DIETRICH & ASSOCIATES, INC. v. NEISON
2:18-cv-05034
| E.D. Pa. | Jun 26, 2020Background
- Dietrich & Associates (D&A), a Pennsylvania pension-risk-transfer broker, sued three former sellers/consultants—John Neison, his daughter Jill Neison, and Mark Unhoch (via EBL Consulting)—after they left to work for a new competitor, O3/October Three.
- Each defendant signed agreements with 2-year non‑solicit, non‑interfere and non‑disclosure provisions (Jill’s agreement contains an apparent drafting omission).
- After meetings and recruitment in 2017–2018, Unhoch and Jill accepted offers from October Three/O3; John was terminated by D&A and joined O3 shortly thereafter.
- D&A alleges defendants downloaded and retained D&A documents, used referral sources/clients and “boomerang” customers to divert business (claiming ~32 placements diverted and >220 referral clients solicited).
- Claims: breach of contract (restrictive covenants), DTSA/PUTSA misappropriation of trade secrets, CFAA, unfair competition, tortious interference, breach of fiduciary duty (John), and unjust enrichment.
- Court considered motions for summary judgment and denied defendants’ motion except as to unfair competition (dismissed as duplicative of contract claims).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability — John: alleged material breach (health insurance cost) | D&A says John remains bound by his contract | John says D&A materially breached first | Jury issue; continuation of performance precludes John’s as‑of‑now forfeiture defense; question for jury on materiality |
| Enforceability — Jill: drafting omission in non‑solicit clause | D&A: omission was a drafter’s error; clause should be read like others | Jill: clause is nonsensical/ambiguous and should be construed for her | Clause is patently ambiguous; interpretation is fact issue for jury (court will not reform now) |
| Enforceability — Unhoch/EBL: party bound? | D&A: agreement is binding | Unhoch: contends not personally bound because contract was with EBL | Contract enforceable against Unhoch: EBL was unformed when signed; individual liable; question of substance for jury |
| Breach of non‑solicit — boomerang customers | D&A: defendants diverted active or in‑progress D&A deals (including MiniFibers, Hytrol) | Defendants: boomerang clients free to engage new broker; no solicitation | Disputed material facts exist (incl. indirect solicitation); jury must decide whether actions breached covenants |
| Breach of non‑solicit — referral sources/clients | D&A: referral sources are D&A’s primary business channel and fall within "customer/account" | Defendants: referral sources are retained by sponsors, not D&A, so not "customers" | Whether referral sources are "customers/accounts" is ambiguous in context; resolution for jury |
| Non‑interference (John recommending hires) | D&A: John interfered with D&A’s relations by recommending Unhoch and Jill to October Three | John: recommendation was normal hiring participation | Factual dispute on intent and conduct; jury question |
| Trade secrets (DTSA/PUTSA) & retained documents | D&A: certain Due Diligence Reports, Meeting Minutes, Proposals are trade secrets and were misappropriated | Defendants: did not take trade secrets / used lawful materials | Whether documents qualify as trade secrets and whether misappropriation occurred are fact questions for trial |
| CFAA claim (unauthorized access; $5,000 damages threshold) | D&A: defendants accessed and copied protected files causing damages | Defendants: no unauthorized access or sufficient damages | Existence of unauthorized/excessive access and requisite damages disputed; jury question |
| Tort claims — unfair competition, tortious interference, fiduciary duty, unjust enrichment | D&A: tort claims based on disparagement, interference and disloyal conduct beyond contract breaches; unjust enrichment for benefit to O3 | Defendants: gist‑of‑the‑action doctrine bars torts that merely restate contract breaches; some acts privileged | Unfair competition dismissed as duplicative; other tort claims survive summary judgment to the extent they allege conduct beyond contract breaches (intent and privilege remain jury issues); unjust enrichment allowed but barred if valid contract governs recovery |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Anderson v. Liberty Lobby, 477 U.S. 242 (genuine dispute / reasonable jury standard)
- Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135 (movant’s burden on summary judgment)
- Socko v. Mid‑Atlantic Sys. of CPA, Inc., 126 A.3d 1266 (Pennsylvania scrutiny of restrictive covenants)
- Bohler‑Uddeholm Am., Inc. v. Ellwood Group, Inc., 247 F.3d 79 (gist‑of‑the‑action doctrine explanation)
- Hullett v. Towers, Perrin, Forster & Crosby, 38 F.3d 107 (contract ambiguity requires contextual/extrinsic evidence)
- BRJM, LLC v. Output Sys., Inc., 917 A.2d 605 (contracts by individuals for unformed entities enforceable)