United Rug Auctioneers, Inc. v. Arsalen

16 Mass. L. Rptr. 420
CourtMassachusetts Superior Court
DecidedApril 11, 2003
DocketNo. CA030347
StatusPublished
Cited by1 cases

This text of 16 Mass. L. Rptr. 420 (United Rug Auctioneers, Inc. v. Arsalen) 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
United Rug Auctioneers, Inc. v. Arsalen, 16 Mass. L. Rptr. 420 (Mass. Ct. App. 2003).

Opinion

Brady, J.

Background

The plaintiff seeks injunctive relief prohibiting the defendants from working in and/or conducting the business of selling oriental and Persian rugs and of divulging any proprietary and/or confidential information of the plaintiff. The complaint was filed on January 24, 2003. On February 4, 2003, after hearing, I granted plaintiffs request for preliminary injunction and, in view of the possibiliiy that the defendants might be financially harmed because of their temporary inability to conduct rug sales pending trial, I advanced the case for a speedy trial on March 17, 2003. Counsel to their credit acted cooperatively with respect to discovery, and the trial (delayed briefly due to plaintiffs counsel’s illness) began on Friday, March 29, 2003 and concluded on April 2, 2003. For reasons stated on the record, I imposed what I considered to be reasonable time limits on the presentation of evidence.1

The evidence was sharply conflicting. On the credible evidence before me, I find and rule as follows.

Findings

1. The plaintiff United Rug Auctioneers, Inc. (United) is a Massachusetts Corporation whose business is the liquidation of oriental and Persian rugs. The principals are three brothers: Ronen, Joseph, and Nir Droiy.

2. The defendant Allied Rug International Auctioneers, LTD (Allied) is a Delaware corporation incorporated on December 5, 2002. As will be discussed hereafter, the defendants Arie Arsalen, Edmon Mam-ane and Beth Reed are three individuals who are associated with Allied. The defendant Ario, Inc. is an alter ego of Allied.

3. Ronen Droiy (age 27) is the prime mover of United. Bom in Framingham, his family moved to Israel when he was veiy young. In 1993 he returned to the U.S. and began to work in the oriental mg business. After working for several years for a mg company which went out of business, he started his own mg business in about 1996. His brothers Joseph and Nir Droiy eventually joined him in the business. Ronen Droiy encountered some difficulties at the beginning, but eventually evolved a business strategy which, by 2002, was proving to be veiy successful.

4. United’s business is to conduct liquidation sales of oriental and Persian mgs by auction and otherwise on weekends at various temporary locations in Massachusetts and other nearby states. United operates out of a warehouse in Canton. It purchases its mgs from three vendors in New York City, primarily Sam Shamoulian. Picking locations from which to sell is of paramount importance. Basically, Ronen Droiy determines sales locations based on cities or towns whose average per capita income in the town and in the surrounding vicinity is high. The mgs are handmade, relatively expensive, and thus most sales locations are in affluent suburbs. When Ronen Droiy determines the location, he will schedule a facility from which to conduct the sale or auction. A few weeks prior to the sale, United advertises by direct mail flyers to households within certain nearby zip codes. The flyers are generally headed by bold captions such as “Liquidation Auction” or “Federal Notice Auction” and [421]*421contain language emphasizing that the rugs are forced to be sold immediately at substantial discounts.

5. The defendant Arie Arsalen grew up with the Drory brothers in a suburb of Jerusalem. On several occasions beginning about 1995, Arsalen traveled to the U.S. to visit Ronen Droiy and to work with him in the rug business. While in the U.S. he would live with Ronen in his apartment in Canton. The rug work that he did consisted primarily of manual labor, loading and unloading rugs and occasionally running errands. From time to time he would accompany Ronen Droiy to New York City to purchase rugs. For aperiod of time in about 1998Arsalen also worked with Joseph Droiy as a mechanic in Florida.

6. In February 2002 Arsalen again returned to the United States and was living in California. Ronen Droiy called him and asked him to come to Massachusetts to work with him in the rug business. Arsalen was willing, but made it clear that he did not want to do mainly physical labor; rather he wanted to acquire knowledge about the rug business and to work as a salesman. Ronen Droiy agreed; Arsalen then came to Massachusetts in early March, again taking up residence with Ronen in Canton.

7. With Arsalen’s arrival, Ronen Droiy purchased a new truck which he assigned to Arsalen. United typically will send out four or five trucks of rugs to different locations for the weekend sales. One or two United employees accompany the truck and run the sale. Thus Arsalen began to become intimately acquainted with the details, including the profitability, of United’s business.

8. Arsalen worked for United from early March 2002 to early October 2002, when he quit. He attended and participated in approximately twenty-one weekend sales or auctions, usually with Joseph Droiy but occasionally with Nir Droiy or Ronen Droiy. For the first few weeks his duties were much as before, namely loading and unloading the trucks. Gradually, the Drory brothers taught him the job of salesman. At core, an effective salesman must be veiy familiar with the details of oriental and Persian rugs, including quality, origin, size and cost. The Droiys gave Arsalen pricing authority. Arsalen knew precisely what each rug cost and for what price he could sell the rug to interested customers. He became privy to all aspects of United’s business.

9. The location of the sales is vitally important to the success of the business. As indicated, the most affluent suburbs are targeted, but there are other locations which do not rank at the top of the average income scale which also have proven to be profitable. Wrentham is one such location. Likewise, the facility to be used for the sale is important. Over the years, the Droiys have built up relationships with various managers of facilities which they are able to rent for a weekend sale, and whom they can trust to keep the information confidential.

10. For each rug sale location United maintains a historical file which contains information such as directions to the site, vendor’s licenses required, contact persons, and summaries of prior sales. The file for each location is stored securely at the company warehouse in Canton; it accompanies the salesmen to the location of the sale. On Sunday evening following a sale, the salesman will return the file to Ronen’s apartment.

11. In June 2002 Ronen Droiy, who regarded his method of doing business as confidential and proprietary, decided that it would be prudent to require his key non-family employees to sign confidentiality and non-competition agreements. United’s lawyer prepared a form agreement which several of United’s employees were required to sign.

12. On June 19, 2002 Ronen Droiy and United secretary Kim Bevins presented such an agreement to Arsalen at the warehouse in Canton. Arsalen’s first language is Hebrew, but he speaks fluent English and is able to read English. He spent several minutes reviewing the form. Km Bevins explained the nature of the contract to Arsalen. He signed it. Thereafter, Bevins made a photocopy of the three-page contract and gave the original to Ronen Droiy. While making the photocopy, the machine jammed after the first two pages. Ms. Bevins used a fax machine to copy the third (signature) page. Ronen Droiy took the original home with him and placed it in his closet. When the events which gave rise to this lawsuit came to his attention, Ronen Droiy was unable to locate the original.

13.

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Related

United Rug Auctioneers, Inc. v. Arsalen
16 Mass. L. Rptr. 607 (Massachusetts Superior Court, 2003)

Cite This Page — Counsel Stack

Bluebook (online)
16 Mass. L. Rptr. 420, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-rug-auctioneers-inc-v-arsalen-masssuperct-2003.