6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 7 AT SEATTLE
8 AMAZON.COM, INC., CASE NO. C19-1176 RSM
9 Plaintiff, ORDER GRANTING IN PART AMAZON’S MOTION FOR 10 v. PRELIMINARY INJUNCTION
11 PHILIP MOYER,
12 Defendant.
13 14 I. INTRODUCTION 15 Plaintiff Amazon.com, Inc. (“Amazon”) seeks to prevent Defendant Philip Moyer 16 (“Moyer”) from working for Google as its Vice President, Healthcare, Google Cloud. Dkt. #19.1 17 Moyer previously worked for Amazon as a sales executive for Amazon Web Services (“AWS”), 18 selling its cloud computing services to the financial services sector. As a condition of his 19 employment, Amazon required Moyer to accept restrictions on his future employment, should 20 he ever stop working for Amazon. 21 22
23 1 The Court cites to the record by the docket numbers and pagination applied by the Court’s CM/ECF system. Where the nature of the document permits the Court to appropriately and 24 clearly cite to numbered paragraphs or page and line numbers, the Court does so. 1 Two years later and unhappy with his opportunities for growth at AWS, Moyer sought 2 opportunities outside of Amazon. Google Cloud, a competing cloud services provider, ultimately 3 hired Moyer. Cognizant of Moyer’s prior obligations to Amazon, but interested in effectively 4 utilizing his skills, Google Cloud plans to have Moyer serve as Google Cloud’s Vice President 5 of sales for the healthcare and life sciences sectors (“healthcare”).
6 Amazon maintains that Moyer’s new position will force him to violate his prior 7 obligations to Amazon and seeks a preliminary injunction preventing him from performing in the 8 position. Dkt. #19. Moyer resists Amazon’s effort to restrict his work on the basis that his new 9 role will not involve the same customers and that he will not be forced to violate his agreement 10 because the needs of healthcare customers are distinct from those of financial services customers. 11 Dkt. #43. 12 The Court heard oral argument in this matter on September 12, 2019, and took the matter 13 under advisement. Having further considered the matter, the Court grants the Motion in part. 14 II. BACKGROUND
15 A. Cloud Computing Sales 16 AWS and Google Cloud directly compete, and compete with others, in providing cloud 17 computing services.2 “Cloud computing is the on-demand delivery of computing power, 18 software, storage, and other information technology services via the internet.” Dkt. #23 at ¶ 3. 19 Cloud computing services essentially allow customers to “rent” hardware and software that they 20 can then access remotely. Id. This allows customers to avoid upfront computing costs and better 21 account for fluctuations in their computing needs. Id. 22
2 Amazon is the market leader, followed by Microsoft. Google trails with a pack of other 23 companies. Amazon points out, that “Google Cloud’s own website maps its services to AWS so that potential customers can identify which Google services offer similar functionality to AWS.” 24 Dkt. #19 at 7 (citing https://cloud.google.com/free/docs/map-aws-google-cloud-platform). 1 Individual cloud computing services can have application across industries. AWS, for 2 instance, develops a variety of services performing specific functions and makes those services 3 available to all its customers. Id. at ¶ 9. However, customer needs across industries vary. For 4 this reason, AWS groups its “cloud sales teams into ‘verticals’” that have similar computing 5 needs—whether by industry or customer attribute. Dkt. #21 at ¶ 4. Financial services customers,
6 for instance, are highly regulated and have a heightened need for reliability, security, and privacy. 7 Dkt. #19 at 2. 8 B. Moyer’s Background 9 Moyer has worked in technology sales since 1991. Dkt. #45 at ¶ 2. Through his career 10 he has served as a general manager with Microsoft, served as the CEO of a company providing 11 access to financial data, and managed a technology portfolio at a venture capital firm investing 12 in enterprise cloud, financial technology, and healthcare technology. Id. at ¶¶ 2–5. In March 13 2017, Amazon hired Moyer as its “Director of Sales” for AWS Global Financial Services. Dkt. 14 #30 at 2 (¶¶ 3–5), 12. As a condition of his employment, Moyer was required to sign a
15 Confidentiality, Noncompetition, and Invention Assignment Agreement (the “Agreement”) with 16 Amazon. Id. at 6–10. The Agreement required Moyer to maintain the secrecy of confidential 17 information learned during his employment3 and, most relevant here, restrained Moyer’s post- 18 Amazon employment: 19
3 The Agreement required Moyer, both “[d]uring employment and at all times thereafter,” to 20 “hold all Confidential Information in strictest confidence and [] not acquire, use, publish, disclose, or communicate any Confidential Information” without approval.” Dkt. #30 at 6–7 21 (sec. 3.1). In the same provision, the Agreement broadly defined “Confidential Information” as:
22 proprietary or confidential information of Amazon in whatever form, tangible or intangible, whether or not marked or otherwise designated as confidential, that is 23 not otherwise generally known to the public, relating or pertaining to Amazon’s business, projects, products, customers, suppliers, inventions, or trade secrets, 24 including but not limited to: business and financial information; Amazon 1 During employment and for 18 months after the Separation Date, Employee will not, directly or indirectly, whether on Employee’s own behalf or on behalf of any 2 other entity (for example, as an employee, agent, partner, or consultant), engage in or support the development, manufacture, marketing, or sale of any product or 3 service that competes or is intended to compete with any product or service sold, offered, or otherwise provided by Amazon (or intended to be sold, offered, or 4 otherwise provided by Amazon in the future) that Employee worked on or supported, or about which Employee obtained or received Confidential 5 Information.
