Opinion
MMXCV186019598S
02-20-2018
INEO, LLC v. Marykate LENEHAN
UNPUBLISHED OPINION
OPINION
PIERSON, J.
PROCEDURAL BACKGROUND
By this action, the plaintiff, Ineo, LLC, requests temporary and permanent injunctive relief, as well as attorneys fees and expenses, in connection with the defendant, Marykate Lenehan’s, change of employment; namely, her departure as one of the plaintiff’s executives, in order to take a position that has been offered to her by a nonparty, Equus Software (Equus). In its motion for temporary injunction, the plaintiff asks the court to enter an order enjoining the defendant from: (1) disclosing any " Propriety Information" of the plaintiff, as defined in the Confidential Information, Non-Compete and Inventions Assignment and Assumptions Agreement (Agreement) signed by the parties, and (2) engaging in any " Competitive Business Activity," as defined in the Agreement, including but not limited to acting as an employee of, or in any other capacity, for Equus. In support of its motion, the plaintiff submitted the affidavit of David Santora. On January 29, 2018, a hearing was held on the motion, during which Santora and the defendant testified, and the Agreement was received into evidence. During the hearing, the defendant’s attorney stated that the defendant was not challenging the anti-piracy, anti-solicitation, or anti-sales provisions of the Agreement, but rather, that the defendant was limiting her argument to the noncompete provisions of the contract, which the defendant claims are overly broad and unreasonable, and, therefore, unenforceable as a matter of law.
FINDINGS OF FACT
On the basis of the evidence admitted at the hearing, the court makes the following findings of fact. Santora is the Chief Executive Officer of the plaintiff and he has held that position since April 2015. The plaintiff has offices in Wilton and Milford, Connecticut, and Denver, Colorado. The corporate plaintiff competes in the mobility and relocation industry. This industry provides software tracking and other tools and services to large international corporations, in connection with the movement and relocation of employees throughout the United States and around the world. Companies competing in this line of business are known as " Relocation Management Companies" or " RMCs."
As suggested by the preceding description, the nature of the plaintiff’s business is international in scope, in that it provides relocation services to companies and their employees around the globe. Moreover, the plaintiff’s clientele is itself international and is not limited to companies based in the United States. The plaintiff operates both as an RMC and as a service provider to other RMCs. Integral to the plaintiff’s business is the development and service of its proprietary software. Among other things, the plaintiff’s software tracks, on a global basis, the accounting, expense, and tax implications of employee relocation and mobility. The plaintiff’s software is able to recreate economic circumstances across international borders and determine the financial and tax implications of an employee’s move to another country, thereby enabling the employee and employer to determine the comparability of employee benefits and employer costs. The plaintiff’s software is a highly technical application that was developed over several decades. The mobility and relocation processes and software developed by the plaintiff are complex, proprietary, and confidential. Revenues from software-related business constitute 60-70 percent of the plaintiff’s annual total. The plaintiff also provides business process outsourcing services as well as tax, advisory, and consulting services. These services are used around the world, with certain tax services covering eighty-two countries.
Equus is a service provider to RMCs. Equus is the plaintiff’s most significant industry rival. The business, however, is highly competitive and there are a large number of RMCs, many offering proprietary solutions to the mobility industry. Moreover, the pace of change in the plaintiff’s business is rapid. As Santora testified, " [t]hings change every day in our industry" and " [i]t’s constantly evolving."
The defendant is a college graduate who holds a bachelor’s degree. Prior to coming to work for the plaintiff, the defendant had twenty-two years of industry experience, which included an extended period of employment with Brookfield Global, a large RMC. At the time the defendant started working for the plaintiff, she had significant, high-level experience with global mobility, particularly in the areas of tax and business process outsourcing. She is well known and well regarded. The defendant joined the plaintiff in late 2015 as director of global mobility. She was hired to help improve the defendant’s service and product offerings, including the expansion of financial services product offerings. The defendant was responsible for analyzing the plaintiff’s global offerings, identifying shortcomings in these offerings, and determining enhancements needed to improve the plaintiff’s product and service offerings for both existing and potential clients. In this role, the defendant interacted with both current and prospective clients. She did so as a well-known industry figure and subject matter expert able to answer prospective client questions about the plaintiff’s software functionality, future enhancements, and its applicability to prospective client needs. The plaintiff has the ability to share with software coders complex tax and accounting processes that assist in the creation of mobility and relocation software products. Although the defendant is not an engineer and does not know how to write software code, while working with the plaintiff, she worked with software coders in connection with the development and improvement of its software.
While employed with the plaintiff, the defendant had unlimited access to confidential information relating to the plaintiff’s product and service offerings, including without limitation to the identity of the plaintiff’s customers, pricing, and the non-public elements of software functionality. The defendant is aware of the strengths and weaknesses of the plaintiff’s business and the plaintiff could be harmed if knowledge of these strengths and weaknesses came into a competitor’s hands, including without limitation Equus.
In the world of RMCs and RMC service providers, the plaintiff is considered a smaller company, and the job offered to her by the plaintiff was a " roll your sleeves up type job." During the course of her employment with the plaintiff, the defendant was paid salary in the amount of $435,406.
