction         was   issued

where the evidence showed that: (1) the defendant violated a

non-compete       agreement       by       soliciting       customers       for   a     rival

company,        (2)     the   defendant        misappropriated           the      plaintiff

company’s confidential information for the rival company, and

(3) the plaintiff would continue to suffer injury should the

defendant        not     be     restrained          from     further        violating       a

confidentiality and non-compete agreement.                         QSP, Inc., 152 N.C.
                                         -30-
App. at 179, 566 S.E.2d at 854.                 Here, the evidence shows that:

(1)   defendant       has    the   opportunity          to     misappropriate        the

confidential information and trade secrets that he developed for

TSG; (2) ACF could benefit by having defendant’s knowledge of

TSG’s trade secrets because it could produce similar products

without   expending      resources   on     research         and   development;      (3)

defendant performs similar work at ACF for some of the same

customers that he served at TSG; (4) Rosenstein testified that

those customers could amount to as much as forty percent of

TSG’s business; (5) TSG had relationships with these customers

for decades; and (6) TSG’s relationships with these customers

became “strained” once defendant left TSG to work for ACF.                           Like

in QSP, Inc., it is clear here that TSG has demonstrated that it

is likely to suffer irreparable loss unless the injunction is

issued, because TSG is at risk of losing its long-held customers

and   whatever    competitive      advantage       it    may       have   had   in   the

textile finishing industry.          See also John G. Bryant Co., Inc.,

369 A.2d at 1167 (“[A non-compete] is designed to prevent a

disturbance      in    the   relationship        that    has       been   established

between   [the        employer]    and     their     accounts         through    prior

dealings. It is the possible consequences of this unwarranted
                                 -31-
interference with customer relationships that is unascertainable

and not capable of being fully compensated by money damages.”).

                              Conclusion

    For the foregoing reasons, we conclude that the trial court

erred   by   denying   plaintiff’s   motion   to   issue   a   preliminary

injunction.    Plaintiff has demonstrated a likelihood of success

on the merits for its claims of trade secret misappropriation

and breach of contract and has shown irreparable loss absent the

issuance of the preliminary injunction.        Accordingly, we reverse

the trial court’s order and remand with instructions to issue

the preliminary injunction.



    REVERSED AND REMANDED.

    Chief Judge McGEE and Judge BELL concur.
