Opinion
No. CV-08-4035468
September 12, 2008
MEMORANDUM OF DECISION ON APPLICATION FOR PRELIMINARY INJUNCTION
The plaintiffs, RKR Dance Studios, Inc., d/b/a Fred Astaire Dance Studio (RKR) and Maximize Your Impact, LLC, (Maximize) seek a preliminary injunction pursuant to General Statutes § 52-471 against the defendants, Jessica Makowski (Makowski) and Steps In Time, Inc., (Steps in Time) based on the allegations that Makowski violated a noncompete agreement that she signed on or about May 5, 2006, that Makowski breached the implied covenant of good faith and fair dealing and that Steps in Time tortiously interfered with the business relationship between the plaintiffs and Makowski.
For the foregoing reasons, the court denies the plaintiffs' application for a preliminary injunction.
FACTS
On February 8, 2008, the plaintiffs filed a three-count complaint alleging the following facts. The plaintiff, RKR, is a Massachusetts corporation with a principal place of business in West Springfield, Massachusetts. The plaintiff, Maximize, is a Connecticut limited liability company with a place of business in Unionville, Connecticut. The defendant, Steps in Time, is a Connecticut corporation with a business address in Canton, Connecticut. The defendant, Makowski, started working for RKR on November 29, 2001, as an at-will employee. Pursuant to her employment, Makowski entered into an employment agreement containing a noncompete covenant. In January of 2004, Maximize became the franchisor of RKR. On or about May 5, 2006, RKR, Maximize and Makowski entered into a new agreement containing a more restrictive noncompete covenant. The plaintiffs allege that this agreement was in consideration of extensive and numerous training programs developed after 2004. Makowski left RKR Dance Studios on September 28, 2007. Shortly thereafter, Makowski started working for the defendant, Steps in Time.
In count one, the plaintiffs allege that Makowski has breached the 2006 noncompete agreement. In count two, the plaintiffs allege that Makowski has breached an implied covenant of good faith and fair dealing. In count three, the plaintiffs allege that Steps in Time has tortiously interfered with their business relations. The plaintiffs sought a preliminary injunction to prevent Makowski from working for Steps in Time. The court had an evidentiary hearing on the matter, at which the contract was introduced. The specific noncompete covenant reads as follows: "I [Makowski] agree that during the term of my employment by, service to, or affiliation with Franchisee [RKR Dance] for a period of two (2) years thereafter, I will not, either directly or indirectly, engage in any business giving, offering or selling dance lessons or dance instruction, either as a proprietor, principal, agent, advisor, or consultant, if such business shall be located within fifteen (15) miles of Franchisee's Fred Astaire Dance Studio, or within ten (10) miles of any Fred Astaire Dance Studio (whether company-owned, franchised or otherwise established) either now or hereafter operated." (Plaintiff's exhibit 1.) There is no dispute that Steps in Time is a business which offers dance instruction and is located within ten miles of another Fred Astaire Dance Studio.
At the close of the plaintiffs' case-in-chief, the court granted the motion for directed verdict of the defendant, Steps in Time.
DISCUSSION I. STANDARD FOR PRELIMINARY INJUNCTION
The standard for a temporary and permanent injunction requires that the moving party must establish: "(1) the plaintiff ha[s] no adequate legal remedy; (2) the plaintiff would suffer irreparable injury absent [the injunction]; (3) the plaintiff [is] likely to prevail . . . and (4) the balance of the equities favor[s] [issuing the injunction.]" Waterbury Teachers Ass'n. v. Freedom of Information Commission, 230 Conn. 441, 446, 645 A.2d 978 (1994). In ordering a permanent injunction, "the relief granted must be compatible with the equities of the case." (Internal quotation marks omitted.) Castonguay v. Plourde, 46 Conn.App. 251, 267, 699 A.2d 226, cert. denied, 243 Conn. 931, 701 A.2d 660 (1997). "The request for injunctive relief is addressed to the sound discretion of the trial court . . . In exercising its discretion, the court, in a proper case, may consider and balance the injury complained of with that which will result from interference by injunction . . . The issuance of an injunction and the scope and quantum of injunctive relief rests in the sound discretion of the trier." (Citations omitted; internal quotation marks omitted.) Tomasso Bros., Inc. v. October Twenty-Four, Inc., 230 Conn. 641, 648, 646 A.2d 133 (1994).
Given the evidence presented and this court's review of applicable law, the plaintiffs have failed to establish the likelihood of success on the merits, and the court is not persuaded that they will suffer irreparable harm and have no adequate remedy at law. Balancing the equities, this court cannot find that a preliminary injunction should issue.
