Amphenol Corporation v. Paul
Filing
101
ORDER granting in part and denying in part 2 Motion for Preliminary Injunction; granting in part and denying in part 65 Motion for TRO. Signed by Judge Alfred V. Covello on November 9, 2012. (Gentile, N.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
AMPHENOL CORPORATION,
Plaintiff,
v.
RICHARD PAUL,
Defendant,
TE Connectivity, Ltd.,
Defendant.
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CIVIL NO: 3:12CV543(AVC)
RULING ON THE PLAINTIFF’S MOTIONS FOR PRELIMINARY INJUNCTION AND
TEMPORARY RESTRAINING ORDER
This is an action for damages and equitable relief in
connection with the alleged breach of a non-competition
agreement. It is brought pursuant to common law principles
concerning breach of contract and equitable doctrines concerning
the entry of restraining orders.
The plaintiff has filed the within motions seeking a
preliminary injunction and a temporary restraining order as a
means of enforcing the parties’ agreements concerning noncompetition. The issues are: 1) Whether the defendant has
violated the terms of the parties’ agreements; and 2) If so,
does the level of his delict warrant the application of the
relief sought.
The motions are granted in part.
1
FACTS
An examination of the pleadings, exhibits, memoranda, the
attachments thereto and the testimony of various witnesses
discloses the following:
The plaintiff, Amphenol Corporation (“Amphenol”), is a
multi-national corporation dealing in a panoply of electronic,
electrical, fiber optic and related products.1 Amphenol has at
least eighty-four divisions located throughout the world. The
company’s largest division, Amphenol’s military aerospace
operations (“Amphenol MAO”), is located in Sidney, New York.
Amphenol MAO designs, manufactures, and supplies interconnect
systems for the military and aerospace markets.
The defendant, Richard Paul, is a former decades-long
employee of Amphenol MAO. Within the current year, Paul acted as
the business unit director of Amphenol’s high speed interconnect
unit. He appears to have an expertise with respect to
connectors.2 At Amphenol, Paul was responsible for various
aspects of the business including sales, pricing, marketing and
1
Amphenol, manufactures and markets electrical, electronic and fiber
optic connectors, coaxial and flat-ribbon cable, and interconnect
systems. The primary markets for Amphenol's products are
communications and information processing markets, including cable
television, cellular telephone and data communication processing
systems; aerospace and military electronics; and automotive, rail and
other transportation and industrial applications.
2
A connector is a device that joins electrical circuits together.
2
engineering. Paul’s primary duties involved product development
and expanding Amphenol’s operations, with respect to connectors,
into other markets. Paul had unlimited access to information at
Amphenol, specifically marketing information regarding sales
history, markets and customers.
The defendant, TE Connectivity, Ltd. (“TE”), designs and
manufactures products that connect and protect data and power.
The company serves customers in more than 150 countries in a
variety of industries including automotive, data communication
systems, consumer electronics, telecommunications, aerospace,
defense and marine, medical, energy and lighting. Within the past
year, TE merged with Deutsch Group (“Deutsch”), a manufacturer
of electrical and fiber optic connectors.
Prior to TE’s merger with Deutsch, Amphenol and TE were not
considered direct competitors. Deutsch, however, has a product
and consumer base that parallels Amphenol’s. Thus, TE’s merger
with Deutsch placed TE in direct competition with Amphenol.
Amphenol was aware of this fact, and when it learned of TE’s
merger with Deutsch, the company created a team to formulate a
strategic response to the merger. Paul had access to the merger
response team’s findings and documents during his employment
with Amphenol.
3
Over the years, Paul and Amphenol executed various noncompetition agreements (“the Agreements”).3 The Agreements
provided, inter alia, that:
So long as [Paul] is employed by [Amphenol] . . . and
for a period of one year thereafter . . . [Paul] shall
not, in any geographic region in the world in which
[Paul] acts or has acted for [Amphenol] or any
division
or
subsidiary
thereof,
directly
or
indirectly, engage in the development, production,
sale or distribution of any product, sold, distributed
or which is in development (i) by the operation of
[Ampehnol] . . . during the twelve month period
immediately
preceding
[Paul’s]
termination
of
employment, or (ii) by [Amphenol] or its subsidiaries
about
which
[Paul
received
and
Confidential
Information.4
The Agreements further provided that Amphenol may extend
the non-competition period for an additional twelve months
if Amphenol gives notice to Paul within nine months of his
termination and pays Paul 50% of his annual base salary.
Additionally, the Agreements restrict Paul’s ability to
divert customers or employees away from Amphenol for a
period of twenty-four months following the termination of
his employment.
3
On November 2, 2006, Paul and Amphenol executed an Intellectual
Property Agreement. In addition, Paul and Amphenol entered into a 2000
Management Stockholder’s Agreement and a 2009 Management Stockholder’s
Agreement. At this stage of the proceedings, the court does not
address the enforceability of the Agreements with respect to duration
or scope.
4
E.g., Exibit C ¶ 17.
4
On March 9, 2012, Paul voluntarily terminated his
employment with Amphenol MAO in order to join TE as global vice
president for product management and pricing for TE’s aerospace,
defense and marine business unit. Paul is responsible for the
marketing of wires and cables, relays and contactors, and
engineered polymer solutions. The aerospace, defense and marine
business unit that Paul oversees is separate and distinct from
other TE or Deutsch divisions that are in competition with
Amphenol. In addition, Paul works from home and does not have
direct physical contact with any TE or Deutsch employee that
deals with connectors. However, Paul has been copied on various
emails related to TE’s merger with Deutsch and the pricing and
marketing of connectors.
