Premier Rides, Inc. v. Stepanian

Filing 27

MEMORANDUM AND ORDER denying 3 Motion for Preliminary Injunctive Relief; Defendant shall fully comply with 5 Standing Order Concerning Removal by March 2, 2018; Defendants Answer to the Complaint shall be filed by March 9, 2018; Plaintiff shall arrange a Case Planning Conference to be held by March 16, 2018. Signed by Judge Marvin J. Garbis on 2/23/2018. (jnls, Deputy Clerk) Modified on 2/23/2018 (jnls, Deputy Clerk).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
PREMIER RIDES, INC.
Plaintiff
vs.

*
Defendant

*

*
* CIVIL ACTION NO. MJG-17-3443

MARK STEPANIAN

*

*

*

*
*
*
*
*
*
MEMORANDUM & ORDER RE: PRELIMINARY INJUNCTION

*

The Court has before it Plaintiff’s request for injunctive
relief following the Court’s denial [ECF No. 7} of Plaintiff’s
Request for Temporary Restraining Order [ECF No. 3].

The Court

has reviewed the materials submitted relating thereto and has
held a hearing, including testimony and the presentation of
evidence.

The Court has made the factual findings stated herein

based on its evaluation of the evidence and the reasonable
inferences drawn therefrom.

I.

INTRODUCTION
Plaintiff, Premier Rides, Inc. (“Premier Rides”) commenced

the instant action against its former employee, Mark Stepanian
(“Stepanian”) on November 15, 2017 in the Circuit Court for
Baltimore City.

Premier Rides alleged that Stepanian breached

the covenant not to compete that was contained within the NonDisclosure, Non-Competition and Non-Solicitation Agreement (“the

Agreement”) by working as an employee or contractor with a
competitor, DreamCraft Attractions Ltd. (“DreamCraft”).

Premier

Rides sought a Temporary Restraining Order to prevent Stepanian
from violating the restrictive covenant.
Stepanian filed his Notice of Removal [ECF No. 1] to this
Court on the basis of diversity jurisdiction1 on November 20,
2017.

On the same date, he filed the Declaration of Mark

Stepanian [ECF No. 4] stating that DreamCraft does not compete
with Premier Rides.

Under the circumstances, the Court denied

Premier Rides’ request for a Temporary Restraining Order but
allowed Premier Rides to proceed with an evidentiary hearing
seeking preliminary injunctive relief.

The issue is now ripe

for resolution.

II.

BACKGROUND
A.

The Agreement

The Non-Disclosure, Non-Competition and Non-Solicitation
Agreement was signed by Premier Rides, as “Company,” and Mark
Stepanian, as “Employee,” on September 24, 2013, three months
after Stepanian began working at Premier Rides.

1

Pertinent to

Plaintiff is a citizen of Maryland, and Defendant is a
citizen of Virginia.

2

the instant dispute,2 Paragraph 8 of the Agreement, the noncompetition provision, provides:
Employee
agrees
that
during
his
employment and for a period of 12 months
after termination of that employment . . .
he shall not, on his own behalf or as a
partner,
officer,
director,
employee,
independent contractor, agent, or consultant
of any other person or entity directly or
indirectly, engage or attempt to engage in
the business of providing goods or services
the same as or similar to the goods or
services of the Company. Employee shall not
involve himself in a capacity the same as or
similar to the capacity he served at the
Company
with any kind of business
or
enterprise
that
competes
directly
or
indirectly with the Company’s business.
Employee understands that this means that he
is not permitted to be employed by or
perform contract work in a capacity the same
as or similar to the capacity he served at
the Company for a business or enterprise in
the Company’s business.
Employee expressly
acknowledges that the Company is entitled to
a court order enjoining any violation of
this paragraph even if Employee has not
solicited or serviced any of the Company’s
Customers. The restrictions in paragraphs 8
and 9 of this Agreement are intended to
limit Employee from competing with the
Company
in
its
role
in
the
design,
fabrication, and construction of amusement
rides and attractions, and the sales of
parts and services for existing amusement
rides and attractions.
This
from

paragraph
becoming

does not
employed

2

prevent Employee
by
any
person,

Premier Rides’ Complaint alleges a violation of Paragraph 8
of the Agreement. Compl. ¶¶ 8, 17-20, ECF No. 2; see also
Plaintiff’s Request for Temporary Restraining Order and
Preliminary and Permanent Injunctive Relief ¶ 3, ECF No. 3;
Memorandum 2, 6-7, ECF No. 3-1.