6 Id. at 7 (Sec. 4.1). Moyer also agreed not to solicit Amazon customers and partners or seek to 7 recruit Amazon employees. Id. (Secs. 4.2 and 4.3). Despite agreeing to these provisions, Moyer 8 maintains that he was informed, both at the time of his hire and after, that Amazon generally 9 negotiated its broad noncompete provision to a more limited scope if a salesperson left to work 10 with a different customer base. Dkt. #45 at ¶¶ 9–11. 11 C. Moyer’s Work at Amazon 12 As the Director of Sales for Global Financial Services, Moyer’s primary responsibility 13 was “selling AWS services to companies in the financial services industry.” Dkt. #23 at ¶ 8; see 14 also Dkt. #45 at ¶ 19; Dkt. #49-3 at 19:4–20:4, 81:14–83:11, 89:20–98:3. This required him to 15 have a firm understanding of existing AWS services as well as planned services (AWS’s 16 “roadmap”). Dkt. #23 at ¶ 10. 17 [L]ike other AWS executives, Moyer was responsible for understanding: (1) AWS’s existing and projected services; (2) the value and efficiency those services 18 deliver to customers; (3) the limitations, gaps, and weaknesses, of those services;
19 techniques, technology, practices, operations, and methods of conducting business; information technology systems and operations; algorithms, software, 20 and other computer code; published and unpublished know-how, whether patented or unpatented; information concerning the identities of Amazon’s 21 business partners and clients or potential business partners and clients, including names, addresses, and contact information; customer information, including 22 prices paid, buying history and habits, needs, and the methods of fulfilling those needs; supplier names, addresses, and pricing; and Amazon pricing policies, 23 marketing strategies, research projects or developments, products, legal affairs, and future plans relating to any aspect of Amazon’s present or anticipated 24 businesses. 1 (4) what AWS services are forthcoming to address customer needs and service gaps; (5) how to obtain customer specific cloud service features and 2 functionalities; (6) the service, pricing, storage volume, and workload capacity terms on which AWS provides those services to its customers; and (7) how AWS 3 positions itself against other cloud computing companies—including [Google Cloud]—to best satisfy customer needs. 4
5 Id. Moyer was not necessarily selling a specialized product. Id. at ¶ 9 (AWS services are 6 developed to have “broad applicability” and support specific industries with limited 7 modifications). Rather, Moyer knew the industry requirements for his thirty-two financial 8 services customers4 and highlighted how AWS services could meet their existing and future 9 needs. 10 Outside of his core function, Moyer’s position also involved him in several other aspects 11 of AWS’s operations. First, Amazon involved Moyer in identifying and removing barriers to the 12 sale of AWS services both within financial services and in other sales verticals. For instance, 13 due to his prior work experience with Independent Software Vendors5 (“ISVs”), Moyer aided 14 AWS in its relationships with ISVs across sales verticals, fostering better integration with AWS 15 services. Dkt. #45 at ¶¶ 24–26. More generally, Moyer served as an intermediary between 16 customers and AWS development teams to solve any issues or service gaps customers 17 encountered while using AWS services. Dkt. #49-3 at 134:1–140:17. Customers shared any 18 issues or gaps with Moyer who sought out solutions or work-arounds. Dkt. #45 at ¶¶ 31–34. 19
20 4 Moyer represents that his team “sold AWS services to the 32 largest United States-based global financial services companies.” Dkt. #46 at ¶ 20. These included “banks, capital markets 21 institutions, insurance companies, financial market utilities (the infrastructure for transferring, clearing, and settling payments, securities, and other financial transactions among financial 22 institutions or between financial institutions and the system).” Dkt. #24 at ¶ 6.
23 5 ISVs are existing and widely used software providers within specific industries. Assuring that AWS services integrate seamlessly with existing ISVs can allay industry concerns about adopting 24 AWS services and facilitate sales. 1 Moyer’s team would track and relay common issues or gaps that could not be resolved for 2 possible action by development teams, but, other than advocating for certain changes, Moyer did 3 not play an active role in determining the AWS roadmap. Moyer’s financial services vertical 4 also served as a sort of development and testing ground because of the heightened regulatory, 5 audit, and security requirements of its customers. Dkt. #24 at ¶ 11. Moyer also took a proactive
6 approach to removing adoption barriers. For example, Moyer’s financial services customers 7 relied on computing resiliency—assuring that outages are avoided or shortened—, so Moyer 8 aided AWS in developing a report to demonstrate that AWS could satisfy the stringent industry 9 requirements. Dkt. #45 at ¶¶ 28–30. 10 Second, Moyer was also involved in formulating sales strategies of AWS services both 11 within financial services and across other sales verticals. Within financial services, Moyer 12 contributed to “financial services sales strategy planning documents for 2019 and 2020 that set 13 AWS’s worldwide sales goals through the end of 2021.” Dkt. #24 at ¶ 21. Outside of financial 14 services, Moyer was involved in setting “sales strategy for the entirety of AWS cloud globally.”
