MEMORANDUM AND ORDER
Plaintiff Corporate Technologies, Inc. (“CTi”) brings this action against its former employee, Brian Harnett, and his new employer, OnX USA LLC, for breach of contract and tortious interference with advantageous business relationships. Plaintiff alleges that Harnett took confidential information he learned at CTI and has used it to solicit his former CTI clients to transfer their business to OnX in violation of the Non-Disclosure and Non-Solicitation Agreement that was a part of his employment contract with CTI.
Both Plaintiff and Defendants move for preliminary injunctive orders. CTI seeks to enjoin Harnett from doing business with clients he worked with while at CTI. Defendants seek to enjoin Plaintiff from describing Harnett’s Non-Solicitation and
I. BACKGROUND
A. Facts
CTI and OnX are competitors providing Information Technology solutions to corporations and universities, integrating software, hardware, consulting, maintenance, and support. Harnett worked as a salesman for CTI from February 2003 until October 2012, when he left to work for CTI’s competitor, OnX. While working at CTI, Harnett’s five largest clients were EBSCO Publishing, Demandware, Liberty Mutual, Harvard University, and Putnam Investments.
When Harnett joined CTI, he signed a Non-Disclosure and Non-Solicitation Agreement, precluding him from divulging confidential information he learned while employed with CTI and also precluding him from soliciting business from CTI’s customers for one year following his departure from CTI. Specifically, the NonDisclosure undertaking provides,
[t]he Employee shall not at any time ... reveal to any person or entity any Confidential Information or Development or information or development belonging to any third party which the Company is under an obligation to keep confidential, and shall keep secret all matters which have or may be entrusted to him or her and shall not use or attempt to use any Confidential Information or Development ... for his or her own benefit or for the benefit of any third party.
The Non-Solicitation undertaking specifically provides that,
for twelve (12) months following the last date on which the Employee provided Services, the Employee shall not ... directly or indirectly, alone or as a partner, officer, director employee, independent contractor, [etc.] ..., solicit, divert or entice away existing customers or business of the Company.
OnX moved into the New England area in 2011. On August 27, 2012, OnX made Harnett a formal employment offer, which he declined. On October 5th, 2012, OnX made him a new offer, raising its promised compensation and offering to indemnify him fully for any disputes with CTI over breach of the Non-Disclosure and Non-Solicitation Agreement. Harnett signed this employment offer on October 10, 2012, but did not announce his resignation to CTI until about one week later. October 26, 2012 was his last day at CTI and he began work at OnX on the next business day, October 29, 2012. On his last day in the office, Harnett met with CTI’s Human Resources manager and he confirmed that he understood and would comply with his obligations under the Agreement.
When he left CTI, Harnett took about 25 pages of notes from his employment spanning a time period from 2010-2012, which he kept on his personal iPad. He also copied his 2012 consumer price quotes onto a USB memory drive, which he claims he left with CTI, but which CTI contends he took with him. No party has yet uncovered or produced the drive.
On Harnett’s first day at his new job, OnX sent an announcement to just over 100 potential clients notifying them of Harnett’s new position with OnX. This list included Harnett’s eight most active CTI
Four of Harnett’s former clients from his time at CTI responded to OnX’s announcement, and Harnett has met with them to discuss and encourage their business on behalf of OnX. At least one of these contacts has ripened into an agreement between OnX and one of Harnett’s former CTI clients. Through his sales efforts, Harnett has persuaded Demand-ware to enter into a contract with OnX to provide services substantially similar to those it previously sought from CTI. The parties have represented that, although Demandware and OnX have reached an agreement, they have not moved forward with the deal in light of the preliminary injunction entered against the Defendants.
In addition, Harnett has submitted more than 10 requests to various venders for “registered opportunities.” Registered opportunities are exclusive pricing discount arrangements between the vendor and the IT service provider (such as CTI or OnX) so that the service provider can sell the vendor’s products to its client for a discounted price. So far, Harnett’s efforts have resulted in a rare “dual registration” with a vendor called NetApp which Harnett has pursued in his attempt to acquire business from EBSCO Publishing and Demandware.
