Corporate Technologies, Inc. v. Harnett
731 F.3d 6
1st Cir.2013Background
- CTI restricted Harnett with non-solicitation and non-disclosure provisions in an employment agreement.
- Harnett left CTI in Oct 2012 to join OnX and engaged in sales activities with CTI customers for OnX.
- CTI sued in Massachusetts state court alleging breach of contract and tortious interference; case removed to federal court based on diversity.
- District court granted a preliminary injunction prohibiting Harnett from soliciting CTI customers for 12 months and ordered OnX to withdraw Harnett-developed bids.
- Appellants challenge the injunction; the district court’s findings and the likelihood-of-success analysis are reviewed on appeal.
- Court affirms the injunction, upholding CTI’s likelihood of success and the reasonable tailoring of the injunction to the non-solicitation/non-disclosure provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CTI is likely to succeed on the breach of the non-solicitation covenant | CTI contends Harnett violated the non-solicit by pursuing CTI customers for OnX. | Harnett argues initial contact by customers breaks the solicitation chain. | CTI likely to succeed on the merits. |
| Whether there is a per se rule that initial contact defeats solicitation | Initial contact should not automatically negate solicitation. | Initial contact is dispositive and per se negates solicitation. | No per se rule; initial contact is just one factor among many. |
| Whether OnX tortiously interfered with CTI’s rights | OnX’s encouragement aided Harnett’s interference with CTI | No improper means or motive shown. | District court did not err in finding potential tortious interference. |
| Whether the district court properly applied the inevitable-disclosure doctrine | Doctrine supports irreparable harm and non-disclosure relief | Doctrine should not govern non-disclosure injunction in this context | Sufficient record evidence supported likely use of CTI confidential information; harmless to apply. |
Key Cases Cited
- Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12 (1st Cir. 1996) (likelihood-of-success framework and four-factor test for preliminary injunctions)
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (U.S. 1938) (state-law governing substantive decision; federal court applies state law for injunction analysis in diversity cases)
- New Comm Wireless Servs., Inc. v. SprintCom, Inc., 287 F.3d 1 (1st Cir. 2002) (standard of review for preliminary injunctions; deference to district court on factual findings)
- Bessemer Trust Co. v. Branin, 949 N.E.2d 462 (N.Y. 2011) (initial-contact considerations and avoidance of per se rules in non-solicitation contexts)
- Ocean Spray Cran., Inc. v. PepsiCo, Inc., 160 F.3d 58 (1st Cir. 1998) (considerations of public-interest/irreparable-harm in injunctions; not required to address public-interest in this diverse case)