J-A28037-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37
PATRICK WOLFINGTON, TIMOTHY : IN THE SUPERIOR COURT OF EARLE AND JOHN GRABOWSKI : PENNSYLVANIA : Appellants : : : v. : : : No. 1564 EDA 2022 THADDEUS BARTKOWSKI, III, : CATALYST OUTDOOR ADVERTISING, : LLC AND CATALYST EXPERIENTIAL, : LLC :
Appeal from the Order Entered April 6, 2022 In the Court of Common Pleas of Chester County Civil Division at No(s): 2021-05143-CT
BEFORE: PANELLA, P.J., LAZARUS, J., and SULLIVAN, J.
MEMORANDUM BY SULLIVAN, J.: FILED JUNE 6, 2023
Patrick Wolfington (“Wolfington”), Timothy Earle (“Earle”), and John
Grabowski (“Grabowski”) (collectively, “Appellants”) appeal from the order
granting a preliminary injunction in favor of Thaddeus Bartkowski, III
(“Bartkowski”), Catalyst Outdoor Advertising, LLC, and Catalyst Experiential,
LLC (collectively, “Appellees”).1 We affirm in part, vacate in part, and remand
for a correction to the order.
The trial court set forth the factual background of this appeal as follows:
[Appellants] were employees and members of Catalyst [Outdoor Advertising, LLC and Catalyst Experiential, LLC (collectively, “Catalyst”), of which Bartkowski is the majority
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1See Pa.R.A.P. 311(a)(4) (permitting an interlocutory appeal as of right from an order granting an injunction). J-A28037-22
owner.2] All were parties to the operating agreement as amended for Catalyst. In addition, [Earle and Grabowski] had employment agreements. [Both the operating agreement and employment contracts contained restrictive covenants.3] Catalyst’s business consisted of various activities [relating to] digital billboards. At one point, Catalyst sold advertising for digital billboards it owned. In addition, and importantly for this litigation, Catalyst’s strategy entailed finding locations where digital billboards would create high revenue (and were often not permitted by right) and seeking to acquire an interest in the real estate via lease, easement, or purchase, and obtaining municipal approvals and developing the sites. Catalyst erects monopole billboards, monument billboards (billboards with stone, brick or other surroundings to improve the aesthetics), and experiential billboards (attached to public developments such as dog parks). Catalyst ultimately sells its interest in both the land and the revenue stream from the billboards receiving upfront money as well as a tailing payment (or deduction) depending on performance of the billboard in the two (2) years post-sale.
At times through the history of Catalyst, members and officers were asked to defer salary during periods of low cash reserves or financial difficulty to be repaid after stabilization of [Catalyst]. All [Appellants] testified that there was no specific timeline to be repaid but that the understanding [among] the parties was that repayment would occur when [Catalyst] achieved a financially sound or stable condition. COVID-19 was one such time when the decision was made to defer salary for members and officers following a sale of assets being canceled by a prospective purchaser due to the pandemic. That sale was ultimately ____________________________________________
2 Wolfington was one of Catalyst’s founders and an executive vice president of real estate; Earle was an executive vice president of investments and became an owner/member in 2020; Grabowski was catalyst’s chief financial officer and became an owner/member in 2017.
3 As detailed below, Appellants were all signatories to a second amendment to a third amended and restated limited liability company agreement (“the amended operating agreement”). The amended operating agreement included a non-compete provision. Earle’s and Grabowski’s employment agreements contained restrictive covenants not to compete and limiting their uses of confidential information. See Employment Agreements, 5/18/15, at § 8, 10.
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renegotiated and consummated at a lower price. [In late 2020, Appellants’ salaries were deferred.] In May of 2021, [Appellants’] unhappiness with Bartkowski reached its breaking point when [they] discovered that Bartkowski had withdrawn money during their period of salary deferral. [Appellants] and Bartkowski had a meeting, however, no agreement was reached . . .. Other areas of disagreement remained as well and [Appellants] left [Catalyst] and [Appellees] locked [Appellants] out of [Catalyst’s] server and email.