On November 30, 2015, the plaintiff and the defendant executed and entered into the Agreement. The Agreement contains restrictive covenants. Section 4.2 of the Agreement provides, in relevant part, that " [d]uring the term of my employment with [the plaintiff] and/or any of its affiliates and for one (1) year following the termination thereof for any reasons ... I shall not, within the geographic area consisting of the world, including the United States, either directly or indirectly: (i)(A) engage in any [c]ompetitive [b]usiness [a]ctivity, (B) have an ownership interest in, manage, operate, control, solicit business for, or otherwise be involved with any [c]ompetitor; and/or (C) perform any work or services (either as an employee, independent contractor or consultant) for any [c]ompetitor ..."
Section 4.1 of the Agreement sets forth the following definitions: " As used in this Agreement, the following capitalized terms shall have the following meanings: (i) ‘Company’s Products/Services’ shall mean: any products or services known to me that the Company [the plaintiff] and/or any of its affiliates has developed and is actively marketing or selling, or preparing to actively market or sell, during the year immediately preceding the termination of my employment; (ii) ‘Competitive Business Activity’ is defined as the research, development, support, assisting, provision, marketing or sale of any product or service that is materially similar to the Company’s Products/Services; (iii) ‘Competitor’ is defined as any person or business that is engaged in a Competitive Business Activity; (iv) ‘Customer’ is defined as any person or entity for whom the Company performed work or services or sold any product or services during the one (1) year period prior to the termination of my employment, or to whom the Company sold products or provided services to during the same one-year period; (v) ‘Potential Customer’ is defined as any person or entity with whom the Company has engaged in substantial contact with respect to the performance of work or services, or for the sale of the Company’s Products/Services, during the one (1) year period prior to the termination of my employment."
In addition, Section 4.4 of the Agreement, entitled, " Blue Pencil," reads as follows: " In the event that any of the foregoing restrictions are deemed to be unreasonable or to otherwise exceed the time and/or geographic limitations permitted by applicable law, such restrictions shall be modified to reference the maximum time and/or geographic limitations permitted by applicable law."
Section 11.7 of the Agreement, entitled " Advice of Counsel," provides: " I ACKNOWLEDGE THAT, IN EXECUTING THIS AGREEMENT, I HAVE HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND I HAVE READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION THEREOF."
The Agreement also contains nondisclosure and other provisions protecting the plaintiff’s confidential and proprietary information.
The defendant resigned from her position with the plaintiff on December 1, 2017, and ceased working on December 21 or 22, 2017. Thereafter, she was offered and accepted a position at Equus. More specifically, the defendant was offered a position as vice president in the area of mobility services, which position is located in Denver, Colorado. Although the defendant accepted the Equus offer, she has not started working for Equus. According to the defendant, she was hired by Equus to assist their clients in implementing financial solutions. There is no sales component to the Equus position and she will be able to avoid contact with current clients of the plaintiff.
When Santora learned of the Equus offer, he became concerned, believing that the defendant’s inside knowledge of the plaintiff’s strengths and weaknesses, acquired during her tenure of employment, would be used by Equus once she became employed there. He was especially concerned because Equus is a company that competes with the plaintiff for business every day. There are several job openings in the United States in the mobility and relocation industry, available to the defendant, which the plaintiff would not consider violative of the noncompete provisions of the Agreement. After resigning her position with the plaintiff, the defendant received job offers from mobility and relocation companies other than Equus.
For her part, the defendant is the primary breadwinner in her household, comprised of herself, husband, and three children, one of whom is in college. Her inability to work for Equus or another competitor of the plaintiff, as defined by the Agreement, for a period of one year from the date of the termination of her employment, would impose a significant economic burden on her and her family.
DISCUSSION
I
" A party seeking injunctive relief has the burden of alleging and proving irreparable harm and lack of an adequate remedy at law ... A prayer for injunctive relief is addressed to the sound discretion of the court ..." (Citation omitted; internal quotation marks omitted.) Aposporos v. Urban Redevelopment Commission, 259 Conn. 563, 571, 790 A.2d 1167 (2002) accord New Breed Logistics, Inc. v. CT INDY N.H. TT, LLC, 129 Conn.App. 563, 571, 19 A.3d 1275 (2011). " The principal purpose of a temporary injunction is to preserve the status quo until the rights of the parties can be finally determined by a hearing on the merits." (Internal quotation marks omitted.) Rustici v. Malloy, 60 Conn.App. 47, 56, 758 A.2d 424, cert. denied, 254 Conn. 952, 762 A.2d 903 (2000). " To be entitled to the equitable relief of a temporary injunction, the moving party must show that: (1) it is likely to prevail on the merits of its claim after trial; (2) it faces immediate and irreparable harm absent an injunction; and, (3) the harm it faces without the injunction is greater than the harm an injunction would do to the defendants. Griffin Hospital v. Commission on Hospitals & Health Care, 196 Conn. 451, 456-58, 493 A.2d 229 (1985); see generally Fleet National Bank v. Burke, 45 Conn.Supp. 566, 570, 727 A.2d 823 (1998)" . POP Radio, LP v. News America Marketing In-Store, Inc., 49 Conn.Supp. 566, 569, 898 A.2d 863 (2005) (Pop Radio ) .
