Opinion
J. A25035/15 No. 461 EDA 2015
11-04-2015
SOFTMART COMMERCIAL SERVICES INC. v. JACQUELYN MARIANI AND ARRAYA SOLUTIONS, INC., Appellant
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order January 13, 2015
In the Court of Common Pleas of Chester County
Civil Division No(s).: 2014-07615-CT
BEFORE: DONOHUE, MUNDY, and FITZGERALD, JJ. MEMORANDUM BY FITZGERALD, J.:
Former Justice specially assigned to the Superior Court.
Appellant, Jacquelyn Mariani, appeals from the order entered in the Chester County Court of Common Pleas that granted the petition of Appellee, Softmart Commercial Services, Inc., for a preliminary injunction. Appellant contends the court misconstrued the restrictive covenant and the record did not justify injunctive relief. We affirm.
Arraya Solutions, Inc. ("Arraya"), is not a party to this appeal.
As this Court recently observed:
Our affirmance is based on the preliminary nature of this record. It is not a holding on the ultimate merits of [the] claims, which can be developed more fully prior to trial. . . .
WMI Grp., Inc. v. Fox , 109 A.3d 740, 743 n.2 (Pa. Super. 2015) (citation omitted).It is somewhat embarrassing to an appellate court to discuss the reasons for or against a preliminary decree, because generally in such an issue we are not in full possession of the case either as to the law or testimony—hence our almost invariable rule is to simply affirm the decree, or if we reverse it to give only a brief outline of our reasons, reserving further discussion until appeal, should there be one, from final judgment or decree in law or equity.
We adopt the facts as set forth by the trial court's opinion. See Trial Ct. Op., 4/21/15, at 1-4. Appellant timely appealed and timely filed a court-ordered Pa.R.A.P. 1925(b) statement.
Appellee did not raise a claim under the Pennsylvania Uniform Trade Secrets Act ("PUTSA"), 12 Pa.C.S. §§ 5301-5308. See also 12 Pa.C.S. § 5308 cmt.
Appellee also moved for counsel fees and costs, averring fourteen timekeepers, over 1,300 billable hours, and a noteworthy almost half-million dollars in fees were required to obtain preliminary injunctive relief. See Appellant's Answer to Appellee's Pet. for Att'ys' Fees and Costs, 1/30/15; cf. American Intellectual Property Law Association, Report of the Economic Survey 36 (2013) (listing median fees for trade secret misappropriation suit).
Appellant raises the following six issues:
1. Did the Trial Court err by concluding that the Restrictive Covenant Agreement ("RCA") is enforceable when it was not ancillary to an employment contract; when it was not supported by adequate consideration; when it was not reasonably limited in time and geographic territory; and when it was not necessary to protect a legitimate business interest of Softmart Commercial Services, Inc. ("Appellee") without imposing an undue hardship on Appellant?
2. Did the Trial Court err by concluding that Appellee would likely succeed on the merits of its claims against Appellant for breach of the RCA when there was no evidence of harm (e.g., lost customers, lost partners, lost revenues, or any other identifiable harm) to Appellee which is an essential element of any cause of action for breach of contract?
3. Did the Trial Court err by giving the RCA as expansive a reading as possible instead of a more narrow reading against Appellee, especially when any competition between Appellant's new employer, Arraya Solutions, Inc. ("Arraya"), and Appellee was limited at most because no witness could point to a single instance in which Arraya and Appellee competed for a client or a project and not one witness could point to a single customer that Appellee lost as a result of Appellant's employment with Arraya?
4. Did the Trial Court err by concluding that Appellant's employment at Arraya was unlawful or wrongful conduct under the RCA when there was no evidence that she utilized or was in physical possession of any confidential or proprietary information of Appellee after she made all of her phones and computers available to Appellee's forensic consultant, who found no wiping utilities used, no confidential information taken, no documents printed or downloaded, no spoliation of evidence, no theft of trade secrets, and no transfer of any information to any third parties?
5. Did the Trial Court err by concluding that a preliminary injunction would restore the status quo existing prior to Appellant's departure from Appellee when the preliminary injunction restricting her from working in eastern Pennsylvania did not restore the status quo but disrupted the status quo, which had her working for seven months in Delaware and Chester counties for Arraya without any harm to Appellee?