Order and Memorandum, 4/6/22, at 3-4 (footnotes omitted). According to
Appellees, Grabowski downloaded confidential information from Catalyst’s
server and Appellants abruptly left Catalyst, leaving Catalyst’s operations in
disarray. According to Appellants, Appellees constructively terminated and
squeezed them out after they confronted Bartkowski about his personal uses
of Catalyst’s funds and he refused their demands for payments and other
conditions on Catalyst’s financial and business operations. There is no dispute
that by May 2021, Appellants no longer worked at Catalyst. The parties began
negotiations to terminate Appellants’ stakes in Catalyst but were unable to
come to an agreement.
In July 2021, Appellants sued Appellees for breaches of contract,
violations of the Pennsylvania Wage Payment and Collection law, 4 and
breaches of fiduciary duty, alleging that Bartkowski had mismanaged Catalyst
and that Catalyst owed them a total of $1.3 million, which included $555,288
4 See 43 P.S. §§ 260.1-260.13.
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in deferred salaries or wages and profit distributions.5 Appellees answered
and raised counterclaims for breaches of fiduciary duties, conversion, fraud,
and breach of contract. Appellees alleged that Appellants had acted against
Catalyst’s interests during their employment and that their abrupt departure
caused additional harms to Catalyst. Appellees also sought injunctive relief to
restrain Appellants from competing against Catalyst.
After their departure from Catalyst, Appellants took steps to create their
own company. In their first attempt, they attempted to form a company, MMD
Development (“MMD”). Appellants used Catalyst’s “deal deck” or “pitch deck,”
which included materials they took from Catalyst in their pitches for MMD,
including Catalyst’s business models, examples of completed projects,
photographs, and financial analyses of deals, when seeking investors and
members. See Order and Memorandum, 4/6/22, at 3-4; see also N.T.,
3/14/22, at 189-90. Additionally, they approached a business contact of
Catalyst to fund or participate in MMD, but that company never formed. See
N.T., 3/14/22, at 189-90. Appellants, however, later formed Wolfgate Devco,
LLC (“Wolfgate”), to develop real estate by (1) identifying properties zoned
for billboards, (2) obtaining permits, and (3) either selling the permits or
developing the site and selling or leasing the billboards. Wolfgate obtained
leases or other interest in seven properties in southeastern Pennsylvania. ____________________________________________
5 Appellants also filed an emergency petition for the appointment of a custodian of Catalyst based on Bartkowski’s alleged mismanagement of Catalyst. The Honorable Mark L. Tunnell denied the petition following a hearing. See Order, 9/23/21.
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Upon learning of Appellants’ new business ventures, Appellees filed
petitions for preliminary injunctive relief.6 The Honorable Bret M. Binder
conducted hearings at which Bartkowski, Joe Weinlick (“Weinlick”), Catalyst’s
new Chief Operating Officer, and Appellants testified. On April 6, 2022, the
trial court granted Catalyst a preliminary injunction and, in relevant part,
prohibited Appellants from competing against Catalyst in “the Greater
Philadelphia Area . . . and New Jersey in leasing, developing, buying, selling,
or otherwise participating in real estate transactions and/or development for
the purposes of use by a digital billboard[.]” See Order and Memorandum,
4/6/22, at 1. The trial court also required Appellants to “destroy any duplicate
copies” of digital or physical property of Catalyst. See id. Appellants timely
appealed and complied with the trial court’s order to submit a Pa.R.A.P.
1925(b) statement. The trial court adopted its order and memorandum
granting the preliminary injunction as its Rule 1925(a) opinion.
Appellants raise the following issues for our review:
1. Did the trial court err by failing to strictly construe the pertinent restrictive covenants and in interpreting them expansively so as to conclude that [Appellants] violated their terms notwithstanding the evidence that [Appellants] are not engaged in the outdoor advertising business and/or in the out of home media industry?
6 As discovery in the underlying action progressed, Appellees filed three different petitions for preliminary injunctive relief: one on October 19, 2021, a supplemental petition on December 14, 2021, and a third on February 25, 2022.
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2. Did the trial court err by granting injunctive relief that is not narrowly tailored, but instead, imposes restrictions in excess of those set forth in the subject agreements?
3. Did the trial court err in concluding [Appellees] proved the existence of immediate and irreparable harm where [Appellees] were unable to identify any actual harm and could only speculate about possible future harm that cannot occur, if at all, until after the expiration of the term of the restrictive covenants and all of which can be fully compensated in monetary damages?
