DISH Network Corp. v. Altomari

224 P.3d 362, 29 I.E.R. Cas. (BNA) 1366, 2009 Colo. App. LEXIS 1178, 2009 WL 1798601
CourtColorado Court of Appeals
DecidedJune 25, 2009
Docket08CA1741
StatusPublished
Cited by14 cases

This text of 224 P.3d 362 (DISH Network Corp. v. Altomari) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DISH Network Corp. v. Altomari, 224 P.3d 362, 29 I.E.R. Cas. (BNA) 1366, 2009 Colo. App. LEXIS 1178, 2009 WL 1798601 (Colo. Ct. App. 2009).

Opinion

Opinion by

Judge TAUBMAN.

In this dispute over the enforceability of a covenant not to compete, plaintiffs, DISH Network Corporation and DISH Network, L.L.C,. (collectively, DISH), appeal the trial court's order partially denying a motion for a preliminary injunction against a former employee, defendant, Christopher M. Altomari. Because we conclude the trial court erred in concluding Altomari was not "management personnel" within the meaning of an exception to Colorado's statute voiding covenants not to compete, section 8-2-118(2), C.R.S. 2008, we reverse and remand.

I. Background

Altomari was hired to be the Commercial Director at DISH in December 2007. As part of his compensation package, he elected to receive a stock option and voluntarily entered into two stock option agreements, which contained this covenant not to compete (covenant):

(a) ... Employee hereby agrees not to compete with the Company, and agrees to protect from disclosure certain information, pursuant to the terms and conditions hereinafter set forth. The covenant not to compete shall have a term beginning on the date hereof and ending on the date that ... is one (1) year after the date of the termination of Employee's employment with the Company at employee's current level (ie., senior executive, vice president, director, manager, or other level held by Employee on the date of this Agreement) for any reason whatsoever.... Since the Company's business encompasses the entire continental United States, Employee acknowledges and agrees that the foregoing covenant is reasonable given the Company's current and future business plans. (b) Employee agrees that during the term of said covenant he or she shall not assist or directly or indirectly provide services to the continental United States business of any person or entity which is at the time of such assistance or provision a "Competitor" of the Company.... The term "Competitor" includes ... (#) The DIRECTV Group, Inc....
(c) Employee further agrees to hold in a fiduciary capacity for the benefit of the Company all proprietary and confidential information, knowledge, ideas and data, including, without limitation, customer lists and the Company's products, processes and programs ("Confidential Information") relating in any way to the present or future business or activities of the Company for as long as such Confidential Information remains confidential.... If any court of competent jurisdiction shall determine that the foregoing covenants are invalid in any respect, the parties hereto agree that any court so holding may limit such covenant in time, in area or in any other manner which the court determines such that the covenant shall be enforceable against Employee. Employee acknowledges that the remedy at law for any breach of the foregoing covenants will be inadequate, and that the Company shall be entitled, in addition to any remedy at law, to preliminary and permanent injunctive relief.

In July 2008, Altomari decided to leave DISH to work at its largest competitor, DirecTV, as a Senior Director of Field Operations. On July 10, 2008, Altomari told DISH he was leaving.

On July 23, 2008, DISH filed a verified complaint and motion to enjoin Altomari from working at DirecTV based upon the covenant. After a preliminary injunction hearing, the trial court partially granted the motion and determined that the covenant's *365 section (c) and the confidentiality provisions in section (a) entitled DISH to an injunction against Altomari from disclosure of any of DISH's confidential information. It otherwise denied the motion and refused to enjoin Altomari after concluding section (b) and the portions of section (a) that pertain to competition were unenforceable.

DISH appeals the order and seeks entry of a preliminary injunction against Altomari from working for DirecTV, or any other company identified in the covenant, until July 10, 2009.

II. Validity of Covenant Not to Compete

DISH contends that the trial court abused its discretion in denying its motion for a preliminary injunction against Altomari and in holding the covenant not to compete void because its decision was based on an erroneous statutory interpretation. We agree.

We review a trial court's decision to grant or deny a preliminary injunction for abuse of discretion and will reverse if it is based on an erroneous application of the law, or is otherwise manifestly arbitrary, unreasonable, or unfair. Phoenix Capital, Inc. v. Dowell, 176 P.3d 835, 840 (Colo.App.2007).

The determination to grant or deny a preliminary injunction depends upon the trial court's consideration of the factors set forth in Rathke v. MacFarlane, 648 P.2d 648 (Colo.1982).

Here, the trial court determined the only Rathke factors at issue were (a) whether DISH had a substantial likelihood of success on the merits; (b) whether the balancing of the equities favored an injunction; and (c) whether an injunction was consistent with the public interest. See 648 P.2d at 658-54. The trial court determined that the other factors favored entry of the injunction.

In determining whether there was a substantial likelihood of success, we address DISH's contention that Altomari was "management personnel" and thus subject to an exception in Colorado's statute prohibiting covenants not to compete, section 8-2-118(2).

A. Executive and Management Personnel Exception

DISH and Altomari dispute the definition of "management personnel" within the meaning of section 8-2-113(2)(d), C.R.$.2008.

That statute provides:

(2) Any covenant not to compete which restricts the right of any person to receive compensation for performance of skilled or unskilled labor for any employer shall be void, but this subsection (2) shall not apply to:
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(d) Executive and management personnel and officers and employees who constitute professional staff to executive and management personnel.

DISH argues that the trial court erred in finding the covenant void because it did not apply the plain language of the statutory exception for executive and management personnel. DISH further maintains that a manager is management personnel, while Al-tomari argues that the term "management personnel" applies only to employees who are "in charge," "act in an unsupervised capacity," and are the "few executives at the very highest echelons of a company." We agree with DISH and view executive and management personnel as two separate categories of employees. We reject Altomarti's assertion that "executive and management personnel" has a judicially defined meaning that applies here.

Whether an employee is executive or management personnel is ordinarily a question of fact for the trial court, and we will not disturb its finding unless it is so clearly erroneous as to find no support in the record. Phoenix Capital, 176 P.3d at 841. This standard of review, however, is premised on the trial court's correct application of the law, which we review de novo. Id.; see also Klinger v.

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Bluebook (online)
224 P.3d 362, 29 I.E.R. Cas. (BNA) 1366, 2009 Colo. App. LEXIS 1178, 2009 WL 1798601, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dish-network-corp-v-altomari-coloctapp-2009.