Bindagraphics, Inc. v. Fox Grp., Inc.

377 F. Supp. 3d 565
CourtDistrict Court, D. Maryland
DecidedMarch 27, 2019
DocketCivil No. CCB-18-2193
StatusPublished
Cited by9 cases

This text of 377 F. Supp. 3d 565 (Bindagraphics, Inc. v. Fox Grp., Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bindagraphics, Inc. v. Fox Grp., Inc., 377 F. Supp. 3d 565 (D. Md. 2019).

Opinion

In Medispec, Ltd. v. Chouinard , the covenant in question prevented the employee from working "in an [sic ] capacity whatsoever, directly or indirectly" with a competitor. 133 F.Supp.3d at 772. The court found that the prohibition was facially overbroad because it "prevents Defendant from taking any, job, no matter how unrelated to his prior sales work, with a company that indirectly competes" with the plaintiff and was "not reasonably targeted to achieve the Plaintiff's stated interest in protecting *573goodwill." Id. at 775. In Seneca One Finance, Inc. v. Bloshuk , albeit a case involving a nationwide restriction, the contract at issue similarly prohibited the employee from "directly or indirectly" working on behalf of the "same or similar" business, 214 F.Supp.3d at 461. The court reasoned that the "provision is not limited to the work that [the defendant] performed ... and is far wider in scope than is reasonably necessary to protect the goodwill" the defendant created on his employer's behalf. Id. at 461-62. Similarly, in MCS Services, Inc. v. Jones , the court reasoned, "the scope of the proscribed activity is not properly bounded ... [because the] covenant demands that Jones shall not directly or indirectly be employed by any other entity, in competition with, or similar in nature to, MCS. It therefore prohibits Jones from working in any capacity with any company that competes or may compete in any way with MCS. This sweeping prohibition is not reasonably necessary to protect the customer goodwill Jones created, and it is not narrowly tailored to that end. It constrains the list of Jones's potential employers instead of targeting possible goodwill-thieving activities." MCS Servs., Inc. , 2010 WL 3895380, at *3 (internal citations omitted). The present covenant similarly proscribes direct or indirect action by the employee and does not cabin its effect to positions where Mr. Rodgers might traffic in customer goodwill.

The Fourth Circuit has ratified this logic. In DPGM II , it deemed facially overbroad a restrictive employment covenant prohibiting "any activity which may affect adversely the interests of" the employer, because, in part, the restrictive covenant was "in no way ... specifically targeted at preventing [the defendants] from trading on the goodwill they created while serving [the plaintiff s] customers." 116 Fed. App'x. at 438. In RLM Communications, Inc. v. Tuschen , a North Carolina case, the Fourth Circuit similarly distinguished between covenants "focus[ed] on employment that raises the risk that [the defendant] will use knowledge obtained" from the plaintiff to its detriment and those that focus on the similarity between the new and former employer. 831 F.3d 190, 197 (4th Cir. 2016).

In light of this precedent, the fact that the plain language of the contract prevents Mr. Rodgers from taking any position with a competitor renders this agreement facially overbroad. Mr. Rodgers's additional arguments pertaining to geographic breadth and breach need not be reached.3

In Maryland, a finding of overbreadth-facial or as-applied-does not end the inquiry. "If a restrictive covenant is unnecessarily broad, a court may blue pencil or excise language to reduce the covenant's reach to reasonable limits." DPGM II , 116 Fed App'x. at 439 (citing Tawney v. Mut System of Maryland , 186 Md. 508 (1946)). A court may not, however, "rearrange or supplement the language of *574the restrictive covenant" to precipitate a properly tailored revision. Id. (citing Fowler v. Printers II, Inc. , 89 Md. App. 448, 465-66, 598 A.2d 794 (1991) ). "A court can only blue pencil a restrictive covenant if the offending provision is neatly severable." Id. "[A] court may not excise the dominant language or words from a covenant that is part of a single indivisible promise." Paul , 2017 WL 2462492, *8 (citing DPGM II , 116 Fed. App'x. at 440 ). Nor can a court "supplement, rearrange, or otherwise rewrite" the language of the restrictive covenant. Id.

The noncompete covenant in this case cannot be salvaged by the blue-pencil doctrine. There is no way to curtail the covenant's scope to specific positions within a competitor organization that raise the risk that Mr. Rodgers will capitalize on the goodwill he generated while at Bindagraphics. DPGM II , 116 Fed App'x. at 439. While the prohibition on direct and indirect competition and the application of the provision to prospective customers, arguably independent grounds to find the contract facially overbroad,4 might possibly be excised from the covenant's text, section 5(d) of the contract, which delineates the specifics of Mr. Rodgers's promise not to compete, cannot be refashioned to focus on the type of prohibited employment instead of the competitor status of the new employer without adding language and rewriting the covenant. The character and extent of revision required is not permitted under the blue-pencil doctrine. The noncompete covenant remains facially overbroad. And it is therefore unenforceable.

B. Nonsolicitation Covenant

The same rules apply to the nonsolicitation covenant Bindagraphics seeks to enforce. By its terms, the nonsolicitation covenant declares that, for one year following his termination, Mr. Rodgers will not directly or indirectly solicit any customer or prospective customer for products or services the same as, or similar to, those sold by Bindagraphics's trade binding division. The covenant additionally forbids Mr.

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Bluebook (online)
377 F. Supp. 3d 565, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bindagraphics-inc-v-fox-grp-inc-mdd-2019.