A. LIKELIHOOD OF SUCCESS ON THE MERITS
In the present case, no party is disputing the validity of the original noncompete covenant. Instead, the defendant, Makowski, challenges the plaintiffs' application for preliminary injunction because she claims that the subsequent 2006 noncompete agreement which she signed is unenforceable for lack of consideration and because it is unreasonably broad in its scope.
1. Consideration
With respect to her claim that the noncompete agreement fails for lack of consideration, Makowski testified that when RKR gave the employees the 2006 noncompete agreement, she was told simply that she must sign the agreement. As the new area franchisor and New England area director for the Fred Astaire studios, Kimberly Haidinger testified that she intended to implement significant improvements in the programs and benefits it would offer its franchisees and their employees in exchange for employees signing the new noncompete agreement. Kimberly Jedlicka, manager of RKR, testified that she would have terminated any employees who refused to sign the new noncompete agreement. The parties, however, do not dispute Makowski's main contention, and thus, this court finds that Makowski was never told that in exchange for new programs and benefits, or in exchange for her continued employment, she must sign the new noncompete agreement. The issue before the court then is whether, as the plaintiffs contend, Makowski's continued employment as an at-will employee obviates the need for overt consideration to support the new noncompete agreement.
"The doctrine of consideration is of course fundamental in the law of contracts the general rule being that in the absence of consideration an executory promise is unenforceable. In defining the elements of the rule, we have stated that consideration consists of a benefit to the party promising, or a loss or detriment to the party to whom the promise is made . . . An exchange of promises is sufficient consideration to support a contract." (Internal quotation marks omitted.) Keefe v. Norwalk Cove Marina, Inc., 57 Conn.App. 601, 606, 749 A.2d 1219, cert. denied, 254 Conn. 903, 757 A.2d 881 (2000). "The general rule is that, in the absence of fraud or other unconscionable circumstances, a contract will not be rendered unenforceable at the behest of one of the contracting parties merely because of an inadequacy of consideration." (Internal quotation marks omitted.) Christian v. Gouldin, 72 Conn.App. 14, 23, 804 A.2d 865 (2002) (quoting 1 Restatement (Second), Contracts § 79, p. 200 (1981): "[i]f the requirement of consideration is met, there is no additional requirement of . . . `mutuality of obligation'").
In considering this issue, this court is bound by our Supreme Court's holding in Roessler v. Burwell, 119 Conn. 289, 176 A. 126 (1934). In that case, the plaintiff had employed the defendant in an at-will relationship from 1926 to 1929 in the New Haven area. Id., 290. In 1929, the parties entered into a written agreement, which provided that the plaintiff would employ the defendant indefinitely and the defendant would be compensated by weekly wages "mutually agreed upon between the parties from time to time." Id., 290-91. In the event that the plaintiff should discharge the defendant for any cause, the defendant, for a period of one year, was not to solicit business from any of the plaintiff's regular customers. Id., 291. Once the defendant left the plaintiff's business, he began to solicit business from the plaintiff's customers, whereupon the plaintiff sought an injunction to enforce the agreement. Id., 291-92. The defendant argued that the covenant was too vague and uncertain to be enforced because it did not specify the terms of the defendant's wages. Id., 292. The court determined that the plaintiff had paid the defendant weekly wages, and the defendant had accepted these wages without objection, rendering otherwise vague terms sufficient. Id., 293.
In the course of holding that the performance of paying these weekly wages had rendered the contract sufficiently clear, the court stated that "[t]he underlying purpose of the defendant in entering into the agreement was to continue thereafter in the employment of the plaintiff at a mutually agreeable salary; the benefit offered him was such a continuance, in return for which the plaintiff was to receive his services and the benefit of the restrictive covenant in the agreement." Id. The court later stated that "the plaintiff, having paid the defendant a weekly salary satisfactory to him, from the time when the agreement was made, and having continued the defendant in his employment until he voluntarily left, has given to the defendant the benefit for which he bargained, and has, by performance, made certain that which before was uncertain; the restrictive covenant is in itself sufficiently definite; and after the withdrawal of the defendant from the plaintiff's employment, it was founded upon an adequate consideration given." Id., 293-94. See also annot., 51 A.L.R. 3d 825 § 4[b] ("An employee's continued employment has been held or recognized . . . to be sufficient consideration for a covenant not to compete which the employee signed after the inception of his employment, at least where it appeared that the employee otherwise would have been discharged, or where he actually remained in the plaintiff's employ for a substantial time after the execution of the covenant").