3

government
agency,
firm,
company,
partnership, corporation, or other entity
which is an end user of amusement rides
including but not limited to, operators of
amusement parks.
This Agreement does not
prevent Employee from accepting employment
or otherwise becoming involved with entities
which solicit Customers of the Company for
services or products other than the kinds of
services or products provided by the Company
to any entity.
Employee may work for a
subcontractor
of
the
Company
without
violating the restrictions in paragraphs 8
and 9 of this Agreement provided the
subcontractor does not compete with the
Company.
Agreement ¶ 8, Compl. Ex. A, ECF No. 2-1 (emphasis added).
Referenced in Paragraph 8, Paragraph 9 further restricts
Employee regarding non-solicitation:
Employee shall not, during his employment
and for a period of 12 months after his
separation from employment . . . either
alone, in conjunction with or through the
use of others, whether as principal, agent,
employee, trustee or through the agency of
any person or entity, canvass, solicit or
accept business from any Customer of the
Company with which Employee had contact
during the 24 months prior to his separation
from employment . . . if the services or
products to be provided to said Customer are
the same as or similar to the services and
products which are or were provided to said
Customer by the Company.
Id. ¶ 9.

4

B.

The Amusement Rides Industry

The Amusement Rides Industry is an industry with few direct
competitors.

Potential customers range from amusement parks to

shopping malls, zoos, and aquariums.

The market itself is

global and the current primary growth area is in Asia and the
Middle East.

Everyone in the industry tries to sell to the same

customers.
The trade association of the industry, the International
Association of Amusement Parks and Attractions (“IAAPA”), hosts
trade shows, the largest of which is held annually in Orlando
with approximately 40,000 people in attendance each year.

The

trade shows are the primary environment for networking and
commercial interaction.

Volunteer organizations for the

development and promotion of safety standards and safety
education have been developed and peopled by members of the
industry, both suppliers and customers.

C.

Premier Rides

Premier Rides is a Baltimore, Maryland-based company that
designs, fabricates, and constructs amusement rides and themed
attractions, such as roller coasters, virtual reality rides,
towers, and pedal rails.

It also sells parts and services for

existing rides and attractions.

Premier Rides generally sells

5

the hardware, but it is combined with software3 and other theming
elements to create a highly-themed attraction.

Premier Rides’

main focus is on designing and manufacturing highly-themed
roller coasters, and it also sells flying theaters4 and motionbase5 attractions.

Premier Rides incorporates virtual reality

into some of its themed rides, and has installed virtual-reality
headsets into rides, but it does not design or manufacture
virtual-reality headsets.
Premier Rides’ customers include familiar names such as Six
Flags, Cedar Fair, Evergrande, Palace Entertainment, Trans
Studio, SeaWorld, and Universal Studios.

Premier Rides is also

working on a project for Wanda, a large Chinese real estate
development company.

Premier Rides’ competitors include a Swiss

company, Intamin Rides, a German company, MACK Rides, and
Canadian companies, Dynamic Attractions and CAVU Designwerks,
Inc. (“CAVU”).

3

Typically, the software or “theme” is owned by the
customer. The steel fabrication and other major components are
often sub-contracted. Premier Rides generally installs and
assembles the ride on the customer site and maintains it
thereafter.
4
A “flying theater” is a ride in which guests are “seated”
and “the seat moves to a location to where you can see a video
at 270 degrees, what seems like 360 degrees, and you’re soaring
or flying over some experience.” M. Turner Dep. at 73:11-12.
5
Motion-base rides are simulator rides that create the feel
of riding on a train or other form of transportation and immerse
the rider in an imaginary environment through use of video
screens and projection technology.

6

D.

DreamCraft

DreamCraft, based in Victoria, British Columbia, Canada,
designs and manufactures virtual-reality headsets.

DreamCraft

was formed in 2016 by a strategic partnership between CAVU and
another Victoria-based company, One Bit Labs, Inc.6

DreamCraft’s

website indicates that DreamCraft is “a CAVU Company.”

