Telamerica Media Incorporated v. AMN Television Marketing, Civil Action No. 99-2572 (E.D. Pa. 12/21/1999)

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TELAMERICA MEDIA INCORPORATED v. AMN TELEVISION MARKETING, et al.

Civil Action No. 99-2572.

United States District Court, E.D. Pennsylvania.

December 21, 1999.

MEMORANDUM AND ORDER

HUTTON, J.

Presently before the Court is Plaintiff's Motion for Preliminary Injunction (Docket No. 3) and Defendants' response by way of Motion to Dismiss (Docket Nos. 6 & 8). For the reasons stated below, the Plaintiff's Motion is GRANTED. Defendants' Motion to Dismiss is DENIED.

I. BACKGROUND

Plaintiff TelAmerica Incorporated ("TelAmerica"), a Delaware Corporation with its place of business in Philadelphia, Pennsylvania, is seeking injunctive relief against Defendants, AMN Television Marketing ("AMN") and Joseph Gray, for an alleged breach of a non-compete agreement. Joseph Gray is the former president of TelAmerica, and majority owner of AMN. The non-compete agreement which Defendants are subject to prohibits them from competing with Plaintiff in the cable programing market through July 28, 2000 pursuant to the terms of the July 1998 Mutual Settlement and Compromise Agreement. Defendants have disclaimed any obligation under the agreement asserting that the agreement and its restrictions are no longer in effect. Plaintiff claims that Defendants' alleged breach has and is currently causing irreparable harm to TelAmerica's market advantage and goodwill. Plaintiff further asserts that said injuries are not compensable through traditional monetary damages. Defendants in this matter have failed to provide the Court with any evidence in which to consider the merits of its claims, other than simple reproductions of relevant contractual provisions. Further, Defendants fail to support their response to Plaintiff's Motion with affidavits or other evidence which would allow the Court to determine the existence of any genuine dispute concerning the material facts in this matter.

II. DISCUSSION

A. Defendants' Objections

Defendants make numerous vague objections to the enforceability of the underlying non-compete agreement, and thus the availability of a preliminary injunction. As such, before the Court considers the merits of Plaintiff's motion these objections will be resolved.

. Jurisdictional Objections

First, Defendants claim that the Court lacks personal jurisdiction, venue, and subject matter jurisdiction. These objections are clearly without merit as the non-compete agreement is a Pennsylvania Contract entered into between Plaintiff and Defendants, which contains a provision explicitly stating that Pennsylvania law controls the agreement. (See Non-Compete Agreement ¶ 8); see also Roadway Packaging Sys, Inc. v. Kayser, No. CIV.A.99-MC-111, 1999 WL 817724, at *3 (E.D.Pa. Oct. 13, 1999) (stating Pennsylvania courts generally honor the intent of the contracting parties and will enforce a choice of law provision in a contract (citing Smith v. Commonwealth Nat'l Bank, 557 A.2d 775, 777 (Pa. Super. 1989))). Further, the agreement states in the clause relating to injunctive relief, that any action for breach may be brought in any Federal Court in the Eastern District of Pennsylvania, and that each party waives any objections to venue or jurisdiction. (See Non-Compete ¶ 6); see also Cottman Transmission Sys. v. Martino, No. CIV.A.92-7245, 1993 WL 306183, at *1 (denying a motion to dismiss for lack of personal jurisdiction because parties agreed to jurisdiction and venue, thus defendants should have reasonably anticipated being haled into court in Pennsylvania).

As Defendants do not dispute that they purposely entered into this agreement with TelAmerica, it is obvious Defendants' contact with the forum is not fortuitous, but rather the result of intentional negotiations with a Pennsylvania business. See Paolino v. Channel Homes Ctrs., 668 F.2d 721, 724 (3d Cir. 1981) (finding personal jurisdiction over defendant where the action rises out of a breach of a Pennsylvania contract); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478, 105 S.Ct. 2174, 2185, 85 L.Ed.2d 528 (1985) (finding that an out of state Defendant was subject to personal jurisdiction in Florida for breach of a franchise agreement with a Florida business).

Further, irrespective of the agreement, venue is proper in the Eastern District of Pennsylvania pursuant to 28 U.S.C. § 1391(a)(3). First, Defendants do not reside in the same state, but rather separately in California and Nevada. (See Def.'s Mot. to Dismiss at 5); see also § 1391(a)(1). Second, although the breach of contract effects Pennsylvania, the actual and potential violations of the non-compete agreement are national in scope. Thus, there is no one judicial district in which it can be said that a substantial part of any injury will or has occurred. (See Def.'s Mot. to Dismiss at 8 (stating actions were directed toward Colorado and Louisiana)); see also § 1391(a)(2). Third, since Defendants are subject to specific personal jurisdiction in the Eastern District of Pennsylvania, as discussed above, and there is no other proper judicial district, this matter is correctly before the Court. See § 1391(a)(3).