4. Did the trial court abuse its discretion and commit an error of law by failing to conclude that [Appellees] have unclean hands in failing to pay [Appellants] in excess of $1.3 million in salary and profit distributions, in squeezing [Appellants] out of [Catalyst], and by concluding that [s]ection 9(d) of the [a]mended [o]perating [a]greement precludes [Appellants] from asserting unclean hands as a defense?
5. Did the trial court err in ordering mandatory preliminary injunctive relief requiring the destruction of property during the pendency of the action?
Appellants’ Brief at 3-5.7
This Court reviews an order granting preliminary injunctive relief for an
abuse of discretion. See Synthes USA Sales, LLC v. Harrison, 83 A.3d 242,
248-49 (Pa. Super. 2013). Our review is “highly deferential.” Id. at 248
(internal citations and quotation omitted). An appellate court must examine
7 We note that Appellees’ responsive brief relies almost entirely on a discussion and application of Delaware law, without offering a detailed analysis of whether Delaware law should apply to the issuance of a preliminary injunction, aside from indicating that the amended operating agreement contained a choice of Delaware law provision. See Appellees’ Brief at 19. We add that Appellees did not mention Delaware standards for issuing a preliminary injunction in any of their three petitions for preliminary injunctive relief, and that they did not do so until part way through the hearings. The trial court did not apply Delaware law, and we decline to so in this appeal.
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the record to determine if there were any apparently reasonable grounds for
the action of the court below. See id. at 248-49. This Court will not inquire
into the merits of the underlying controversy. See id. at 249. We will only
disturb the trial court’s decision if it is plain that no grounds existed to support
the order or that the trial court relied upon a rule of law that was palpably
erroneous or misapplied. See id.
It is well settled that “[a] preliminary injunction’s purpose is to preserve
the status quo and to prevent imminent and irreparable harm that might occur
before the merits of a case can be heard and determined.” Ambrogi v.
Reber, 932 A.2d 969, 976 (Pa. Super. 2007). A preliminary injunction is an
“extraordinary remedy,” and the party seeking the injunction bears a heavy
burden of establishing:
1) that the injunction is necessary to prevent immediate and irreparable harm that cannot be adequately compensated by damages; 2) that greater injury would result from refusing an injunction than from granting it, and, concomitantly, that issuance of an injunction will not substantially harm other interested parties in the proceedings; 3) that a preliminary injunction will properly restore the parties to their status as it existed immediately prior to the alleged wrongful conduct; 4) that the activity it seeks to restrain is actionable, that its right to relief is clear, and that the wrong is manifest, or, in other words, must show that it is likely to prevail on the merits; 5) that the injunction it seeks is reasonably suited to abate the offending activity; and, 6) that a preliminary injunction will not adversely affect the public interest.
Allied Envtl. Serv., Inc. v. Roth, 222 A.3d 422, 426 (Pa. Super. 2019)
(internal citation omitted).
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Appellants, in their first issue, argue that the trial court erred in
construing and applying the restrictive covenants, which, as stated in the
amended operating agreement, provided:
No Member shall directly or indirectly engage in any outdoor advertising business of the type in which [Catalyst] historically engaged (the development of traditional sign structures and the sale and marketing of advertising thereon) in the Philadelphia Standard Metropolitan Statistical Area other than through [Catalyst] . . . so long as such Person is a Member of the Company and for a period of one (1) year after such Person ceases to be a Member of [Catalyst]. . . .
Amended Operating Agreement, 1/1/20, § 9(a).
Additionally, Earle’s and Grabowski’s employment agreements
contained the following non-compete provision:
Because of [Catalyst’s] legitimate business interest and the good and valuable consideration offered to the Employee, during the term of Employee’s employment and for the period of two (2) years following the voluntary or involuntary termination of the Employee’s employment with the Employer, the Employee agrees and covenants not to engage in Prohibited Activity within the out of home media industry.
For purposes of this non-compete clause, “Prohibited Activity” is activity in which the Employee contributes his knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, partner, director, stockholder, officer, volunteer, intern or any other similar capacity to an entity engaged in the same or similar business as the Employer and in the same geographic region in which Employee preformed services for the Employer.[8] Prohibited Activity also includes ____________________________________________
8 As noted by the trial court, Grabowski’s employment agreement did not contain the “in the same geographic region” phrase. See Order and Memorandum, 4/6/22, at 6 & n.6; see also Grabowski’s Employment (Footnote Continued Next Page)
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activity that may require or inevitably require disclosure of trade secrets, proprietary information or Confidential Information.