15 Dkt. #19 at 10 (citing Dkt. #21 at ¶¶ 4–6). This included being involved in decisions about where 16 to focus resources to maximize sales. Dkt. #24 at ¶ 21. The parties disagree as to whether 17 Moyer’s involvement was limited to focusing on his financial services customers or whether he 18 played a more expansive role. 19 D. Moyer Leaves for Google 20 From the beginning, Moyer anticipated a promotion within AWS to Vice President of 21 Sales for AWS financial services. When that plan was delayed and did not materialize, Moyer 22 began to explore his other employment opportunities. By April 2019, he planned to leave AWS 23 for a position as a CEO of a company providing “governance, risk, compliance advisory services, 24 1 and technology solutions.” Dkt. #46 at ¶ 60. Amazon attempted to retain him but was unwilling 2 to meet his salary request. 3 During the process of his anticipated job change, Moyer contacted Ms. Kliphouse, a 4 colleague from Microsoft, to serve as a reference. Ms. Kliphouse was in the process of being 5 hired as Google Cloud’s North American President. Id. at ¶ 60. Ms. Kliphouse encouraged
6 Moyer to apply to Google Cloud and supported him within Google Cloud. Dkt. #39 at 30:8– 7 31:14; Dkt. #49-2 at 21:9–22:6. Google Cloud ultimately decided to make Moyer an offer and, 8 aware of Moyer’s offer for the CEO position, made it a high one. Dkt. #45 at ¶ 62. Moyer 9 indicated to AWS, on May 22, 2019, that he was joining Google Cloud “as their Vice President 10 of Healthcare.” Dkt. #23 at ¶ 26. 11 III. DISCUSSION 12 A. Standard of Review 13 In determining whether to grant a preliminary injunction, courts consider: (1) the 14 likelihood of the moving party’s success on the merits; (2) the possibility of irreparable injury to
15 that party if an injunction is not issued; (3) the extent to which the balance of hardships favors 16 the moving party; and (4) whether the public interest will be advanced by the injunction. See 17 Miller v. Cal. Pac. Med. Ctr., 19 F.3d 449, 456 (9th Cir. 1994); Los Angeles Mem’l Coliseum 18 Comm’n v. Nat’l Football League, 634 F.2d 1197, 1201 (9th Cir. 1980). The Ninth Circuit has 19 often compressed this analysis into a single continuum where the required showing of merit 20 varies inversely with the showing of irreparable harm. See Prudential Real Estate Affiliates, Inc. 21 v. PPR Realty, Inc., 204 F.3d 867, 874 (9th Cir. 2000). Thus, Plaintiff will be entitled to 22 preliminary relief if it is able to show either: (1) probable success on the merits and the possibility 23 of irreparable harm; or (2) the existence of serious questions going to the merits and a fair chance 24 1 of success thereon, with the balance of hardships tipping sharply in favor of an injunction. Miller, 2 19 F.3d at 456. 3 B. Likelihood of Success on the Merits 4 Amazon’s Complaint pursues a single cause of action: breach of a noncompetition 5 agreement. Dkt. #1-1 at ¶¶ 29–34. Amazon argues that if Moyer is not restrained from
6 performing his new role, he will necessarily breach his promises not to compete with Amazon. 7 Washington law6 provides for the enforcement of reasonable noncompete clauses. Labriola v. 8 Pollard Grp., Inc., 152 Wash. 2d 828, 846, 100 P.3d 791, 799–800 (2004) (J. Madsen 9 concurring). “The determination of whether a covenant is reasonable is a question of law.” 10 Emerick v. Cardiac Study Ctr., Inc., P.S., 189 Wash. App. 711, 721, 357 P.3d 696, 701 (2015) 11 (citing Alexander & Alexander, Inc. v. Wohlman, 19 Wash. App. 670, 684, 578 P.2d 530 (1978)). 12 To determine reasonableness, the Court considers: 13 (1) whether the restraint is necessary to protect the employer’s business or goodwill, (2) whether it imposes on the employee any greater restraint than is reasonably 14 necessary to secure the employer’s business or goodwill, and (3) whether enforcing the covenant would injure the public through loss of the employee’s service and 15 skill to the extent that the court should not enforce the covenant, i.e., whether it violates public policy. 16
17 Emerick, 357 P.3d at 701 (citing Perry v. Moran, 109 Wash.2d 691, 698, 748 P.2d 224 (1987), 18 judgment modified on recons. on other grounds, 111 Wash.2d 885, 766 P.2d 1096 (1989)). 19 Washington courts are relatively deferential to employers in enforcing agreements restricting a former employee’s work with the employer’s clients or customers. 20 Courts are less deferential to general restrictions on competition that are not tied to specific customers. An employer can demonstrate that more general 21 restrictions are necessary, but can do so only by pointing to specific information about the nature of its business and the nature of the employee’s work. Finally, 22
6 The parties agree that the dispute is governed by Washington law, as provided for in the 23 Agreement. Dkt. #30 at 9 (sec.7.3) (Agreement to “be governed by and construed in accordance with the laws of the State of Washington”); Dkt. #19 at 17 (applying Washington law); Dkt. #43 24 at 8 (same). 1 although courts are somewhat deferential about the duration or geographic extent of noncompetition agreements, they will readily shorten the duration or limit the 2 geographic scope, especially where the employer cannot offer reasons that a longer or more expansive competitive restriction is necessary. 3
4 Amazon.com, Inc. v. Powers, Case No. C12-1911RAJ, Dkt. #31 at 15, 2012 WL 6726538 at *9 5 (W.D. Wash. Dec. 27, 2012). 6 1. Is a Restriction Necessary to Protect Amazon’s Business or Goodwill? 7 The inquiry begins, of course, by considering the business interests at stake. Washington 8 provides broad protection to tangible and intangible business interests and goodwill.7 Oberto 9 Sausage Co. v. JBS S.A., Case No. C10-2033RSL, Dkt. #36 at 9, 2011 WL 939615 at *5 (W.D. 10 Wash. Mar. 11, 2011) (noting that employer not only “has a legitimate interest in protecting its 11 confidential information” but also “in avoiding unfair competition” based upon confidential 12 information learned during the scope of employment); Knight, Vale & Gregory v. McDaniel, 37 13 Wash. App. 366, 369–70, 680 P.2d 448, 452 (1984) (employer had “legitimate business interest 14
7 Washington courts have most often considered goodwill in the context of professional practices 15 caught up in dissolutions and divorces. Regardless, the Court finds those cases instructive. Goodwill is intangible property, separate and apart from earning capacity. Matter of Marriage 16 of Crosetto, 82 Wash. App. 545, 553, 918 P.2d 954, 958 (1996). Generally, it is best thought of as “the monetary value of a reputation” or as “representing the expectation of a continued public 17 patronage.” Dixon v. Crawford, McGilliard, Peterson & Yelish, 163 Wash. App. 912, 918–19, 262 P.3d 108, 112 (2011); In re Marriage of Monaghan, 78 Wash. App. 918, 926, 899 P.2d 841, 18 845 (1995). More specifically, goodwill is
19 a benefit or advantage “which is acquired by an establishment beyond the mere value of the capital, stock, funds or property employed therein, in consequence of 20 the general public patronage and encouragement, which it receives from constant or habitual customers on account of its local position, or common celebrity, or 21 reputation for skill or affluence, or punctuality, or from other accidental circumstances or necessities, or even from ancient partialities or prejudices.” 22
In re Marriage of Lukens, 16 Wash. App. 481, 483–84, 558 P.2d 279, 281 (1976). Notably, the 23 Washington Supreme Court has cautioned that not every business necessarily develops goodwill and that the “evaluation of goodwill must be done with considerable care and caution.” In re 24 Marriage of Hall, 103 Wash. 2d 236, 243, 692 P.2d 175, 179 (1984) (citation omitted). 1 in maintaining [its] large and profitable clientele” especially where employee had gained 2 “extensive, valuable knowledge of the clients’ business and internal operations and develop[ed] 3 a close, familiar working relationship with the client”). But the protections have limitations and 4 do not, for instance, extend to “skills acquired by an employee during his or her employment.” 5 Copier Specialists, Inc. v. Gillen, 76 Wash. App. 771, 774, 887 P.2d 919, 920 (1995).