What exactly is necessary to establish irreparable harm and the lack of an adequate remedy at law, in the context of noncompete cases, has been the subject of some debate in our trial court. One line of cases holds that " [t]he standard for granting a temporary injunction to enforce a covenant not to compete ... is ... different in that the plaintiff does not need to prove irreparable harm. While ordinarily proof of imminent harm is essential, in this type of case there is no such requirement. It has long been recognized in this state that a restrictive covenant is a valuable business asset which is entitled to protection ... Irreparable harm would invariably result from a violation of the defendant’s promises ... The reason for this is that such a plaintiff’s actual injury is not susceptible of determination to its entire extent but is estimable largely by conjecture and prediction ... The standard is also different in that the plaintiff does not have to demonstrate that there is no adequate remedy at law. [Although] the plaintiff could maintain a claim for damages as to each violation that causes injury the difficulty of proof and the inefficiency of repetitive suits render inadequate the use of successive remedies at law, and injunctive relief is therefore warranted to protect the plaintiff from harm which the restrictive covenant was intended to prevent." (Citation omitted; internal quotation marks omitted.) Sabatasso v. Bruno, Superior Court, judicial district of New Haven, Docket No. CV- 03-0384486-S (April 8, 2014, Tanzer, J.) (36 Conn.L.Rptr. 851, 852).
In POP Radio, the Superior Court referred to the foregoing line of trial court decisions " not as controlling authority of course, but because they collectively appear to develop a theme that combines the concepts of the inherent difficulties of proving harm that might not occur until the future and the need to enjoin an ongoing breach of an agreement that devalues the agreement itself and potentially the company’s goodwill, both of which are business assets." POP Radio, supra, 49 Conn.Supp. 576, The court in POP Radio goes on to cite another line of Superior Court decisions " requiring a showing of irreparable harm to support an injunction that is based on a breach of a noncompetition agreement." Id. Faced with these two disparate lines of cases, the court concluded that " Connecticut law supports a distinctly moderated level of proof ... to establish the elements of irreparable harm and lack of an adequate remedy at law necessary for the issuance of a temporary injunction when the circumstances involve an alleged breach of a noncompetition agreement. Although this court will not go so far as to say that these two elements are automatically established ... the realities of attempting to prove irreparable harm in circumstances, such as here, when the competition has not yet, or only barely commenced, counsel toward the imposition of a more lenient standard that allows for a certain amount of informed prediction of future results to be weighed by the court as evidence than otherwise might normally be the case." (Citation omitted.) Id., 577.
This court concludes that " [i]f the named defendant is threatening a breach of the restrictive covenant, there can be no question that the plaintiff is entitled to an injunction restraining the breach, irrespective of whether the damage it will suffer is great or small." Lampson Lumber Co. v. Caporale, 140 Conn. 679, 685, 102 A.2d 875 (1954) (The court agrees with the view expressed in Musto v. Opticare Eye Health Centers, Inc., Judicial District of Waterbury, Complex Litigation Docket, Docket No. X02-CV-99-00155663-S (Aug. 9, 2000, Hodgson, J.), that " [i]rreparable injury and lack of an adequate remedy at law are considered to be established by the nature of the threatened conduct where a party seeks to enforce a covenant not to compete." As a result, in the present case, the plaintiff satisfies certain prerequisites necessary for the issuance of a preliminary injunction, and the court now turns to consider the enforceability of the restrictive covenants at issue under the Agreement. In order for a temporary injunction to issue, a reasonable degree of probability of success on the merits also must be shown. Thus, any decision regarding the plaintiff’s entitlement to a temporary injunction is dependent on the enforceability of the restrictive covenants at issue.
II
The enforceability of noncompete agreements has long been the subject of discussion in the law. An example of the early common-law view is the fifteenth century decision in Dyer’s Case, Y.B. 2 Hen. V, f.5, pl. 26 (1414). Dyer’s Case involved a laborer who promised not to exercise his trade in the same town as the plaintiff for six months. Although the promise was unenforceable for lack of consideration, the court, Hull, J., stated that, " [i]n my opinion, you might have demurred upon [the plaintiff’ that the obligation is void, inasmuch as the condition is against the common law ..." (Emphasis added.) Id. Initially, the common law disfavored noncompete restrictions as restraining trade, and, thus, considered them unenforceable as a matter of law. Federal Land Bank of St. Louis v. Walker, 212 Ill.App.3d 420, 423, 571 N.E.2d 242 (1991) (citing Dyer’s Case as involving " a contract that has been judicially declared illegal and unenforceable is a contract that is in restraint of trade" ). Dyer’s Case is cited as the earliest example of the common-law’s ancient blanket prohibition of noncompete agreements. See, e.g., United States v. Addyston Pipe & Steel Co., 85 F. 271, 280 (6th Cir. 1898), aff’d, 175 U.S. 211, 20 S.Ct. 96, 44 L.Ed. 136 (1899) (" [t]he inhibition against restraints of trade at common law seems at first to have had no exception" ); M. Garrison & J. Wendt, " The Evolving Law of Employee Noncompete Agreements: Recent Trends and An Alternative Policy Approach," 45 Am. Bus. L.J. 107, 113-14 (2008) (" As a matter of public policy, courts have traditionally looked upon agreements not to compete with disfavor. Such restrictions on employees were prohibited under the early English common law ..." ); see also 6 R. Lord, Williston on Contracts (4th ed. 2009) § 13:2; M. Callahan, Comment, " Post-Employment Restraint Agreements: A Reassessment," 52 U. Chi. L.Rev. 703, 704 (1985) (" Post-employment restraint agreements ... have not been accorded [a] presumption of validity. Courts have viewed such agreements with disfavor for centuries ..." ).