6. Did the Trial Court err by concluding that the harm to Appellee outweighed the harm to Appellant if a preliminary injunction were not issued when Appellant was forced out of her local region into a smaller commission market with significantly reduced income and new obstacles for travel
and business development, especially where the evidence suggested an abuse by Appellee of its superior bargaining power and a callous disregard for Appellant's interest in pursuing her chosen occupation, neither of which serves the public interest?Appellant's Brief at 7-9.
We summarize Appellant's arguments in support of her first four issues. In support of her first issue, Appellant claims the RCA is not enforceable for four reasons. First, Appellant asserts that when she accepted the job offer, no one mentioned a non-compete agreement. Second, she contends she did not receive adequate consideration for the RCA, as she signed it five years after starting her job. Third, Appellant argues that the geographic restriction was unclear. Lastly, she insists the RCA was unnecessary to protect Appellee's business interest given the existence of a non-solicitation clause.
Appellee, however, counters that Appellant is restricted from contacting customers within her assigned regions of eastern Pennsylvania and Georgia. See Appellee's Brief at 29; N.T. Prelim. Inj. Hr'g, 1/9/15, at 121-22.
Regarding her second issue, Appellant reasons Appellee failed to establish harm and thus could not recover for its breach of contract claim. For her third issue, Appellant maintains the court erred by holding Arraya and Appellee are competitors. With respect to Appellant's fourth issue, she maintains that she never used or possessed any of Appellee's trade secrets. She insists that Appellee adduced no evidence that she possessed any confidential information on any of her phones and computers. For these four issues, we hold Appellant is due no relief.
Our scope and standard of review was recently set forth as follows:
Our scope of review is plenary.
Our review of a trial court's order granting or denying preliminary injunctive relief is highly deferential. This highly deferential standard of review states that in reviewing the grant or denial of a preliminary injunction, an appellate court is directed to examine the record to determine if there were any apparently reasonable grounds for the action of the court below. . . .
We do not inquire into the merits of the controversy. Only if it is plain that no grounds exist to support the decree or that the rule of law relied upon was palpably erroneous or misapplied will we interfere with the decision of the trial court.
A trial court has apparently reasonable grounds for granting the extraordinary remedy of preliminary injunctive relief if it properly finds that all of the essential prerequisites are satisfied.
There are six essential prerequisites that a party must establish prior to obtaining preliminary injunctive relief. The party must show: 1) "that the injunction is necessary to prevent immediate and irreparable harm that cannot be adequately compensated by damages"; 2) "that greater injury would result from refusing an injunction than from granting it, and, concomitantly, that issuance of an injunction will not substantially harm other interested parties in the proceedings"; 3) "that a preliminary injunction will properly restore the parties to their status as it existed immediately prior to the alleged wrongful conduct"; 4) "that the activity it seeks to restrain is actionable, that its
right to relief is clear, and that the wrong is manifest, or, in other words, must show that it is likely to prevail on the merits"; 5) "that the injunction it seeks is reasonably suited to abate the offending activity"; and, 6) "that a preliminary injunction will not adversely affect the public interest." The burden is on the party who requested preliminary injunctive relief.
A decision addressing a request for a preliminary injunction thus requires extensive fact-finding by the trial court because the moving party must establish it is likely to prevail on the merits. If the moving party's right to relief is unclear, then a preliminary injunction should not issue. . . .
To establish a clear right to relief on a claim for breach of restrictive covenants of an employment contract, a party must, inter alia, demonstrate the following:
In Pennsylvania, restrictive covenants are enforceable if they are incident to an employment relationship between the parties; the restrictions imposed by the covenant are reasonably necessary for the protection of the employer; and the restrictions imposed are reasonably limited in duration and geographic extent. Our law permits equitable enforcement of employee covenants not to compete only so far as reasonably necessary for the protection of the employer. However, restrictive covenants are not favored in Pennsylvania and have been historically viewed as a trade restraint that prevents a former employee from earning a living.