6 The Court first notes that several aspects of the case already provide Amazon with 7 significant protection. Amazon does not allege that Moyer possesses or has access to any 8 documents containing its confidential or proprietary information. C.f. Powers, 2012 WL 9 6726538 at *5 (concern limited when confidential information was “in [employee’s] memory 10 alone” and employee may be unable to recall it). Amazon does not allege that Moyer will 11 disclose Amazon’s confidential or proprietary information. See Oberto Sausage, 2011 WL 12 939615 at *5 (noting employer’s interest “in avoiding unfair competition” based upon its 13 confidential information). And Amazon does not allege that Moyer will contact his former AWS 14 customers or jeopardize Amazon’s relationship with his customers. C.f. Genex Co-op., Inc. v.
15 Contreras, Case No. C13-3008SAB, 2014 WL 4959404 at *6 (E.D. Wash. Oct. 3, 2014) (noting 16 that the “Supreme Court of Washington has suggested covenants may need to be limited to 17 soliciting or serving former clients”) (citing Wood v. May, 73 Wash. 2d 307, 312, 438 P.2d 587, 18 590 (1968); Columbia College of Music v. Tunberg, 64 Wash. 19, 116 P. 280 (1911)). 19 The interests at issue here are the knowledge and information Moyer has learned and the 20 business relationships he has forged while working for Amazon. Moyer interacted with AWS’s 21 financial services customers extensively, building relationships, gaining insight into their 22 business needs, and negotiating contracts. Dkt. #23 at ¶¶ 22–23; Dkt. #49-3 at 19:4–20:4, 81:14– 23 83:11, 89:20–98:3. But Moyer was also exposed to and involved in drafting documents setting 24 sales strategies across all AWS sales verticals. Dkt. #21 at ¶ 22; Dkt. #23 at ¶ 21. Additionally, 1 Moyer was exposed to documents highlighting future services and features in various stages of 2 planning, development, and implementation. Dkt. #23 at ¶¶ 11–12. Lastly, Moyer was exposed 3 to discussion of ongoing sales opportunities, including both those within financial services, 4 healthcare, and all other verticals. Id. at ¶ 20. 5 The Court has little difficulty finding that Amazon has identified legitimate business
6 interests and goodwill. Most significantly, Amazon retains a significant interest in the goodwill 7 it has built with its existing customers. Nw. Mobile Servs., L.L.C. v. Schryver Med. Sales & 8 Mktg., Inc., Case No. C06-5227RBL, Dkt. #25 at 3, 2006 WL 1799620 at *2 (W.D. Wash. June 9 28, 2006) (noting “protectable interests, including customer lists and relationships”); Pac. 10 Aerospace & Elecs., Inc. v. Taylor, 295 F. Supp. 2d 1205, 1217 (E.D. Wash. 2003) (noting 11 employer’s “enhanced” interest because the “nature of the accountant-client relationship” made 12 employee “exceptionally competitive” with regard to employee’s clients). Further, Amazon has 13 an interest in maintaining the competitive advantage it anticipates from its sales strategies, new 14 features, and new services. See Organo Gold Int’l, Inc. v. Ventura, Case No. C16-487RAJ, Dkt.