Amphenol has completed a forensic study of Paul’s computer
activity in the time before his departure. The study found that
2,000 work-related emails were forwarded to Paul’s personal
email address. In addition, a review of the computer hard drives
that Paul returned to Amphenol revealed that he had removed
various files from Amphenol, the majority of which have business
relevance.
STANDARD
To merit imposition of a preliminary injunction, the moving
party “must demonstrate (1) that it will be irreparably harmed
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in the absence of an injunction, and (2) either (a) a likelihood
of success on the merits or (b) sufficiently serious questions
going to the merits of the case to make them a fair ground for
litigation, and a balance of hardships tipping decidedly in its
favor." Brewer v. West Irondequoit Central Sch. Dist., 212 F.3d
738, 743-44 (2d Cir. 2000).
DISCUSSION
At this stage of the proceedings it does not appear that
Paul is competing with his former employer. Accordingly, Paul
may continue in his current capacity as the global vice
president for product management and pricing for TE’s aerospace,
defense and marine business unit. There are, however, certain
indicia that, upon further development, may lead to the
conclusion that Paul is indeed competing with Amphenol, and
therefore, acting in violation of the Agreements. For example,
Paul’s possession of proprietary documents belonging to Amphenol
(which he has returned) provides the possibility that the
documents could be used in a manner that violates the
Agreements. Additionally, the fact that Paul was included on
internal emails related to TE’s merger with Deutsch, and the
pricing and sale of connectors, indicates that TE is not taking
adequate measures to insulate Paul from activities that may
violate the Agreements. To help ensure that violations of the
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Agreements do not occur in the future, the court orders the
following:
1. Until March 9, 2013,5 Paul shall have no involvement
and/or offer or be asked for any input regarding or
relating to the Deutsch acquisition by and/or integration
into TE and the post-merger operations of Deutsch;
2. Paul shall not use Amphenol’s confidential information
(as defined in the IPA and Stockholder’s Agreements) or
trade secrets, including confidential business and sales
information, pricing structures, customer and product
information, customer preferences, information from the
POS Pivot database and other confidential and trade
secret information;
3. Paul shall not use or disclose Amphenol’s confidential
information (as defined in the IPA and Stockholder’s
Agreements) and/or trade secrets to solicit and/or divert
Amphenol’s customers;
4. Paul shall not profit and/or capitalize, directly or
indirectly, by using Amphenol’s confidential information
and/or trade secrets to solicit, communicate with, and/or
divert Amphenol’s existing and/or potential customers;
5
The court acknowledges that pursuant to the Agreements, Amphenol has
the right to extend this period for an additional year.
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5. Up to and including March 9, 2013, Paul shall not contact
any employee, or former employee employed by Amphenol at
any time in the one year prior to March 9, 2012, for the
purpose of or with the intent of soliciting, diverting,
or otherwise enticing such employee away from or out of
the employ of Amphenol;
6. Paul shall not contact any person or entity which was, at
the time of Paul’s resignation from Amphenol, or which
has been, within one year prior to the time of his
resignation, a customer, supplier, customerrepresentative, or distributor of/for Amphenol for the
purpose of communicating with, soliciting, diverting,
and/or otherwise selling products or services in
competition with Amphenol;
7. Paul shall not use or disclose any knowledge,
confidential information (as defined in the IPA and
Stockholder’s Agreements) or trade secrets concerning or
belonging to Amphenol and/or its Military and Aerospace
Operations; and
8. Up to and including Until March 9, 2013, Paul shall not
have responsibilities for connectors or interconnectors
of any kind.
8
It is further ordered that Paul shall cooperate with TE in TE’s
implementation of the following precautions to confirm that Paul
has not and will not share Amphenol confidential, trade secret,
or proprietary information with TE:
1. TE’s distribution of a written memorandum reminding
senior leaders and managers of TE that Paul is to have no
involvement with Deutsch and/or connectors;
2. TE’s designation of an information technology
professional employed by TE to search TE’s systems for
any evidence that Paul has uploaded any Amphenol
documents or Amphenol data to TE’s computers, servers,
and hard drives, and to certify that these searches were
performed by 14 days from this Court’s order, and every
30 days thereafter;
3. TE’s implementation of a word-based filter including the
term “Amphenol” and “Deutsch” on Paul’s email accounts on
a network level so that Paul remains “fire walled” from
any competitive activities and/or communications, such
filter to be implemented up to and including March 9,
2014; and
4. When Paul works from the TE Middleton Facility, he will
conduct his work in the ITAR secure and limited access
facility.
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Within seven calendar days of this order, Paul and TE shall meet
and confirm that Paul is in full compliance of this order. A
written certification stating as such shall be provided to
Amphenol and this court within fourteen days.
CONCLUSION
For the foregoing reasons, the motion for preliminary
injunction and the motion for temporary restraining order are
GRANTED IN PART.
It is so ordered, this 9th day of November 2012, at
Hartford, Connecticut.
___/s/___
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Alfred V. Covello, U.S.D.J.
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