Advantage Technical Resourcing, Inc. v. Adam Guinn (2012)

Ruling on Application for Temporary Injunction

Plaintiff Advantage Technical Resourcing, Inc., applies for a temporary injunction pending trial to enforce against defendant Adam Guinn provisions of an Employee Agreement (Agreement) prohibiting solicitation of former customers and disclosure of confidential information.   For the following reasons, the court grants most of the requested injunction.

Although the Agreement calls for the application of Massachusetts law, the law in that state governing applications for temporary or preliminary injunctions is essentially the same as the law in Connecticut.   In Massachusetts, the applicant must show:  “(1) a likelihood of success on the merits;  (2) that irreparable harm will result from denial of the injunction;  and (3) that, in light of the plaintiff's likelihood of success on the merits, the risk of irreparable harm to the plaintiff outweighs the potential harm to the defendant in granting the injunction.”  Tri–Nel Management, Inc. v. Board of Health, 433 Mass. 217, 219, 741 N.E.2d 37 (2001);  See also Aqleh v. Cadlerock Joint Venture II, L.P., 299 Conn. 84, 97, 10 A.3d 498 (2010).¹  The court will examine these three factors.

1. Likelihood of Success

The three-count complaint alleges breach of contract, breach of good faith and fair dealing, and conversion.   The allegations arise from the defendant's purported breach of the Agreement at the time of his resignation from the position of account executive with the plaintiff company, which provides staffing services to other businesses.

The court finds that there is a likelihood of success on the merits.   Contrary to the defendant's argument, the Agreement is likely to be found enforceable under Massachusetts law since it does not restrict any future employment in any geographical area but rather prohibits only solicitation of former customers for eighteen months and disclosure of confidential information.   See, e.g., Stone Legal Resource Group, Inc. v. Glebus, Mass. Superior Court, Docket No. CA025136 (December 17, 2002, Burnes, J.) [15 Mass. L. Rptr. 738] (eighteen-month nonsolicitation agreement in staffing industry found reasonable).   Cf. Deming v. Nationwide Mutual Insurance Co., 279 Conn. 745, 757–69, 905 A.2d 623 (2006) (fact issue exists concerning whether de facto covenant not to compete is reasonable).

The evidence is clear that the defendant violated the Agreement.   Paragraph 8 prohibits an employee from divulging confidential information, while paragraph 9 requires an employee, upon termination of his employment, to return all records and papers of the company.   Contrary to these provisions, the defendant, during the twenty-four hours before his January 27, 2012 resignation, sent confidential company information to his personal email account and entered the plaintiff's confidential job database approximately 340 times.   The defendant did not return or delete this information until at least one week after his resignation and then only upon request of the plaintiff.   In addition, in his new position at Celerity IT, LLC (Celerity), a competitor of the plaintiff, the defendant has serviced the account of, and assembled employee teams for, Cigna HealthCare, which is also a customer of the plaintiff for the same general purposes.   Such actions by the defendant appear to violate paragraph 7(iii) of the Agreement, which provides:  “[An employee] shall not solicit business from or perform services for any client, customer, licensee or business relation of [the plaintiff] ․” ²

2. Irreparable Harm to the Plaintiff

Although the defendant may not have remembered or otherwise been aware of the terms of the Agreement on January 26 and 27 when he downloaded the plaintiff's confidential information, his doing so reveals an interest in using that information at some future time.   Accordingly, the plaintiff has a legitimate concern that, without an injunction, the defendant will use confidential information in a way that would prejudice their future business interests.   Also, it appears the defendant has also violated paragraph 7(iii) of the Agreement by performing services for Cigna, a major client of the plaintiff.   Without an injunction, these violations are likely to continue.   Money damages for the violations that have occurred to date will not adequately compensate the defendant for, or prevent, violations likely to occur in the future.

Further, the task of quantifying the consequences of violating a nonsolicitation clause is a particularly difficult and elusive one.   See Kroeger v. Stop & Shop Companies, Inc., 13 Mass.App.Ct. 310, 322, 432 N.E.2d 566 (1982) (noncompetition clause).   Although the plaintiff will surely be harmed if the defendant continues to use the knowledge and business relationships he developed in the plaintiff's employ to advance his new employer's relationship with Cigna or any other common customer, it would be undeniably hard to isolate the precise extent to which any new business that the defendant obtains from a common customer stemmed from his prior experience as a salesman for the plaintiff.   In view of these inadequacies of a money damages remedy, the plaintiff would suffer irreparable harm without injunctive relief.

3. Irreparable Harm to the Defendant

The defendant will unquestionably suffer economic harm if he cannot solicit business from or perform services for Cigna, as it is his primary client at Celerity.   However, the plaintiff does not seek, and the court will not enter, an order prohibiting his employment with his new employer.   Under the proposed injunction, the defendant is free to do business in any capacity for Celerity, which is a large company in the staffing industry, as long as he does not solicit business from, or perform services for, his former customers of the plaintiff for the eighteen months following his resignation.   Presumably, the defendant informed Celerity of the existence of the Agreement when Celerity hired him, and thus Celerity is prepared to use the defendant in some capacity that will not violate the Agreement.   Thus, the harm to the defendant is not wholly irreparable.