15 #27 at 11, 17, 2016 WL 1756636 at *6, *10 (W.D. Wash. May 3, 2016) (noting distributor’s 16 knowledge of employer’s guidelines would allow him to unfairly recruit employer’s other 17 distributors, especially where business model depended on distributors). 18 In considering whether a noncompete provision is necessary to protect these interests, the 19 Court again notes the existence of the nondisclosure and non-solicitation provisions. These 20 adequately address Amazon’s interests in preventing Moyer from directly contacting his AWS 21 customers and from directly disclosing Amazon’s confidential information. Moyer cannot 22 disclose Amazon’s confidential information to Google Cloud’s existing and potential customers 23 or partners. Moyer cannot disclose Amazon’s sales strategies to Google Cloud so that it may 24 1 formulate more competitive strategies of its own. Nor can Moyer disclose who Amazon views 2 as important partners and customers so that Google Cloud may target them. 3 But Amazon’s concern extends beyond disclosure of its confidential information. 4 Amazon is also concerned that Moyer’s role at Google Cloud is essentially the same role he had 5 with AWS, albeit with different customers,8 and that his knowledge of Amazon’s confidential
6 information will effectively “taint” his actions. At Google Cloud, Moyer will weigh in on 7 strategy decisions and will make strategy decisions of his own. Amazon believes that he will use 8 its confidential information to make decisions that provide Google Cloud competitive advantages 9 against Amazon’s plans. Amazon also believes Moyer will use his knowledge of its product 10 roadmaps to steer Google Cloud towards developing similarly competitive services. Because 11 Moyer knows of issues experienced by existing AWS customers, Amazon believes he will be 12 able to prey on those existing issues in convincing existing customers that Google Cloud offers 13 preferable services, a significant blow to Amazon’s goodwill. Lastly, Amazon believes that 14 potential customers, learning that he was formerly sold AWS services, will place undue weight
15 on his representations that Google Cloud provides superior services. 16 The Court agrees that these are the essential considerations. Moyer agreed not to unfairly 17 compete with Amazon after leaving its employ. The noncompete provision is necessary to 18 protect Amazon from Moyer positioning Google Cloud to better compete with AWS even if he 19 does not disclose confidential information in the process. No other provision of the Agreement 20 can protect these business interests and goodwill. 21 22
23 8 While the responsibilities for the two positions are similar, Moyer represents that he “will not work with any of the same customers, or even with customers in the same industry (financial 24 services) as he worked with at AWS.” Dkt. #43 at 4. 1 2. What is a Reasonable Restraint on Moyer to Protect Amazon’s Interests? 2 The question then becomes whether the scope of the noncompete provision places 3 restraints on Moyer’s ability to earn a livelihood that are greater than are necessary to protect 4 Amazon’s business interests and goodwill. The Court’s inquiry is guided by the scope of the 5 noncompete as drafted. Emerick, 357 P.3d at 701 (considering the reasonableness “of the
6 noncompete covenant as written as opposed to whether and how much the employer experiences 7 actual harm and competition”). 8 a. The Agreement is Unreasonable as Drafted 9 As drafted, there is little question that the restraint is unreasonable. The Agreement 10 prohibits competition as to “any product or service sold, offered, or otherwise provided by 11 Amazon (or intended to be sold, offered, or otherwise provided by Amazon in the future) that 12 Employee worked on or supported, or about which Employee obtained or received Confidential 13 Information.” Dkt. #30 at 7 (Sec. 4.1). Amazon maintains that Moyer received confidential 14 information about almost all AWS’s product roadmaps and sales strategies. Resultantly, Moyer
15 would be precluded from working for any competitor providing cloud services anywhere around 16 the globe.9 But such a scope would be a general restriction on competition, not a reasonable 17 restriction on unfair competition. See Powers, 2012 WL 6726538 at *10; Organo, 2016 WL 18 1756636 at *7 (noting that noncompete should be limited to a product type, not a business model, 19 and approving of a noncompete limited to “a very specific type of competitive venture”). 20 b. Some Restraint is Reasonable 21 This does not conclude the inquiry though, as Washington law provides that the Court 22 may reform the provision to a more limited—and reasonable—scope. Emerick, 357 P.3d at 703 23
24 9 The parties do not dispute that a global restriction is reasonable. 1 (“court should still seek to enforce the covenant to the extent reasonably possible to accomplish 2 the contract’s purpose.”) (citing Wood, 438 P.2d at 590–91). Washington law, however, does 3 not require that the Court reform the provision. Genex Co-op., 2014 WL 4959404 at *4. The 4 Court therefore pauses to consider whether reformation is appropriate in this case. 5 Amazon made no attempt to tailor its noncompete restrictions to the job it hired Moyer
6 to perform. Powers, 2012 WL 6726538 at *10 (noting that the failure to tailor a noncompete 7 provision to the individual employee’s situation cuts against full enforcement). Rather, Amazon 8 turns a legal shield into a sword by relying on the possibility of reformation. Amazon’s already 9 broad noncompete expands further if Amazon exposes an employee to information outside the 10 scope of the employee’s original position. Dkt. #30 at 7 (sec. 4.1) (extending provision to include 11 product or service “about which Employee obtained or received Confidential Information”). 12 Thus, even as Amazon extracts the benefit of its employees’ varied abilities and backgrounds 13 beyond the employees’ core responsibilities, Amazon gains greater leverage should an employee 14 ever seek to leave its employ.
15 Amazon could have easily crafted a noncompete provision more targeted to the position 16 it hired Moyer to perform. Amazon could have limited the noncompete to financial services 17 sales. If the sale of cloud computing to healthcare customers is as similar to sales to financial 18 services customers as Amazon represents, Amazon could have reasonably restricted Moyer from 19 both future financial services and healthcare sales positions. If Amazon’s concern is with 20 individual competitors, it could have identified those competitors. If Amazon’s concern is with 21 the information it shared with Moyer beyond that related to financial services, Amazon could 22 have negotiated expansions to the noncompete provision to assure continued protection. Amazon 23 did not limit the provision in any way. Rather, Amazon leaves it to the Court to draft a restriction 24 that reasonably protects its interests. 1 The Court does not look favorably on Amazon’s apparent practices. Powers, 2012 WL 2 6726538 at *10 (“[T]he court is not inclined to defer to [Amazon’s] one-size-fits-all contractual 3 choices.”). The Court is especially aware that all but the most advantaged employees are unlikely 4 to combat Amazon’s broad claims. Amazon no doubt relishes its opportunity to exert pressure 5 and control over its departing employees. But the facts of this case do not present this commonly