While many Superior Court decisions have addressed the issue of whether continued employment is sufficient consideration to support a noncompete covenant, very few have taken the Roessler holding into account. One exception is Piscitelli v. Pepe, Superior Court, judicial district of New Haven, Docket No. CV 04 4002472 (November 5, 2004, Lopez, J.) ( 38 Conn. L. Rptr. 219). Quoting Roessler, the Piscitelli court upheld the validity of a noncompete contract in an at-will relationship that was executed years after the employee had started working for the employer, holding that continued employment in an at-will relationship is sufficient consideration to support a noncompete covenant. Id. The court did not address whether additional education and training benefits provided to the defendant constituted consideration above and beyond the continued employment. Id.
Additional case law from the Superior Court supports this same position. See Russo Associates, Inc. v. Cachina, Superior Court, judicial district of Fairfield, Docket No. 276910 (March 1, 1995, Levin, J.) (In an alternative holding, the court held "where, as here, the preexisting contract of employment is terminable at-will, no overt consideration is required to support an otherwise valid covenant not to compete. The law presumes that such a covenant is supported by the employer's implied promise to continue the employee's employment . . . or his forbearance in not discharging the employee then and there"); Daniel V. Keane Agency, Inc. v. Butterworth, Superior Court, judicial district of Fairfield, Docket No. 313181 (February 22, 1995, Levin, J.); NewInno, Inc. v. Peregrim Development, Inc., Superior Court, judicial district of Fairfield, Docket No. CV 01 0390074 (November 27, 2002, Stevens, J.) ("Except as otherwise prohibited by law, at-will employees may be terminated at an employer's discretion, and thus, continued employment, even after the start of the employment relationship, is sufficient consideration to support a confidentiality agreement"); Nurotocco of Mass., Inc. v. Kudlach, Superior Court, judicial district of New Britain, Docket No. CV 92 0453323 (October 6, 1993, Dorsey, J.T.R.) ("The Connecticut courts . . . hold that the continuation of employment is adequate consideration in such a case."); R C Livolsi, Inc. v. Campanelli, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 97 0259105 (October 8, 1997, Dorsey, J.T.R.).
Furthermore, federal courts applying Connecticut law have agreed with this position. See MacDermid, Inc. v. Selle, 535 F.Sup.2d 308, 316 (D.Conn. 2008) ("[The defendant's] continued employment with and compensation by [the plaintiff] following the execution of these two agreements suffices to make the obligations contractually binding, particularly as both [parties] agree that [the defendant's] employment would have been terminated without the agreement in place"); Home Funding Group, LLC v. Kochmann, United States District Court, Docket No. 3:06 CV 1234 (D.Conn. June 7, 2007); United Rentals, Inc. v. Bastanzi, United States District Court, Docket No. 3:05 CV 596 (D.Conn. December 22, 2005) ("Connecticut recognizes that continued employment is adequate consideration to support noncompete covenants with at-will employees"); Sartor v. Manchester, 312 F.Sup.2d 238, 245 (D.Conn. 2004) (same); Weseley Software Development Corp. v. Burdette, 977 F.Sup. 137, 144 (D.Conn. 1997) (finding continued employment, among other factors, adequate consideration for noncompete agreement).
Notwithstanding Roessler, a number of Superior Court decisions have nevertheless found continued employment inadequate consideration to support noncompete covenants. National Safe Northeast, Inc. v. Smith, Superior Court, judicial district of Hartford, Docket No. 304189 (December 31, 1985, Aspell, J.); Artman v. Output Technologies Solutions Eastern Region, Inc., Superior Court, judicial district of Hartford, Docket No. CV 00 0595362 (May 16, 2000, Rittenband, J.T.R.); Norton v. Commercial Credit Corp., Superior Court, judicial district of Hartford, Docket No. CV 98 0578441 (October 6, 1998, Rittenband, J.) [ 23 Conn. L. Rptr. 102]; J.M. Layton Co. v. Millar, Superior Court, judicial district of Ansonia-Milford at Derby, Docket No. CV 04 0084446 (August 9, 2004, Robinson, A., J.) [ 37 Conn. L. Rptr. 649].
Notably, the case of Van Dyck Printing Co. v. DiNicola, 43 Conn.Sup. 191, 648 A.2d 898 (1993), aff'd, 231 Conn. 272, 648 A.2d 877 (1994) (per curiam) is frequently cited for the proposition that continued employment does not constitute adequate consideration for noncompete covenants. Although the issue was raised by the defendant in that case, the Van Dyck court stated that "[t]his general proposition is not, however, applicable to the situation presented." Id., 195. The situation was actually one where the defendant had begun working for the plaintiff based on an employment agreement that had not yet been fully developed. Id., 196. The court determined that the subsequent agreement was close enough temporally to the commencement of work that it was, in fact, part of the original employment agreement. Id.
