EMC Corp v. Arturi, et al
Filing
OPINION issued by Michael Boudin, Appellate Judge; David H. Souter, Associate Supreme Court Justice and Bruce M. Selya, Appellate Judge. Published. [11-1001]
Case: 11-1001
Document: 00116251551
Page: 1
Date Filed: 08/26/2011
Entry ID: 5575271
United States Court of Appeals
For the First Circuit
No. 11-1001
EMC CORPORATION,
Plaintiff, Appellant,
v.
EMANUEL ARTURI, ET AL.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. F. Dennis Saylor IV,
U.S. District Judge]
Before
Boudin, Circuit Judge,
Souter, Associate Justice,*
and Selya, Circuit Judge.
James R. Carroll, with whom Kurt Wm. Hemr, Eben P. Colby,
Skadden, Arps, Slate, Meagher & Flom LLP, Paul T. Dacier, Elizabeth
M. McCarron, Stewart A. Broder, John Mirick, and Mirick, O'Connell,
Demallie & Lougee, LLP were on brief, for appellant.
James M. Hirschhorn, with whom Joseph L. Buckley, Richard H.
Epstein, Sills Cummis & Gross P.C., David A. Bunis, Daniel J.
Cloherty, and Collora LLP were on brief, for appellees.
August 26, 2011
*
The Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
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SOUTER, Associate Justice.
federal
courts
on
diversity
Entry ID: 5575271
In this case before the
jurisdiction,
the
plaintiff,
EMC
Corporation, sought, among other things, a preliminary injunction
against
its
former
employee,
Christopher
Blotto,
forbidding
violation of his employment agreement: specifically, enjoining
competition with EMC, solicitation of its customers and remaining
employees,
and
possession
and
use
information gained while employed.
of
confidential
business
The District Court granted a
preliminary injunction as to the confidential information, but not
as to competition or solicitation, declining on the ground that the
contractual
restrictions
on these
activities
limited
Blotto’s
efforts for one year only, a period that had passed before any
injunction could be issued.
In this appeal for review for abuse of
discretion (turning on an issue of law) we affirm.1
See McClure v.
Galvin, 386 F.3d 36, 41 (1st Cir. 2004).
In 2007, Blotto signed the agreement with the plaintiff
business and technology consulting firm, which he left on December
4, 2009.
EMC filed the motion for the preliminary injunction at
issue here on November 8, 2010, and a hearing was held on December
1.
On December 15, the District Court denied the request on the
1
We have limited the statement of facts to those bearing on
the narrow issue before us, omitting, for example, references to an
earlier preliminary injunction against dealing with a specific
customer, to a factual dispute about the application of the noncompetition clause of the agreement, and to the claims made against
other named defendants (also former EMC employees) and the
competing business they formed.
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Entry ID: 5575271
ground that the one-year period had expired, and with it the
court’s discretion to award specific relief (as distinguished from
damages for breach, if shown by evidence at trial).
The court
ruled, we think correctly, on the basis of an opinion of this court
resting
in
turn
on
one
from
the
Supreme
Judicial
Court
of
Massachusetts, whose law concededly governs in this diversity case.
This court’s understanding of the state equity standards
was expressed in the holding of A-Copy, Inc. v. Michaelson, 599
F.2d 450
(1st
Cir.
1978),
which
reversed
an
order
enjoining
competition by a former employee issued after the expiration of the
one-year period of restriction set out in the employment contract.
Unlike EMC, A-Copy had requested the injunction early in the year,
but the motion was under consideration by the district court for
fourteen months, during which the span of the restrictive covenant
ran out.
We explained that “when the period of restraint has
expired, even when the delay was substantially caused by the time
consumed in legal appeals, specific relief is inappropriate and the
injured party is left to his damages remedy.”
Id. at 452 (citing
All Stainless, Inc. v. Colby, 364 Mass. 773, 308 N.E.2d 481, 485
(1974), among other Massachusetts cases).
