Corporate Technologies, Inc. v. Harnett

943 F. Supp. 2d 233, 35 I.E.R. Cas. (BNA) 863, 2013 WL 3334979, 2013 U.S. Dist. LEXIS 63598
CourtDistrict Court, D. Massachusetts
DecidedMay 3, 2013
DocketCivil Action No. 12-12385-DPW
StatusPublished
Cited by25 cases

This text of 943 F. Supp. 2d 233 (Corporate Technologies, Inc. v. Harnett) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Corporate Technologies, Inc. v. Harnett, 943 F. Supp. 2d 233, 35 I.E.R. Cas. (BNA) 863, 2013 WL 3334979, 2013 U.S. Dist. LEXIS 63598 (D. Mass. 2013).

Opinion

MEMORANDUM AND ORDER

DOUGLAS P. WOODLOCK, District Judge.

Plaintiff Corporate Technologies, Inc. (“CTi”) brings this action against its former employee, Brian Harnett, and his new employer, OnX USA LLC, for breach of contract and tortious interference with advantageous business relationships. Plaintiff alleges that Harnett took confidential information he learned at CTI and has used it to solicit his former CTI clients to transfer their business to OnX in violation of the Non-Disclosure and Non-Solicitation Agreement that was a part of his employment contract with CTI.

Both Plaintiff and Defendants move for preliminary injunctive orders. CTI seeks to enjoin Harnett from doing business with clients he worked with while at CTI. Defendants seek to enjoin Plaintiff from describing Harnett’s Non-Solicitation and [236]*236Non-Disclosure Agreement as a non-competition agreement to potential customers. I granted Plaintiffs motion for preliminary injunction orally during the March 11, 2013 motion hearing in this case. This memorandum provides a more extended explanation for that ruling and resolves some lingering disputes over the particular written formulation of the injunctive order. This memorandum also addresses Defendants’ separate motion for preliminary injunction, which I decline to grant.

I. BACKGROUND

A. Facts

CTI and OnX are competitors providing Information Technology solutions to corporations and universities, integrating software, hardware, consulting, maintenance, and support. Harnett worked as a salesman for CTI from February 2003 until October 2012, when he left to work for CTI’s competitor, OnX. While working at CTI, Harnett’s five largest clients were EBSCO Publishing, Demandware, Liberty Mutual, Harvard University, and Putnam Investments.

When Harnett joined CTI, he signed a Non-Disclosure and Non-Solicitation Agreement, precluding him from divulging confidential information he learned while employed with CTI and also precluding him from soliciting business from CTI’s customers for one year following his departure from CTI. Specifically, the NonDisclosure undertaking provides,

[t]he Employee shall not at any time ... reveal to any person or entity any Confidential Information or Development or information or development belonging to any third party which the Company is under an obligation to keep confidential, and shall keep secret all matters which have or may be entrusted to him or her and shall not use or attempt to use any Confidential Information or Development ... for his or her own benefit or for the benefit of any third party.

The Non-Solicitation undertaking specifically provides that,

for twelve (12) months following the last date on which the Employee provided Services, the Employee shall not ... directly or indirectly, alone or as a partner, officer, director employee, independent contractor, [etc.] ..., solicit, divert or entice away existing customers or business of the Company.

OnX moved into the New England area in 2011. On August 27, 2012, OnX made Harnett a formal employment offer, which he declined. On October 5th, 2012, OnX made him a new offer, raising its promised compensation and offering to indemnify him fully for any disputes with CTI over breach of the Non-Disclosure and Non-Solicitation Agreement. Harnett signed this employment offer on October 10, 2012, but did not announce his resignation to CTI until about one week later. October 26, 2012 was his last day at CTI and he began work at OnX on the next business day, October 29, 2012. On his last day in the office, Harnett met with CTI’s Human Resources manager and he confirmed that he understood and would comply with his obligations under the Agreement.

When he left CTI, Harnett took about 25 pages of notes from his employment spanning a time period from 2010-2012, which he kept on his personal iPad. He also copied his 2012 consumer price quotes onto a USB memory drive, which he claims he left with CTI, but which CTI contends he took with him. No party has yet uncovered or produced the drive.

On Harnett’s first day at his new job, OnX sent an announcement to just over 100 potential clients notifying them of Harnett’s new position with OnX. This list included Harnett’s eight most active CTI [237]*237clients in 2012: EBSCO Publishing, Demandware, Harvard University, Liberty Mutual, Putnam Investments, Convexity Capital, Interactive Data, and Wellington Management. OnX contends that Harnett played no role in determining the list of recipients. While CTI does not yet affirmatively dispute this fact, having engaged in only limited and expedited discovery, its skepticism is evident.

Four of Harnett’s former clients from his time at CTI responded to OnX’s announcement, and Harnett has met with them to discuss and encourage their business on behalf of OnX. At least one of these contacts has ripened into an agreement between OnX and one of Harnett’s former CTI clients. Through his sales efforts, Harnett has persuaded Demand-ware to enter into a contract with OnX to provide services substantially similar to those it previously sought from CTI. The parties have represented that, although Demandware and OnX have reached an agreement, they have not moved forward with the deal in light of the preliminary injunction entered against the Defendants.

In addition, Harnett has submitted more than 10 requests to various venders for “registered opportunities.” Registered opportunities are exclusive pricing discount arrangements between the vendor and the IT service provider (such as CTI or OnX) so that the service provider can sell the vendor’s products to its client for a discounted price. So far, Harnett’s efforts have resulted in a rare “dual registration” with a vendor called NetApp which Harnett has pursued in his attempt to acquire business from EBSCO Publishing and Demandware.

B. Procedural History

CTI filed this case in state court on December 19, 2012. Defendants removed the action to this court two days later on December 21, 2012. Harnett filed counterclaims for intentional interference with an advantageous business relationship and unfair business practices on January 9, 2013.

Plaintiff filed a motion for preliminary injunction on February 15, 2013. At the motion hearing on March 11, 2013,1 granted Plaintiffs motion orally and directed the parties to confer on the text of a written order in accordance with my rulings. The parties have been unable to reach agreement on two discrete issues: (1) whether Harnett and OnX should be enjoined from doing business with Harvard University entirely, or whether the injunction should be tailored to allow them to do business with discrete independent business units within Harvard as to which Harnett had not previously provided services, and (2) whether Plaintiff should be enjoined from referring to Harnett’s post-employment covenant as a non-competition rather than a non-solicitation agreement. I heard further oral argument on April 3, 2013, directed the parties to file supplementary briefing with respect to the Harvard issue, and directed Defendants to file their own separate preliminary injunction motion with respect to the non-solicitation/non-competition issue. After the parties made supplementary submissions, I heard further argument on May 1, 2013.

II. CTI MOTION FOR PRELIMINARY INJUNCTION

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943 F. Supp. 2d 233, 35 I.E.R. Cas. (BNA) 863, 2013 WL 3334979, 2013 U.S. Dist. LEXIS 63598, Counsel Stack Legal Research, https://law.counselstack.com/opinion/corporate-technologies-inc-v-harnett-mad-2013.