See e.g., Earle’s Employment Agreement, 5/18/15, § 10(b).
Pennsylvania law disfavors restrictive covenants as restraints on trade
that undercut an individual’s abilities to earn a living. See Rullex Co., LLC
v. Tel-Stream, Inc., 232 A.3d 620, 624 (Pa. 2020). Our courts, however,
recognize that “in the modern business environment, such covenants can be
important business tools which prevent individuals from learning employers’
trade secrets, befriending their customers and then moving into competition
with” a former employer. Id. (internal citation, quotation, and bracket
omitted). “To be enforceable, a restrictive covenant must be incident to an
employment relationship between the parties and supported by consideration;
also, its restrictions must be reasonably necessary for the protection of the
employer’s legitimate interests and reasonably limited in duration and
geographic extent.” Id. at 624-25 (internal citations omitted). “In essence,
the court must examine and balance the employer’s legitimate business
interest, the individual’s right to work, the public’s right to unrestrained
competition, and the right to contract in determining whether to enforce a
restrictive covenant.” WMI Group., Inc. v. Fox, 109 A.3d 740, 749 (Pa.
Super. 2015) (internal citation omitted).
Agreement, 5/8/15, at § 10(b). Appellants do not argue that this difference between Earle’s and Grabowski’s employment agreements bears any relevance to the disposition of this appeal.
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A court will not assume that a contract’s language was chosen
carelessly, nor will a court assume that the parties were ignorant of the
meaning of the language they employed. See id. “When a writing is clear
and unequivocal, its meaning must be determined by its contents alone. It is
not the function of this Court to re-write it, or to give it a construction in
conflict with the accepted and plain meaning of the language used.” See id.
Appellants argue that the amended operating agreement did not prohibit
their activities in real estate development. See Appellants’ Brief at 29-30.
The amended operating agreement, they note, did not expressly preclude
activities related to real estate development, and they claim that the trial court
essentially rewrote the provision to enjoin their activities.9 See id. at 35-36.
Moreover, Appellants contend that the trial court erred by ignoring their
evidence that they deliberately chose not to compete with Catalyst in
Catalyst’s known locations or in Catalyst’s specialty in high-cost/high-revenue
projects. See id. at 39-40.
9 Appellants further suggest Catalyst is no longer in the “outdoor advertising business.” See id. at 38-39. However, that contention appears to be based on Appellant’s overly narrow reading of the outdoor advertising business as limited to the sale of advertising space on Catalyst’s billboards. To the extent Appellants argue that any prohibition on working in the “out of home media” industry, as stated in the employment agreements, would apply only to Earle and Grabowski, who signed the agreements, and not to Wolfington, id. at 31- 32, there is no dispute that Wolfington was an owner/member subject to the non-compete provision in the amended operating agreement.
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The trial court found Appellants’ attempts to distinguish their real estate
activities from Catalyst’s outdoor advertising business unavailing. See Order
and Memorandum, 4/6/22, at 7. The trial court determined that “a significant
portion of Catalyst’s business is the identification of potential locations for
digital billboards, the acquisition of interests in the underlying land, and
receiving approvals to construct a digital billboard.” Id. Appellants’ activities,
the trial court concluded, “mirror these exactly.” Id. The trial court thus
concluded that Appellees were likely to prevail in their claims against
Appellants. See id.
Following our review, we discern no error in the trial court’s conclusion.
The amended operating agreement precluded Appellants from competing in
“any outdoor advertising business of the type in which [Catalyst] historically
engaged[,]” including, parenthetically, the “the development of traditional
sign structures and the sale and marketing of advertising thereon.” Amended
Operating Agreement, 1/1/20, § 9(a). Nothing in the plain language of the
amended operating agreement or the record supports Appellants’ argument
that this provision was limited to the actual construction of billboards or the
sales of advertising space on billboards. Moreover, the record evidence
supports the trial court’s findings that Appellants engaged in precisely the
same activities as Catalyst’s historical development of billboards, including
acquiring interests in real estate and developing the real estate for outdoor
advertising. See Order and Memorandum, 4/6/22, at 7-8; see also N.T.,
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3/14/22, at 8 (indicating Bartkowski’s testimony that “Catalyst is in the
business of developing, securing real estate for the purpose of developing
outdoor advertising assets”). Thus, Appellants’ first issue fails.
