Houserman v. Comtech Telecomms. Corp.

LYNNE HOUSERMAN, Plaintiff, v. COMTECH TELECOMMUNICATIONS CORPORATION, FRED KORNBERG,AND MICHAEL D. PORCELAIN Defendants.

TELECOMMUNICATION SYSTEMS, INC., Plaintiff, v. LYNNE HOUSERMAN AND MOTOROLA SOLUTIONS, INC., Defendants.

CONSOLIDATED UNDER NO. 2:19-CV-00644-RAJ

NO. 2:19-CV-00336-RAJ

NO. 2:19-CV-00644-RAJ

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

February 3, 2021

HONORABLE RICHARD A. JONES

ORDER ON LYNNE HOUSERMAN AND MOTOROLA SOLUTIONS INC.'S MOTION FOR SUMMARY JUDGMENT AND TELECOMMUNICATION SYSTEMS, INC.'S MOTION FOR PARTIAL SUMMARY JUDGMENT

I. INTRODUCTION

Two motions are before this Court. The first is a Motion for Summary Judgment filed by Lynne Houserman ("Ms. Houserman") and Motorola Solutions Inc. ("Motorola") (collectively "Defendants") in Telecommunication Systems, Inc. v. Houserman and Motorola Solutions, Inc., Case No. 2:19-cv-00336-RAJ. T-Dkt.¹ # 99. The second is amotion for partial summary judgment, filed a few days later, by TeleCommunication Systems, Inc. ("TCS" or "Plaintiff"). T-Dkt. # 111. This case was subsequently consolidated with Houserman v. Comtech Telecommunications Corp., et al., Case No. 2:19-cv-00644-RAJ, which was designated as the lead case on December 7, 2020. H-Dkt. # 143. The Court will address both motions in this order.

After reviewing the parties' briefs, the relevant case law, and the record, the Court finds that oral argument is unnecessary. For the reasons below, the Court DENIES in part and GRANTS in part Defendants' motion for summary judgment. T-Dkt. # 99. The Court DENIES Plaintiff's motion for partial summary judgment. T-Dkt. # 111.

II. BACKGROUND

Ms. Houserman served as the Senior Vice President and General Manager of the Safety and Security Technologies Group ("SST Group") at TCS, a provider of advanced communication solutions for governmental and commercial customers. T-Dkt. # 99 at 8. On September 6, 2014, she entered into an employment agreement with TCS for this role ("2014 Agreement"). T-Dkt. # 1 ¶ 45. The agreement included a non-compete, a non-solicitation of clients, and a confidentiality agreement (collectively "restrictive covenants"). Id. ¶ 47-53.

When TCS was acquired by Comtech in February 2016, Ms. Houserman was offered and accepted a new position as the President of Comtech's SST Group. T-Dkt. # 99 at 8; T-Dkt. # 101-4 at 3. Her offer letter ("2016 Agreement") delineated her compensation, bonus eligibility, and vacation policy, among other conditions, but did not contain any non-compete or non-solicitation provisions. T-Dkt. # 101-4 at 4. It was signed by Ms. Houserman and Dr. Stanton Sloane, the Chief Executive Officer of Comtech at that time. Id. In her new role, she was responsible for emergency call routing and call handling services. Id. In August 2016, the call handling business was transferred to another division, and Ms. Houserman remained responsible only for call handling. T-Dkt. # 99 at 8-9.

On April 2, 2018, Comtech terminated Ms. Houserman for cause. T-Dkt. # 1 ¶ 71. Several months later, in August 2018, Ms. Houserman was hired by Motorola to serve as a Vice President overseeing Motorola's emergency call handling business. T-Dkt. # 99 at 9. On March 6, 2019, TCS filed a lawsuit against Ms. Houserman and Motorola. TCS alleged four counts: (1) breach of contract against Ms. Houserman under Maryland law for violating the non-compete, non-solicitation of clients, and confidentiality provisions of her 2014 Agreement, T-Dkt. # 1 ¶¶ 103-112; (2) tortious interference with the 2014 Agreement against Motorola under Washington law, id. ¶¶ 113-119; (3) tortious interference with contractual relations against Motorola and Ms. Houserman under Washington law, id. ¶¶ 113-127; and (4) tortious interference with business expectancy against Motorola and Ms. Houserman under Washington law, id. ¶¶ 128-35.

Ms. Houserman and Motorola filed a motion for summary judgment on all claims. T-Dkt. # 99. TCS then filed a motion for partial summary judgment on its first claim for breach of contract against Ms. Houserman and on its second claim for tortious interference with the 2014 Agreement against Motorola, as well as Motorola's affirmative defense of competition. T-Dkt. # 111 at 6-7.

