Opinion
No. CV03-0081927S
August 1, 2003
MEMORANDUM OF DECISION
The plaintiff asks this court to issue a temporary injunction enforcing a noncompetition agreement with the defendant, its former employee. Given the defendant's limited role in the operation of plaintiff's business, I conclude that the protections afforded the plaintiff by the noncompetition agreement are broader than necessary for the fair protection of its business and that the issuance of a temporary injunction is not warranted.
The plaintiff is engaged in the business of remodeling bathrooms through the installation of prefabricated acrylic bathtub liners and wall systems. The defendant was employed by the plaintiff as an installer. His job was to install the plaintiff's acrylic bathtub liners and wall systems over the existing bathtubs and walls in the bathrooms of the plaintiff's customers. Although the precise date that the plaintiff first hired the defendant was unclear from the evidence, it was on or about the end of March or the beginning of April 2001.
At the inception of his employment with the plaintiff, the defendant signed a "Company Confidentiality Agreement" which contained a covenant not to compete. In relevant part, the covenant prohibits the defendant from being employed by any business in competition with the plaintiff within any county in which the plaintiff is doing business for a period of three years from the termination of his employment with the plaintiff. A business in competition with the plaintiff is defined by the agreement as any business utilizing prefabricated acrylic bathtub liners and wall systems to remodel or refinish bathrooms. The plaintiff does business in New Haven, Fairfield and Litchfield Counties.
On February 28, 2003, the defendant voluntarily terminated his employment with the plaintiff. The next business day, the defendant began work as an installer with Re-Bath of Connecticut (Re-Bath), a competitor of the plaintiff. Re-Bath is located in Hamden, Connecticut and is operated by Kenneth Bustin, who was formerly employed by the plaintiff as its general manager. Like the plaintiff, Re-Bath is engaged in the business of remodeling bathrooms through the use of prefabricated acrylic bathtub liners and wall systems. The plaintiff asks the court for an injunction prohibiting the defendant from continuing his employment with Re-Bath as an installer.
"The principal purpose of a temporary injunction is to preserve the status quo until the rights of the parties can be finally determined after a hearing on the merits." (Internal quotation marks omitted.) Clinton v. Middlesex Mutual Assurance Co., 37 Conn. App. 269, 270 (1995).
A party seeking injunctive relief has the burden of establishing irreparable harm and the lack of an adequate remedy at law. Walton v. New Hartford, 223 Conn. 155, 165 (1992). In its consideration of a request for an injunction, the court may consider and balance the injury complained of with that which will result from interference by an injunction. Moore v. Ganim, 233 Conn. 557, 616 n. 25 (1995). The court must properly weigh the equities between the parties and only grant that relief compatible with the equities of the case. Walton v. New Hartford, supra, 223 Conn. 167.
The task of balancing the equities "necessarily requires consideration of the probable outcome of the litigation. Decisions of our trial courts have frequently referred to the burden of an applicant to show a reasonable degree of probability of success before a temporary injunction to preserve the status quo may be granted." Griffin Hospital v. Commission on Hospitals, 196 Conn. 451, 457 (1985).
The plaintiff's probability of success in this case rests on the reasonableness of the restraint contained in its covenant not to compete. Mattis v. Lally, 138 Conn. 51, 54 (1951). The covenant must fairly protect the plaintiff's business and not unreasonably restrict the plaintiff's right to seek employment elsewhere. "In dealing with a restrictive stipulation between an employer and an employee, as in this case, in order that the court may uphold and enforce the restriction, if it is not otherwise contrary to public policy, the court must find that the facts alleged disclose a restriction on the employee reasonably necessary for the fair protection of the employer's business or rights, and not unreasonably restricting the rights of the employee, due regard being had to the interests of the public, and the circumstances and conditions under which the contract is to be performed." (Citations and internal quotation marks omitted.) Samuel Stores, Inc. v. Abrams, 94 Conn. 248, 253 (1919).
The criteria for determining the reasonableness of the noncompetition clause were established by the Connecticut Supreme Court in Scott v. General Iron Welding Co., 171 Conn. 132 (1976). See Robert S. Weiss Associates, Inc. v. Wiederlight, 208 Conn. 525, 529 (1988), in which the court stated that " Scott v. General Iron Welding Co., 171 Conn. 132 (1976), sets forth the factors relevant to an evaluation of the reasonableness of a covenant not to compete ancillary to an employment agreement." In Scott, the court decreed that: "In order to be valid and binding, a covenant which restricts the activities of an employee following the termination of his employment must be partial and restricted in its operation in respect either to time or place, and must be reasonable — that is, it should afford only a fair protection to the interest of the party in whose favor it is made and must not be so large in its operation as to interfere with the interests of the public. The interests of the employee himself must also be protected, and a restrictive covenant is unenforceable if by its terms the employee is precluded from pursuing his occupation and thus prevented from supporting himself and his family." (Citations and internal quotation marks omitted.) Scott v. General Iron Welding Co., 171 Conn. 132, 137 (1976).
