ARDURRA GROUP, INC. v. GERRITY
2:19-cv-03238
E.D. Pa.Dec 9, 2019Background
- Ardurra (formerly King Engineering) sold Ardurra Group in 2017; Gerrity (former CEO and Head of Sales) participated in the sale, received $4,330,854, and signed a Purchase Agreement with a four‑year non‑compete/non‑solicit and an Employee Agreement containing confidentiality and a one‑year post‑employment non‑compete/non‑solicit.
- Gerrity’s employment was terminated March 28, 2019; he began working for Bernhard Capital (June/July 2019) to help build an infrastructure fund that invests in distressed utilities. Bernhard also operates a separate service fund of portfolio companies that provide engineering, water/wastewater, disaster recovery, and construction management services that overlap Ardurra’s business.
- Ardurra presented evidence (including forwarded Bernhard emails to Gerrity’s Ardurra account and use of his Ardurra email for Bernhard matters) suggesting potential crossover between the infrastructure fund and Bernhard’s service/portfolio companies and a risk of solicitation or indirect benefit to competitors.
- Ardurra sued July 25, 2019 for breach of contract and tortious interference and moved for a preliminary injunction to enjoin Gerrity from competing, soliciting clients, and using confidential information.
- After an August 8, 2019 hearing, the court granted a preliminary injunction enjoining Gerrity from working in breach of the Purchase and Employee Agreements; the injunction was later broadened (Sept. 9) to bar Gerrity from employment by or performing work for Bernhard Capital and its portfolio/related companies and funds.
- The court found Ardurra likely to succeed on the merits (Gerrity likely violated the agreements), that Ardurra would suffer irreparable harm (loss of customers/confidential information), that the equities favor Ardurra, and that the injunction is in the public interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gerrity’s work at Bernhard Capital violates the Purchase Agreement/Employee Agreement | Gerrity’s role (even in an infrastructure fund) assists or indirectly benefits Bernhard’s portfolio companies that compete with Ardurra | Gerrity’s work is financial/investment focused and separate from the service fund; no operational control or direction to portfolio companies | Court: Likely breach — role plausibly assists competitors and may funnel or indirectly benefit portfolio companies |
| Enforceability of the non‑competes (time/territory/legitimate interest) | Covenants are reasonable, supported by sale consideration, and protect legitimate business interests | Covenants are overbroad (worldwide) and unnecessary because Gerrity moved to the investment realm | Court: Covenants enforceable at least as narrowly construed to relevant regions/time (Purchase Agreement four years); protect Ardurra’s legitimate interests |
| Irreparable harm and balance of equities | Ardurra will lose actual and prospective customers and confidential competitive advantages absent an injunction | Injunction would harm Gerrity by preventing employment; disproportionate given his new role | Court: Ardurra would suffer irreparable harm; equities favor Ardurra (Gerrity received substantial sale proceeds tied to restrictions) |
| Geographic scope (worldwide vs. limited regions) | Enforcement should cover relevant regions where Ardurra operates (northeast/southeast/Texas–Carolinas) | Worldwide language is overbroad and unenforceable | Court: Construed narrowly; enforces covenants as to relevant regions implicated by Bernhard’s activities; rejected wholesale «worldwide» challenge for purposes of injunction |
Key Cases Cited
- Groupe SEB USA, Inc. v. Euro‑Pro Operating LLC, 774 F.3d 192 (3d Cir. 2014) (articulating preliminary injunction standard in Third Circuit)
- Winter v. Nat’l Res. Def. Council, Inc., 555 U.S. 7 (2008) (Supreme Court’s four‑factor injunction framework)
- Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102 (3d Cir. 2010) (upholding temporary restrictions where necessary to prevent irreparable harm)
- Volunteer Firemen’s Ins. Servs., Inc. v. Cigna Prop. & Cas. Agency, 693 A.2d 1330 (Pa. Super. Ct. 1997) (factors for enforceability of restrictive covenants)
- Kellam Energy, Inc. v. Duncan, 668 F. Supp. 861 (D. Del. 1987) (non‑compete covenants must be positively expressed and are narrowly construed)