Dietrich & Assocs. v. Neison

DIETRICH & ASSOCIATES, INC., Plaintiff, v. JOHN R. NEISON, et al., Defendants.

CIVIL ACTION NO. 18-5034

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

June 26, 2020

PAPPERT, J.

MEMORANDUM

Dietrich & Associates, Inc. sued John R. Neison, Jill K. Neison and Mark P. Unhoch alleging breaches of the restrictive covenants in their respective employment and consulting agreements, statutory trade secret violations, Computer Fraud and Abuse Act violations, unfair competition, tortious interference with business and prospective business relations, breach of fiduciary duty and unjust enrichment. (Compl., ECF No. 1.) Defendants move for summary judgment on all claims. (ECF No. 21.) After hearing oral argument, reviewing the record and considering D&A's response (ECF No. 23), Defendants' reply (ECF No. 25), the parties' supplemental briefs (ECF Nos. 32 and 34) and their statements of undisputed material facts (ECF Nos. 31 and 35), the Court grants the motion only with respect to the unfair competition claims and denies it in all other respects.

I

A

D&A is a Pennsylvania-based "independent advisory firm . . . specializing in assisting pension plan fiduciaries with insuring retirement benefits." (Pl's Statement of Facts, ECF No. 35, ¶ 1.) More specifically, the company "specializes in transferring pension plan obligations over to insurance companies" through transactions known as "pension risk transfers." (Defs.' Statement of Facts, ECF No. 31, ¶ 4.) D&A is based in Pennsylvania. Non-party Kurt Dietrich is D&A's founder, President, Chief Executive Officer and 98% owner. (Pl.'s Statement of Facts, ¶ 3.) Geoffrey Dietrich is Kurt's nephew and D&A's Executive Vice President. (Id. ¶ 5.)

John Neison is Kurt Dietrich's brother-in-law. He worked for D&A in a sales role from his home in South Carolina from 1991 until January 15, 2018, when he was terminated. (Id. ¶¶ 9-10, 13.) Approximately eight years after Neison started working for D&A, he was asked to sign an employment agreement as a condition of his continuing employment. (Defs.' Br., ECF No. 21, at 3.) The agreement, executed on June 6, 1999, is the only employment agreement Nieson signed with D&A. It included the following non-solicitation clause:

From and after the date hereof, and for a two (2) year period following the termination of your employment with the Company for any reason whatsoever (including your resignation from employment), except in connection with your employment duties and responsibilities hereunder, you shall not, either directly or indirectly, in any capacity whatsoever, solicit from, or sell to, or divert business from, or act as a consultant to, any customer or account of the Company (or any potential customer or account of the Company) of which you are or shall become aware or with which you have had personal contact as a result of, or in connection with, through your employment with, or through your affiliation with, the Company, whether or not pursuant to this letter and whether or not prior to or after the date hereof.

(Defs.' Mot., Ex. 5, ¶ 14.)

Jill Neison is John's daughter and Kurt Dietrich's niece. (Pl's Statement of Facts at ¶ 15.) She began work for D&A in a sales role from her home in Georgia in or around August 2012 and resigned on January 5, 2018. (Id. ¶ 16.) On August 25, 2012,she signed an employment agreement including a non-solicitation provision which tracks the language used in John Nieson's employment agreement, except for one absent line of text. Instead of barring solicitation from any "customer or account of the Company . . . of which you are or shall become aware or with which you have had personal contact as a result of, or in connection with, through your employment with or through your affiliation with the Company" (Def.'s Mot. Ex. 5, ¶ 14), Jill Nieson's agreement bars her from soliciting "any customer or account of the Company" with which she had "personal contact as a result of" her "employment with, the phrase 'in any capacity' . . . ." ((Defs.' Mot., Ex. 4, ¶ 14 (emphasis added).) Said otherwise, after the phrase "through your affiliation with," her agreement excludes the words "the Company, whether or not pursuant to this letter and whether or not prior to or after the date hereof." (Def.'s Mot. Ex. 5, ¶ 14.) D&A contends the omitted words are the result of a drafter's error and the language in John Neison's agreement was used in all employment agreements for employees hired prior to Jill. (Pl.'s Resp., ECF No. 23, Geoffrey Dietrich Decl., ¶ 49.)