Pennsylvania cases have recognized that trade secrets of an employer, customer goodwill and specialized training and skills acquired from the employer are all legitimate interests protectable through a general restrictive covenant. In essence, the court must examine and balance the employer's legitimate business interest, the individual's right to work, the public's right to unrestrained
competition, and the right to contract in determining whether to enforce a restrictive covenant.
In construing a restrictive covenant, courts do not assume that a contract's language was chosen carelessly, nor do they assume that the parties were ignorant of the meaning of the language they employed. When a writing is clear and unequivocal, its meaning must be determined by its contents alone. It is not the function of this Court to re-write it, or to give it a construction in conflict with the accepted and plain meaning of the language used.
Only where a contract's language is ambiguous may extrinsic or parol evidence be considered to determine the intent of the parties. A contract contains an ambiguity if it is reasonably susceptible of different constructions and capable of being understood in more than one sense. This question, however, is not resolved in a vacuum. Instead, contractual terms are ambiguous if they are subject to more than one reasonable interpretation when applied to a particular set of facts. In the absence of an ambiguity, the plain meaning of the agreement will be enforced. The meaning of an unambiguous written instrument presents a question of law for resolution by the court. . . .
Furthermore, with respect to restrictive covenants:
Fox , 109 A.3d at 747-49 (citations omitted).Courts have consistently held that the taking of employment is sufficient consideration for a covenant not to compete. An employee's promotion to a new position within the company also constitutes sufficient consideration.
As noted above, a restrictive covenant protects an employer's trade secrets. For a non-PUTSA claim,
Appellee elected not to raise a claim under PUTSA, which defines "trade secret" as follows:
"Trade secret." Information, including a formula, drawing, pattern, compilation including a customer list, program, device, method, technique or process that:
12 Pa.C.S. § 5302.(1) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
[t]he very concept of a "trade secret" is itself "somewhat nebulous." Therefore, the decision of whether a particular compilation of customer data deserves protection as a trade secret necessarily must be made on a case-by-case basis. Our law is well settled that, to be classified as a trade secret, information must be an employer's actual secret and not comprise mere "general trade practices." Furthermore, the information must be of peculiar importance to the employer's business before the law will protect it as a trade secret.Iron Age Corp. v. Dvorak , 880 A.2d 657, 664 (Pa. Super. 2005) (citations omitted).
[O]ur Supreme Court has held that, under certain circumstances, customer lists and customer data may be entitled to protection as trade secrets. Furthermore, a trade secret may include compiled information which gives one business an opportunity to obtain an advantage over
competitors. Nevertheless, customer lists are at the very periphery of the law of unfair competition. There is no legal incentive to protect the compilation of such lists because they are developed in the normal course of business anyway.Id. at 663 (citations and quotation marks omitted). Even if such a list is not entitled to protection as a trade secret, "the law will also prevent an employe[e] from using customer contacts as well as confidential customer information to his own advantage by soliciting the customers of his former employer." Morgan's Home Equipment Corp. v. Martucci , 136 A.2d 838, 843 (Pa. 1957) (footnote omitted).
After careful review of the parties' briefs, the record, and the reasoned decision of the Honorable Edward Griffith, we affirm Appellant's first four issues based on the trial court's decision. See Trial Ct. Op. at 5-14 (holding (1) RCA executed in connection with Appellant's promotion within company; (2) Appellant's promotion resulted in increased compensation; (3) RCA limited to eastern Pennsylvania and Georgia; (4) record substantiates multiple solicitations such that enforcement of RCA reasonably necessary to protect Appellee; and (5) grounds exist supporting determination of harm to Appellee and that Appellee is competitor to Arraya). We need not resolve whether the identity of Appellee's customers is a trade secret, see Dvorak , 880 A.2d at 663, as Appellant admitted to soliciting those customers, which both the RCA and the law forbids. See Martucci , 136 A.2d at 843; see also In re Strahsmeier , 54 A.3d 359, 364 n.17 (Pa. Super. 2012) ("As an appellate court, we may uphold a decision of the trial court if there is any proper basis for the result reached; thus we are not constrained to affirm on the grounds relied upon by the trial court." (citation omitted)).