As noted by the Court of Common Pleas of Ohio in 1952, " [o]ver five hundred years of ... history look down on this type of litigation." Arthur Murray Dance Studios of Cleveland, Inc. v. Witter, 62 Ohio Law Abs. 17, 105 N.E.2d 685, 691 (1952). As of the date of this decision, over six hundred years have passed since Dyer’s Case, Y.B. 2 Hen. V, f.5, pl. 26 (1414).
The rule of Dyer’s Case continued to be applied in England in subsequent centuries. See, e.g., Colgate v. Bacheler, 78 Eng.Rep. 1097 (Q.B. 1602).
Over time, the outright prohibition against noncompete agreements gave way to a more nuanced approach that attempted " to balance the conflicting interests of employers and employees as well as societal interests in open and fair competition." M. Garrison & J. Wendt, supra, 45 Am. Bus. L.J. 114-15. This change occurred when " it became apparent to the people and the courts that it was of interest to trade that certain covenants in restraint of trade should be enforced." United States v. Addyston Pipe & Steel Co., supra, 85 F. 280. Or, as stated somewhat more colorfully by the court in Arthur Murray, supra, 105 N.E.2d 691, " [p]ounded by the pressures of social, economic, industrial, communication and transportation[ ] change, the law has changed ... [so that] today, as a rough rule of thumb, the law is that a covenant restraining an employee, on termination of employment, from competing with his former employer, is valid if it is reasonable in view of all the circumstances of the particular case." (Citations omitted.) With respect to employers, the courts recognized that, at least in cases involving business sales, restrictive covenants constitute " a valuable asset of the business and upon the sale of that business the benefits of the covenant may be assigned to the purchaser." Torrington Creamery v. Davenport, 126 Conn. 515, 521, 12 A.2d 780 (1940). Moreover, courts came to acknowledge that an employer had interests, more generally, " in protecting the goodwill of the business and in protecting its trade secrets." M. Garrison & J. Wendt, supra, 45 Am. Bus. L.J. 116. Thus, and as noted by our Supreme Court, " [e]mployments which involve acquisition of confidential knowledge involved in the business and acquaintance with the employer’s clientele are regarded as particularly appropriate to restrictions against the use of such knowledge in competition with the employer." May v. Young, 125 Conn. 1, 7, 2 A.2d 385 (1938). As for the individual employee’s interests, and in addition to the public policy against agreements in restraint in trade, it was recognized that " sound public policy considerations strongly militate against sanctioning the loss of a person’s livelihood ..." Consolidated Brands, Inc. v. Mondi, 638 F.Supp. 152, 156 (S.D.N.Y. 1986) (applying New York law). To this must be added the importance of an employee’s mobility in employment matters, especially in our contemporary economy.
It was not until 1711 that an English court recognized that non-compete agreements could be enforced in certain circumstances. See Mitchel v. Reynolds, 24 Eng. Rep. 347 (Q.B. 1711). In Mitchel v. Reynolds, " the court elaborately examined the whole question of bargains or contracts restraining a party from exercising his trade, and held that if a covenant or the condition of a bond imposed a restraint only during a certain time or within a limited place, it was not unlawful." 6 R. Lord, Williston on Contracts (4th ed. 2009) § 13:2. According to Callahan, Mitchel v. Reynolds represents " [t]he modern approach" which " has survived virtually unchanged to the present day. The reasonableness of a restraint is usually determined by balancing the legitimate interest of the employer (which must be more than a mere interest in restraining competition) against the employee’s interest in labor mobility. If a court decides that the agreement protects a legitimate interest of the employer, and does so without unduly limiting the employee’s mobility, it will be enforced." (Footnote Omitted.) M. Callahan, Comment, " Post-Employment Restraint Agreements: A Reassessment," 52 U. Chi. L.Rev. 703, 708-09 (1985).
In Connecticut, as in other jurisdictions, the law developed a multi-factor approach based on reasonableness, taking into account " the conflict of interests of the employer, the employee, and the public ..." Scott v. General Iron & Welding Co., 171 Conn. 132, 137, 368 A.2d 111 (1976). This approach is reflected in the nineteenth century decision of our Supreme Court in Cook v. Johnson, 47 Conn. 175 (1879) (Cook ). In Cook, the court reviewed noncompete language contained in a sales agreement, in which the defendant agreed " not to practice dentistry within a radius of ten miles of ... Litchfield," Id., 176. The court noted that the contract at issue " belongs to the class of contracts in restraint of trade." Id. As such, the court held that " three requisites are essential to its validity. 1st. It must be partial, or restricted in its operation in respect either to time or place. 2nd. It must be on some good consideration. 3d. It must be reasonable, that is, it should afford only a fair protection to the interests 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." Id.