B. Procedural History
CTI filed this case in state court on December 19, 2012. Defendants removed the action to this court two days later on December 21, 2012. Harnett filed counterclaims for intentional interference with an advantageous business relationship and unfair business practices on January 9, 2013.
Plaintiff filed a motion for preliminary injunction on February 15, 2013. At the motion hearing on March 11, 2013,1 granted Plaintiffs motion orally and directed the parties to confer on the text of a written order in accordance with my rulings. The parties have been unable to reach agreement on two discrete issues: (1) whether Harnett and OnX should be enjoined from doing business with Harvard University entirely, or whether the injunction should be tailored to allow them to do business with discrete independent business units within Harvard as to which Harnett had not previously provided services, and (2) whether Plaintiff should be enjoined from referring to Harnett’s post-employment covenant as a non-competition rather than a non-solicitation agreement. I heard further oral argument on April 3, 2013, directed the parties to file supplementary briefing with respect to the Harvard issue, and directed Defendants to file their own separate preliminary injunction motion with respect to the non-solicitation/non-competition issue. After the parties made supplementary submissions, I heard further argument on May 1, 2013.
II. CTI MOTION FOR PRELIMINARY INJUNCTION
In order to justify a request for the extraordinary remedy of a preliminary injunction, a movant must demonstrate the applicability of four basic factors — (1) likelihood of success on the merits, (2) irreparable harm, (3) that the balance of the hardships between the parties favors injunctive relief, and (4) that the injunction would not harm the public interest. Swar
A. Likelihood of Success
The parties do not dispute that Massachusetts law allows and enforces non-solicitation and non-disclosure agreements. BNY Mellon, N.A. v. Schauer, No. 201001344BLS1,
The Agreement itself provides that Harnett may not “solicit, divert or entice away” CTI’s customers. Harnett’s actions fall squarely within the unambiguous meaning of this clause. While at CTI, Harnett worked with Harvard, EBSCO, Demandware, and Convexity Capital.
Since leaving CTI and joining OnX, he has actively pursued business from these companies, seeking to convince them to do business with OnX. This necessarily involves solieitation-by encouraging the companies to purchase products and services through OnX — as well as enticement-by offering incentives to do so, such as better pricing, purportedly better products and services, and whatever other comparative advantage Harnett, as a salesman, would customarily use to attract clients to his new company. Neither the plain meaning of the word solicit, nor the plain meaning of the word entice requires some kind of first contact. See Webster’s Third New International Dictionary 757 (1993) (“entice ... 2a: to draw on by arousing hope or desire----”); id. at 2169 (“solicit ... 7: to endeavor to obtain by asking or pleading... .”).
Harnett’s actions also fall squarely within the conduct proscribed by Massachusetts courts enforcing non-solicitation agreements. Contrary to Defendants’ contention, Massachusetts courts do not draw a bright-line distinction between those actions following first contact by the client and those following first contact by the employee. See Alexander & Alexander, Inc. v. Danahy,
Although both Getman and Alexander & Alexander do draw some distinction between situations in which a client makes first contact and those in which the employee makes first contact, this distinction is far too narrow to shield Harnett’s conduct from liability. Although Getman mentions that “there is plainly a real difference between an insurance agent initiating a telephone call or meeting with a former client and the client initiating that contact himself,” the court’s concern extended only to any incidental limitations on third parties’ conduct. A non-solicitation agreement does not prevent a company from receiving business initiated by the client with no direct or indirect participation by the individual employee bound by the non-solicitation agreement. See Alexander & Alexander,
Defendants objection that CTI’s interpretation of the language in the agreement would impermissibly convert a narrow non-solicitation agreement into a broad non-competition agreement, Dynamics Research Corp. v. Analytic Sciences Corp.,
Moreover, even if the bright line “first contact” rule Defendants propose found some greater support in the case law— which it does not — it still could not shield Defendants from liability on the breach of contract claim for violation of the nondisclosure provision.