Similarly, the Supreme Court case, Dick v. Dick, 167 Conn. 210, 224, 355 A.2d 110 (1974) is also frequently cited for the proposition that continued employment is not additional consideration. See, e.g., North American Outdoor Products, Inc. v. Curt Dawson, Superior Court, judicial district of New Haven, Docket No. CV 04 0490177 (September 21, 2004, Zoarski, J.). In that case, however, the Supreme Court was applying New York law, and merely stated in dicta that, "if the contract were to be governed by Connecticut law, it would not be valid in that the consideration is `past consideration' which will not support a promise." Dick v. Dick, supra, 167 Conn. 224. In addition, unlike Roessler which addressed a noncompete agreement executed years after an at-will employment relationship began, Dick did not address an employment contract. As such, this court finds reliance on Dick v. Dick misplaced and Roessler the more compelling precedent in the context of noncompete covenants in at-will employment relationships.
In holding that continued employment is not consideration, the Superior Court in Cost Management Incentives, Inc. v. London-Osborne relies on much of the language from Artman. Cost Management Incentives Inc. v. London-Osborne, Superior Court, judicial district of New Haven, Docket No. CV 02 0463081 (December 5, 2002, Munro, J.). Significantly, however, that court noted not only Superior Court decisions to the contrary, but also acknowledged Roessler v. Burwell and distinguished that line of cases by the fact that the employees left employment voluntarily. Id. By contrast, the employees in Cost Management Incentives, Inc., had been terminated; thus, the court found the employer had "broken the bargain, or, withdrawn the consideration it cites for the agreements." Id.
In light of what this court considers the binding precedent of Roessler v. Burwell, this court finds adequate consideration to support the 2006 noncompete covenant, given that the defendant was as an at-will employee and then voluntarily left RKR one year and one half after the agreement was executed.
2. Reasonableness of the Noncompete Covenant
The court must also determine whether this contract is valid and binding under Connecticut law. "By definition, covenants by employees not to compete with their employers after termination of their employment restrain trade in a free market . . . Consequently, these covenants may be against public policy, and, thus, are enforceable only if their imposed restraint is reasonable, an assessment that depends upon the competing needs of the parties as well as the needs of the public. These needs include: (1) the employer's need to protect legitimate business interests, such as trade secrets and customer lists; (2) the employee's need to earn a living; and (3) the public's need to secure the employee's presence in the labor pool." (Citation omitted.) Deming v. Nationwide Mutual Ins. Co., 279 Conn. 745, 761, 905 A.2d 623 (2006); see also Scott v. General Iron Welding Co., Inc., 171 Conn. 132, 137, 368 A.2d 111 (1976).
"Our Supreme Court has specified five areas in which the reasonability of a restrictive covenant must be evaluated: (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." New Haven Tobacco Co. v. Perrelli, 11 Conn.App. 636, 638-39, 528 A.2d 865 (1987). "Although in Van Dyck Printing Co. v. DiNicola . . . the court stated that the reasonableness of time and geographic restrictions in a covenant not to compete are intertwined and that broad geographic restrictions may be reasonable if the duration of the covenant is short, and longer periods may be reasonable if the geographic area is small, our Appellate Court has instructed us that the five-pronged test is disjunctive; a finding of unreasonableness in any one of the criteria is enough to render the covenant unenforceable . . . [W]hile the noncompete must be viewed in its entirety, a single unreasonable provision may be sufficient to invalidate the entire agreement." (Citations omitted; internal quotation marks omitted.) Braman Chemical Enterprises, Inc. v. Barnes, Superior Court, judicial district of New Haven, Docket No. CV 06 4020633 (December 12, 2006, Silbert, J.) [ 42 Conn. L. Rptr. 547].
The five-pronged analysis of New Haven Tobacco Co. is also necessarily fact-intensive. See Hart, Nininger Campbell Associates, Inc. v. Rogers, 16 Conn.App. 619, 637, 548 A.2d 758 (1988). "Agreements by which an employee undertakes not to enter a competing business or employment on leaving his employer's service are reasonably necessary for the protection of the employer's business . . . When the character of the business and the nature of the employment are such that the employer requires protection for his established business against competitive activities by one who has become familiar with it through employment therein, restrictions are valid when they appear to be reasonably necessary for the fair protection of the employer's business or rights, and do not unreasonably restrict the rights of the employee, due regard being had to the subject-matter of the contract and the circumstances and conditions under which it is to be performed." (Citation omitted; internal quotation marks omitted.) May v. Young, 125 Conn. 1, 6, 2 A.2d 385 (1938). "[A noncompete covenant] 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 omitted; internal quotation marks omitted.) Scott v. General Iron Welding Co., supra, 171 Conn. 137.
