It's a David and Goliath story that's gone to the dogs. Phoenix-based PetsMart, the largest pets store in North America with more than 600 superstores and second quarter net income of $28 million, filed a civil lawsuit earlier this year to shut down a small Mesa dog grooming shop named Aunt Donna's, a business the owner says makes $800 a week while spiffing up an average of 30 pooches.
“They even had a private investigator come here to have their dog done to see if we were grooming,” said Donna Rager, a former PetsMart groomer and owner of Aunt Donna's.
“There's a big red sign that says 'Grooming.' You can't miss it.”
When Rager went to work for PetsMart in July 1996, she signed noncompete and confidentially agreements that said she would not compete within five miles of a PetsMart. When she quit the store in April, she opened her 800-square-foot grooming business at Baseline and Extension roads, less than five miles from a PetsMart at Stapley Drive and Baseline Road.
Citing the agreement, the company sued in June saying the shop will cause “substantial, immediate and irreparable harm.” It also alleged she took the company's trade secrets, including confidential grooming training materials and customer contact information.
The company also accused Rager of recruiting at least two PetsMart groomers who also had signed a noncompete clause. Jennifer Pflugfelder, a PetsMart spokeswoman, said company policy is not to comment on cases in litigation. Two calls to the company's attorney, Robert Itri, were not returned.
Arizona State University law professor Jonathan Rose said noncompete contract clauses are common.
Most often they are used with high-profile people who have special skills or access to trade secrets.
“They are enforceable only if they are reasonable,” he said. “They have to be necessary to project some legitimate interest of the employer.”
In Rager's case, Rose said the mere fact PetsMart gave her some training probably wouldn't be enough to enforce the agreement.
“But if she had a lot of customer or trade secret information, they might say what outweighs the obvious restriction it puts on her ability to practice her profession.”
Lately Arizona courts have been tougher upholding the clauses than in other jurisdictions, Rose said. Rager began her PetsMart career as a dog bather and brusher. In the suit, the company says it spent $7,000 for her groomer training. She became a grooming manager and worked at two of the company's Mesa stores, including the one at Stapley and Baseline.
More than two years ago Rager began making plans to leave PetsMart, but she was diagnosed with breast cancer and decided to stay because she needed a job and benefits. Seven operations later, Rager's health improved and she called an attorney in January to ask about the noncompete contract she had signed. A copy of her agreement says she cannot own, manage or operate “any pet food or pet supplies retail business.”
“It doesn't say anything about grooming services and it doesn't say anything about grooming,” she said. “It just says I won't work for a retailer.”
Nonetheless, her lawyer suggested she look outside the five-mile radius.
“I did look outside of it,” Rager said. “A month-and-a-half later I called him back and told him it was close to impossible. It takes out Mesa, Gilbert, most of Chandler and Scottsdale. The only thing that's not five miles from a PetsMart is like south Chandler where you're in the farms and all that kind of stuff, and the landfill. It's an unrealistic geographical area they are trying to enforce. It's ridiculous.”
Rager said she and her employees researched the company's lawsuits during the last decade and found it had never filed a suit against a groomer or grooming manager.
“You can't have a contract and then all of a sudden, after 10 years, enforce it,” she said, adding she has a list of roughly 20 former groomers, grooming managers and bather-brushers who quit the store and went to work for other grooming shops. “It's crazy because they've never done it before.”
In its lawsuit, PetsMart claims Rager told her manager she was starting a business and only gave the company one day's notice she was quitting.
But Rager said her boss was aware of the plan.
“I was honest,“ she said. “I was straight up. I said ‘I'm starting my own business. I'm out of here. You've known for years I wasn't happy here.’ ”
According to court documents, the company hired a private investigator who took her dog to visit the shop. A cash register receipt shows the the investigator tipped Crystal Melton, a former PetsMart employee, $5 to make the total bill $46.
Rager had a six-hour deposition Thursday, and she says she has racked up between $5,000 and $6,000 in legal fees. A judge refused to grant PetsMart a temporary restraining order in July and a preliminary hearing is set for Sept. 19. Rager's attorney, William Shostak, has filed a motion for summary judgment to get the case settled quickly.
To show the stranglehold she says PetsMart has on the local dog grooming industry, Rager points to recent U.S. census numbers that show Mesa recently jumped past Atlanta to become the nation's 40th-largest city.
“It's a matter of how big is too big,” she said. “They've just about covered the Valley. Would you think Atlanta was small if somebody said you can't work in Atlanta.”