In their second issue, Appellants claim that the trial court did not
narrowly tailor its order. See Appellants’ Brief at 40. They argue that the
trial court should have limited the injunction to areas where their activities
would affect an existing Catalyst billboard, and they posit that a prohibition
on their activities within one mile of an existing Catalyst billboard is more
appropriate. See id. at 41. Appellants also assert that the trial court erred
when it enjoined their activities in all of New Jersey. See id. at 42
(emphasizing that the trial court enjoined their activities in the entire state
of New Jersey).
Relatedly, Appellants assert that the trial court unreasonably extended
the duration of the non-compete provisions. See id. Appellants argue that
the trial court’s preliminary injunction could last indefinitely unless and until
the court determined that they had been squeezed out or constructively
terminated as of May 2021. See id. They claim that the trial court should
have set an expiration date should have expired in May 2022, one year from
the date they were squeezed out of Catalyst. See id.
The trial court did not expressly address Appellants’ claims but
determined that the preliminary injunction reasonably protected the status
quo pending the resolution of the underlying controversies between the
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parties. See Order and Memorandum, 4/6/22, at 3-4. The trial court briefly
mentioned that the one- and two-year restrictions in the amended operating
agreement and the employment agreements were reasonable and that their
geographic scopes were limited. See id. at 10-11. The court, however,
determined that the duration of an injunction would have to be determined at
trial. See id. at 11 n.10 (indicating that the parties agreed that Appellants
were still owner/members under the amended operating agreement).
As to the geographic scope of the preliminary injunction, the amended
operating agreement uses the term “the Philadelphia Standard Metropolitan
Statistical Area” and the hearing evidence established that Catalyst operated
in the marketing area that included Philadelphia, Bucks, Montgomery,
Delaware, and Chester counties in Pennsylvania, and “most municipalities in
South Jersey . . . somewhat in line with Route 195 . . .” N.T., 3/14/22, at 15
(emphasis added). Therefore, we discern no merit to Appellants’ assertion
that they were entitled to narrower zones of non-competition than stated in
the amended operating agreement and supported by the hearing testimony.
However, our review reveals that Appellees, as the petitioning party for
preliminary injunctive relief, offered no specific evidence or argument to
extend the non-compete provisions to the entirety of the State of New Jersey.
Therefore, we agree with Appellants that the prohibition of all of their activities
in all of New Jersey is overbroad, and we vacate that portion of the order and
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direct the trial court to enter a corrected order limiting the geographic scope
of the injunction to southern New Jersey.
As to the duration of the preliminary injunction, we discern no error or
abuse of discretion in the trial court’s decision not to set an expiration date
for the non-compete provisions. Appellants do not argue the non-compete
provisions were unenforceable due to the lack of specificity in the duration of
the restrictive covenants. We agree with the trial court that the ultimate
resolution of the duration of the non-compete provision in the amended
operating agreement is a matter for trial on the merits of the parties’
substantive claims and counterclaims. See Summit Towne Centre, Inc. v.
Shoe Show of Rocky Mount, Inc., 828 A.2d 995, 1000 (Pa. 2003) (noting
that in an appeal from the grant or denial of a preliminary injunction, an
appellate court does not inquire into the merits of the controversy, but only
examine the record to determine if there were any apparently reasonable
grounds for the action of the court below). Accordingly, we discern no merit
to Appellants’ claim that the trial court should have issued a preliminary
injunction with an expiration date of May 2022.
In their third issue, Appellants assert that Appellees failed to prove a
preliminary injunction will prevent immediate and irreparable harm. See
Appellants’ Brief at 43. In order to meet the burden of showing immediate
and irreparable harm, a party seeking a preliminary injunction “must present
concrete evidence demonstrating actual proof of irreparable harm.”
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Greenmoor, Inc. v. Burchick Const. Co., Inc., 908 A.2d 310, 314 (Pa.
Super. 2006) (internal citation and quotation omitted). A claim of irreparable
harm cannot be based solely on speculation and hypothesis and must be
shown to be irreversible. See id. Further, the party seeking the preliminary
injunction must show that the need for relief is immediate. See id.