Harnett’s agreement precludes him from “reveal[ing] ... any Confidential Information or Development or information or development belonging to any third party which the Company is under and obligation to keep confidential.” In Massachusetts, courts assess six factors in determining whether information is confidential:
*240 (1) the extent to which the information is known outside of the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken by the employer to guard the secrecy of the information; (4) the value of the information to the employer and to his competitors; (5) the amount of effort or money expended by the employer in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.
Jet Spray Cooler, Inc. v. Crampton,
This case is one in which the record before me makes it “difficult to believe that in [his] time at [CTI], [Harnett] did not pick up any confidential or proprietary information.” Lombard Medical Techs., Inc. v. Johannessen,
These data — especially price quotes— are not generally known outside the business because CTI generates this information over the course of its dealings with its clients. The evidence in the record indicates that the information is not widely known even within the business. Harnett’s supervisor asked him to meet with those CTI employees taking over his various accounts to “transition” each account and provide them with the information Harnett knew about the accounts. Harnett also downloaded the 2012 customer price quotes for his accounts to a USB memory drive, which he contends he provided to CTI. The natural implication of Harnett’s actions is that the price quotes are not widely known and even someone generally familiar with them, like Harnett, needs written backup to manage a refreshed recollection. Otherwise, there would be no need to download the information to provide it to others at CTI. CTI has taken measures to guard the secrecy of this kind of information including by means of the non-disclosure agreements that its sales force must sign. The parties’ submissions are replete with argument and evidence that relationships and momentum are important factors in the IT solutions industry and that the confidential information a sales person has about pricing and future need can be instrumental in cultivating repeat clients, which CTI contends constitutes the majority of its business and in which both the entity parties before me invest substantial resources.
The parties dispute the difficulty with which “the information could be properly acquired or duplicated by others.” Jet Spray Cooler,
CTI is also likely to succeed in showing that Harnett has disclosed such confidential information. In similar circumstances, Judge Gertner, in Lombard Medical, held that disclosure would be inevitable. She observed that “[e]ven if [Defendant] fully intended] to protect [Plaintiffs] confidential information, [he] does not begin at [the Defendant company] with ‘a tabula rasa with respect to [Plaintiffs] ... customers and other significant business information .... ’ Given the similarities among the products and the [individual] defendant’s] positionf] at the companies, I find that disclosure would be inevitable.” Lombard Medical,
Defendants argue that inevitable disclosure is not an appropriate consideration in the likelihood of success analysis, but is reserved for analysis of irreparable harm. See U.S. Elec. Servs., Inc. v. Schmidt, No. 12-cv-10845,
Finally, I find that CTI is likely to succeed on its tortious interference claim against OnX. In order to succeed on a tortious interference claim, a plaintiff must show that
(1) he had a contract with a third party;
(2) the defendant knowingly interfered with that contract [by inhibiting the third party’s or the plaintiffs performance thereof, depending on the theory];
(3) the defendant’s interference, in addition to being intentional, was improper in motive or means; and (4) the plaintiff was harmed by the defendant’s actions.