Taking these factors into consideration, the court finds the noncompete covenant unenforceable because it is unreasonably broad in its geographic scope and unreasonably precludes the defendant from pursuing her occupation.
In this case, the covenant prohibits Makowski, for two years after her employment with RKR, from working as a dance instructor or providing dance lessons in the employ of a competitor within fifteen miles of RKR or within ten miles of any Fred Astaire Dance Studio. This covenant appears to encompass all Fred Astaire studios nationally. The court reviewed evidence, specifically Exhibit 11, which demonstrated the impact of the covenant upon Makowski's employment in the states of New York, Massachusetts, Connecticut and Rhode Island. Consisting of a map with concentric pink circles over the areas for which Makowski was barred from employment, both parties relied on Exhibit 11 before this court. The court also heard compelling evidence from Makowski regarding the nature of her professional work. Specifically, as both a ballroom dance instructor as well as a professional ballroom dancer, she required employment with a professional ballroom dance studio that specializes in ballroom dance instruction and is involved in professional dance circuit competitions. In order to find comparable work outside of the prohibited areas, the closest dance studio to her home in Holyoke, Massachusetts was in Natick, Massachusetts, a full-hour and a half commute and three-hour round trip. The four other potential employers' studios were as much as two-hour commutes and four-hour round trips. Her current employer's location in Canton is a one-hour commute from her home.
Makowski also effectively challenged the plaintiffs' claims that there were viable dance studios closer to her home, which purportedly offered ballroom dancing. She testified that these studios did not offer the full scale dance instruction services combined with professional growth and competition opportunities as well as benefits comparable to her current employment, including a 401k retirement plan, healthcare and disability benefits. For example, she noted that some of the "studios" on the plaintiffs' list either do not exist or are traveling "circus" studios, which consist of self-employed dancers who would not employ her. Other dance studios were actually ballet schools, or schools offering many different kinds of dance instruction, but only perfunctorily list ballroom dancing on their website, and, in any event, do not specialize in ballroom dance. For example, the website for Stafford Spring Academy of Dance listed ballroom dance as an offering, but, in contrast to the other dance offerings, ballroom was neither scheduled for class instruction nor even described. This court is thus persuaded that the covenant's geographic scope is unreasonably broad and unduly and unfairly restricts the defendant's ability to pursue her occupation. As such, the plaintiffs have failed to establish their likelihood of success on the merits.
B. IRREPARABLE INJURY AND ADEQUACY OF REMEDY AT LAW
Although the court has already found that the plaintiffs have failed to meet their burden with respect to the likelihood of success on the merits, the court also finds that it is not persuaded that the plaintiffs have established irreparable injury or that they have no adequate remedy at law.
The court is aware that there is some disagreement among the judges of the Superior Court as to whether a violation of a noncompete covenant is per se irreparable injury or whether there must be some evidence of irreparable harm. This court finds most helpful the analyses of the state of the law in the recent decision of Opticare, P.C. v. Zimmerman, Superior Court, complex litigation docket at Waterbury, Docket No. UWY CV 07 5003365 (March 27, 2008, Eveleigh, J.), and in the case of POP Radio, LP v. News America Marketing In-Store, Inc., 49 Conn.Sup. 566, 898 A.2d 863 (2005) [ 40 Conn. L. Rptr. 332]. Both courts acknowledge that the Supreme Court in Mattis v. Lally, 138 Conn. 51, 56, 82 A.2d 155 (1951), in response to the defendant's claim that the plaintiff failed to prove irreparable damage and no inadequate remedy, stated "irreparable harm would inevitably result from a violation of the defendant's promises." Mattis v. Lally, supra, 138 Conn. 56. Moreover, they acknowledge that various Superior Court decisions, relying in part on Mattis and its progeny, have thus held that irreparable injury need not be proved in cases involving noncompete covenants. See, e.g., Group Concepts, Inc. v. Barberino, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 03 0286221 (April 16, 2004, Tanzer, J.) ( 37 Conn. L. Rptr. 9); Century 21 Access America v. Lisboa, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 03 081901 (July 22, 2003, Ronan, J.) ( 35 Conn. L. Rptr. 272); Musto v. Opticare Eye Health Centers, Inc., Superior Court, complex litigation docket at Waterbury, Docket No. X02 CV 99 0155663 (August 9, 2000, Hodgson, J.).