Sixty-one years later, our Supreme Court cited Cook for the following proposition: " A covenant restricting the activities of an employee after the termination of his employment in order to be valid and enforceable must be partial or restrictive in its operation in respect either to time or place, must be on some good consideration, 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." Torrington, supra, 126 Conn. 519; see Scott v. General Iron & Welding Co., supra, 171 Conn. 137 (Same). In 1951, our Supreme Court held that, unless the restraint on competition was reasonable, noncompete agreements were contracts in restraint of trade and therefore against public policy. Domurat v. Mazzaccoli, 138 Conn. 327, 330, 84 A.2d 271 (1951) (" [i]t is basic that a covenant restricting the covenantor from engaging in a competing enterprise is one in restraint of trade and therefore is against public policy if the restraint is unreasonable" ); see Hayes v. Parklane Hosiery Co., 24 Conn.Supp. 218, 220, 189 A.2d 522 (1963) (same). Thus, in Connecticut, " [u]nder the common law, the well-settled rule is that an anticompetitive covenant ancillary to a lawful contract is enforceable if the restraint upon trade is reasonable." Elida, Inc. v. Harmor Realty Corp., 177 Conn. 218, 225, 413 A.2d 1226 (1979).
In New Haven Tobacco Co., Inc. v. Perrelli, 11 Conn.App. 636, 638-39, 528 A.2d 865 (1987) (Perrelli I ), our Appellate Court outlined the factors to be considered by the trial court in reviewing a noncompete agreement as follows: " (1) the length of time the restriction is to be in effect; (2) the geographical area covered by the restriction; (3) the degree of protection afforded to the interest of the party in whose favor the covenant is made; (4) the restrictions imposed on the employee’s ability to pursue his occupation; and (5) the potential for undue interference with the interests of the public." In outlining these five factors, the court observed that " the test enunciated above should be viewed as disjunctive rather than conjunctive. A finding of [unreasonableness] in any one of the factors will be enough to hold the covenant unenforceable." Id., 639 n.2; accord New Haven Tobacco Co. v. Perrelli, 18 Conn.App. 531, 533-34, 559 A.2d 715 (1989) (Perrelli II ). Of necessity, these factors must be considered in light of the evidence presented to the court on a case-by-case basis.
Echoing earlier case law holding that courts look more favorably on noncompete agreements connected with the sale of a business, in Perrelli I, supra, 11 Conn.App. 638, the court observed that " [a]nticompetitive or restrictive covenants are frequently found in two distinct classes of contracts: those between a vendor and a vendee when the goodwill of the subject business is being purchased; and those between an employer and an employee when an employer is trying to protect [its] trade secrets, customer lists or ‘territory.’ Although the latter is not afforded the same degree of indulgence as is the former; Samuel Stores, Inc. v. Abrams, 94 Conn. 248, 253, 108 A. 541 (1919); a restrictive covenant in an employment contract need only be reasonable." " [T]he courts have been less willing to uphold such restrictions against departing employees than they have in cases involving the sale of a business." Braman Chemical Enterprises, Inc. v. Barnes, Superior Court, judicial district of New Haven, Docket No. CV-06-4020633-S (December 12, 2006, Silbert, J.) (42 Conn.L.Rptr. 547) (Braman Chemical ).
Finally, " [u]nder our law, the party challenging the enforceability of a non-compete has the burden of proving that it is not enforceable ..." (Citation omitted.) Id., 549. With these principles in mind, the court turns to the facts of this case.
III
To begin, as for the first factor, while contending that the restrictive covenants at issue are unreasonable overall, the defendant has not challenged specifically the reasonableness of the one-year time period applicable to the subject restrictions. Moreover, the one-year period appears reasonable on its face, at least in isolation and without reference to the other relevant factors. As observed by the court in Braman Chemical, supra, 42 Conn.L.Rptr. 549, " Connecticut courts have fairly frequently enforced non-compete periods of a year or more." See Scott v. General Iron & Welding Co., supra, 171 Conn. 141 (holding that a five-year statewide restriction on the plaintiff’s right to work in a management position is reasonable); Robert S. Weiss and Associates, Inc. v. Wiedelight, 208 Conn. 525, 546 A.2d 216 (1988) (enforcing two-year restrictive covenant against insurance salesman); Friese v. Fadner Media Enterprises, LLC, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-14-6021437-S (January 18, 2017, Lee, J.) (Friese ) (noting a party’s concession " that a noncompete period of one year following termination is not an unreasonable period to protect the employer’s interests" ); Sabatasso v. Bruno, supra, 36 Conn.L.Rptr. 851 (granting motion for temporary injunction and enforcing restrictive covenant with one-year term); Branson Ultrasonics Corp. v. Stratman, 921 F.Supp. 909 (D.Conn. 1996) (Branson Ultrasonics ) (granting motion for preliminary injunction and enforcing restrictive covenant with one-year term). However, the reasonableness of the time period that a restriction is in force may not be determined in a vacuum. Rather, reasonableness must be judged in conjunction with all the other relevant factors, most importantly, the applicable geographic restriction. Thus, as noted by the court in Van Dyck Printing Co. v. DiAricola, 43 Conn.Supp. 191, 197, 648 A.2d 898 (1993), " time and geographical restrictions are to be reviewed as intertwined considerations when a determination is made on the reasonableness of the limitations of an employee’s post-termination activities. A restriction covering a large area might be reasonable if in effect for a brief time, while a restriction covering a small area might be reasonable for a longer time." (Emphasis added.) In that context, the court considers the global restriction at issue here.