III. LEGAL STANDARD

Summary judgment is appropriate if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the moving party will have the burden of proof at trial, it must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party. Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). On an issue where the nonmoving party will bear the burden of proof at trial, the moving party can prevail merely by pointing out to the district court that there is an absence of evidence to support the non-moving party's case. Celotex Corp., 477 U.S. at 325. If the moving party meets the initial burden, theopposing party must set forth specific facts showing that there is a genuine issue of fact for trial to defeat the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The court must view the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor. Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 150-51 (2000).

However, the nonmoving party must present significant and probative evidence to support its claim or defense. Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir. 1991). Uncorroborated allegations and "self-serving testimony" will not create a genuine issue of material fact. Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002); T.W. Elec. Serv. v. Pac Elec. Contractors Ass'n, 809 F. 2d 626, 630 (9th Cir. 1987). The court need not, and will not, "scour the record in search of a genuine issue of triable fact." Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996); see also White v. McDonnel-Douglas Corp., 904 F.2d 456, 458 (8th Cir. 1990) (explaining that the court need not "speculate on which portion of the record the nonmoving party relies, nor is it obliged to wade through and search the entire record for some specific facts that might support the nonmoving party's claim"). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Scott v. Harris, 550 U.S. 372, 380 (2007) (emphasis original).

IV. DISCUSSION

Defendants filed for summary judgment on all claims, including breach of contract based on violations of three restrictive covenants (non-compete, client non-solicitation, and confidentiality) and three tortious interference claims. The latter claims include (1) tortious interference with Ms. Houserman's 2014 Agreement against Motorola; (2) tortious interference with contractual relations with South Dakota against Motorola and Ms. Houserman; and (3) tortious interference with business expectancy with respect to General Dynamics Information Technology ("GDIT") against Motorola and Ms.Houserman. T-Dkt. # 99.

Plaintiff filed for summary judgment on the breach of contract claims, the tortious interference claim related to Ms. Houserman's 2014 Agreement, and Defendants' competition defense. T-Dkt. # 111. Plaintiff claims that there are genuine issues of material fact precluding summary judgment for the tortious interference claims related to South Dakota and GDIT.

A. Breach of Contract Claim

With respect to the breach of contract claim, both parties agree that based on Section 13 of the 2014 Agreement, Maryland law governs the Agreement. T-Dkt. # 99 at 14; T-Dkt. # 111 at 17; T-Dkt. # 112-24 ¶ 13. The Court concurs. See Patton v. Cox, 276 F.3d 493, 495 (9th Cir. 2002) (holding that a federal court sitting in diversity looks to a forum state's choice of law rules); see also McKee v. AT&T Corp., 191 P.3d 845, 851 (Wash. 2008) (noting that Washington courts "generally enforce contract choice of law provisions with certain exceptions," none of which exist here). The parties' agreement, however, ends here.

Defendants argue that they are entitled to summary judgment on the breach of contract claim for three reasons. T-Dkt. # 99 at 14. First, they argue that the restrictive covenants in the 2014 agreement are overbroad and thus invalid under Maryland law. Id. Second, they claim that even if they are valid, the 2014 Agreement was superseded by the 2016 Agreement, which did not contain such restrictive covenants. Id. Third, they argue that even if the Court finds the 2014 restrictive covenants to be enforceable, Ms. Houserman did not breach them. Id. TCS, on the other hand, claims that it is entitled to summary judgment on its breach of contract claim because the 2014 Agreement is enforceable, and Ms. Houserman violated it as a matter of law. T-Dkt. # 111 at 6-7. The Court considers each argument in turn.

Under Maryland law, there are four elements that must be met for a restrictive covenant to be enforceable: (1) the employer must have a legally protected interest, (2)the covenant must not be wider in scope and duration than is reasonably necessary to protect the employer's interest, (3) the covenant cannot impose an undue hardship on the employee, and (4) the covenant cannot violate public policy. Medispec, Ltd. v. Chouinard, 133 F. Supp. 3d 771, 773 (D. Md. 2015) (citing Deutsche Post Glob. Mail, Ltd. v. Conrad, 116 Fed. App'x. 435, 438 (4th Cir. 2004)). The "test used for a restrictive covenant in an employment contract is 'whether the particular restraint is reasonable on the specific facts.'" Intelus Corp. v. Barton, 7 F. Supp. 2d 635, 641 (D. Md. 1998) (citing Ruhl v. F.A....