Opinion
HHDCV166068213S
12-27-2016
Visonpoint, LLC v. Marcus Gish
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE PLAINTIFF'S MOTION FOR TEMPORARY INJUNCTION
A. Susan Peck, Judge
The plaintiff, VisionPoint, LLC, seeks a temporary injunction to enforce a covenant not to compete contained in a written " Confidentiality and Restrictive Covenant Agreement" (Restrictive Covenant Agreement), entered into with its former employee, the defendant, Marcus Gish on December 20, 2012. Gish was employed by the plaintiff from November 2006, until March 17, 2016, when he abruptly resigned his employment to take a job with Red Thread Spaces, LLC, (Red Thread), a much larger competitor of the plaintiff.
The underlying verified complaint is set forth in six counts as follows: breach of contract (count one), promissory estoppel (count two), tortious interference with contract (count three), tortious interference with business relations (count four), violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., and violation of the Connecticut Trade Secrets Act, General Statutes § 35-53. On May 12, 2016, the plaintiff filed an application for temporary injunction, pursuant to General Statutes § 52-471, now before the court. The application seeks to enjoin Gish as follows:
1. for a period of twelve (12) months from his March 17, 2016 termination of employment from VisionPoint from engaging in any business with any person, firm, or business in which his duties would be the same or similar to those performed while he was employed by VisionPoint or engaging in a position in which he would likely be called upon or use the trade secrets or other confidential information of VisionPoint and where his duties would be performed in whole or in part, in the area within a fifty (50) mile radius from VisionPoint's office located at 152 Rockwell Road, Newington, Connecticut.
2. for a period of twelve (12) months from his March 17, 2016 termination of employment with VisionPoint from directly or indirectly soliciting, accepting the business of, marketing to or providing products or services that are competitive with those offered by VisionPoint to any VisionPoint customer (defined as any business who was a customer of VisionPoint at any time during the twelve months preceding his termination of employment or to whom VisionPoint submitted a bid for work with his assistance or involvement at any time during the twelve months preceding his termination of employment.
3. for a period of twelve (12) months from his March 17, 2016 termination of employment with VisionPoint from soliciting for employment or retention as a consultant any person who is or was an employee or consultant of VisionPoint at any time during the twelve months preceding his termination of employment.
4. from using or disclosing any of Plaintiff's trade secrets, confidential information or business opportunities.
On December 20, 2012, in consideration of entering into the Restrictive Covenant Agreement, the plaintiff paid the defendant $5,000.
Paragraph 4 of the Restrictive Covenant Agreement provides, in pertinent part, as follows:
Employee recognizes and agrees that, in the competitive business in which VisionPoint is engaged, personal contacts and relationships are of primary importance in securing new business opportunities. Therefore, without limiting any other restrictive covenant or obligation to which Employee may be subject under applicable law, Employee agrees:
a. that while employed with VisionPoint and for twelve (12) months after the voluntary or involuntary termination of your employment with VisionPoint, for any reason or no reason at all, you shall not directly or indirectly by yourself or with any person, firm or business, engage in any business in which your duties would be the same or similar to those performed while you were employed by VisionPoint or engage in a position in which you would likely call upon or use the trade secrets or other confidential business information of VisionPoint, and where your duties would be performed, in whole or in part, in the area within a fifty (50) mile radius from the VisionPoint office(s) in which you worked during the twelve months preceding your employment termination;
b. that during the term of your employment and twelve (12) months thereafter, you shall not directly or indirectly solicit, accept the business of, market to or provide products or services that are competitive with those offered by VisionPoint to any VisionPoint customer (defined as any business who was a customer of VisionPoint at any time during the twelve months preceding your termination of employment or to whom VisionPoint submitted a bid for work with your assistance or involvement at any time during the twelve months preceding your termination of employment).
Further, Paragraph 7 of the Restrictive Covenant Agreement, in pertinent part, provides as follows:
Employee acknowledges and recognizes that a breach or threatened breach of any of the covenants contained in this agreement cannot be reasonably or adequately compensated in damages in an action at law and that irreparable injury or damage will result to the business of VisionPoint in the event of the breach or threatened breach of any covenant contained in this Agreement. Therefore, Employee agrees that . . . VisionPoint will be entitled to injunctive and equitable relief to restrain the violation or threatened violation of the terms and covenants contained in this agreement.Plaintiff's Exhibit 7.