In opposing the plaintiff’s motion, the defendant argues that the second factor- namely, the geographical area covered by the restriction- renders unenforceable the restrictive covenants contained in the Agreement. In connection with the geographical restriction, Connecticut courts " have tended to apply greater scrutiny to non-competes that create general bars based on geographical considerations than to those which focus simply on doing business with the employer’s customers." Braman Chemical, supra, 42 Conn.L.Rptr. 548-49. The plaintiff argues that the global restriction contained in the Agreement is unenforceable because it is unreasonable on its face. In advancing this argument, the defendant echoes, although she does not cite, the holding of the court in Connecticut Stone Supplies, Inc. v. Fresa, Superior Court, judicial district of New Haven, Docket No. CV-02-0470204-S (December 20, 2002, Munro, J.), that " [a] worldwide prohibition on competition is patently and grossly unreasonable."
The court rejects any per se invalidation of a noncompete provision on the ground that it imposes a worldwide geographic restriction. Such a per se invalidation would be inconsistent with the fact-based, case-by-case inquiry that requires the court to weigh the equities in light of the factors relevant under our law. In addition, the court in Connecticut Stone Supplies, Inc. v. Fresa, supra, Superior Court, Docket No. CV-02-0470204-S, did not impose a per se prohibition on noncompete agreements with global application. In that case, the court held that the worldwide prohibition against competition was unreasonable where the plaintiff " offered nothing to suggest that it is a worldwide competitive business in its field." Id. Furthermore, the term of the restriction at issue in that case was for two years. Id. This is in stark contrast to the plaintiff here, which is engaged in a highly competitive business offering worldwide services to a multinational clientele, in the context of a one-year restriction period.
Moreover, Connecticut courts have demonstrated an increased willingness to enforce worldwide restraints in appropriate cases. As observed by the court in Friese, supra, " [t]he courts that have upheld relatively narrow geographic limitations have generally been dealing with businesses not engaged in internet or global commerce, such as barber shops, beauty parlors, and insurance agents. On the other hand, the law has come to acknowledge the inapplicability of geographic bounds to companies that do business on a national or international basis ..." Id. ; see also Lys Global Technology, LLC v. Bonarrigo, Superior Court, judicial district of Hartford, Docket No. CV-15-6061764-S (May 12, 2016, Dubay, J.) (" Connecticut courts have upheld non-compete agreements that fail to contain geographical limits ... Furthermore, courts have upheld covenants that are worldwide in scope." [citing Perrelli II, supra, 18 Conn.App. 534; Robert S. Weiss & Associates, Inc. v. Wiederlight, supra, 208 Conn. 525; Branson Ultrasonics, supra, 921 F.Supp. 913] ). Judicial recognition of the inapplicability of geographic bounds to certain types of businesses has been especially pronounced in cases involving computer-driven commerce. See, e.g, Friese, supra (" This trend is particularly applicable to a business operating on the internet" ), Branson Ultrasonics, supra, 921 F.Supp. 911 (granting preliminary injunction against an employee of a company " in the business of designing, engineering, manufacturing and selling a line of products that use ultrasonics to join plastics and other materials in a wide variety of industrial applications," where the process at issue " is controlled by sophisticated computer hardware and software ," and the company seeking the injunction " has customers in the United States, Europe, and Asia and faces competition in all those areas." [Emphasis added.] ); see also Business Intelligence Services, Inc. v. Hudson, 580 F.Supp. 1068, 1069, 1073 (S.D.N.Y. 1984) (enforcing restrictive covenant with unlimited geographic scope in favor of former employer engaged " in developing, producing, marketing, licensing, leasing and maintaining computer software," where the former employer’s business " is worldwide" ). The increased willingness of courts to enforce broad and even global restrictions in the context of such businesses is a response to the realities of a certain segment of our contemporary economy. Thus, and as noted by the court in Friese, supra, " [a] prohibition against competing from a location less than twenty-five miles away, for example, would provide no effective protection to a company engaged in internet commerce ..." In this case, in light of the worldwide nature of the plaintiff’s business and clientele, as well as the fact that it is technologically based, the court does not find the global scope of the restrictive covenant set forth in the Agreement to be unreasonable, and the defendant offers no argument on this point, other than contending that a global restriction at issue is unreasonable on its face. See, e.g., id. (" [T]he [former employee] makes no convincing argument as to why a global prohibition against competing with [the former employer’s] global internet business is unreasonable." ) Taken together, the court does not find unreasonable the worldwide geographic restriction or one-year time period set forth in the Agreement.
As for the third factor, given the breadth of the geographic restriction, as well as the time limitation imposed, the degree of protection afforded to the plaintiff is substantial. The court does not consider this degree of protection inappropriate in the context of this case for the reasons stated in connection with the first and second factors.