D&A hired Mark Unhoch (who is not related to any D&A employee) to work as a consultant in or around September 2006 and he worked for the company from his home in Connecticut until December 31, 2017. (Pl.'s Statement of Facts, ¶ 20.) On September 15, 2006, Unhoch signed a consulting agreement with D&A on behalf of EBL Consulting, LLC. (Defs.' Mot., Ex. 6.) Unhoch is EBL Consulting's founder, sole owner and only employee. (Pl.'s Resp., Ex. 17, Operating Agreement of EBL Consulting LLC at Ex. B; see also Pl.'s Resp., Ex. 2, Unhoch Dep. At 59:21-24.) EBL filed its Articles of Organization with the State of Connecticut on October 11, 2006, after Unhoch signedthe consulting agreement with D&A. (Pl.'s Resp., Ex. 17.) Kurt Dietrich testified he did not hire Unhoch as a W2 employee because, at the time, the Attorney General of Connecticut was investigating D&A and others in the annuity brokerage industry. (Kurt Decl. ¶¶ 26-28; Kurt Dep. 137:2-20.) The agreement Unhoch signed with D&A on EBL's behalf included a non-solicitation provision identical to that in John Neison's employment agreement, except that "consulting arrangement" is substituted for employment. (Defs.' Mot., Ex. 6, ¶ 12.) Through EBL, Unhoch managed and maintained existing client, referral and insurance company relationships, underwriting business opportunities for D&A. He also managed the annuity placement process.

In addition to the non-solicitation provisions, Defendants' agreements also included non-interference and non-disclosure restrictions. In relevant part, the non-interference provisions state:

At any and all times from and after the date hereof, and for a two (2) year period following the termination of your [employment/consulting arrangement] with the Company for any reason whatsoever, you shall not . . . (b) directly or indirectly interfere with the Company's relations with any person employed by it.

(Defs.' Mot., Ex. 4, ¶ 13; Ex. 5, ¶ 13; Ex. 6, ¶ 10.)

The non-disclosure provisions provide that, for a two-year period following the termination of their respective employment or consulting arrangement, each should not:

make any use of, exploit, disclose, copy, remove from the Company's business premises or divulge to any other person, firm or corporation, any trade or business secret, customer or supplier information, documents, know-how, data, marketing information, methods or means, software, reports, special insurance company arrangements, or any other confidential (i.e., not already otherwise disseminated to or available to the public) information concerning the business or policies of the Company, that you learned as a result of, in connection with, through your employment with,or through your affiliation with the Company, whether or not pursuant to this letter, and whether or not prior to or after the date hereof.

(Defs.' Mot., Ex. 4, ¶ 12; Ex. 5, ¶ 12; Ex. 6, ¶ 10.)

B

October Three Consulting LLC provides actuarial and administration services for defined benefit pension plans. (Defs.' Statement of Facts, ¶ 25.) It was founded in 2009 by its current President and CEO Jeff Stevenson. (Id. ¶ 26.) October Three placed annuities on a limited basis (Id. ¶ 69) but was not D&A's direct competitor. (Pl.'s Statement of Facts, at ¶ 29.) It referred various actuarial services clients to D&A for annuity placements. (Id. ¶ 169.) Eventually it determined "the pension risk transfer business might be 'a good business to get into' in a more comprehensive manner." (Defs.' Statement of Facts ¶ 69.)

In August 2017, Unhoch met with October Three personnel in Chicago to discuss work D&A was doing for the company. (Pl.'s Statement of Facts ¶¶ 175-176; Defs.' Statement of Facts ¶¶ 74-78.) After the meeting, October Three employee Ray Aguilera spoke to Unhoch on the phone and told him Stevenson would like to meet with Unhoch to discuss possible employment opportunities. (Defs.' Statement of Facts ¶¶ 79-80.) Unhoch went back to Chicago on August 28, 2017 and met with Stevenson, Aguilera and Brian Donohue, an October Three partner. (Id. ¶¶ 81-82.) After the meeting, Unhoch told John Neison he was discussing a potential job with October Three. (Pl.'s Statement of Facts ¶ 185.) On September 19, 2017, Neison emailed Stevenson from his personal account "without [Unhoch's] knowledge, to offer [his] unsolicited opinion and recommendation" and "urge [Stevenson] to hire [Unhoch]." (Id. ¶ 186.) In the email, John Neison expressed "concern[ ] about Dietrich's future" and noted he "fores[aw] theconclusion of [his own] career with Dietrich to be imminent." (Id.) After he sent the email, John forwarded it to Unhoch and his niece Jill. (Id. ¶ 187.) After receiving Neison's email, Stevenson called him to discuss Unhoch's "character." (Id. ¶ 188.) On October 16, 2017, Unhoch emailed Stevenson from his personal account and proposed that October Three hire him to enter the pension risk transfer market, in competition with D&A. (Id. ¶ 189.) Stevenson and Unhoch later spoke on the phone and discussed other D&A employees who supported Unhoch, including John and Jill Neison. (Id. ¶¶ 190-91.)

On November 21, 2017, Stevenson called Jill Neison to discuss a potential job and made plans for her to visit October Three's headquarters the following week. (Id. ¶¶ 192, 197.) She met with Stevenson at October Three in Chicago on November 27, 2017 and discussed starting an annuity services practice. (Id. ¶ 199.) On November 29, 2017, Stevenson...