Thermal Eng'g Int'l (USA) Inc. v. Lanaville

646 F.Supp.3d 202

THERMAL ENGINEERING INTERNATIONAL (USA) INC., Plaintiff, v. Daryl L. LANAVILLE, Defendant.

Civil Action No. 21-10937-NMG

United States District Court, D. Massachusetts

Signed December 8, 2022

Gabrielle A. Giombetti, Pro Hac Vice, Kathleen Marie Laubenstein, David J. Walton, Fisher & Phillips LLP, Philadelphia, PA, Joshua D. Nadreau, Fisher & Phillips, LLP, Boston, MA, for Plaintiff.

Christopher S. Feudo, Foley Hoag LLP, Boston, MA, Eric H. Rumbaugh, Pro Hac Vice, Michael Best & Friedrich, LLP, Milwaukee, WI, Stephen J. Horace, Pro Hac Vice, Michael Best & Friedrich LLP, Denver, CO, for Defendant.

MEMORANDUM & ORDER

GORTON, UNITED STATES DISTRICT JUDGE

Thermal Engineering International (USA) Inc. ("Thermal Engineering" or "plaintiff") brings this action against Daryl L. Lanaville ("Lanaville" or "defendant") seeking monetary damages and injunctive relief. Plaintiff alleges that defendant breached a non-solicitation covenant when he left Thermal Engineering to join a new company, HyPro, Inc. ("HyPro"), and shortly thereafter solicited other Thermal Engineering employees to follow him there. Defendant has filed a motion for summary judgment (Docket No. 53) which plaintiff opposes. For the reasons set forth below, the Court will allow, in part, and deny, in part, the motion for summary judgment.

I. Background

A. The Separation and Non-Solicitation Agreements

Thermal Engineering is a Delaware corporation that builds heat transfer technology for companies in the electric power generation industry. HyPro is a machine shop that uses raw castings to manufacture parts according to customer specifications. Until October, 2020, defendant worked at a Thermal Engineering manufacturing facility in Joplin, Missouri. Shortly after he left its employ, defendant started working at HyPro as the manager of a plant in Vinita, Oklahoma.

Defendant signed a Separation Agreement and General Release ("the Separation Agreement") with Thermal Engineering when his employment there was terminated. That agreement incorporated by reference an Employee Non-Disclosure, Non-Solicitation, Non-Competition and Assignment Agreement ("the Non-Solicitation Agreement") which Lanaville had previously agreed to when he was hired at Thermal Engineering. The pertinent portion of the Non-Solicitation Agreement requires that Lanaville, during the course of his employment and for one year thereafter, will not

(i) induce or attempt to induce any employee, consultant or advisor of the Company to end its relationship with the Company, or in any way interfere with the relationship between the Company, on the one hand, and the employee, company and advisor, on the other hand,

(ii) knowingly hire any person who was an employee, consultant or advisor of the Company until twelve (12) months after such individual's relationship with the Company has been terminated . . . .

B. The Conduct at Issue

In the spring of 2021, after his departure from Thermal Engineering, Lanaville had conversations with two individuals who were then still employed at Thermal Engineering. Lanaville and those individuals - Wrangler Bowman ("Bowman") and Jeremy Graham ("Graham") - discussed their employment status and the possibility of Bowman and Graham working at HyPro. Following those conversations, Lanaville informed his supervisor at HyPro that Bowman and Graham might be interested in working there. In late May, Bowman, a plant superintendent, and Graham, a skilled machine shop supervisor, left plaintiff's employ and went to work for HyPro in Oklahoma.

Thermal Engineering filed this suit against Lanaville in June, 2021. Plaintiff seeks injunctive relief to prevent defendant from violating the terms of the Separation Agreement and Non-Solicitation Agreement (Count I) and damages for breach of contract (Count II). Defendant moves for summary judgment in his favor as to both claims. The Court will address the claim for breach of contract first and then the request for injunctive relief.

II. Motion for Summary Judgment

A. Legal Standard

The role of summary judgment is "to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991) (quoting Garside v. Osco Drug, Inc., 895 F.2d 46, 50 (1st Cir. 1990)). The burden is on the moving party to show, through the pleadings, discovery and affidavits, "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).

A fact is material if it "might affect the outcome of the suit under the governing law . . . ." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact exists where the evidence with respect to the material fact in dispute "is such that a reasonable jury could return a verdict for the nonmoving party." Id.

