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PC Connection, Inc. v. Price

United States District Court, D. New Hampshire

March 18, 2010

PC Connection, Inc.
v.
Stephen P. Price Opinion No. 2015 DNH 202

MEMORANDUM AND ORDER

PAUL BARBADORO UNITED STATES DISTRICT JUDGE

PC Connection, Inc. brought this action against its former employee, Stephen P. Price, alleging breach of Price’s employment contract, breach of the implied covenant of good faith and fair dealing, conversion, and breach of fiduciary duties. Price moves to dismiss all claims for lack of subject matter jurisdiction. In the alternative, he argues that the complaint must be dismissed because it fails to state a viable claim for relief. For the reasons provided below, I determine that this court has subject matter jurisdiction over PC Connection’s claims, and grant in part and deny in part Price’s motions to dismiss for failure to state a claim.

I. BACKGROUND

PC Connections is a Delaware corporation headquartered in New Hampshire that “sells computers, software and related products and services” nationwide. Doc. No. 12 ¶¶7, 15. Price, a Maryland resident, worked for PC Connection from April 2010 until May 2015 as a Business Development Manager (“BDM”) in the Mid-Atlantic region, where PC Connection has “dozens of customers” and enjoys “revenue . . . well in excess of $10, 000, 000.” Id., ¶¶3, 8, 24. As a BDM, Price “worked directly with PC Connection’s customers and potential customers regarding the purchasing of PC Connection products and services, ” “obtained detailed knowledge of confidential information regarding PC Connection’s overall business practices related to sales, ” and “participated in high-level strategy discussions regarding PC Connection’s business.” Id., ¶¶24, 26, 27.

Price executed an Employee Agreement as a condition of his employment. Id., ¶21. The Agreement, which Price, included non-competition, non-solicitation, good will, and nondisclosure/nonuse of confidential information provisions. Id., ¶22, 29; see Doc. No. 12-1.

Price voluntarily resigned from his position at PC Connection on May 22, 2015. Doc. No. 12 ¶30. He subsequently informed PC Connection that he planned to work “in sales” for Presidio, an IT company that is a “direct competitor to PC Connection.” Id., ¶¶32, 33. PC Connection told Price that it believed that working for Presidio would violate Price’s obligations under the Agreement. Id., ¶34. Price disagreed and reconfirmed his intention to work for Presidio. Id., ¶35.

On May 4, 2015, the same day Price received his formal job offer from Presidio, he sent five Excel spreadsheets containing “confidential PC Connection customer sales and revenue information” from his PC Connection email account to his personal email address. Id., ¶37. Price has also refused to return a USB drive he had used in the course of his work at PC Connection, which contained confidential files. Id., ¶38.

II. ANALYSIS

Price moves to dismiss on two grounds. First, he argues that the court lacks subject matter jurisdiction because PC Connection has failed to satisfy the $75, 000 amount in controversy requirement that must be met when jurisdiction is based on diversity of citizenship. Second, Price argues in the alternative that all of PC Connection’s claims must be dismissed for failure to state a claim. Because the standards of review that govern these two arguments differ, I deal with them separately.

A. Subject Matter Jurisdiction[1]

PC Connection asserts that the court has diversity of citizenship jurisdiction over this case. Doc. No. 12 ¶11; see 28 U.S.C. § 1332(a)(1). With respect to the amount in controversy requirement, PC Connection states that “the amount of damages cannot reasonably be ascertained at present but will exceed $75, 000” based on Price’s sales revenue as a PC Connection employee, the potential lost revenue due to Price’s competition against PC Connection, and the value of the confidential information that Price allegedly misappropriated. Id. at ¶45. Price argues that these allegations are not sufficient to satisfy the requirement. Doc. No. 14-1 at 19-20.

