EMC Corp. v. Kempel

14 Mass. L. Rptr. 131
CourtMassachusetts Superior Court
DecidedNovember 20, 2001
DocketNo. 014631BLS
StatusPublished

This text of 14 Mass. L. Rptr. 131 (EMC Corp. v. Kempel) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
EMC Corp. v. Kempel, 14 Mass. L. Rptr. 131 (Mass. Ct. App. 2001).

Opinion

van Gestel, J.

This matter is before the Court on the application of the plaintiff, EMC Corporation (“EMC”), for a preliminary injunction against the defendant Doron Kempel (“Kempel”).1

BACKGROUND

Kempel first began working with EMC in the spring of 1998, on a consulting basis. For about three years prior thereto, Kempel served as Vice President of Sales and Marketing for Imedia Corporation (“Imedia”). Imedia was a privately held company, based in San Francisco, that developed and sold video compression [132]*132and statistical multiplexing technology. In his position with Imedia, Kempel developed an expertise in a field known in the information technology industry as “rich media.” Rich media refers to video, audio, and imaging, as contrasted with plain digital consisting of text and numbers.

Based upon his expertise in video and related markets and given his contact base with customers in this space, Kempel provided EMC with consulting services regarding video-related products that EMC had under development — in particular, a video server and video compression technology. His role, among other things, was to evaluate the projected market for rich media; determine what EMC would have to do to retain its leadership position in the overall data storage marketplace, given the assumption that rich media would, in the future, become a significant portion of the overall digital market; and recommend an implementation strategy.

Kempel ultimately recommended that EMC establish a new, independent business unit that would focus solely on the rich media markets, and that this unit should lead and orchestrate all EMC’s activities in that space. His recommendations were accepted fully, and Kempel was asked by EMC to become a full-time employee and lead the implementation of his proposed strategy. Specifically, EMC asked him to assume the role of a general manager and establish a new business unit that would operate as an autonomous organization, sheltered from EMC’s core sales, marketing, engineering and other mainstream divisions. The new unit was called the Media Solutions Group (“MSG”).

Kempel reported directly to EMC’s head of engineering, Moshe Yanai (“Yanai”), and to the head of EMC’s Business Development. MSG had a separate budget and was managed by Kempel as an independent profit and loss center.

Kempel was not a mid-level manager but rather a highly compensated high-level executive employee having received about $2 million in economic rewards in the past two years. In his position he had access to a broad range of significant and confidential strategic EMC business and product information.

Upon joining EMC as a full time executive employee, Kempel executed the EMC Key Employee Agreement (the “Agreement"). Among other things, the Agreement provides:

1. Non-Competition . . . For the twelve-month period following the effective date of your termination, for any reason, from the Company, you agree not to directly or indirectly compete with the Company in any manner, including but not limited to directly or indirectly developing, producing, marketing, soliciting or selling products or services being developed, produced, marketed or sold by the Company as of the date of your termination. For purposes of the immediately preceding sentence you shall not be considered to be competing with the Company unless you have an ownership interest amounting to at least 1% in the competing enterprise (whether direct or indirect by way of stock options (vested or unvested) or otherwise) or an officership, directorship or other policy-making position with the competing enterprise.
7. Miscellaneous . . . (d) You agree that any breach of this Agreement will cause immediate and irreparable harm to the Company not compensable by monetary damages and that the Company will be entitled to obtain injunctive relief, in addition to other relief in any court of competent jurisdiction, to enforce the terms of this Agreement.
(e) No failure by the Company to insist upon strict compliance with any of the terms, covenants, or conditions hereof, and no delay or omission by the Company in exercising any right under this Agreement, will operate as a waiver of such terms, covenants, conditions or rights . . .

The Agreement is said to be “governed by and construed in accordance with the laws of the Commonwealth of Massachusetts ...” The Agreement also contains provisions regarding customer and vendor confidentiality and confidentiality of company records.

Kempel was contacted at some time prior to August of 2001 by a start-up company called SANgate Systems, Inc. (“SANgate”), or investors on its behalf, who were apparently seeking to find a person to become its chief executive officer. At that time, the situation at EMC was changing in ways that caused Kempel concern about the future of his MSG venture. He began to pursue with EMC changes in his position and let it be known that he would consider leaving EMC unless he was given an alternative position that would meet his career aspirations.

At one time during .this period. Kempel told his superior, Moshe Yanai, that he was considering joining SANgate if things could not be worked out for him at EMC. Yanai later, but unofficially, provided Kempel with a note or memorandum dated “8/20/01" that reads in its entirety:

To: Doron Kempel
From: Moshe Yanai
Subject: Your Leaving of EMC
I am very sorry to hear about your intentions to leave EMC and see it as a great loss for us. I still hope that you will change your mind at the last minute and would not leave us.
You also inquired about your intention that if you leave us you will move to be the CEO of SANGATE corporation. Per my knowledge about their work, I don’t see it as a problem to EMC.
Moshe
/s/ Moshe Yanai VP ENGINEERING

[133]*133It was later in. the day on August 20, 2001, that Kempel was advised by EMC that it would not be able to create for him a position of the kind that he sought. When given that advice by EMC’s Chief Executive Officer, Kempel handed him a letter of resignation, outlining that his last day of employment at EMC would be on September 2nd or 3rd. Later, on that same day, Kempel signed an agreement accepting a position with SANgate as its CEO and Chairman.

On the following day, August 21, 2001, Kempel was advised by General Counsel for EMC that EMC viewed SANgate as a competitor and that he would be in violation of his non-competition clause if he were to join SANgate as Chairman and CEO.

In his affidavit filed in this matter — from which much of the foregoing information has been taken— Kempel says at paras. 26 and 27, among other things:

26. As Chairman and CEO at SANgate I am expected to devise a strategy, establish an organization that will develop, sell and support certain information technology products (described below, and in more detail in the Affidavit of Alex Winokur) through a series of alliances with product and services companies.
27. SANgates’s router/switch-like product will address the Enterprise market place, offering complementary performance and interoperability enhancements to existing architectures and products.

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Bluebook (online)
14 Mass. L. Rptr. 131, Counsel Stack Legal Research, https://law.counselstack.com/opinion/emc-corp-v-kempel-masssuperct-2001.