If the moving party satisfies its burden, the burden shifts to the nonmoving party to set forth specific facts showing that there is a genuine, triable issue. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The Court must view the entire record in the light most favorable to the non-moving party and make all reasonable inferences in that party's favor. O'Connor v. Steeves, 994 F.2d 905, 907 (1st Cir. 1993). Summary judgment is appropriate if, after viewing the record in the non-moving party's favor, the Court determines that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Celotex Corp., 477 U.S. at 322-23, 106 S.Ct. 2548.

B. Application

1. Breach of Contract

A claim of breach of contract under Massachusetts law requires a plaintiff to demonstrate that: 1) there was an agreement between the parties, 2) the agreement was supported by consideration, 3) the plaintiff was ready, willing, and able to perform his or her part of the contract, 4) the defendant committed a breach of the contract and 5) the plaintiff suffered harm as a result. See Bulwer v. Mount Auburn Hosp., 473 Mass. 672, 690, 46 N.E.3d 24, 39 (2016).

Defendant moves for summary judgment on the grounds that the Non-Solicitation Agreement is unenforceable, there was no breach of the agreement and the alleged damages were not caused by his purported breach of contract.

a. Enforceability

The enforceability of a restrictive covenant under Massachusetts law depends upon whether it is

[1] necessary to protect a legitimate business interest, [2] reasonably limited in space and time, and [3] consonant with the public interest.

Oxford Glob. Res., LLC v. Hernandez, 480 Mass. 462, 470, 106 N.E.3d 556, 565 (2018)(quoting Boulanger v. Dunkin' Donuts Inc., 442 Mass. 635, 639, 815 N.E.2d 572, 577 (2004)).

For the reasons that follow, the Court finds that the challenged provisions of the Non-Solicitation Agreement are enforceable.

i. Legitimate Business Interest

Lanaville asserts that the Non-Solicitation Agreement does not protect a legitimate business interest such as the protection of trade secrets, confidential information or good will. In support of his position, he refers to a Massachusetts Superior Court holding that an employer

does not have a legitimate interest in barring employees from using their training and experience on behalf of a competitor [and thus] it also has no legitimate interest in restraining former employees from soliciting current [ ] employees to leave and join a competitor.

Robert Half Int'l v. Simon, No. 2084-CV-00060, 2020 WL 1218988, at *9, 2020 Mass. Super. LEXIS 27, at *22 (Mass. Super. Ct. Jan. 28, 2020).

The Massachusetts Superior Court, in turn, cites to a Wisconsin Supreme Court case which relied upon the interpretation of a Wisconsin statute evincing "a strong public policy against enforcement of trade restraints which are determined to be unreasonable upon all employees." Manitowoc Co. v. Lanning, 379 Wis. 2d 189, 204 n.18, 906 N.W.2d 130, 137 n.18 (Wis. 2018) (citation omitted). Furthermore, the court in Robert Half found that the employer there had not paid employees "extra consideration for agreeing to the anti-raiding provision." Robert Half, 2020 WL 1218988, at *9, 2020 Mass. Super. LEXIS 27, at *22. In the case at bar, Thermal Engineering has submitted a sworn declaration that it provided Lanaville with severance payments and other benefits in consideration for his compliance with the Non-Solicitation Agreement and other aspects of the Separation Agreement.

Thermal Engineering also disputes that Lanaville's recitation of legitimate business interests fully defines the interests an employer is permitted to protect in the context of an employer-employee restrictive covenant. Thermal Engineering cites a decision from within this district in which the court held that employers have an interest "in preserving the talent and goodwill of their employees". Seniorlink Inc. v. Landry, No. 19-CV-11248, 2021 WL 3932309, at *8 (D. Mass. Sept. 2, 2021) (quoting Advanced Micro Devices, Inc. v. Feldstein, No. 13-CV-40007, 2013 WL 10944934, at *11 (D. Mass. May 15, 2013)). Such an interest includes "ensuring [current employees] are not influenced to leave by former employees." Id.

Although neither of the cases cited by the parties is binding authority upon this Court, Seniorlink is persuasive and analogous to the facts of the pending case. In Seniorlink, the relevant provisions of the agreement at issue were substantially similar to the disputed terms of the Non-Solicitation Agreement. See Seniorlink, 2021 WL 3932309, at *2 (quoting the operative portion of the disputed non-solicitation agreement). Moreover, the defendant in Seniorlink received additional compensation as consideration for his compliance with the challenged terms, just as Lanaville did here. Thus, the Court finds that the Non-Solicitation Agreement here protects a legitimate business interest.

ii. Scope

Defendant next contends that even if the...