With respect to the fourth factor, and as noted by our Supreme Court in Scott v. General Iron & Welding Co., supra, 171 Conn. 137, " [t]he 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." It has long been the law in our state that " [e]quity under some circumstances will hold invalid contracts which are so broad in their application that they prevent a party from carrying on his usual vocation and earning a livelihood, thus working undue hardship." Mattis v. Lally, 138 Conn. 51, 56, 82 A.2d 155 (1951). Certainly, enforcement of the non-compete provisions of the Agreement, which prohibit the defendant from being involved with or perform work or services for any of the plaintiff’s competitors, globally, for a period of one year, imposes a heavy burden on the defendant in connection with her employment and ability to make a living to support her family. In fact, and as written, the court concludes that the Agreement effectively prevents her from pursuing her occupation because it prohibits her from being involved with or performing any work or services, of any kind, for any competitor of the plaintiff, as defined by the Agreement. The Agreement defines a " Competitor" as " any person or business entity that is engaged in a Competitive Business Activity." In addition, the Agreement defines " Competitive Business Activity" as " the research, development, support, assisting, provision, marketing or sale of any product or service that is materially similar to the Company’s Products/Services." The breadth of these provisions is sweeping and includes all of the plaintiff’s competitors in the mobility and relocation industry. Taken together with the language that prohibits the plaintiff from any involvement with, and the provision of work or services of any kind to the plaintiff’s " competitor[s]," the restrictive covenant provisions of the Agreement have the practical effect of preventing the defendant from working for anyone in the industry in which she has been employed for over two decades.
Finally, as for the public interest factor, no evidence or argument was offered on this point. As such, this factor does not figure in to the court’s analysis.
IV
Considering all of the relevant factors together and balancing the equities, the court begins by reviewing those that favor enforcement of the restrictive covenants as requested by the plaintiff. The Agreement was entered into by the defendant, an experienced and sophisticated businessperson. The defendant had a duty to read the terms and conditions of the Agreement; Ursini v. Goldman, 118 Conn. 554, 562, 173 A. 789 (1934); and she had an opportunity to consult with counsel before signing it, if she so desired. The parties entered the Agreement with essentially comparable bargaining power. Moreover, the plaintiff, a smaller company engaged in a highly competitive international business with numerous other rivals, including larger ones, hired the defendant, a recognized leader in her field, to assist it in improving its competitive position around the world. Success in this field is driven by proprietary, knowledge-based processes and systems, to which the defendant had full access. As such, the noncompete provisions of the Agreement were of special and particular importance to the plaintiff. The nature of the plaintiff’s business makes reasonable and understandable the worldwide geographic scope of the noncompete provisions. Furthermore, ample consideration was provided to the defendant by the plaintiff under the Agreement, including without limitation the payment of substantial monetary compensation. While these considerations serve as forceful arguments in favor of the plaintiff’s position, ultimately, they are more than offset by the factors that weigh against enforcement of the subject restrictive covenants.
In the defendant’s favor, the defendant cannot be prevented from pursuing her profession. By comparison with the deprivation of the defendant’s livelihood, the burden placed on the plaintiff is considerably lighter, especially given the rapidly-changing nature of the plaintiff’s business. See, e.g., Wesley Software Development Corp. v. Burdette, 977 F.Supp. 137, 147 (D.Conn. 1997) (Wesley Software ) (in a case where the court " decline[d] to determine ... whether the one-year restriction not to compete is over broad under the circumstances presented by this case," holding that " [d]ue to the rapid changes in the software industry generally ... the Court declines to enjoin the defendants for a period greater than six (6) months at this stage of the litigation" ). Moreover, although the plaintiff is understandably concerned with the potential for the defendant to share, intentionally or inadvertently, information with Equus that would be harmful to the plaintiff’s competitiveness and business interests, that concern may be addressed by enforcement of the nondisclosure and other provisions of the Agreement designed to protect the plaintiff’s proprietary information and trade secrets, which provisions the defendant does not challenge here. See, e.g., M. Garrison & J. Wendt, supra, 45 Am. Bus. L.J. 179 (" Nondisclosure and confidentiality agreements, if enforced rigorously by the courts, prevent the unfair exploitation of trade secrets, while allowing free competition by former employees" ); see also id., 178 (" Only confidentiality and nondisclosure agreements directly prevent misappropriation ... [N]oncompete agreements designed to protect trade secrets will not be carefully tailored to prevent unfair competition, the result of which will be over deterrence of employees and a potentially anticompetitive effect on the market" ). In sum, and keeping in mind the competing equities, the court will not enforce a restrictive covenant that prevents the plaintiff from following her usual occupation; Scott v. General Iron & Welding Co., supra, 171 Conn. 137; and thus, the restrictive covenant provisions of the Agreement will not be enforced against the defendant in this case. The court’s decision is based on the sweeping restrictions imposed on the defendant’s ability to pursue her occupation, which prevent her from working for any of the plaintiff’s competitors, disjoined from the elements of time and geography considered above.
In deciding not to enforce the restrictive covenants of the Agreement as a whole, as requested by the plaintiff, the court declines any invitation to modify the Agreement in accordance with the provisions of § 4.4. The parties do not contest the authority of this court to alter the Agreement under the " Blue Pencil" provision contained in that section, which applies to the time and geographic limitations imposed by the Agreement. See Beit v. Beit, 135 Conn. 195, 63 A.2d 161 (1948). In so holding, a consideration of the similarities and differences between this case and the court’s decision in Wesley Software, supra, is appropriate.
