Perficient, Inc. v. Munley

PERFICIENT, INC., Plaintiff, v. THOMAS MUNLEY, et al., Defendants.

Case No. 4:19-cv-01565-JAR

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

April 15, 2021

MEMORANDUM AND ORDER

This matter is before the Court on motions for summary judgment filed by Plaintiff Perficient, Inc. ("Perficient") (Doc. 95) and Defendant Thomas Munley ("Munley"). (Doc. 92). Both motions are fully briefed and ready for disposition.

I. BACKGROUND¹

A. Factual Background

Perficient provides software consulting and business implementation services, assisting its clients with complex software offered by companies like IBM, Oracle, Salesforce, and Microsoft. In July 2014, Perficient hired Munley as General Manager of its Oracle practice group. Over the next few years, Munley received multiple promotions, eventually becoming Vice President of Field Operations. This role entailed overseeing multiple groups, including the Salesforce practice.

Salesforce is a software technology company whose main product lines are Sales Cloud, Service Cloud, Marketing Cloud, and Integration Cloud. In 2015, Salesforce acquired Steelbrick for its Configure, Price, Quote ("CPQ") product. CPQ allows sellers to automate quotes for prospective buyers even for complex purchases involving multiple variables. Though CPQ apparently remains a relatively niche product in the overall software consulting and business implementation industry, it is central to this dispute.

CPQ was not a source of revenue during the time that Munley was employed at Perficient. In 2017, Perficient sold two projects to implement CPQ, but neither advanced beyond the proof-of-concept stage. Munley encouraged Perficient leadership to pursue an acquisition of Advanced Technology Group, Inc. ("ATG"), a CPQ implementation firm, but the deal never materialized. In September 2018, Munley attended the Salesforce Dreamforce conference and met with a Salesforce representative to discuss Perficient's potential entry into the CPQ implementation market. Following the conference, Munley took clear steps demonstrating that CPQ had become a strategic priority for Perficient.

Munley was terminated by Perficient on April 24, 2019, with the performance of the Salesforce practice cited among the reasons for the decision. Just days after leaving Perficient, Munley met with Jay Laabs, Chief Executive Officer of Spaulding Ridge, LLC ("Spaulding"), concerning potential job opportunities.² Spaulding was created through the acquisition of Buan Consulting, one of the original companies to implement Steelbrick (i.e., CPQ), and Plan Rocket, which specialized in Anaplan implementation. The vast majority of Spaulding's implementation services for Salesforce are for CPQ. In early May 2019, Munley accepted a position as Partner and Salesforce Group Leader at Spaulding. On May 24, 2019, Munley reached out to Perficient's ChiefExecutive Officer and Chief Financial Officer by e-mail proposing a transaction in which Spaulding would purchase Perficient's Salesforce subcontracting business. The e-mail cited several confidential Perficient metrics, including targeted gross margins, historical gross margins, and sales volumes.

Munley signed multiple agreements during his time at Perficient, including a Restricted Stock Award and Non-Competition Agreement ("Non-Competition Agreement") and Confidentiality and Intellectual Property Assignment Agreement ("Confidentiality Agreement"). The Non-Competition Agreement includes, among other provisions, a prohibition on Munley "engag[ing] in a Competing Business anywhere within the Restricted Area" or "perform[ing] any Competitive Duties (as an employee, consultant or otherwise) . . . for any Competing Business" for a period of 24 months after leaving Perficient. (Doc. 1-1). The Confidentiality Agreement prohibited Munley from disclosing Perficient's confidential information. Perficient alleges that Munley breached these agreements in the course of his employment at Spaulding.

B. Procedural Background

On June 3, 2019, Perficient filed suit against Munley and Spaulding and moved for a temporary restraining order ("TRO"). (Docs. 1, 4). Count I of Perficient's complaint contends that Munley violated the Non-Competition and Confidentiality Agreements by performing competitive duties for a competing business, disclosing confidential information, and offering the sale of identical competing services, among other alleged breaches. (Doc. 1 at ¶ 79). Count II demanded a preliminary and permanent injunction. (Id. at ¶¶ 86-98). In August 2019, this Court held a consolidated hearing on Perficient's request for a preliminary and permanent injunction. On September 5, 2019, this Court granted the preliminary and permanent injunction in part, enjoining Munley from violating certain restrictive covenants until May 1, 2020. (Doc. 59).