In its memorandum in support of its application for temporary injunction, the plaintiff contends that the defendant has violated the Restrictive Covenant Agreement in that, on March 21, 2016, four days after his resignation from VisionPoint, the defendant went to work for Red Thread, a direct competitor of VisionPoint, at a location in East Hartford, well within fifty miles of VisionPoint's Newington offices where the defendant worked, and has, since that time, performed a job or jobs whose duties, directly or indirectly, are the same or similar to those performed by him while employed by VisionPoint. The plaintiff further argues that the restraint imposed by the covenant to compete is reasonable and fair; that it is likely to prevail on at least one of its six counts against the defendant; and, that the defendant's breach of the covenant not to compete contained in this agreement constitutes irreparable harm. Finally, the plaintiff argues that the length of time of the temporary injunction should be extended by the period of the violation of the agreement or the period of the litigation.
In opposition to the motion, the defendant counters that, in his current position he does not perform any work for any customer of VisionPoint, has no role in sales or marketing, has not solicited business from VisionPoint's customers, uses none of VisionPoint's business processes or other confidential information, follows Red Thread's own pre-existing procedures and policies rather than use those of VisionPoint, and manages projects that are solely for audio visual equipment being installed at locations more than 50 miles away from VisionPoint's only offices. The defendant also states that he splits his time between Red Thread's offices in Wilmington, Massachusetts, the primary location of Red Thread's AV group, and East Hartford, Connecticut, which is closer to his home in Portland, Connecticut. He further argues that VisionPoint has no protectable interest in where he sits while performing work for Red Thread customers beyond 50 miles of VisionPoint's offices that are not VisionPoint customers; and that, under Connecticut law, an agreement imposing such a restriction is unenforceable. Finally, he argues that VisionPoint cannot demonstrate irreparable harm, and therefore, cannot meet the standard for a temporary injunction.
An evidentiary hearing was held on the motion on July 28, 2016. The witnesses at the hearing were Zofia and Kevin Lavoie, the managing members of the plaintiff, Jennifer Dunphy, a seven-year employee of the plaintiff as office manager and customer service manager, and the defendant.
I
FINDINGS OF FACT
Based on all the evidence presented, the court finds the following facts. The plaintiff is an audio and visual (AV) communications company that provides AV equipment and related services to customers primarily in Connecticut and Massachusetts. It hired the defendant in November 2006 as an installer. The defendant had no prior AV experience. He previously worked as a warehouseman performing duties related to shipping, receiving and inventory. Over the nine years of his employment with VisionPoint, the plaintiff expended over $30,000 in training the defendant both on the job and with third parties, providing him with numerous technical and training certification courses relating to work in the AV industry. At the time of his resignation, his title was Installation Supervisor/Lead with annual compensation in excess of $80,000 per year, not including company 401K contributions and profit sharing. The defendant's duties included all aspects of the AV installation processes, including custom design, installation and client training.
On Thursday, March 17, 2016, the defendant met with Zofia Lavoie for the purpose of reviewing his 2015 performance and 2016 compensation. Prior to the meeting, the defendant was paid a $6,000 bonus for 2015. The defendant was angry at the meeting and stated that he thought he should be making $10,000 more per year. Zofia Lavoie told him she wanted to think about it and discuss it with her husband and business partner, Kevin Lavoie who was out of the office. Shortly after the meeting ended, the defendant came back into Zofia Lavoie's office, threw his company keys and credit cards on her desk and said, " I'm done, " and left. The following Monday, on March 21, 2016, the defendant began employment with Red Thread. His job title at Red Thread was Audio Visual Project Manager, at its East Hartford location. The defendant accepted the job with Red Thread before March 17, 2016, when he was scheduled to meet with Zofia Lavoie for his salary review.
The defendant is 31 years old and lives in Portland, Connecticut. He initially inquired about a job at Red Thread installing products onsite to check out his value in the AV industry. However, he was really interested in a career path in project management. He interviewed for a project management position, which he did not believe would violate the agreement. He disclosed the Restrictive Covenant Agreement during the interview. He believed that only a " field and installation" position would violate the agreement so the discussion about the agreement was brief. He was hired at Red Thread as a project manager for the AV division in East Hartford. He did not provide Red Thread with a copy of the agreement before starting working there.