As noted above, Appellee maintains Appellant's regions are limited to eastern Pennsylvania and Georgia. See Appellee's Brief at 29; N.T. Prelim. Inj. Hr'g, 1/9/15, at 121-22.
For her fifth issue, we reproduce the entirety of Appellant's argument below:
The preliminary injunction did not restore the status quo existing prior to Appellant's departure from Appellee because Appellant had been working in Delaware and Chester counties for Arraya without any harm to Appellee for over seven months. To the contrary, the preliminary injunction restricting her from working in these counties could not restore the status quo but only disrupt it.Appellant's Brief at 36. Appellant is not due any relief.
As a prefatory matter, Appellant's one-paragraph argument is devoid of any legal analysis. Id. Appellant has not explained how or why the trial court erred. "It is the appellant who has the burden of establishing his entitlement to relief by showing that the ruling of the trial court is erroneous under the evidence or the law. Where the appellant has failed to cite any authority in support of a contention, the claim is waived." Bunt v. Pension Mortg. Assocs., Inc., 666 A.2d 1091, 1095 (Pa. Super. 1995) (citations omitted); accord Korn v. Epstein , 727 A.2d 1130, 1135 (Pa. Super. 1999). Because Appellant has cited no legal authority, she has waived this claim on appeal. See Bunt , 666 A.2d at 1095.
Regardless, we would have discerned no trial court error. As our Supreme Court explained, the "status quo to be maintained by a preliminary injunction is the last actual, peaceable and lawful noncontested status which preceded the pending controversy." Valley Forge Historical Soc'y v. Washington Mem'l Chapel , 426 A.2d 1123, 1129 (Pa. 1981) (citation omitted). As the trial court observed, the status quo is prior to Appellant's unlawful actions. See id. Accordingly, we would not have granted Appellant relief.
Appellant lastly argues that the harm from the preliminary injunction outweighed the harm to Appellee from not granting a preliminary injunction:
Appellant was forced out of her local region of Chester and Delaware Counties into a smaller commission market with significantly reduced income and new obstacles for travel and business development. By contrast, Appellee's claims of greater injury are merely speculative harms about its reputation and the potential loss of goodwill and future business. These harms pale in comparison to the harm Appellant faces. Thus, by granting the preliminary injunction, the Trial Court rewarded the abuse by Appellee of its superior bargaining power and its callous disregard for Appellant's interest in pursuing her chosen occupation despite suffering no identifiable harm, neither of which served the public interest.Appellant's Brief at 36-37 (citations omitted). As with Appellant's fifth issue, her bald allegations are not supported by legal analysis and thus she has waived them on appeal. See Bunt , 666 A.2d at 1095.
In any event, in Ogontz Controls Co. v. Pirkle , 499 A.2d 593 (Pa. Super. 1985), this Court addressed whether "the lower court incorrectly found that greater harm would be done by refusing the preliminary injunction than by granting it." Id. at 597. In resolving this issue, the Pirkle Court referenced
cases in which a former employer alleges that his former employee has violated an anti-competition provision of an employment contract. In those cases, the defendant can often claim great harm, because a preliminary injunction puts him out of business or out of a job. However, preliminary injunctions have been approved in those situations due to the very nature of the agreed upon restriction, to prevent the way in which the former employee goes about making his or her livelihood after leaving the former employer.Id. (citations omitted).
Instantly, Appellant noted she would be inconvenienced and earn less income if she complied with the injunction—less impactful than having no business or no job. Cf. id. While we do not minimize the gravity of the harm to Appellant, we discern no basis—particularly given this preliminary record, cf. Fox , 109 A.3d at 743 n.2—to conclude the trial court abused its discretion by improperly weighing the harms attendant to a preliminary injunction. Accordingly, after careful consideration of the record, grounds exist for the trial court's ruling and thus we discern no abuse of discretion. See id. at 748.
It bears repeating that "our standard of review for preliminary injunctive relief is highly deferential" and thus, Appellant has "an opportunity to develop the record further at trial." See Fox , 109 A.3d at 753 n.2.
Order affirmed. Judgment Entered. /s/_________
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/4/2015
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