O’Donnell v. Boggs,
B. Irreparable Harm
CTI will suffer irreparable harm in the absence of an injunction. A showing of irreparable harm requires “an actual, viable, presently existing threat of serious harm” that cannot adequately be remedied through money damages alone. Bio-Imaging Techs., Inc. v. Marchant,
First, Defendants tacitly concede that a. plaintiff can show irreparable harm through inevitable disclosure by arguing— albeit incorrectly — that inevitable disclosure can only be used to show irreparable harm. As discussed above, see supra Section 11(A), it is likely that Harnett will inevitably disclose confidential CTI information and confidential CTI-client information if OnX permits him to-solicit and conduct business with his former CTI clients. See U.S. Elec. Servs.,
It would be extraordinarily difficult, if not impossible, to quantify this potential harm in dollars at this point. As a result, it constitutes irreparable harm meriting preliminary injunctive relief. See Iron Mountain Information Mgmt., Inc. v. Viewpointe Archive Servs., Inc.,
Second, ongoing breaches of a non-solicitation agreement can separately constitute irreparable harm. See Lawson Prods., Inc. v. Anderson, No. 12-cv-2882,
Defendants’ two arguments — that CTI’s harm is (1) purely economic and therefore not irreparable, Tri-Nel Mgmt., Inc. v. Board of Health of Barnstable,
Because Harnett has ignored his non-solicitation obligations between the time he began his employment with OnX and the time I first ordered the preliminary injunction, the 12 months of non-solicitation shall run from the date the preliminary injunction order issued: March 11, 2013. To
However, I will deny CTI’s request that I specifically order Defendants to cease doing business with Demandware. As discussed below, see infra Section 11(D), there is a strong public policy interest in allowing third parties to choose those with whom they do business. The parties represent that although OnX and Demand-ware have reached an agreement, neither has yet acted upon the agreement. However, because Demandware has already consummated its agreement with OnX, any future harm flowing from that contract can be quantified on the basis of the value of the contract and will be compensable in monetary damages. In this setting, I leave it to the parties to consider what remedy — money damages or contempt— might be pursued if OnX and Demandware continue their business.
C. Balance of Hardships
The balance of the hardships weighs decidedly in CTI’s favor. The difficulties and injury CTI will likely suffer if I do not impose the injunction far outweigh any difficulties and injury OnX and Harnett will suffer if I impose the requested injunction.
The requested injunction will only prohibit Harnett from soliciting business from “a fairly tiny slice of the total market. Given this narrow scope, defendants will not suffer severe hardship.” Oxford Global Resources, Inc.,
On the other hand, CTI stands to suffer substantial harm absent injunctive relief. OnX and Harnett have already demonstrated a willingness and intention to pursue the business of Harnett’s former CTI clients. Because Harnett knows significant confidential information underlying CTI’s relationship with those clients, CTI stands to lose substantial investments of time, resources, and money in their relationships with those clients as well as the goodwill and reputation it has built up with clients and in the industry. Absent an injunction, CTI stands to lose irretrievably aspects of its reputation and goodwill as well as the business of some of its most significant clients. Subject to the injunction, OnX stands only to lose the uncertain opportunity to benefit in the next year from business with new clients in the narrow pool of Harnett’s former accounts at CTI. I therefore find that the balance of hardships weighs in favor of issuing the injunction.
The parties dispute whether the injunction should include doing business with Harvard University entirely, or whether it should extend only to those discrete Harvard entities with which Harnett has done business in the past. Specifically, Defendants request a clarification that Harvard University, as listed in the preliminary injunction does not include “any independent sub-entities.” I conclude the balance of hardships weighs in favor of prohibiting Harnett from doing business with Harvard as a whole for the length of the one-year Non-Solicitation Agreement. Although Allen Riñes, librarian for Defendants’ counsel, described Harvard, not inaccurately, as “a decentralized institution [in which] there is no single place where requisitions for goods or services are processed,” and in which several departments
In weighing the balance of hardships, I have further refined the calibration by imposing a bond in the amount of $475,000 on Plaintiff as security against the improvident grant of interlocutory relief. This bond is based on Harnett’s anticipated first-year compensation at OnX, which stands as a proxy for the economic benefit OnX sought to obtain from his services.