Moreover, the defendant agreed to the nonsolicitation and nondisclosure provisions in partial consideration for his employment with the plaintiff.   See Horner v. Boston Edison Co., 45 Mass.App.Ct. 139, 143, 695 N.E.2d 1093 (1998).   There can be little irreparable harm to the defendant from an injunction that merely enforces contractual obligations to which he consented.   Indeed, in paragraph 10 of the Agreement, the defendant also acknowledged that if he violated the Agreement, the plaintiff “shall be entitled, in addition to its legal or equitable remedies and damages, to temporary and permanent injunctive relief to restrain against such violation(s) thereof by him ․” (Exhibit 2, paragraph 10.)   The defendant thus had ample notice that he was subject to injunctive relief if he violated the agreement.   To a large extent, then, the defendant could have avoided the harm he now claims is irreparable by simply not violating the agreement.

4. The Relief Sought

Because the plaintiff has prevailed on all three factors, the plaintiff is entitled to temporary injunctive relief pending trial.   One aspect of the requested injunction requires further comment.   The plaintiff requests an order requiring the defendant to make his family's computer available for a forensic examination for confidential business information at the defendant's own expense.   At oral argument, the plaintiff added a request to examine a laptop computer that Celerity has provided the defendant.   The court declines to grant these requests.   Such forensic examinations pose the risk of intrusion into personal information of the defendant's family or confidential business information of Celerity.   As an alternative, the court will allow a forensic examination of the defendant's Yahoo account for the sole purpose of discovering and retrieving any of the plaintiff's confidential business information.   Although the court credits the defendant's testimony that he has returned or deleted all such information, an examination of the plaintiff's Yahoo account, coupled with the other terms of the injunction stated below, will provide additional and fully adequate security to the plaintiff that the defendant will return and will not use its confidential business information.

Accordingly, the court enters the following injunction pending final decision in this case:

1. The defendant shall forthwith return all confidential information of the plaintiff, including but not limited to all paper documents, electronically stored information, or handwritten notes that he may have created, and thereafter certify in an affidavit that he has returned to the plaintiff all copies of documents and files that are its property;

2. In the affidavit, the defendant shall also identify any electronic transmissions or physical deliveries of the plaintiff's confidential information and documents that he may have made to any employer, customer, or other recipient after the termination of his employment with the plaintiff;

3. The defendant shall specifically state in the affidavit whether he has disseminated any of the plaintiff's confidential business information to Celerity or any of its representatives;

4. The defendant shall cooperate fully, by providing any necessary passwords or access, in a forensic examination of the defendant's Yahoo account to be conducted by representatives of the plaintiff, at the plaintiff's expense, for the sole purpose of discovering, returning, or deleting any of the plaintiff's confidential business information.

5. The defendant shall not divulge or disseminate any the plaintiff's confidential business information.

6. The defendant shall not solicit or provide services for any client, customer, or business relation of the plaintiff of which the defendant was aware during his employment with the plaintiff ³ until July 27, 2013.⁴

It is so ordered.

Carl J. Schuman

Judge, Superior Court

FOOTNOTES

FN1. In Connecticut, “[t]he standard for granting a temporary injunction is well settled.   In general, a court may, in its discretion, exercise its equitable power to order a temporary injunction pending final determination of the order, upon a proper showing by the movant that if the injunction is not granted he or she will suffer irreparable harm for which there is no adequate remedy at law ․ A party seeking injunctive relief must demonstrate that:  (1) it has no adequate remedy at law;  (2) it will suffer irreparable harm without an injunction;  (3) it will likely prevail on the merits;  and (4) the balance of equities tips in its favor.”   (Internal quotation marks omitted.)  Id..  FN1. In Connecticut, “[t]he standard for granting a temporary injunction is well settled.   In general, a court may, in its discretion, exercise its equitable power to order a temporary injunction pending final determination of the order, upon a proper showing by the movant that if the injunction is not granted he or she will suffer irreparable harm for which there is no adequate remedy at law ․ A party seeking injunctive relief must demonstrate that:  (1) it has no adequate remedy at law;  (2) it will suffer irreparable harm without an injunction;  (3) it will likely prevail on the merits;  and (4) the balance of equities tips in its favor.”   (Internal quotation marks omitted.)  Id.

FN2. Contrary to the defendant's argument, the fact that the plaintiff is a “Tier 2” provider for Cigna, while Celerity is a “Tier 1” provider, does not mean that the services the defendant provides for Cigna while at Celerity do not harm the plaintiff.   Any advantage that Celerity gets from the defendant's services make it less likely that Cigna will have to utilize a Tier 2 provider such as the plaintiff..  FN2. Contrary to the defendant's argument, the fact that the plaintiff is a “Tier 2” provider for Cigna, while Celerity is a “Tier 1” provider, does not mean that the services the defendant provides for Cigna while at Celerity do not harm the plaintiff.   Any advantage that Celerity gets from the defendant's services make it less likely that Cigna will have to utilize a Tier 2 provider such as the plaintiff.

FN3. So limited in view of cases such as Robert Half International, Inc. v. Buoncontri, Mass.Super.Ct., Docket No. CA030298BLS2 (January 28, 2003, Botsford, J.) [15 Mass. L. Rptr. 742]..  FN3. So limited in view of cases such as Robert Half International, Inc. v. Buoncontri, Mass.Super.Ct., Docket No. CA030298BLS2 (January 28, 2003, Botsford, J.) [15 Mass. L. Rptr. 742].

FN4. At this point, the court chooses not to enforce the tolling provision of paragraph 7 of the Agreement, but rather to run the eighteen-month period from the date of the defendant's resignation from the plaintiff..  FN4. At this point, the court chooses not to enforce the tolling provision of paragraph 7 of the Agreement, but rather to run the eighteen-month period from the date of the defendant's resignation from the plaintiff.

Schuman, Carl J., J.