All Stainless was an appeal to the Commonwealth’s highest
court
from
the
denial
of
an
injunction
to
enforce
a
former
employee’s agreement to refrain from competing for a period that
was still running on the date of the trial court’s order, but had
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expired by the time the appeal was decided.
Entry ID: 5575271
While the reviewing
court held it had been error for the trial court to deny specific
relief, it concluded that it was then too late.
period of restraint has . . . expired.
“The two year
Any relief to which All
Stainless may be entitled must come in the form of monetary
damages.”
All Stainless, 308 N.E.2d at 487.
The unequivocal character of the state rule creates a
frosty climate for EMC’s attempts to avoid it,2 and requires little
resort to policy in order to understand it. Its object is, indeed,
the familiar concern with the unequal bargaining power of employee
and employer, which is understood to call for construing the
agreement against the latter and limiting the availability of
equitable enforcement accordingly.
Sentry Ins. v. Firnstein, 14
Mass. App. Ct. 706, 442 N.E.2d 46, 47 (1982).
That policy, of
course, applies squarely here.
EMC protests that the rule denies it the benefit of its
bargain with Blotto, but this begs the question in more than one
2
We assume arguendo that the door is at least open to
distinguishing All Stainless from the case of a defendant who had
taken affirmative steps to conceal his acts of breach, see Exeter
Group Inc. v. Sivan, No. 2005-0628-BLS2, 2005 WL 1477735 (Mass.
Super. Ct. Mar. 24, 2005), a situation not before the All Stainless
court. But that door is not open here, where the District Court
dealt with no issue of affirmative concealment of breaches of the
non-competition and non-solicitation clauses.
Apparently the
closest pass at considering any affirmative obstruction was
revealed in the trial judge’s mild observation in connection with
Blotto’s possession of proprietary information, that “he has not
been particularly forthcoming.”
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way.
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Date Filed: 08/26/2011
Entry ID: 5575271
EMC can, first of all, enforce its bargain to the penny by
remedy at law if it can prove a breach of the agreement and
damages, as was true in A-Copy and All Stainless, and as the trial
court expressly noted here.
Second, like any contracting party,
EMC makes its agreements subject to the rules of equity governing
specific enforcement; rules, moreover, that were clearly in place
in the governing federal and state cases well before the company
required
Blotto
to
sign.
Being
forewarned,
EMC
could
have
contracted, as the district judge noted, for tolling the term of
the restriction during litigation, or for a period of restriction
to commence upon preliminary finding of breach.
EMC’s
only
other
argument
attempts
But it did not.
to
deflect
All
Stainless by citation to five unreported Massachusetts Superior
Court cases that show that court’s readiness to extend equitable
enforcement beyond the terminal date of restrictions such as these.
See Zona Corp. v. McKinnon, 28 Mass. L. Rptr. 233 (Super. Ct. Mar.
14, 2011); Exeter Group Inc. v. Sivan, No. 2005-0628-BLS2, 2005 WL
1477735 (Mass. Super. Ct. Mar. 24, 2005); Oxford Global Resources,
Inc. v. Consolo, 16 Mass. L. Rptr. 415 (Super. Ct. June 6, 2003);
Darwin Partners, Inc. v. Signature Consultants, LLC, No. 00-0277,
2000 WL 33159238 (Mass. Super. Ct. Mar. 24, 2000); Modis, Inc. v.
Revolution Grp., Ltd., 11 Mass. L. Rptr. 246 (Super. Ct. Dec. 29,
1999).
Like the District Court, we have some question about the
harmony of these results with All Stainless, but that is neither
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here nor there.
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Date Filed: 08/26/2011
Entry ID: 5575271
The answer to these citations is that we are bound
both by A-Copy and by the obligation of a federal court to take its
law in diversity cases from the state’s highest court once that
court has spoken on point, see Phoung Luc v. Wyndham Mgmt. Corp.,
496 F.3d 85, 88 (1st Cir. 2007), as it has here in All Stainless.
Affirmed and remanded for further proceedings.
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