At Red Thread, although he initially reported to a supervisor at the East Hartford location and worked on at least two projects in Connecticut, after receiving correspondence from the plaintiff stating that it believed that the defendant was in violation of his post-termination restrictive covenants, in mid-April 2016, the defendant was given a new title of AV Remote Project Manager and reassigned to a supervisor at Red Thread's Wilmington, Massachusetts location. He is the only employee at Red Thread with that title.
East Hartford is within fifty miles of VisionPoint's Newington office. Red Thread's East Hartford location performs AV work. Currently, he does not work with anyone directly who is located in the East Hartford office. He sometimes works in East Hartford, responding to emails, making phone calls and making sure his computer is synced with the Red Thread server. He spends a day in East Hartford each week. Otherwise, he is in Wilmington or working onsite. He works more in East Hartford than in Wilmington. At his job at Red Thread, the defendant manages several projects. Since April 2016, overall, the defendant spends 80% of his time working in Wilmington, Massachusetts or onsite at various projects, and 20% of his time working out of the Red Thread location in East Hartford. All his current work is on projects outside of a fifty (50) mile radius of the plaintiff's Newington offices.
The defendant has not deliberately used VisionPoint's workflow and processes since joining Red Thread although the training and experience he gained at VisionPoint no doubt informs his work at Red Thread. Otherwise, it is not clear why Red Thread would have hired him. The project manager job for which the defendant was hired required two years of project management or related experience. The defendant did not have project management experience but obviously had related AV experience gained at VisionPoint. Red Thread is a much larger business but there are similarities in the way Red Thread and VisionPoint conduct their AV business. The defendant has never discussed confidential information learned at VisionPoint, does not work for customers who he knew were also VisionPoint customers and has not interacted with VisionPoint customers while at Red Thread. Curiously, the defendant's LinkedIn account does not reflect his employment with Red Thread. Some VisionPoint clients have looked at his LinkedIn page since he began his employment with Red Thread, but he has not otherwise interacted with VisionPoint customers. At some point he edited his LinkedIn page to reflect that his employment with VisionPoint ended but it is not clear when that change was made.
Both the job at VisionPoint and the one at Red Thread involve onsite project planning and managing installations for similar customers in the same industry. In addition, the AV Project Manager job and the AV Remote Project Manager job at Red Thread involve the same or similar duties. The defendant does scheduling and remote management at Red Thread and administrative work preparing the sites for installations. He does no programming. He did programming and more physical work at VisionPoint. He supervises the installations but has not been involved in physical work. His job title at VisionPoint was " installation supervisor/lead." He has interpreted the Restrictive Covenant Agreement to mean that he could not do the same or similar tasks within a fifty-mile radius of VisionPoint. At VisionPoint, the defendant did ninety-five percent (95%) of VisionPoint's programming work, but programming was only one-third or thirty percent (30%) of the total work he was doing at VisionPoint at the time that he left. The remainder of his job at VisionPoint was as an Installation Supervisor/Lead. Many of the tasks that the defendant performs for Red Thread as AV Remote Project Manager involve the same or similar tasks involving planning and supervising project installations and related tasks as he did at VisionPoint. In fact, the defendant spends fifteen to twenty (15% to 20%) of his time doing the same things he did at VisionPoint.
The $5,000 that the defendant received for entering into the Restrictive Covenant Agreement was higher at the time than any other bonus he received at VisionPoint. VisionPoint created the Restrictive Covenant Agreement after losing several employees in 2012 to BKM, a company that also provided AV services to Connecticut companies. BKM was subsequently purchased by Red Thread.
II
LEGAL PRINCIPLES
A.
General Principles Governing Temporary Injunctions
" The principal purpose of a temporary injunction is to preserve the status quo until the rights of the parties can be finally determined after a hearing on the merits." (Internal quotation marks omitted.) Rustici v. Malloy, 60 Conn.App. 47, 56, 758 A.2d 424, cert. denied, 254 Conn. 952, 762 A.2d 906 (2000). " A prayer for injunctive relief is addressed to the sound discretion of the court . . ." (Internal quotation marks omitted.) Tighe v. Berlin, 259 Conn. 83, 87, 788 A.2d 40 (2002). " In general, a court may, in its discretion, exercise its equitable power to order a temporary injunction pending final determination of the order, upon a proper showing by the movant that if the injunction is not granted he or she will suffer irreparable harm for which there is no adequate remedy at law." (Internal quotation marks omitted.) Aqleh v. Cadlerock Joint Venture II, L.P., 299 Conn. 84, 97, 10 A.3d 498 (2010).