Appellants argue that any harms their activities pose to Catalyst are
speculative and cannot occur before the expiration of the non-compete
provisions. See Appellants’ Brief at 43. In support, Appellants assert that
they have yet to construct or sell a sign. See id. They add that given the
typical times between obtaining interests in real estate and sales of
advertising space, they will not be able to directly compete for advertisements
with a Catalyst billboard until after the restrictive covenant in the operating
agreement expires. See id. at 45. Appellants emphasize that none of
Catalyst’s existing assets actually suffered any losses because of their
activities. See id. at 46. They thus assert that the trial court erred in granting
the preliminary injunction based on the speculative and remote possibility that
Catalyst could lose revenue in the future. See id. at 47.
The trial court addressed the irreparable harm requirement for issuing
a preliminary injunction and concluded that Catalyst showed that Appellants’
activities would result in a loss of business opportunities. See Order and
Memorandum, 4/6/22, at 8-9. The trial court noted that Appellants “have
used material, information, photographs and the like obtained from
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[Catalyst]” when seeking to form their own business ventures and identified,
pursued, and contacted municipalities about digital billboard locations in
Catalyst’s geographic region. Id. at 8. The trial court further credited
Appellees’ testimony that
(1) every application for a digital billboard in any municipality makes it increasingly more difficult to receive approval for future billboards; (2) every billboard placed reduces the value of future billboards due to the advertising revenue being less valuable when more competition is located nearby; (3) existing sales by [Catalyst] of certain assets could be reduced due to underperformance during a look-back period for revenues; (4) [Catalyst’s] property and trade secrets are being used by [Appellants] to further their business, including the use in a pitch deck of financial analysis, photos, historical performances of [Catalyst], and the like; and (5) damages are too nebulous to ascertain and compensate solely with monetary damages.
See id.
Based on these findings, the trial court concluded that Appellees
suffered irreparable harm due to
the reduction in receptiveness to [Catalyst] due to [Appellants’] activities in a region, the value of [Catalyst’s] materials used by [Appellants], . . . [and t]he potential impending loss of business or market opportunities due to [Appellants] attempting to receive approvals for digital billboards in municipalities within the geographic reach of [Catalyst].
See id. at 8-9 (internal citations omitted).
Following our review, we discern no basis to disturb the trial court’s
findings of fact or conclusions of law. Catalyst presented testimony, which
the trial court accepted, that Appellants’ activities in seeking interests in land
to develop billboards would adversely affect Catalyst’s ability to obtain
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approvals for additional billboards in the same area and would diminish the
profitability of their existing billboards. See N.T., 3/29/22 (A.M.), at 209-10.
Because there were apparently reasonable grounds for the trial court’s
determinations that a preliminary injunction was immediately necessary to
prevent irreparable harm, we have no basis to disturb the trial court’s ruling.10
In their fourth issue, Appellants claim that the trial court erred in
rejecting their arguments that Catalyst’s failures to pay them their deferred
salaries and Bartkowski’s unclean hands rendered the amended operating
agreement and the employment contracts unenforceable. Additionally,
Appellants assert that the trial court erred when rejecting their arguments
based on section 9(d) of the amended operating agreement, which states:
“[t]he existence of a claim, charge, or cause of action by any Member against
[Catalyst] shall not constitute a defense to the enforcement by [Catalyst] of
the [non-compete provision].” See id. at 50 (quoting Amended Operating
Agreement, 1/1/20, at 1/1/20, § 9(d)). However, Appellants do not allege
that they received no consideration from these agreements. Appellants’
allegations concerning the nonpayment of their deferred salaries and
Bartkowski’s improper actions are matters that concern breaches of the
amended operating agreement and the employment agreements or violations
of the law, not the underlying consideration necessary to enforce the ____________________________________________
10To the extent Appellants suggest that the trial court erred in balancing the harms to Catalyst against their need to make a living, we agree with the trial court’s statements at the hearing that Appellants were free to develop real estate for purposes unrelated to billboards.
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provisions of the underlying amended operating agreement. Therefore, we
decline to review the merits of the pending action between the parties, and
we discern no basis upon which to disturb the trial court’s determination that
the underlying facts satisfied the requirements for the issuance of a
preliminary injunction. See Summit Towne Centre, 828 A.2d at 1000.