On the other hand, the court in Pop Radio also cited those Superior Court cases which required a showing an irreparable harm to support an injunction. POP Radio, LP v. News America Marketing In-Store, Inc., supra, 49 Conn.Sup. 576 (citing Haims, Buzzeo Co. v. Wikstrom, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 02 0190077 (September 8, 2003, Lewis, J.T.R.); Wentworth Laboratories, Inc. v. Probe 2000, Inc., Superior Court, judicial district of Danbury, Docket No. CV 02 0346892 (November 19, 2002, Fischer, J.); G7 Systems v. Ginthwain, Superior Court, judicial district of Tolland, Docket No. CV 01 76334 (September 17, 2001, Klaczak, J.). The Pop Radio court also cited New England Eye Care v. New England Eyecare, Superior Court, judicial district of Waterbury, Docket No, CV099465 (January 18, 1991, Blue, J.) [ 3 Conn. L. Rptr. 724], which found that irreparable injury from an alleged violation of noncompete was not established where there was "no evidence from which the court can infer that this impact is likely to be ruinous under all of the circumstances." Following its exhaustive review of the cases on this issue, the court concluded that "Connecticut law supports a distinctly moderated level of proof required to establish the elements of irreparable harm and lack of an adequate remedy at law necessary for the issuance of a temporary injunction where the circumstances involve an alleged break of a noncompetition agreement." POP Radio, LP v. News America Marketing In-Store, Inc., supra, 49 Conn.Sup. 577.
Like the court in Opticare, P.C. v. Zimmerman, supra, Superior Court, Docket No. UWY CV 07 5003365, this court is similarly persuaded by the court's holding in Pop Radio that "the Mattis decision must be analyzed with respect to the facts of that case" given evidence that notwithstanding the noncompete agreement, the defendant/seller had set up a competing business within 300 yards of the plaintiff/buyer's shop and had "the patronage of old personal customers." Opticare, P.C. v. Zimmerman, supra, Superior Court, Docket No. UWY CV 07 5003365.
Similarly, Lampson Lumber Co., Inc. v. Caporale, 140 Conn. 679, 685, 102 A.2d 875 (1954), is frequently cited for the proposition that where a party who has engaged in "a breach of a restrictive covenant, there can be no question that the plaintiff is entitled to an injunction restraining the breach, irrespective of whether the damage he will suffer is great or small." See, e.g., Welles v. O'Connell, 23 Conn.Sup. 335, 337, 183 A.2d 287 (1962) (relying on Lampson and Mattis in granting an injunction for the defendant's violation of a noncompete agreement). Yet in Lampson the court was very clear in distinguishing this breach of restrictive covenant as part and parcel of a transfer of real estate; although the covenant incorporated a noncompete provision, the court observed as significant that it was "concerned here with neither a contract between a vendor and vendee of a business nor one between an employer and employee." Lampson Lumber Co. v. Caporale, supra, 140 Conn. 684.
This court acknowledges that in no insignificant number of cases, the rationale for this per se irreparable harm standard is compelling, hence the Pop Radio court's observation that a "moderated level of proof" may require a more lenient standard where, for example, competition has not yet commenced. POP Radio, LP v. News America Marketing In-Store, Inc., supra, 49 Conn.Sup. 577. In such instances, the "realities of attempting to prove irreparable harm . . . counsel toward the imposition of a more lenient standard which 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." Id. For example, Gartner Group, Inc. v. Mewes, Superior Court, judicial district Stamford-Norwalk at Stamford, Docket No. CV 91 0118332 (January 3, 1992, Mottolese, J.) [ 5 Conn. L. Rptr. 411], is frequently cited for its observation that "a plaintiff's actual injury is not susceptible of determination to its entire extent but is estimable largely by conjecture and prediction . . . The very nature of the defendant's conduct is such that its real impact will not be felt fully for several years in the future." (Citation omitted.) Yet in that case, the defendant was employed by the plaintiff in the business of providing information and technology concerning trends and advancements in the computer field. Id. The defendant was vice-president of marketing, participated in major company decisions, developed over thirty-six hundred business prospects, became aware of all existing and planned future company products, and became familiar with company client based customer lists and marketing strategies. Id.