The standard for granting a temporary injunction in Connecticut is well settled. The requirements for a temporary injunction are: " (1) the plaintiff had no adequate legal remedy; (2) the plaintiff would suffer irreparable injury absent [an injunction]; (3) the plaintiff was likely to prevail . . .; and (4) the balance of the equities favored [the issuance of an injunction]." Waterbury Teachers Ass'n v. Freedom of Information Commission, 230 Conn. 441, 446, 645 A.2d 978 (1994).
B.
Validity of Restrictive Covenant Agreement--Covenant Not to Compete
When evaluating the reasonableness of covenants not to compete, Connecticut courts look to five factors: " (1) the length of time the restriction operates; (2) the geographical area covered; (3) the fairness of the protection accorded to the employer; (4) the extent of the restraint on the employee's opportunity to pursue his occupation; and (5) the extent of interference with the public's interests." Robert S. Weiss & Associates, Inc. v. Wiederlight, 208 Conn. 525, 529, n.2, 546 A.2d 216 (1988).
" By definition, covenants by employees not to compete with their employers after termination of their employment restrain trade in a free market." Deming v. Nationwide Mutual Insurance Company, 279 Conn. 745, 761, 905 A.2d 623 (2006). " Consequently, these covenants may be against public policy, and, thus, are enforceable only if their imposed restraint is reasonable, an assessment that depends on the competing needs of the parties as well as the needs of the public. These needs include " (1) the employer's need to protect legitimate business interests, such as trade secrets and customer lists; (2) the employee's need to earn a living; and (3) the public's need to secure the employee's presence in the labor pool." Id.
Under all the circumstances, the court finds that the Restrictive Covenant Agreement, specifically, the covenant not to compete contained in paragraph 4.a., is fair and reasonable. The duration of twelve months and the fifty (50) mile geographic limitation are reasonable under established Connecticut legal precedent. See, Robert S. Weiss & Associates, Inc. v. Wiederlight, supra, 546 A.2d at 219-20, and its progeny. The geographic limitation is limited in scope. It does not even cover the entire state of Connecticut. Based on the valuable and transferable training and expertise gained by the defendant while at VisionPoint, there is no evidence whatsoever that his ability to earn a living is impaired by these limited restrictions. The Restrictive Covenant Agreement does not restrict the defendant from working in any location where the plaintiff does not do business. Rather, it limits the defendant primarily within Connecticut and Massachusetts where VisionPoint does the lion's share of its business and where the defendant primarily performed his work for VisionPoint. In addition, the defendant has not argued that the Restrictive Covenant Agreement unreasonably restricts his ability to pursue his occupation. In fact, the defendant asserts that, at present, he only performs work on projects beyond a fifty (50) mile radius even while working in East Hartford.
Furthermore, the Restrictive Covenant Agreement was created by VisionPoint for legitimate business reasons as a direct response to the recruitment of several VisionPoint employees in 2012 by BKM, Red Thread's predecessor company. Red Thread competes directly with Visionpoint and is a much larger player in the AV business. The plaintiff's claim that it routinely expends thousands of dollars training employees in house and with third parties and that it created the Restrictive Covenant Agreement to protect the investment it has made in its employees and its customer base is not unreasonable. Also, the goodwill that VisionPoint has generated in the AV industry is predominantly in Connecticut and Massachusetts, within the geographic limitation contained in the Restrictive Covenant Agreement. Finally, the defendant has not claimed that the Restrictive Covenant Agreement in any way interferes with the public's interests; nor has the evidence even suggested any such interference.
Although the defendant did his utmost to distinguish his job duties at Red Thread from those he performed at VisionPoint, his own testimony revealed that there is significant overlap in the tasks he performs at Red Thread as AV Remote Project Manager 1 and those he performed at VisionPoint, a much smaller company where he performed a greater number of tasks. The defendant played a role in developing processes and programs at VisionPoint. In his job at Red Thread, he manages installations of projects for customers as he did at VisionPoint. Accordingly, the court finds that these job duties are substantially similar within the meaning of the Restrictive Covenant Agreement. Further, the defendant has admitted that he performed onsite work at for Red Thread on a couple of projects within the fifty (50) mile radius of the plaintiff's Newington offices.
C.