D. Public Interest
The public interest element of the preliminary injunction standard is rarely in dispute in cases involving restrictive covenants and analysis “is usually confined to brief platitudes.” Oxford Global Resources, Inc.,
As a matter of long-standing Massachusetts case law, it is “beneficial to the public that contracts for the partial restraint of trade should be upheld to a reasonable extent.” New England Tree Expert Co. v. Russell,
But CTI further requests that I enjoin OnX from doing business with Harnett’s former CTI clients in addition to enjoining Harnett himself from engaging in that business. I decline that request. There is a strong public policy interest in allowing third parties, not bound by the restrictive covenant, to make unencumbered decisions regarding those individuals and entities with whom they would like to do business. See BNY Mellon, N.A. v. Schauer, No. 201001344BLS1,
Thus, the relevant public policy focus for purposes of a preliminary injunction to enforce the provisions of the Non-Solicitation and Non-Disclosure Agreement is the conduct of Harnett himself. I have enjoined Harnett from doing business with his former CTI clients for one year in accordance with his Non-Solicitation Agreement, but I will not enjoin OnX from doing business with those clients so long as Harnett does not participate, directly or indirectly, in those business initiatives. In addition, I will require OnX and Harnett to withdraw the “registered opportunities” that Harnett filed with vendors requesting preferred pricing for sales of products to OnX’s clients. Registered opportunities trade on the goodwill of the individual salesman’s relationship with the vendor and the client. It therefore runs both to Harnett as an individual, and the goodwill he built up between the vendor and client on behalf of CTI and is subject to the non-solicitation agreement.
III. DEFENDANTS’ MOTION FOR PRELIMINARY INJUNCTION
Defendants, in their Opposition to CTI’s motion for preliminary injunction, argue that I should enjoin CTI from characterizing Harnett’s agreement in the marketplace as a non-competition rather than a non-solicitation and non-disclosure agreement during its interactions with common contacts in the IT industry. Harnett formalized this request as a separate motion on April 10, 2013. He predicates his request for preliminary injunctive relief on his counterclaim against CTI for tortious interference with advantageous business relationships. The standard for injunctive relief is the same as discussed above in the analysis of CTI’s requested injunction, see supra Section II. Although Harnett otherwise meets the standard for a preliminary injunction, I will deny his motion because he cannot show any likelihood of irreparable harm prospectively.
Harnett appears likely to succeed on the merits of his claim at least to a limited degree. To succeed on a claim for intentional interference with advantageous business relationship, the complaining party must show: (1) an advantageous business relationship, (2) that the defendant knowingly induced the third party to break off the relationship, (3) the defendant did so by improper motive or means, and (4) harm. See Blackstone v. Cash-man,
CTI’s conduct also falls within the meaning of “improper motive or means.” As discussed above, improper means includes “violation of a statute or common-law precept, e.g., by means of threats, misrepresentation, or defamation.” Cavicchi,
Thus, there is a likelihood that CTI has purposefully and improperly interfered with Harnett’s relationship with vendors by contacting those third parties and falsely stating that Harnett was bound by a non-competition agreement.
This type of past harm appears to have occurred. However, Harnett cannot demonstrate a likelihood of future irreparable harm. CTI has contacted entities with whom Harnett seeks to do business in the future and has accused him of violating a non-competition agreement. These actions likely did serious harm to Harnett’s reputation and goodwill at the time, and that kind of harm is plainly irreparable. See RossSimons of Warwick, Inc. v. Baccarat, Inc.,
The balance of the hardships would otherwise tip decidedly in favor of the injunction. Absent an injunction, Harnett might suffer irreparable harm to his reputation and goodwill if he could show that future mischaracterizations were likely. In the presence of an injunction, CTI would suffer no harm whatsoever, because it is still free to characterize the agreement accurately as a Non-Disclosure and Non-Solicitation Agreement preventing Harnett from disclosing confidential information and preventing him from doing business with his former CTI clients as identified.
It goes without saying that Harnett’s requested injunction would support the existing public policy interest in precluding misrepresentations. See Cavicchi,
IV. CONCLUSION
For the foregoing reasons, I have granted the Plaintiffs motion for preliminary injunction (Dkt. 22) and I deny Defendants’ motion for preliminary injunction (Dkt. 62). The written form of this injunction shall be docketed separately.