Given that record and its review of the various cases relating to this issue, this court is thus persuaded by the rationale in Arthur Murray Dance Studios of Cleveland, Inc. v. Witter, 62 Ohio Law Abs. 17, 105 N.E.2d 685, 701-02 (1952), that the "character of the acts or acts alleged to be injurious," and not the fact of a noncompete agreement per se, determines the extent to which irreparable harm can or should be proven.
The court in Arthur Murray Dance Studios of Cleveland, Inc. v. Witter addressed a strikingly similar fact pattern in deciding whether to enjoin violations of noncompete agreements executed between an employee/dance instructor with his employer, Arthur Murray Dance Studios. Extensively cited not only for its picturesque language, the more than fifty-year-old case has been recently described as a "tour de force exposition on the law of employment noncompete agreements." M. Garrison and J. Wendt, "The Evolving Law of Employee Noncompete Agreements: Recent Trends and an Alternative Policy Approach," 45 Am. Bus. L. J. 107, 124 (2008).
See, e.g., "When the defendant . . . dance instructor, waltzed out of the employment of the plaintiff, the Arthur Murry Dance Studios of Cleveland, Inc., into the employment of the Fred Astaire Dancing Studios, the plaintiff waltzed Witter into court . . . At the time Witter took his contentious step, Arthur Murray had a string attached to him — a certain contract prohibiting Witter, after working for Arthur Murray no more, from working for a competitor . . . Now Arthur Murray wants the court to pull that string and yank Witter out of Fred Astaire's pedagogical pavilion." Arthur Murray Dance Studios of Cleveland, Inc. v. Witter, 62 Ohio Law Abs. 17, 105 N.E.2d 685, 687 (1952).
In contributing his remarkable survey of employment noncompete agreements, Judge Hoover explained his rationale: "No layman could realize the legal complication involved in Witter's uncomplicated act. This is not one of those questions on which the legal research cannot find enough to quench his thirst. To the contrary, there is so much authority it drowns him. It is a sea — vast and vacillating, overlapping and bewildering. One can fish out of it any kind of strange support for anything, if he lives so long. This deep and unsettled sea pertaining to an employee's covenant not to compete with his employer after termination of employment is really Seven Seas; and now that the court has sailed them, perhaps it should record those seas so that the next weary traveler may be saved the terrifying time it takes just to find them." Arthur Murray Dance Studios of Cleveland, Inc. v. Witter, supra, 105 N.E.2d 687.
In holding that irreparable injury must be proved in an employee covenant case, as opposed to presumed, the Witter court observed that "the question of whether the complainant will in fact suffer an irreparable injury in the sense here intended must depend for its solution largely upon the character of the act or acts alleged to be injurious." (Emphasis added.) Arthur Murray Dance Studios of Cleveland, Inc. v. Witter, supra, 105 N.E.2d 701-02. The court observed that while "conceding that an irreparable injury is something difficult to measure, usually there must be something more than just fear of injury, and something more than trivial or inconsequential injury." Id., 702. The court further noted that the "[m]ere difficulty in proving injury standing alone does not automatically mean irreparable injury. It does not even mean that there is injury. One must distinguish between something that is difficult to measure only because it is non-existent and something that is difficult to measure though existent." Id., 703.
Given the facts of this case, the court concludes that irreparable harm needs to be proven and may not be presumed. In attempting to establish irreparable harm, the plaintiffs claim that Makowski was privy to confidential trade secrets in the form of Fred Astaire dance manuals, training with respect to its method of teaching and training with respect to retention of student strategies. The plaintiffs also claim that Makowski, as an instructor of ballroom dance, whose primary training came from Fred Astaire, cannot help but impart those confidential skills, training and knowledge acquired from Fred Astaire to their competitor, Steps in Time. Although they assert that Makowski had access to client lists, the plaintiffs concede there is absolutely no evidence that Makowski solicited former students of RKR Studios to the Steps in Time studio. Indeed, the plaintiffs acknowledge they cannot prove that students from the Fred Astaire Studio in Canton have been lost to the Steps in Time Studio as a result of Makowski's employment at that studio. At the same time, the plaintiffs also concede that the dances being taught at Steps in Time are essentially the same dances taught at Fred Astaire. For example, according to Edward Salgado, president and owner of Steps in Time, the Fred Astaire curriculum and the curricula for Arthur Murray and independent studios like Steps in Time each have unique variations on various dances in the form of "twinkles," including "triple twinkles" and "zigzag twinkles," but the basic dance form is common to all.