. Unclean Hands and Nullification

Recognizing that an injunction is an equitable remedy, Defendants assert that Plaintiff has also breached the agreement, and thus has "unclean hands." As such, Defendants maintain that because of this breach Plaintiff is not entitled to an injunction. (See Def. Mot. to Dismiss at 19).

First, Defendants present no evidence or affidavit demonstrating such a breach, nor do they cite any authority in support of their "unclean hands" argument. See Stinchcomb v. United States, 132 F.R.D. 29, 31 (E.D.Pa. 1990) (stating that "[t]he court cannot rely on conclusory statements in briefs by counsel."). Second, Defendants stating that they believe this issue to be premature fail to engage in any substantive discussion of the merits of this position. (See Def.'s Mot. to Dismiss at 19). As such, the Court finds that there is no basis to deny an injunction on the grounds of "unclean hands."

Defendants also claim that the Non-Compete Agreement is superseded by the Mutual Compromise and Settlement Agreement entered into by the Parties. (See Def.'s Mot. to Dismiss at 4, 20). The Court finds no basis for such a conclusion as the Mutual Compromise and Settlement Agreement unambiguously states that "[t]he Non-Competition Agreement shall continue in all aspects, but only in accordance with those terms applicable under the circumstance that TelAmerica has failed to timely exercise the Option under the Purchase Agreement . . . ." (See Settlement Agreement ¶ 3.8(d)). Thus, said language, contrary to Defendants' suggestion, is unambiguous in its equivocation that the Non-Compete Agreement continues despite the signing of the Mutual Settlement and Compromise. See Arnold M. Diamond, Inc., v. Gulf Coast Trailing Co., 180 F.3d 518, 521 (3d Cir. 1999) (stating that unambiguous contract language is entitled to judgment as a matter of law if it is only subject to one reasonable interpretation).

Further, the Court finds that the Arbitration Clause contained within the Mutual Compromise and Settlement Agreement is not applicable to the Non-Compete Agreement. Said provision states that the agreement to arbitrate is applicable "[e]xcept as expressly set forth in any of the aforementioned and binding agreements to the contrary . . . ." (See Settlement Agreement at ¶ 18). As the Non-Compete Agreement is an existing binding agreement, and it contains a contrary provision providing for injunctive relief, to apply the Mutual Compromise and Settlement Agreement's arbitration clause is clearly contrary to the parties intentions. (See Non-Compete Agreement ¶ 6); see also Kaplan v. First Options of Chicago, Inc., 19 F.3d 1503, 1523 (3d Cir. 1994) (stating that although there is a presumption concerning the scope of arbitration, before such presumption is applicable there must be a clear and unequivocal contractual obligation to arbitrate the claim).

. Enforceability of Non-Compete Agreement

Defendants suggest that the terms of the Non-Compete Agreement are unenforceable because its scope is overly broad in time and geography. (See Def.'s Mot. to Dismiss at 16). The relevant terms in question are the Non-Compete Agreement's two (2) year exclusionary period, (see Settlement Agreement ¶ 3.8(d); see also Aff. of Funston ¶ 6), and the national scope of the restriction. (See Non-Compete at 1(a); see also Def.'s Mot. to Dismiss at 17).

Under Pennsylvania Law a covenant not to compete will be enforceable "so far as reasonably necessary for the protection of the employer." Sidco Paper Co. v. Aaron, 351 A.2d 250, 254 (Pa. 1976). In the context of an equitable remedy, such as a preliminary injunction, the Pennsylvania Supreme Court has stated that "where the covenant imposes restrictions broader than necessary to protect the employer, we have repeatedly held that a court of equity may grant enforcement limited to those portions of the restrictions which are reasonably necessary for the protection of the employer." Id. In determining "whether to enforce a post-employment restrictive covenant, we must balance the interest the employer seeks to protect against the important interest of the employee in being able to earn a living in his chosen profession." See Thermo Guard, Inc. v. Cochran, 596 A.2d 188, 193-94 (1991) (analyzing the availability of an injunction based upon a non-compete clause).

The Court finds that neither the two year time limitation, nor the territorial scope of the agreement are overly broad or unreasonable. The Defendants assert, without any legal authority, that agreements beyond one year in scope are as a matter of law unreasonable. Pennsylvania case law, however, clearly holds to the contrary. See DeMuth v. Miller, 652 A.2d 891, 900 (Pa. Super. 1996) (finding that where Defendant agreed to a five year non-compete clause he must adhere to it, absent evidence of a public policy violation). Defe...