The plaintiff bears the burden of showing that § 1332 (a)(1)’s amount in controversy requirement, currently $75, 000, has been met.[2] Abdel-Aleem v. OPK Biotech LLC, 665 F.3d 38, 41 (1st Cir. 2012). If made in good faith, the sum claimed by the plaintiff controls. Stewart v. Tupperware Corp., 356 F.3d 335, 338 (1st Cir. 2004). “Good faith is measured objectively; the question is whether to anyone familiar with the applicable law this claim could objectively have been viewed as worth more than the jurisdictional minimum.” Abdel-Aleem, 665 F.3d at 41 (citations and internal alterations omitted). It “must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.” Id. (citations and internal punctuation omitted).

A party’s “general allegation of damages that meet the amount requirement suffices unless questioned by the opposing party or the court.” Stewart, 356 F.3d at 338 (citation and internal punctuation omitted). Once questioned, however, the party invoking federal jurisdiction must allege “with sufficient particularity facts indicating that it is not a legal certainty that the claim involves less than the jurisdictional amount.” Id. A party can meet this burden by amending pleadings or submitting affidavits. Abdel-Aleem, 665 F.3d at 42.

In actions, like this one, for injunctive relief, “the amount in controversy is measured by the value of the object of the litigation.” Hunt v. Washington State Apple Advert. Comm’n, 432 U.S. 333, 347 (1977); see Richard C. Young & Co. v. Leventhal, 389 F.3d 1, 3 (1st Cir. 2004) (stating that amount in controversy is measured “by the judgment’s pecuniary consequences to those involved in the litigation”). As other courts have explained, “[t]he value of an injunction may not be capable of precise determination, but precision is not required” to satisfy the amount in controversy requirement. Mailwaukee Mailing, Shipment and Equip., Inc. v. Neopost, Inc., 259 F.Supp.2d 769, 772 (E.D. Wis. 2003) (citing Hedberg v. State Farm Mut. Auto. Ins. Co., 350 F.2d 924, 929 (8th Cir. 1965).

When weighing the “value of the object of the litigation” in cases involving injunctions to enforce (or prevent enforcement of) non-competition agreements, courts have previously considered a number of factors, including (1) the business generated by the employee immediately before his employment ended, (2) anticipated lost revenues caused by the alleged breach of the covenant, and (3) the value of the confidential information endangered by the employee’s new association with a competitor. 4 Callmann on Unfair Comp., Tr. & Mono. § 24:16 (4th Ed.); see, e.g., Johnson v. ISCO Indus., LLC, 2008 WL 4999274, at *2-3 (E.D. Wis. Nov. 21, 2008) (relying on loss of customer goodwill and customer information to competitor); Mahoney v. Dupuy Orthopaedics, Inc., 2007 WL 3341389, at *4 (E.D. Cal. Nov. 8, 2007) (relying on employee’s prior sales); Davis v. Advanced Care Techs., Inc., 2007 WL 1302736, at *1-2 (E.D. Cal. May 2, 2007) (relying on the value of trade secrets); see also 14AA Charles Alan Wright, et al., Fed. Prac. & Proc. Juris. § 3708 (4th ed.).

Here, PC Connection alleges that “the yearly revenue from the customers for which [Price] was responsible is well in excess of $10, 000, 000, ” and so “the loss of even a very small percentage of such revenue as a result of [Price’s] actions would easily satisfy the $75, 000 amount in controversy standard.” Doc. No. 12 ¶45. PC Connection also states that Price’s alleged “misuse . . . of PC Connection’s Confidential Information, which it spends many hundreds of thousands of dollars developing and maintaining, will also easily satisfy the $75, 000 amount in controversy standard.” Id. PC Connection thus points to specific, relevant evidence to support its assertion that the “value of the object of the litigation” exceeds $75, 000.[3] See Hunt, 432 U.S. at 347; see also Johnson, 2008 WL 4999274, at *2-3; Mahoney, 2007 WL 3341389, at *4. I therefore determine that PC Connection has alleged sufficient facts to show that it is not a legal certainty that its claims involve less than $75, 000. Stewart, 356 F.3d at 338. As such, this court has subject matter jurisdiction over PC Connection’s claims.

B. Failure to State a Claim

PC Connection brings claims for: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) conversion, and (4) breach of fiduciary duties. Price argues in a motion to dismiss pursuant ...


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