Moreover, as the Witter court so aptly pointed out in rejecting the "trade secret" theory of irreparable harm in the context of ballroom dance instruction, "[t]here is no presumption that a thing is a secret." Arthur Murray Dance Studios of Cleveland, Inc. v. Witter, supra, 105 N.E.2d 709. "To be a secret in the sense necessary here to obtain equitable relief, it must be known only to the particular employer and those of his employees to whom it is necessary to confide it in order to use it for what it was intended . . . It must be a secret of the particular employer and not a general secret of the trade." Id. See also TGR Enterprises, Inc. v. Kozhev, 167 Ohio App.3d 29, 39, 853 N.E.2d 739, cert. denied, 111 Ohio St.3d 1433, 855 N.E.2d 497 (2006). Essentially similar to the plaintiffs' evidence in the case before this court, Arthur Murray in the Witter court merely asserted in its proof, "I taught [the defendant] my method of teaching," to which the court rhetorically asked, "how does that prove secrecy?" Arthur Murray Dance Studios of Cleveland, Inc. v. Witter, supra, 105 N.E.2d 709. Finally, this claim of confidential trade secrets is further muddied by the fact that the Fred Astaire studios also bring into their studios the same outside dance instruction coaches used by Arthur Murray Studios and the independent studios, including Kristi Mullens, who teaches at Fred Astaire in that capacity but is also the manager at Steps in Time. Notwithstanding the concern expressed by Eric Barckmann, owner of the Fred Astaire franchise in Canton, the plaintiffs offered no evidence that they take any precautions to ensure that confidential trade secrets are not disclosed to non-Fred Astaire dance coaches teaching at their studios.
As such, this court is simply not convinced that this injury, even if it were not so speculative, is irreparable. There is no evidence that any students have flocked to Steps in Time because of any specialized skills acquired by Makowski and unique to Fred Astaire. There is no persuasive evidence that Makowski is utilizing Fred Astaire's retention strategies or, even if she were, that these strategies are any more effective than or distinct from the ones utilized by Steps in Time. Indeed, this court is convinced that the real injury to Fred Astaire is the loss of Makowski herself, whose skill as a dance instructor was described by Haidinger as "an exception to the regular" dance instructor. By all accounts and frankly, most vehemently attested to by the plaintiffs themselves, Makowski is an extraordinarily talented and gifted ballroom dance instructor. This court's perception is further buttressed by the testimony of Jedlicka, the owner of R.KR Studios, who admitted that she refused Makowski permission to transfer to another Fred Astaire studio, in part because the defendant was "very valuable" to her studio. Thus the evidence strikes this court as being a dispute, above and beyond her training as a Fred Astaire instructor, about the loss of Makowski's exceptional abilities to a competitor. See Arthur Murray Dance Studios of Cleveland Inc. v. Witter, 105 N.E.2d 695 (equitable considerations include assessing the real object behind enforcing a noncompete covenant). Based on all of the above, this court cannot find that the plaintiff has established irreparable harm.
For similar reasons, the plaintiffs have failed to establish that they have no adequate remedy at law. The plaintiffs' lack of evidence establishing irreparable harm, such as in the active solicitation of Fred Astaire students, or in presenting credible evidence that the defendant's conduct has the potential for significantly harming the business interests of Fred Astaire, does not mean that they have no adequate remedy at law. Indeed, in their prayer for relief, the plaintiffs specifically seek monetary damages. Courts have found damages award appropriate where a dance instructor has breached an employment contract and noncompete agreement. See, e.g., Arabesque Studios, Inc. v. Academy of Fine Arts International, Inc., 529 S.W.2d 564 (1975). Therefore, the plaintiffs have failed to show that they lack an adequate remedy at law.
C. BALANCING THE EQUITIES
In balancing the equities, this court's finding that the plaintiffs have failed to establish their likelihood of success on the merits should, in itself, be reason to find in favor of the defendant, especially where, as here, the court engaged in an equitable analysis in the first instance with respect to whether the covenant was unreasonably broad in its geographic reach. The court also notes, however, that while as a matter of law, it felt compelled to find that the covenant was supported by adequate consideration as a result of the defendant's continued employment, the circumstances under which the defendant signed the noncompete covenant are also factors in balancing the equities in her favor. As a matter of law, the defendant is an adult and perfectly capable of executing a contract and evaluating and accepting the consequences, including the uncertainty of her employment, if she failed to sign. As a matter of equity, however, the court appreciates the defendant's dilemma as to whether she should sign the agreement. Given these considerations, coupled with the court's finding that the plaintiffs have failed to show irreparable harm or an adequate remedy at law, this court denies the plaintiffs' application for temporary injunction.