6 inequitable scenario. Moyer, possibly enjoying some support from Google Cloud, is fully able 7 to protect his interests and undoubtedly was aware of and agreed to a limitation on his post- 8 separation employment. Dkt. #45 at ¶¶ 7–11. 9 c. Reformation of the Agreement is Appropriate 10 As a result, the Court finds that some restriction is appropriate here. Moyer was exposed 11 to Amazon’s confidential information beyond that strictly involved in his position as Director of 12 Sales for financial services. At a minimum, Moyer’s position at Google Cloud will influence 13 competition between AWS and Google Cloud in the healthcare sector. Indeed, Moyer himself 14 recognizes that enforcement of some portion of the provision is reasonable. Dkt. #43 at 9
15 (heading indicating that provision “is an overly broad restraint on Moyer’s post-Amazon 16 employment that must be reformed”). Moyer likewise concedes, and the Court agrees, that he 17 should be screened from participating in activities directly10 related to the financial services 18 vertical and customers. Dkt. #43 at 23. Accordingly, the Court considers restraints that are 19 reasonable to further protect Amazon’s interests. 20 21 22
10 The Court recognizes that Moyer will also be involved in helping set higher level strategy 23 touching on other industry verticals, including financial services. This potential harm is likely mitigated to a substantial extent because Moyer may not disclose confidential information and 24 will not be the only decision maker involved. 1 d. Protection of Relationships and Goodwill 2 The Court first considers protection of Amazon’s interests in its customer relationships 3 and goodwill. In so doing, the Court concludes that Moyer is reasonably restrained from any 4 contact with any financial services customers. Moyer’s established relationships with existing 5 AWS financial services customers would obviously allow for unfair competition. Additionally,
6 Moyer’s knowledge of Amazon’s confidential financial services information would naturally 7 influence his contacts with those customers, even if he did not disclose confidential information. 8 Both Moyer and AWS’s existing customers know of AWS’s service offerings, strengths, 9 weaknesses, and ongoing issues. Moyer’s knowledge would allow him to unfairly highlight 10 Google Cloud’s strengths and target AWS’s weaknesses. Even if Moyer did not disclose 11 Amazon’s confidential information, existing users would be likely to pick up on hints and 12 obscure characterizations. Similarly, but to a lesser extent, Moyer’s experience with Amazon’s 13 financial services vertical would result in unfair competition as to potential AWS/Google Cloud 14 financial services customers. Moyer would again be able to provide Google Cloud a competitive
15 edge in determining how to sell to potential financial services prospects. The Court finds it 16 reasonable to restrain Moyer from contacting both groups. 17 Outside of the financial services sector, the Court also finds it reasonable to restrain 18 Moyer from contacting existing AWS customers, including healthcare customers. Amazon has 19 established relationships and goodwill with its existing customers and Moyer would be able to 20 unfairly jeopardize and harm those relationships. This again strikes the Court as the essence of 21 noncompete clauses. Moyer’s inside knowledge allows him to unfairly exploit AWS’s 22 weaknesses in casting Google Cloud as the correct choice. 23 24 1 The Court does not find that this restraint should reasonably be extended beyond AWS’s 2 existing customers, including potential healthcare customers.11 Because Moyer is prohibited 3 from disclosing Amazon’s confidential information, any competitive advantage would have to 4 come from intimation and inference. But potential customers are far less likely to understand the 5 nuances of AWS and Google Cloud services. The playing field is substantially evened, and
6 Google Cloud and Amazon are left in much the same positions they currently find themselves. 7 Restraining Moyer’s contact with potential customers in such a way is not reasonable to protect 8 from a speculative advantage. 9 e. Internal Google Cloud Activities 10 Outside of activity related to financial services, the Court does not find that a restraint on 11 Moyer’s internal Google Cloud activities is reasonable. Moyer’s Google Cloud job duties will 12 be categorically like his responsibilities at AWS.12 Moyer will be involved in setting sales 13
14 11 As discussed further below, the Court does not find that Moyer was exposed to confidential information related to healthcare sales to create a competitive advantage. Of note, Moyer 15 establishes that he never interacted with AWS healthcare customers in his position with Amazon. Dkt. #43 at 14 (summarizing Moyer’s deposition testimony that he “did not sell to healthcare 16 customers, did not have direct conversations with or collect feedback from healthcare customers, and was not exposed to the AWS messaging, partnerships, or marketing that was used with 17 healthcare customers”) (citing Dkt. #49-4 72:12-73:12, 74:9-75:9)); Dkt. #49-3 at 141:6–14 (Moyer’s AWS manager is unable to identify an instance where Moyer talked to a non-financial 18 services customer in a sales setting). Amazon does nothing to rebut this.
19 12 As laid out by his future manager, Robert Enslin, Moyer’s position at Google Cloud is anticipated to include many similar duties: 20 Moyer will “[e]xecute strategy for healthcare in Google Cloud”. As VP, Moyer will be 21 “involved in formulating the sales strategy for [his] particular vertical and go-to-market. They are not involved [in] determining which products come to market, how those products 22 come to market, how pricing is – is determined. So, to be clear, he’s responsible for how his team approaches the customer and how they present their business case.” Dkt. #51 at 23 53:2-15. Moyer will “manage the sales and the customer facing teams,” “have relationships with the 24 independent software vendors,” “build his sales team,” “negotiate pricing in terms and 1 strategies, identifying and addressing barriers preventing industries from adopting cloud services, 2 and raising customer issues internally for possible action by development teams. Even without 3 disclosing confidential information, Moyer may influence the approaches taken by Google 4 Cloud. But the Court finds that restraining these categorical responsibilities is only reasonable 5 as they relate to financial services customers.