The Appellate Court has discerned in Scott five factors for determining the validity of a noncompetition restriction: (1) the length of time the restriction is to be in effect; (2) the geographic area covered by the restriction; (3) the degree of protection afforded to the party in whose favor the covenant is made; (4) the restrictions on the employee's ability to pursue his occupation; and (5) the extent of interference with the public's interests. New Haven Tobacco Co. v. Perrelli, 18 Conn. App. 531, 533-34 (1989). A covenant not to compete must be reasonable in all five respects. Id., 534. The burden is on the defendant to demonstrate the unreasonableness of the covenant's restrictions. Milaneseo v. Calvanese, 92 Conn. 641, 642 (1918).
In deciding whether the noncompetition agreement in this case fairly protects the plaintiff's business, the court's decision in Samuel Stores, Inc. v. Abrams, supra, 94 Conn. 248, is instructive. Samuel Stores which operated a number of clothing stores in various cities brought an action seeking injunctive relief against Abrams who was formerly employed as the branch manager for one of its stores and who had left its employ to work in another clothing store. Abrams' employment contract with Samuel Stores contained a restrictive covenant prohibiting Abrams from engaging in business similar to that of Samuel Stores for five years after the termination of his employment.
The court ruled that the noncompetition restriction in Abram's employment contract was broader than reasonably necessary for the fair protection of Samuel Store's business. It so ruled primarily because it found that the services provided by Abrams were not "special or extraordinary," nor were they unique. Id., 254. Abrams also did not acquire during his employ any confidential information of Samuel Stores. Abrams was merely the manager of a local retail business and it was unwarranted to expect that his employment at competitor's store would result in an unfair competitive disadvantage to Samuel Stores.
Other jurisdictions have similarly determined that enforcement of a noncompetition restriction is not necessary to fairly protect an employer's business where the particular employee involved did not have access to confidential information or trade secrets and the employee's services were not deemed special, extraordinary or unique. See BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 690 N.Y.S.2d 854, 712 N.E.2d 1220 (1999), and Reed, Roberts Assocs. v. 1Strauman, 40 N.Y.2d 303, 386 N.Y.S.2d 677, 353 N.E.2d 590 (1976). See also American Institute of Chemical Engineers v. Reber-Friel Co., 682 F.2d 382 (2d Cir. 1982) (restrictive noncompete covenant not justified for manager of trade shows), and Earth Web, Inc. v. Schlack, 71 F. Sup.2d 299 (S.D.N.Y. 1999) (noncompetition agreement with an employee who managed the content of the employer's websites not reasonably necessary to fairly protect the interests of the employer).
In this case, the defendant did not have access to trade secrets of the plaintiff or to any confidential information that would put the plaintiff at a competitive disadvantage if disclosed to or used in the services of a competitor. No evidence was presented that he was involved in sales or marketing or the development of the plaintiff's business plan or that he was privy to any valuable or strategic corporate information.
The services provided by the defendant to the plaintiff were also not special, extraordinary or unique. He was simply a bathtub and wall system installer, albeit a very talented one. He was a skilled laborer, not a high level executive or strategically placed employee. The success of the plaintiff's business did not depend on the defendant's services; it had at least seven other qualified installers.
This is also not a case where restraint is necessary to preserve special or long-standing customer relationships. "The employer has a legitimate interest in preventing former employees from exploiting or appropriating the goodwill of a client or customer, which had been created and maintained at the employer's expense, to the employer's competitive detriment." BDO Seidman v. Hirshberg, supra, 93 N.Y.2d 392. The defendant, as an installer of bathtubs and wall systems, was not in a position to cultivate special relationships with the plaintiff's customers that could be unfairly utilized in the services of a competitor.
In short, there is nothing about the defendant's employment at a competitor which would put the plaintiff at an unfair competitive disadvantage and a restriction on the defendant's future employment opportunities is not reasonably necessary for the fair protection of the employer's business or rights. Accordingly, the plaintiff's request for a temporary injunction is hereby denied.
The parties have informed me that United States District Court for the District of Connecticut (Covello, J.) has recently granted an injunction to the plaintiff enforcing a noncompetition agreement that it has with Kenneth Bustin, the operator of Re-Bath. My denial of the plaintiff's request in this case for an injunction against Jon Palmer is not necessarily inconsistent with that decision as Bustin was formerly the plaintiff's general manager, not an installer, and his access to confidential or strategic information, his relationship to the plaintiff's clients and the unique or special nature of his services are undoubtedly quite different from Palmer's.
BY THE COURT
Judge Jon M. Alander