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Corporate Technologies, Inc. v. Harnett

United States Court of Appeals, First Circuit

September 23, 2013

CORPORATE TECHNOLOGIES, INC., Plaintiff, Appellee,
v.
Brian HARNETT; OnX USA LLC, d/b/a OnX Enterprise Solutions, Defendants, Appellants.

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[Copyrighted Material Omitted]

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Michele A. Whitham, with whom Christopher Hart, Elizabeth M. Holland, and Foley Hoag LLP were on brief, for appellants.

Kevin J. O'Connor, with whom Kelley A. Jordan-Price, Mark A. Bross, and Hinckley, Allen & Snyder, LLP were on brief, for appellee.

Before HOWARD, SELYA and LIPEZ, Circuit Judges.

SELYA, Circuit Judge.

Businesses commonly try to protect their good will by asking key employees to sign agreements tat prohibit them from soliciting existing customers for a reasonable period of time after joining a rival firm. When a valid non-solicitation covenant is in place and an employee departs for greener pastures, the employer ordinarily has the right to enforce the covenant according to its tenor. That right cannot be thwarted by easy evasions, such as piquing customers' curiosity and inciting them to make the initial contact with the employee's new firm. As we shall explain, this is such a case.

I. BACKGROUND

This is an interlocutory appeal growing out of a business dispute. Below, the district court granted a preliminary injunction that restrained defendant-appellant Brian Harnett, a former employee of plaintiff-appellee Corporate Technologies, Inc. (CTI), from doing business with certain customers to whom he had sold products and services while in CTI's employ. The preliminary injunction extended to other matters as well; for example, it included an order that defendant-appellant OnX USA LLC (OnX), a competitor of CTI and Harnett's current employer, withdraw certain bids on which Harnett had toiled.

The defendants appeal from the issuance of the preliminary injunction. After careful consideration, we affirm.

The pertinent facts are catalogued in the district court's rescript, see CTI v. Harnett ( CTI I ), 943 F.Supp.2d 233, 235-37, No. 12-12385, 2013 WL 1891308, at *1-2 (D.Mass. May 3, 2013), and we assume the reader's familiarity with that account. For present purposes, a sketch of the origin and travel of the case will suffice.

For nearly a decade, Harnett worked as an account executive/salesman at CTI, a provider of customized information technology solutions to sophisticated customers. Because CTI regards many of the details of its business operations as proprietary, it insisted that Harnett sign an agreement (the Agreement) that contained non-solicitation and non-disclosure provisions when he came on board. Harnett obliged.

In October of 2012, Harnett jumped ship to work for OnX. The record makes manifest that, following his departure from CTI, Harnett participated in sales-related communications and activities with certain of his former CTI customers on behalf of OnX.

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CTI was not pleased. It lost little time in repairing to a Massachusetts state court, where it alleged that Harnett's actions transgressed the Agreement and that OnX's encouragement of those actions constituted tortious interference with CTI's contractual rights and advantageous relationships. CTI's suit sought both money damages and injunctive relief.

The defendants removed the case to the United States District Court for the District of Massachusetts based on diversity of citizenship and the existence of a controversy in the requisite amount. See 28 U.S.C. §§ 1332(a), 1441(a). When they answered the complaint, the defendants denied that they had committed either a breach of contract or a tort. Harnett also interposed a counterclaim (immaterial to the issues on appeal).

CTI sought a preliminary injunction based on affidavits, deposition testimony, and documentary proffers. The defendants opposed the motion, submitting evidence of their own. In due course, the district court granted a preliminary injunction. See CTI v. Harnett ( CTI II ), No. 12-12385, 2013 WL 3334979, at *1-2 (D.Mass. May 3, 2013). Its decree restrained Harnett from engaging " in any marketing or sales efforts ... for a period of twelve months" with respect to several CTI customers whom he formerly had serviced. Id. at *1. With regard to those customers, it also compelled the defendants to withdraw any bids that Harnett had helped to develop. See id.

This timely appeal followed. Notwithstanding its interlocutory character, we have jurisdiction under 28 U.S.C. § 1292(a)(1). Because the issues are ...


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