FLEXcon Co., Inc. v. McSherry

123 F. Supp. 2d 42, 2000 U.S. Dist. LEXIS 19285, 2000 WL 1827818
CourtDistrict Court, D. Massachusetts
DecidedDecember 8, 2000
DocketCIV.A. 00-40206-NMG
StatusPublished

This text of 123 F. Supp. 2d 42 (FLEXcon Co., Inc. v. McSherry) 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
FLEXcon Co., Inc. v. McSherry, 123 F. Supp. 2d 42, 2000 U.S. Dist. LEXIS 19285, 2000 WL 1827818 (D. Mass. 2000).

Opinion

MEMORANDUM & ORDER

GORTON, District Judge.

On November 30, 2000, the parties appeared before this Court at a hearing on whether to convert a temporary restraining order entered by this Court on November 17, 2000, into a preliminary injunction. At the conclusion of the hearing, the matter was taken under advisement and the TRO was extended for ten days.

I. Background

The plaintiff, FLEXcon Company, Inc. (“Flexeon”), is a private, family-run Massachusetts corporation with a principal place of business in Worcester, MA. Flexeon manufactures, among other things, pressure-sensitive adhesive coated film products, both for off-the-shelf purchase and specialty orders. Flexcon’s products are *43 used in a variety of applications ranging from product identification stickers and decals to high-temperature circuit board manufacturing labels.

The defendant, David A. McSherry (“McSherry”), until recently a resident of Columbus, Nebraska, was hired by Flex-con in October, 1986 as a quality analyst. After his second promotion in September, 1992, he became a member of Flexcon’s executive staff and was appointed Manager of Flexcon’s Nebraska operations. Three days after he began employment as a quality analyst in 1986, McSherry signed a written employment agreement which contained, inter alia, non-disclosure and non-competition provisions.

On November 6, 2000, Flexcon’s CEO, Michael Engel, received an undated letter from McSherry (“notice letter”) in which McSherry informed Flexcon that he had accepted a position as Director of Operations of the Graphics Media Division (Ohio) of Avery-Dennison Corporation (“Avery”), one of Flexcon’s chief competitors. His last day of work at Flexcon was November 17, 2000.

On November 15, 2000, Flexcon filed a verified complaint against McSherry alleging breach of contract, breach of implied covenant of good faith and fair dealing, breach of duty of loyalty, misappropriation of confidential information and taking of trade secrets. Flexcon filed a motion for injunctive relief on the same day.

At an exit interview on November 16, 2000 with Flexcon’s General Counsel, McSherry indicated that he was planning to start his new position with Avery on Monday, November 20, 2000.

On November 17, 2000, the parties appeared before this Court on Flexcon’s motion for a temporary restraining order. Both parties agreed to abide by a temporary restraining order, drafted by Flexcon and entered by this Court. That order prohibited McSherry from (1) engaging in any activities on behalf of Avery or its affiliates, (2) using or disclosing any confidential information of Flexcon and (3) otherwise violating the terms of his 1986 employment agreement with Flexcon.

On November 30, 2000, this Court held a hearing on Flexcon’s motion for a preliminary injunction at the conclusion of which this Court took the matter under advisement and extended the TRO for ten days.

II. Discussion

A Preliminary Injunction Standard

In ruling on a motion for a preliminary injunction, this Court must consider whether the plaintiff has established that (1) it has a substantial likelihood of success on the merits, (2) there exists, absent in-junctive relief, a significant risk of irreparable harm, (3) the balance of hardship tilts in its favor, and (4) granting the injunction will not negatively affect the public interest. TEC Engineering Corp. v. Budget Molders Supply Inc., 82 F.3d 542, 544 (1st Cir.1996). Though a district court enjoys considerable discretion in applying this test, its decision to grant or deny a preliminary injunction must be supported by adequate findings of fact and conclusions of law. Id.; Fed.R.Civ.P. 52(a).

B. Likelihood of Success on the Merits

The claims in this case center around a non-competition provision contained in the employment agreement McSherry signed three days after commencing work as a quality analyst for Flexcon. That provision states:

Restrictions on Post-Employment Competition.

Restricted Activity. After the termination of my employment with the Company for any reason, absent the Company’s prior written approval, I shall not engage in activities similar to the Activities in the territories in which I worked for the Company for a period of two (2) years, whether on my own behalf or that of any business organization (I) engaged in direct or indirect competition with the *44 Company (II) conducting a business of the type and character engaged in by the Company at the time of my termination, or (III) developing products or services competitive with those of the Company.

The parties agree that this provision, like the rest of the employment agreement, is governed by Massachusetts law.

Flexcon asserts that this provision is enforceable and applicable to the employment McSherry seeks with Avery. Flex-con contends that “territories” should be construed as encompassing the entire United States, not just the specific states of Massachusetts and Nebraska where McSherry physically worked for Flexcon, because (1) it operates on a national and international level and (2) McSherry had access to its international, strategic business planning information. Flexcon also argues that McSherry’s prospective employment as a plant manager for Avery constitutes “Activities” similar to those he performed for Flexcon while head of its Nebraska facility.

Flexcon has not shown a likelihood of success on the merits of its claim for breach of contract because the non-competition clause in its employment agreement is ambiguous and poorly drafted. The definitions of “territories” and “Activities” (alternately capitalized or in the lower case) are non-existent. Furthermore, the agreement was signed just after McSherry was hired as a quality analyst, an entry position quite dissimilar in pay and responsibility from the manager’s position to which he was ultimately promoted.

The employment agreement was presented to McSherry as routine paperwork and signed three days after he began to work for Flexcon. His original offer letter and the letters of his subsequent promotions made no mention of, nor were they conditioned upon, the restrictive covenant.

Moreover, McSherry seems to have held only token membership on Flexcon’s Executive Committee in his capacity as plant manager in Nebraska. He does not appear to have been involved in the inner sanctum of running the corporation and apparently received allegedly confidential information regarding strategic planning, marketing, customers and suppliers on a distribution basis only.

The cases relied upon by Flexcon in support of its argument that the non-competition clause is enforceable and applicable to the new position which Avery has offered to McSherry are distinguishable from our case. The defendant in EMC Corp. v. Allen,

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Related

Marcam Corp. v. Orchard
885 F. Supp. 294 (D. Massachusetts, 1995)
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364 N.E.2d 799 (Massachusetts Supreme Judicial Court, 1977)

Cite This Page — Counsel Stack

Bluebook (online)
123 F. Supp. 2d 42, 2000 U.S. Dist. LEXIS 19285, 2000 WL 1827818, Counsel Stack Legal Research, https://law.counselstack.com/opinion/flexcon-co-inc-v-mcsherry-mad-2000.