In imposing the injunction, this Court held that the "Competing Business" section of the Non-Competition Agreement was unenforceable because it was "broader than necessary to protect Perficient's interests." (Id. at 12), The Court did find, however, that Perficient had demonstrated actual success on the merits of its claim that Munley performed "Competitive Duties." This Court determined that "Munley's work on behalf of Spaulding related to Salesforce products is a 'Competitive Dut[y]' that threatens Perficient's protectable interests in customer contacts and trade secrets." (Id. at 13). The Court also found that Munley "ran afoul of his non-disclosure obligations" by disclosing confidential information in the May 24, 2019 e-mail. (Id. at 16). In reaching these conclusions, this Court specifically noted that the posture was "somewhat unique insofar as the parties agreed to an expedited briefing schedule and combined hearing on the preliminary and permanent injunctions, meaning the Court is left to rule on the merits of the relevant underlying claims without the benefit of a full trial." (Id. at 2).

Both Munley and Spaulding filed interlocutory appeals, but neither sought a stay pending appeal. Perficient, Inc. v. Munley, 973 F.3d 914, 916 (8th Cir. 2020). Accordingly, since the permanent injunction expired on May 1, 2020, the appeal became moot by the time the Eighth Circuit rendered a decision. Considering this "unusual setting," the Eighth Circuit noted that the case "remains pending in the district court, with unresolved damage and attorneys' fee issues that may turn on or be affected by [this Court's] findings and conclusions in the permanent injunction order." Id. at 917. The Eighth Circuit dismissed the appeal and provided the following guidance:

We do not direct the court to vacate as moot its Order dated September 5, 2019 granting a permanent injunction. However, the findings and conclusions in that Order will remain subject to review should they be challenged on appeal from [this Court's] final order. In other words, the Order remains in effect subject to modification (or vacating) by [this Court] based on further pretrial and trial proceedings, or on a subsequent appeal. Id. at 918.

After receiving the mandate from the Eighth Circuit, this Court held a status conference (Doc. 73) and set a briefing schedule on the issue of attorneys' fees. (Doc. 77). Perficient proceeded to voluntarily dismiss Counts III -VIII of its complaint. (Doc. 76). Munley and Spaulding objected to the voluntary dismissal of Counts VI and VII, arguing that this Court's ruling on the preliminary and permanent injunction constituted a judgment disposing of these counts. (Doc. 78). In its Order on the injunctions, this Court found that Perficient "cannot succeed on the merits of its trade-secrets claims against Munley or Spaulding." (Doc. 59 at 21). Munley and Spaulding even proposed a final stipulated judgment in favor of Perficient on Count I and Defendants on Counts VI and VII (with voluntary dismissal of the remaining counts) on the basis of this Court's preliminary and permanent injunction Order. (Doc. 80).

This Court disagreed with their assessment, explaining that the injunctions Order "made findings of fact and conclusions of law but was not a judgment as to Counts VI and VII," and consequently granted Perficient's motion for voluntary dismissal. (Doc. 82 at 1). When assessing the issue of attorneys' fees, this Court will consider the full context of Count VI and VII's dismissal. After granting Perficient's motion to dismiss Counts VI and VII, this Court ordered the parties to submit either a joint stipulation of final judgment as to Count I, the only remaining count, or a proposed briefing schedule for dispositive motions. (Doc. 83). The parties chose the latter route, and their respective motions for summary judgment as to Count I are now before this Court.

II. LEGAL STANDARD

Under Fed. R. Civ. P. 56, a movant is entitled to summary judgment if they can "show[] that there is no genuine dispute as to any material fact" and they are "entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In determining whether summary judgment is appropriate, the evidence must be viewed in the light most favorable to the nonmoving party. Osborn v. E.F.Hutton & Co., 853 F.2d 616, 619 (8th Cir. 1988). The nonmovant, however, "'must do more than simply show that there is some metaphysical doubt as to the material facts,' and must come forward with 'specific facts showing that there is a genuine issue for trial.'" Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp, 475 U.S. 574, 587-87 (1986)); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Where parties have filed cross motions for summary judgment, each motion must be evaluated independently to determine whether a genuine issue of material fact exists and whether the movant is entitled to judgment as a matter of law. Exel Inc. v. Int'l Broth. of Teamsters, Local No. 600, No. 1:14-CV-81 JAR, 2015 WL 3795808, at *3 (E.D. Mo. June 18, 2015...