6 Moyer provides evidence establishing that his AWS work was primarily limited to 7 financial services and independent of the healthcare vertical. See Dkt. #43 at 2 (“Financial 8 Services Business Unit has its own sales team, business development team, marketing team, and 9 partners team due to the unique needs of financial services customers.”) (citing Dkt. #49-2 at 10 50:13–51:11). Moyer’s team “sold AWS services to the 32 largest United States-based global 11 financial services companies.” Dkt. #46 at ¶ 20. The needs of Moyer’s AWS financial services 12 customers and healthcare customers are different as there are “entirely different ecosystems” of 13 ISVs within each industry and different regulations and regulators at play. Id. at ¶ 16. Moyer 14 explains that cloud computing solutions are built for customers with a combination of cloud
15 services and that the services he sold to financial services customers are largely distinct from 16 those needed by healthcare customers. Id. at ¶¶ 14–15. On this record, Amazon has not 17 established that restraining Moyer from serving as Google Cloud’s VP of Healthcare is 18 reasonable to protect its interests. 19 20
discounts with the companies he dealt with based on the price lists and standard 21 documentation and approvals that are placed at Google Cloud.” Id. at 98:6–99:6. Moyer will also coordinate with the technical deal blockers team to address technical deal 22 blockers. Blockers are things that customers believe inhibit them from converting to cloud services. Sales works with the customers to determine whether there really is a blocker 23 and whether there is a work around. Id. at 148:17–151:7. However, the sales team does not have any real control as the product management team determines which services to 24 focus on and roll out. Id. at 139:1–24. 1 The record also leaves the Court with serious questions as to how much confidential 2 information Moyer recalls outside of financial services, further supporting the Court’s 3 conclusion. See Powers, 2012 WL 6726538 at *5 (noting that employee may not remember 4 confidential information stored only in his memory). The Court does not mean to imply that 5 Amazon must somehow prove what Moyer remembers—a seemingly impossible standard.
6 Rather, the Court’s conclusion indicates that while Amazon establishes that Moyer was exposed 7 to a broad range of confidential information, it was generally tangential to his role inside the 8 financial services vertical. Amazon often overstates Moyer’s involvement with strategy and 9 development outside of the financial services vertical.13 Compare Dkt. #22 at ¶ 17 10 (characterizing Moyer as investing heavily in cross vertical initiatives and that “[w]ith Moyer’s 11 assistance, AWS developed” a service planned for mid-2020 release) with Dkt. #22-9 (Moyer 12 copied as an optional attendee on two meeting invites attaching preliminary planning documents 13 for discussion without indication that he attended) and Dkt. #46 at ¶ 51 (Moyer indicating that 14 he provided three verbal opinions in aid of drafting initial planning documents, introduced
15 development team to account managers, and attended a single phone meeting). 16 Likewise, Amazon stretches its expert’s opinion to argue that “[t]he limited evidence that 17 was retrievable showed that Moyer was reviewing highly confidential materials [on his work 18 laptop] up until the eve of his departure.” Dkt. #19 at 16 (citing Dkt. #36 at ¶ 12; Dkt. #52). But 19 Amazon’s expert does not testify that Moyer viewed any individual files, only that he opened 20 folders containing the documents. Dkt. #36 at ¶¶ 11–12 (“database records file ‘thumbnails’ 21 appearing when a user opens a folder full of files”). Amazon does establish that Moyer viewed 22 documents in April and May, just prior to his departure. Dkt. #31 (listing document access logs). 23
13 The exception is one document related to ISVs, but the substantive work on that was completed 24 in approximately May of 2018. Dkt. #22-11; Dkt. #50-16. 1 But the record does not support the inference that the access was outside of Moyer’s work for 2 AWS, that Moyer’s review was deeper than surface level, or that Moyer remembers the contents 3 of the files. See also Dkt. #43 at 17–20 (citing to instances in the record indicating Moyer had 4 limited involvement or memory).14 On the whole, Amazon establishes that Moyer had some 5 exposure to confidential information outside of the financial services vertical. But Amazon does
6 not establish that Moyer is reasonably restrained from being Google Cloud’s VP of healthcare to 7 protect the general and conceptual knowledge Moyer gained at Amazon outside of the financial 8 services vertical. 9 Moyer is in sales. Ultimately, the services themselves must be sold to the customer. 10 Amazon and Google already compete for sophisticated customers in the healthcare sector. 11 Contracting decisions are most likely to be on the merits of the services. Without disclosing 12 confidential information, Moyer is unlikely to alter the development of Google Cloud services 13 to any appreciable extent. Restraints on his actions become less reasonable as they stray further 14 from specific information and customer contacts Moyer formed while working for AWS.
15 Amazon may not unreasonably restrain Moyer’s occupational field and his ability to capitalize 16 on his general knowledge, skills, and sales experience.15 17 C. Irreparable Harm 18 The Court finds its conclusions further supported by its consideration of irreparable harm. 19 Amazon bears the burden of demonstrating that “irreparable injury is likely in the absence of an 20 injunction.” Herb Reed Enterprises, LLC v. Florida Entertainment Management, Inc.,736 F.3d 21 1239, 1249 (9th Cir. 2013) (quoting Winter v. Natural Resources Defense Council, Inc., 555 U.S. 22
14 The Court notes that Amazon did little in its reply to contest this portion of Moyer’s brief. 23
15 The Court does not find it necessary, in this case, to consider “whether enforcing the covenant 24 would injure the public through loss of the employee’s service and skill.” 1 7, 22 (2008)) (emphasis in original). The mere possibility of irreparable harm is “too lenient” of 2 a standard. Id. So long as there is concrete evidence in the record, “[e]vidence of loss of control 3 over business reputation and damage to goodwill [can] constitute irreparable harm.” Herb Reed 4 Enterprises, LLC v. Florida Entertainment Management, Inc.,736 F.3d 1239, 1250 (9th Cir. 5 2013). But irreparable harm is not established by platitudes that do not establish “whether
