WMI Group, Inc. v. Fox, C.

109 A.3d 740, 39 I.E.R. Cas. (BNA) 1243, 2015 Pa. Super. 25, 2015 WL 500883, 2015 Pa. Super. LEXIS 37
CourtSuperior Court of Pennsylvania
DecidedFebruary 6, 2015
Docket1550 EDA 2013
StatusPublished
Cited by17 cases

This text of 109 A.3d 740 (WMI Group, Inc. v. Fox, C.) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
WMI Group, Inc. v. Fox, C., 109 A.3d 740, 39 I.E.R. Cas. (BNA) 1243, 2015 Pa. Super. 25, 2015 WL 500883, 2015 Pa. Super. LEXIS 37 (Pa. Ct. App. 2015).

Opinion

OPINION BY

FITZGERALD, J.:

Appellants, WMI Group, Inc., WM Robots, LLC, and WM Management Group, Inc., appeal from the order entered in the Montgomery County Court of Common Pleas denying their petition for a temporary restraining order and preliminary injunction against Appellees, Charles Fox and IED Detection Systems, LLC. 1 Appellants contend the trial court erred by not issuing a preliminary injunction enjoining Appellees from violating a restrictive covenant. We hold that Appellants have not established their burden that the restrictive covenant binds Fox and, regardless, have not demonstrated the existence of a trade secret. Given the preliminary na *743 ture of the record and that Appellants’ entitlement to injunctive relief is presently unclear, we affirm. 2

We state the facts as set forth by the trial court:

[Appellants] are in the business of marketing and selling machine and robotic products, some of which they manufacture, and some of which are manufactured by other companies.
On August 6, 2004, [Fox] entered into an employment agreement with Wol-stenholme Machine, Inc. (WMI). [3] Attached to the employment agreement was an employment letter on Wolsten-holme Machine stationary which outlined Fox’s salary, commission, benefits and general employment duties. Both of these documents were signed by Agit Gene Samsi (hereinafter “Samsi”) [who was then the] Vice President General Manager and Fox. Section 5 of the 2004 Employment Agreement stated as follows:
NON-COMPETITION
5.01 During the term of this Agreement and for 12 months following the termination of Employee’s employment, Employee will not, without WMI’s prior written consent: (i) accept employment with a competitor or in any other manner compete with those business activities to which the Employee was assigned during the 24 month [sic] prior to his termination of employment with WMI, (ii) solicit any customer or potential customer of WMI that Employee or his subordinates solicited or serviced for WMI or (iii) solicit to leave WMI or hire any individual who was an WMI employee during Employee’s employment at WMI.

Trial Ct. Op. at 1-2.

The 2004 Agreement explicitly provided that the non-compete clause was effective upon termination of the Agreement:

1.04 This Agreement and all obligations hereunder, except for the post-employment obligation, shall automatically terminate if and when Employee assumes a different position in the Company [4] and signs a new Agreement, or upon termination of employment. The post-employment obligations described in Section 4.0 and 5.0 of the Agreement shall remain in full force and effect after this Agreement is terminated.

Appellants’ Prelim. Inj. Hr’g Ex. 3-B. 5 The 2004 Agreement was also binding upon *744 any successors and assigns to WMI: “This Agreement ... shall be binding upon and inure to the benefit of WMI and Employee and their respective successors and permitted assigns and the Company will require its successors to expressly assume its obligations under this Agreement... Id.

We continue to quote the trial court’s recitation of the facts:

Fox’s initial employment duties were to acquire new customers and sell products manufactured by [Appellants] in their machine shop.
On January 10, 2007, Fox signed a document on WM Robots, LLC stationary titled “Promotion to new Position within Company.” The employer listed is A. Gene Samsi with WM Management Group, LLC. [6] This document described Fox’s new position as WM Robots’ Sales and Business Development Manager and set forth his salary and commissions. The document did not contain a non-compete provision and did not refer to the non-compete provision in the 2004 agreement [with WMI].

Trial Ct. Op. at 2 (citation omitted).

We reproduce the 2007 document, as follows:

Promotion to new Position within Company
Employee: [Fox]
Employer: A. Gene Samsi with WM
Management Group, LLC
Date: 1/10/2007
Effective Date: 1/1/2007
This letter is to formalize and define the agreement to Promote ... Fox to the position of WM Robots’ Sales and Business Development Manager.
Responsibilities include, but not limited to, Sales, Sales Management, Customer Service & Business Development for WM Robots’ products.
The defined territory for these responsibilities is global with the exception of UVSS products with territories reserved by BDL Systems Limited (England).
Products included, but not limited to, Robots (Currently [sic] the KNIGHT) and accessories, Wolstenholme Aer-oMed’s HazProbe, BDL Systems’ UVSS, and any other WM Robots’ product defined as any product or system sold as a WM Management Group’s part number. Salary is $70,000 per year with annual reviews in the month of December.
Commissions on all WfiVI Robot products will be 1% of Gross Sales with the exception of the KNIGHT product line, which will be .5% of Gross Sales. All new sales (sales orders received after January 1st, 2007) are subject to this commission structure. In addition to commissions received for WM Robots’ products, certain projects currently running or pending in WMI and CST are subject to a commission of .25% through 2007. These projects are listed below. ...

Appellants’ Prelim. Inj. Hr’g Ex. 4. As noted above, WM Robots, LLC, is a different entity than WMI/WMI Group, Inc., in the 2004 agreement.

Fox’s new position replaced two individuals who left the company, and included new responsibilities of working on WM *745 Robots’ robotic under-vehicle surveillance and [robotic camera]-type equipment. Fox stopped selling WMI products and solely worked on WM Robots’ product lines in his new position.
Later in 2007, WM Robots, LLC contracted with Vallon, a German manufacturer of metal detection systems, magnetometers and degaussing equipment to represent and sell their products in the United States. Fox was assigned by Samsi as the sole salesperson for Vallon products. In this new position, Fox established a relationship with Vallon and the U.S. Military, the largest customer of WM Robots’ Vallon products. Thereafter, 90 percent of Fox’s sales were devoted to selling Vallon products. The annual sales from WM Robots to the U.S. Military was approximately $60 million in 2011 and $110 million in 2012.

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Bluebook (online)
109 A.3d 740, 39 I.E.R. Cas. (BNA) 1243, 2015 Pa. Super. 25, 2015 WL 500883, 2015 Pa. Super. LEXIS 37, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wmi-group-inc-v-fox-c-pasuperct-2015.