In Wesley Software, supra, 977 F.Supp. 138-39, the plaintiff, a software development company, sought a preliminary injunction against the defendant, a former employee who had worked for the plaintiff as a Senior Logistics Analyst. By its action, the plaintiff asked the court to enjoin the individual defendant from commencing employment with a new employer, also named as a party defendant, which new employer was described as the plaintiff’s " principal competitor." Id. The plaintiff in Wesley Software had customers " throughout the United States and Canada" with whom the plaintiff competed. Id., 139. The individual defendant was not an engineer or computer programmer and he had a bachelor’s degree in business administration. Id. While employed with the plaintiff, the individual defendant had access to confidential information regarding methods and processes used to build the plaintiff’s logistics management software; research and development efforts regarding the plaintiff’s logistics management software; methods of evaluating the needs of potential customers; pricing; sales and marketing plans; methods for implementing the plaintiff’s software; the direction that the plaintiff was taking its new products; and competitive strategies for its customers, and against its major competitor, the defendant’s prospective new employer. Id., 140. Moreover, the plaintiff considered the following information to be confidential and proprietary: the design of its software product; how the product works; how the plaintiff solves its client’s problems; the manner of implementing its software; research and development plans; sales and marketing plans and strategy; prices charged; the names of potential customers; and source code. Id. The court in Wesley Software concluded that the defendant " knows the identity of [the plaintiff’s] customers and prospects, [its] prices and pricing methods, the features and bugs of [its software] ... He also knows details of contracts with [the plaintiff’s] customers." Id., 145-46. In addition, the employment contract at issue had a provision allowing a court of competent jurisdiction to modify the contract, in the event any provision was held to be invalid or unenforceable due to " scope, duration, subject matter or any other aspect," in order " to make such provision enforceable to the fullest extent permitted by law ..." Id., 142. Furthermore, the court found that " it is likely that [the individual defendant] will disclose confidential information either intentionally or inadvertently in his position" at the plaintiff’s chief business competitor. Id., 146. Applying the five factors to be considered in evaluating a restrictive covenant under Connecticut law, the Wesley Software court concluded that " the restrictive covenant is reasonable." Id., 144.
While the factual similarities in Wesley Software are notable, and at first blush appear to favor enforcement of the restrictive covenant provisions of the Agreement against the defendant in this case, the dissimilarities are of even greater importance. To begin, in Wesley Software, the plaintiff sought to enjoin the defendant from going to work for only one company- namely, its principal business rival. Id., 138-39; see also Express Courier Systems, Inc. v. Brown, Superior Court, judicial district of New Haven, Docket No. CV-06-4023011-S (December 18, 2006, Hadden, J.T.R.) (42 Conn.L.Rptr. 525) (enforcing non-compete provision where " [t]he degree of protection that the agreements provide for the plaintiff is reasonable. It applies in this case to only one customer of the plaintiff ..." [Emphasis added.] ) By contrast, in this case, the plaintiff asks the court to enter an order preventing the defendant from " engaging in any Competitive Business Activity ... including but not limited to acting as an employee of or in any capacity for Equus Software." This prohibition applies not only to Equus but to all of the plaintiff’s competitors, as broadly defined by the Agreement. Furthermore, in Wesley Software, the court found that " other employment opportunities are available to [the individual defendant] that will enable him to work in [the individual defendant’s field] ..." Wesley Software, supra, 977 F.Supp. 145; see also Branson Ultrasonics, supra, 921 F.Supp. 913 (granting preliminary injunction where " other employment opportunities are available to [the individual defendant] that will enable him to continue to use his expertise ..." ). Given the breadth of the restrictions set forth in the Agreement, the court cannot find that the defendant is able to take advantage of any other employment opportunities in the mobility and relocation industry without running afoul of the covenants sought to be imposed by the plaintiff. As a result, the court holds that the restrictive covenants set forth in the Agreement may not be enforced against the defendant as a matter of law.
In light of the conclusion that the restrictive covenants relied upon by the plaintiff are unenforceable the court also determines that the plaintiff is unlikely to prevail on the merits of its action. Braman Chemical Enterprises, Inc. v. Barnes, supra, 42 Conn.L.Rptr. 552 (" Because the court has concluded that the geographical restriction contained in the non-compete is not enforceable as a matter of law, it also concludes that the plaintiff is unlikely to prevail on the merits of its action" ). As a result, the plaintiff is not entitled to a temporary injunction preventing the defendant from " engaging in any Competitive Business Activity, including but not limited to acting as an employee of or in any other capacity for Equus Software."
V
Finally, the court also concludes that the plaintiff is not entitled to a temporary injunction barring the defendant from disclosing any " Propriety Information" of the plaintiff as defined by the Agreement. The defendant is already under contractual and fiduciary obligations not to divulge such information, and the plaintiff has not demonstrated that it faces immediate and irreparable harm absent entry of the requested temporary injunctive relief.
CONCLUSION
For the foregoing reasons, the plaintiff’s motion for temporary injunction is denied.