Thus, Appellants’ fourth issue merits no relief.
In their fifth issue, Appellants claim that the trial court erred in ordering
them to destroy their copies of the Catalyst’s confidential information in their
possession. It is well settled that courts will hold mandatory injunctions, which
require a positive act to preserve the status quo, to a higher standard than
prohibitory injunctions, which require a party to refrain from acting. See
Constantakis v. Bryan Advisory Servs., LLC, 275 A.3d 998, 1021 (Pa.
Super. 2022). Thus, this Court will more extensively review the underlying
merits of the claims to determine if the party seeking the mandatory injunction
has established a “clear right to relief.” Id. at 1021.
As to the prohibitions on Appellants’ use of Catalyst’s information, we
note that Earle and Grabowski’s employment agreements defined confidential
information as follows:
. . . “Confidential Information” includes, but is not limited to, all information not generally known to the public, in spoken, printed, electronic or any form or medium, relating directly or indirectly to: business practices, methods, policies, plans, research, referral sources, operations, services, strategies, techniques, agreements, contracts, transactions, potential transactions, negotiations, pending negotiations, know-how, trade secrets, computer
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programs . . databases, manuals, records, . . . graphics, drawings, . . . product plans, designs, styles, [and] models . . ..
Grabowski’s Employment Agreement, 5/18/15, § 8(a). The employment
agreements prohibited Grabowski from copying “any documents, records,
files, media, or other resources containing any Confidential Information, or
remove any such documents, records, files, media or other resources from
the premises or control of [Catalyst], except as required in performance of . . .
authorized employment duties . . ..” Id. § 8(c). Grabowski’s obligations as
to confidential information continued “during or after [their] employment until
such time as such Confidential Information has become public
knowledge . . ..” Id. § 8(d).
When departing Catalyst, Grabowski sent himself twenty-eight emails
attaching Catalyst’s files to a personal address, “essentially moving company
information to his private account.” N.T., 3/16/22, at 61. During discovery,
Appellants turned over a hard drive containing 283 gigabytes of information
that included Catalyst’s financial data and information that came from
Catalyst’s files. See id.; see also N.T., 3/29/22 (A.M.), 154 (indicating
Grabowski’s testimony that he downloaded files from Catalyst’s servers that
were eventually placed on the hard drive). Further, the court heard testimony
that Appellants had used the information obtained from Catalyst when
attempting to form MMD and in other ventures. See Order and Memorandum,
4/6/22, at 3-4; see also N.T., 3/14/22, at 189-90. The trial court, in
fashioning the preliminary injunction, noted its concern about the information,
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determined that Appellants should return the hard drive containing Catalyst’s
files and destroy copies of the files in their possession, but allowed Appellants’
counsel to retain copies of the information subject to keeping the information
confidential. See N.T., 3/29/22 (P.M.), at 7-8.
On appeal, Appellants note the stricter standards applicable to
mandatory injunctions than prohibitory injunctions. See Appellants’ Brief at
53-54. They assert that a prohibitive injunction was sufficient to protect
Appellees’ interests and that the court’s order for them to destroy their copies
of Catalyst information was improper because they remained
owners/members of Catalyst. See id. at 55.
The trial court’s order and memorandum did not expressly address the
portion of its order requiring Appellants to destroy any personal copies of the
information they had taken from Catalyst. Nevertheless, our review of the
record, the trial court’s findings, and Appellants’ arguments compel the
conclusion that Grabowski took Catalyst’s information and used it outside of
the scope of his employment with Catalyst as prohibited by the employment
agreement. Thus, Catalyst established a clear right to relief as to the improper
taking of its information. See Constantakis, 275 A.3d at 1021. Moreover,
given the evidence that Appellants had used the information to compete with
Catalyst, we conclude that the trial court had a proper basis to order
Appellants to destroy their copies of Catalyst’s information to maintain the
status quo between the parties.
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In sum, we vacate that portion of the order prohibiting Appellants’
activities in all of New Jersey as overbroad and direct the trial court to enter
a corrected order limiting the geographic scope of the injunction to southern
New Jersey. We otherwise affirm the trial court’s order granting Catalyst a
preliminary injunction.
Order affirmed in part and vacated in part. Case remanded with
instructions. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq. Prothonotary
Date: 6/6/2023
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