WMI Group, Inc. v. Fox, C.
109 A.3d 740
| Pa. Super. Ct. | 2015Background
- Fox signed a 2004 employment agreement with Wolstenholme Machine, Inc. (WMI) that contained a 12‑month post‑employment non‑compete and stated post‑employment obligations survive termination; the agreement referenced successors and assigns.
- In 2007 and 2011 Fox accepted promotions and signed letters on WM Robots, LLC stationery (different corporate entity) that set new roles and commission terms but contained no non‑compete or reference to the 2004 covenant.
- Fox thereafter became WM Robots’ primary sales rep for Vallon products and cultivated substantial military sales; he resigned in March 2013 and formed IED Detection Systems to represent Vallon and a competitor.
- Appellants (WMI Group, WM Robots, WM Management) sued Fox and IED alleging breach of restrictive covenant, misappropriation of trade secrets under PUTSA, and related claims, and sought a TRO/preliminary injunction to enjoin competition.
- The trial court denied preliminary injunctive relief; the Superior Court affirmed, concluding Appellants failed to show the 2004 covenant bound Fox at the time of resignation and failed to establish a protectable trade secret on the preliminary record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2004 WMI non‑compete continued to bind Fox after his promotions and agreements with WM Robots | The 2004 covenant remained effective; the later 2007 and 2011 promotion letters did not supersede or extinguish it and should be read to incorporate the original covenant | The 2007/2011 documents (different employer entity) lacked a non‑compete and showed a new employment arrangement; no ambiguity to permit parol evidence; no assignable covenant to WM Robots absent explicit assignment | Held: 2004 covenant did not continue to bind Fox as pleaded — promotions and new agreements with a different entity without a contemporaneous covenant or explicit assignment meant the non‑compete was not enforceable as argued |
| Whether parol/extrinsic evidence can be used to show the parties intended to carry the 2004 covenant forward | Parol evidence shows parties intended to incorporate the 2004 covenant into later agreements | Contract language is unambiguous; parol evidence is disallowed absent ambiguity; parties to the later agreements were not identical to the 2004 agreement | Held: Parol evidence inappropriate because no ambiguous language and contracts involved different parties; Restatement §408 inapplicable |
| Whether Appellants’ pricing methodology, currency‑hedging practice, and customer/contract information constitute trade secrets under PUTSA | The combination of negotiated discounts, margins, and unique currency‑hedging procedures is a proprietary compilation giving economic value and warranting injunctive protection | Hedging practices were common knowledge, only Samsi performed hedging, prices and contracts are publicly obtainable (e.g., FOIA); Fox did not possess unique hedging expertise | Held: Appellants failed to prove a trade secret on the preliminary record and waived any argument that the asserted secret was the specific compilation; information was readily ascertainable or not unique |
| Whether Appellants established irreparable harm warranting a preliminary injunction | Loss of supplier/customers and misuse of confidential information would cause irreparable harm | No proven trade secret or enforceable covenant; harm is speculative and compensable by damages | Held: Because Appellants failed to show a likely right to relief (no enforceable covenant or trade secret), they did not satisfy the irreparable‑harm prerequisite for injunctive relief |
Key Cases Cited
- Synthes USA Sales, LLC v. Harrison, 83 A.3d 242 (Pa. Super. 2013) (describes standard and six prerequisites for preliminary injunctions)
- Hess v. Gebhard & Co., 808 A.2d 912 (Pa. 2002) (restrictive covenants construed narrowly; assignment not presumed)
- Capital Bakers v. Townsend, 231 A.2d 292 (Pa. 1967) (consideration and contemporaneous execution principles for supplemental covenants)
- Records Ctr., Inc. v. Comprehensive Mgmt., Inc., 525 A.2d 433 (Pa. Super. 1987) (promotion within company can constitute consideration; contemporaneous execution required)
- Shepherd v. Pittsburgh Glass Works, LLC, 25 A.3d 1233 (Pa. Super. 2011) (if a competitor can obtain information by legitimate means, it is not a trade secret)
- Summit Towne Ctr., Inc. v. Shoe Show of Rocky Mount, Inc., 828 A.2d 995 (Pa. 2003) (appellate deference on preliminary injunctions; limited discussion appropriate on interlocutory review)