Breach of a Noncompete Agreement Representing Sufficient Irreparable Harm
" Irreparable injury and lack of an adequate remedy at law are considered to be established by the nature of the threatened conduct where a party seeks to enforce a covenant not to compete." Musto v. Opticare Eye Health Centers, Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. X02-CV-99-00155663, (August 9, 2000, Hodgson, J.). " Where an injury is of such a nature that it cannot be adequately compensated in damages, or cannot be measured by any pecuniary standard, it is irreparable. Whether damages are to be viewed by a court of equity as irreparable or not depends more upon the nature of the right which is injuriously affected than upon the pecuniary measure of the loss suffered." (Internal quotation marks omitted.) Connecticut Ass'n of Clinical Laboratories v. Conn. Blue Cross, Inc., 31 Conn.Supp. 110, 113-14, 324 A.2d 288 (1973).
" Restrictive covenants are recognized as valuable business assets that are entitled to protection . . . Loss of the benefits of compliance with such agreements is recognized as an irreparable injury . . .; since a party's actual injury is not, because of its nature, susceptible to determination." Musto v. Opticare Eye Health Centers, Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. X02-CV-99-00155663, (August 9, 2000, Hodgson, J.).
Finally, as quoted earlier in this memorandum of decision, paragraph seven of the Restrictive Covenant Agreement provides that a breach of the covenants therein, " cannot be reasonably or adequately compensated in damages in an action at law, and that irreparable damage will result to the business of VisionPoint in the event of a breach or threatened breach . . ." It further provides that, " in addition to other remedies available at law or in equity . . . VisionPoint will be entitled to injunctive and equitable relief to restrain the violation or threatened violation of the terms and covenants contained in this Agreement."
D.
Duration of the Temporary Injunction
The plaintiff argues that should the temporary injunction be granted, the length of time it is in effect should be extended by the period of the violation of the agreement or the period of the litigation. Paragraph 12 of the Restrictive Covenant Agreement provides as follows: " The time periods covered by the covenants contained herein shall not include any period(s) of violation of any covenant or any period(s) required for any litigation to enforce any covenant." Although there is no appellate authority on this issue, some courts have suggested that the duration of a restrictive covenant may be extended as a remedy if the parties have included language in their agreement providing for such an extension. See, Aladdin Capital Holdings, LLC v. Donoyan, Docket No. 3:11cv655 (MRK), (D.Conn., June 8, 2011) (request for injunctive relief based on restrictive covenant becomes moot upon expiration of the period specified unless it contains language expressly permitting extension).
III
CONCLUSION
The plaintiff has satisfactorily established that the restrictive covenant subject of the Restrictive Covenant Agreement is fair, reasonable and supported by consideration. By the defendant's own admission, when he first joined Red Thread he reported to a supervisor in the East Hartford office and performed work within a fifty (50) mile radius of the plaintiff's Newington offices. Although he has been reassigned to a supervisor in Wilmington, Massachusetts, he currently spends at least one day per week, or twenty percent (20%) of his time, working from the East Hartford office located within fifty (50) miles of VisionPoint's offices. Thus, based on the foregoing findings of fact, the job duties of the defendant's position at Red Thread are similar to those he performed at VisionPoint and are performed at least in part within fifty (50) miles of the plaintiff's offices in violation of the Restrictive Covenant Agreement. Although the defendant's job title may be different at Red Thread, the substantial evidence presented by the plaintiff establishes that there is significant overlap in the tasks he performs for Red Thread and those performed at VisionPoint.
Accordingly, the court finds that the plaintiff is likely to succeed on the merits of count one, its breach of contract claim. The balance of equities favors enforcing the Restrictive Covenant Agreement in accordance with the agreement of the parties. Granting the injunction will preserve the status quo in that the defendant may remain at his current job at Red Thread subject to the same Restrictive Covenant Agreement. Finally, in the present case, the defendant has been in breach of the covenant not to compete since he started working for Red Thread on March 21, 2016, a mere four days after resigning his employment with the plaintiff. It would be inequitable to credit the defendant for the period of time of his breach. Further, pursuant to paragraph 12 of the Restrictive Covenant Agreement, he agreed to extend the time for any period he has been in violation of the agreement. Finally, for all the reasons stated previously in this memorandum of decision the covenant in question is reasonable and enforceable. Therefore, a temporary injunction in accordance with the terms of the plaintiff's application is hereby granted to commence on this date and to remain in effect for a period of twelve (12) months less four days.
It would also be unfair to charge the defendant for the 120-day statutory period of time, since August 29, 2016, taken by the court to render a decision on the application for temporary injunction.
See order on docket entry #100.36.