Speedmark Transportation, Inc. v. Mui
778 F. Supp. 2d 439
S.D.N.Y.2011Background
- Speedmark sues Mui, Phan, Liu and Everglory alleging breach of their February 19, 2002 employment agreements and related misappropriation, non-solicitation, and non-solicitation of customers covenants.
- Mui, Phan and Liu, long-time Speedmark employees with access to confidential pricing and customer information, resign and form Everglory to compete.
- Everglory commences operations before Nov. 26, 2010, with Mui and Phan soliciting Speedmark personnel and customers.
- Several Speedmark employees resign after Mui and Phan resign; defendants allegedly solicit them to join Everglory.
- Speedmark sought injunctive relief and asserted claims for breach of contract, tortious interference, bad faith, unfair competition, and fiduciary duty.
- Defendants move to dismiss under Rule 12(b)(6) or, alternatively, for summary judgment, arguing New York choice-of-law applies and may void the agreements; motion contested and decision deferred on choice-of-law pending discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the amended complaint plausibly states breach of non-solicitation and related covenants. | Speedmark adequately alleges that Mui, Phan and Liu solicited former employees and customers in violation of their contracts. | Defendants contend pleading is insufficient to show breach and that choice-of-law issues affect enforceability. | Plaintiff plausibly states breach of contract at this stage. |
| Whether Massachusetts law governs the agreements and voids them, requiring dismissal. | New York choice-of-law clause should be enforced or the analysis deferred. | Massachusetts law may void covenants; center-of-gravity analysis is premature. | Choice-of-law analysis premature; dismissal denied awaiting discovery. |
| Whether other claims (tortious interference, unfair competition, fiduciary duty) survive dismissal. | Claims closely track contract claims and discovery will clarify. | Claims depend on contract breaches; may be encompassed by contract claims. | Recognized as viable at this stage; will be revisited after discovery. |
Key Cases Cited
- AllGood Entm't, Inc. v. Dileo Entm't & Touring, Inc., 726 F.Supp.2d 307 (S.D.N.Y. 2010) (sufficient pleading to support breach of contract where confidential information and non-solicitation terms implicated)
- Penrose Computer Marketgroup, Inc. v. Camin, 682 F.Supp.2d 202 (N.D.N.Y. 2010) (non-compete/non-solicit allegations may be sufficient; context matters)
- Medtech Prods. Inc. v. Ranir, LLC, 596 F.Supp.2d 778 (S.D.N.Y. 2008) (breach of contract based on non-compete/non-solicitation allegations)
- American Rock Salt Co. v. Norfolk S. Corp., 180 F.Supp.2d 420 (W.D.N.Y. 2001) (second contract claim based on same facts may proceed where discovery not expanded)