6 ‘irreparable injury is likely in the absence of an injunction’ . . . [or] whether legal remedies, such 7 as money damages, are inadequate.” Herb Reed, 736 F.3d at 1250 (quoting Winter, 555 U.S. at 8 22) (emphasis in original). Irreparable harm will not be presumed where a plaintiff presents no 9 proof beyond speculation that its reputation or goodwill in the market will be damaged, because 10 the Court has no way of evaluating this intangible harm. See Mirina Corp. v. Marina Biotech, 11 770 F. Supp. 2d 1153, 1162 (W.D. Wash. 2011). 12 The Court agrees with Amazon’s argument that the type of damages caused by violation 13 of noncompete provisions are often irreparable. Dkt. #55 at 8, n.24. There is no simple way to 14 identify, quantify, and compensate harms to competitive advantage and establishment of market
15 share. But, the fact that the harms themselves are irreparable does not mean that they are likely. 16 In this case, the likelihood of harm is also correlated to the closeness of Moyer’s relationship 17 with the customer. Moyer is very likely to harm Amazon if he contacts his former AWS financial 18 services customers. Less so with potential Google Cloud/AWS financial services customers. 19 Still less with existing AWS healthcare customers. And still less with potential Google 20 Cloud/AWS healthcare customers. 21 // 22 // 23 // 24 1 The likelihood that Moyer will irreparably harm Amazon’s competitive advantages 2 further decreases outside of customer relationships.16 Such harm is premised on Moyer guiding 3 Google Cloud, without disclosing confidential information, to unfairly compete with Amazon. 4 The most likely harm would seem to flow from Moyer being involved in setting Google Cloud’s 5 healthcare sales strategies. But Moyer is no expert on AWS’s sales strategies to healthcare
6 customers. At most he may have gleaned some insight from his presence or involvement in 7 discussions of AWS’s plans more generally.17 But Google Cloud has presumably already 8 developed its own sales strategies. Moyer may elect to merely implement those strategies. While 9 he will no doubt have a significant impact on the approach Google Cloud takes, Moyer will not 10 be the sole decisionmaker in many of the competitive decisions. This record does not support 11 the conclusion that Amazon will be irreparably harmed if Moyer is not restrained from selling 12 Google Cloud services to prospective healthcare customers. 13 The likelihood of irreparable harm diminishes even further when considering Moyer’s 14 potential impact on the development of Google Cloud services and features. Moyer is not a
15 developer. Without disclosing confidential information, the Court struggles to see how Moyer 16 is likely to lead timely development of Google Cloud services to compete with AWS services 17 that are already being developed. First, the services may not even transfer to Google Cloud’s 18 current offerings. Second, it may not be possible to develop competing services within Google 19 20
16 The exception, again, relates to financial services. As the Court already noted, Moyer should 21 be screened from participating in activities directly related to the financial services vertical or customers. 22
17 Moyer successfully calls into question Amazon’s argument that Moyer and Google Cloud will 23 unfairly compete because Moyer knows of Amazon’s pricing and negotiation strategies. Dkt. #50-3 at 130:4–133:25 (establishing that the foundation of pricing is public, and that Moyer did 24 not control and was minimally involved in calculating offers during negotiations). 1 Cloud’s framework. Third, Google Cloud is presumably already planning its own services to 2 seek what it expects to be its own competitive advantage. So removed, the harm is speculative. 3 On the current record, the Court finds that Amazon has demonstrated a likelihood of 4 irreparable harm only if Moyer is not restrained from contacting his former AWS financial 5 services customers, potential Google Cloud/AWS financial services customers, and existing
6 AWS customers. Further, Amazon has demonstrated a likelihood of irreparable harm if Moyer 7 participates in activities directly related to Google Cloud’s financial services vertical or 8 customers. 9 D. Balance of Hardships and Public Interest 10 The Court does not consider a balancing of the hardships in this case to be particularly 11 instructive. Amazon’s primary hardship in the absence of the relief it seeks appears to be the 12 possibility that its confidential information will be used to its competitive disadvantage. But this 13 is a hardship that exists any time Amazon chooses not to retain an employee. If the Court granted 14 Amazon the relief it seeks, the hardship on Moyer appears to be the possibility that Google Cloud
15 no longer wants to employ him and that he faces severely limited employment opportunities in 16 his chosen field of cloud computing sales. This certainly would be a significant hardship, but 17 one that he ultimately agreed too. The Court believes that its resolution has otherwise struck the 18 appropriate balance between these hardships. 19 E. Bond 20 Federal Rule of Civil Procedure 65 provides that this “court may issue a preliminary 21 injunction . . . only if the movant gives security in an amount that the court considers proper to 22 pay the costs and damages sustained by any party found to have been wrongfully enjoined or 23 restrained.” FED. R. CIV. P. 65(c). The Ninth Circuit has recognized that Rule 65 “invests the 24 district court with discretion as to the amount of security required, if any.” Johnson v. Couturier, 1 572 F.3d 1067, 1086 (9th Cir. 2009) (quoting Jorgensen v. Cassiday, 320 F.3d 906, 919 (9th Cir. 2 2003)) (quotation marks omitted). For example, “the district court may dispense with the filing 3 of a bond when it concludes there is no realistic likelihood of harm to the defendant from 4 enjoining his or her conduct.” Id. 5 Amazon requests that the Court dispense with the requirement to post a bond, indicating
6 that Google will continue to employ Moyer. Dkt. #19 at 25. Moyer does not contest the request 7 and the Court finds it appropriate. The Court therefore sets the required bond amount at zero. 8 IV. CONCLUSION 9 Having reviewed Plaintiff’s Motion, the responsive briefing, and the remainder of the 10 record, and after hearing oral argument, the Court finds and ORDERS: 11 1. Amazon’s Motion for Preliminary Injunction (Dkt. #19) is GRANTED in part. 12 2. Pending a resolution of this matter on the merits (or November 22, 2020, whichever 13 comes first), Philip Moyer is and shall be ENJOINED from: 14 a. Participating in activities directly related to Google Cloud’s financial services vertical
15 or customers; 16 b. Contacting any of his former AWS financial services customers; 17 c. Contacting any potential Google Cloud/AWS financial services customers; and 18 d. Contacting any existing AWS customers. 19 3. This preliminary injunction is effective immediately. 20 4. Amazon is not required to post a security bond. 21 DATED this 24th day of October 2019. 22 A 23 RICARDO S. MARTINEZ 24 CHIEF UNITED STATES DISTRICT JUDGE