Pl.’s

Ex. 7.
DreamCraft is a preferred supplier and subcontracts to
CAVU, and the companies work closely together, sharing the same
mailing address and having certain senior management in common.
For example, Peter Schnable, the founder and Chief Executive
Officer (“CEO”) of CAVU is a corporate director and past CEO of
DreamCraft;7 Ken Yao, the President and Chief Financial Officer
(“CFO”) of CAVU is the CFO of DreamCraft.

DreamCraft and CAVU

coordinated adjoining booths at IAAPA, sharing a joint marketing
video in which DreamCraft was referred to as a sister company
that CAVU created to improve the virtual reality experience.
DreamCraft’s website promotes attractions that its team has
worked on to demonstrate DreamCraft’s expertise in the

6

CAVU owns 90,000 Class A common voting shares, One Bit Labs
Inc. owns 90,000 Class B common voting shares, and an
independent investor, Yong Liao, owns 20,000 preferred shares.
Def.’s Ex. 5.
7
Peter Schnable also has worked for Intamin Rides, Premier
Rides, and Dynamic Attractions prior to CAVU.

7

attractions industry, including three rides8 that are Premier
Rides’ attractions.

DreamCraft does not design or manufacture

roller coasters, motion-based rides, or flying theaters.9
DreamCraft is a virtual reality and augmented reality service
provider.

Its focus is to design and build virtual-reality

headsets10 that can be incorporated into amusement attractions.

E.

Mark Stepanian

Mark Stepanian is a 27-year-old structural engineer living
in Alexandria, Virginia.

He obtained his degree in structural

engineering from Cornell University in May 2013 and initially
began working with Premier Rides as an intern11 in June 2012
while still in school.

Premier Rides offered him a full-time

position in April 2013, and he began working for Premier Rides
after graduation in May 2013 as an entry-level project engineer.

8

Italian Job, Outer Limits, and Revenge of the Mummy. Pl.’s
Ex. 7. None of these rides incorporate virtual-reality
headsets.
9
But CAVU does. CAVU’s stated intention is to focus on
virtual reality rides such as motion-based rides and flying
theaters. CAVU is currently installing a themed roller coaster
called Scrat’s Nutty Adventure in Genting Highlands, a Malaysian
theme park, a project for which Premier also bid.
10
DreamCraft has filed for patents on its current headset
design.
11
To obtain the internship, Stepanian connected with Premier
Rides through the Cornell alumni network. The President of
Premier Rides, James Seay, is also a Cornell engineering
graduate.

8

At Premier Rides, Stepanian started in the parts and
service division, performing evaluations and maintenance on
roller coasters.

He also worked on a service project that

involved moving a spinning ride called Sandstorm from one theme
park to a different theme park in another state.

After a year,

Stepanian moved to the roller coaster division, where he worked
until he left Premier Rides in May 2017.
In the roller coaster division, Stepanian provided
technical sales support,12 oversaw the design and integration of
rides and systems that manage rides, worked with contractors and
vendors, certified built roller coasters as meeting safety
standards, maintained project budgets, and prepared maintenance
manuals. He also provided support to the company at the IAAPA
conference each year and participated in voluntary safety
standards organizations as a representative of Premier Rides.
Projects that Stepanian worked on included the Wanda Monkey
Kingdom ride, the Adventure Dining motion-base ride, a dark ride
roller coaster in Doha, the Guangzhou Chimelong roller coaster,
and he assisted the sales presentation to Universal Studios
related to the Mario Kart video game ride.

12

With respect to supporting sales of rides, Stepanian would
assist Premier Rides’ salesperson by providing technical
engineering information and explanations to Premier Rides’
customers.

9

After deciding to leave Premier Rides and seek other
employment, Stepanian consulted with legal counsel.

In his

resignation letter of May 22, 2017, he formally asked to be
released from his non-compete obligation in the Agreement.13

By

letter on May 26, 2017, Premier Rides refused to release
Stepanian.

Shortly thereafter, on May 28, 2017, Stepanian

communicated to a co-worker that he would not be going to work
for CAVU and was looking at other offers because he did not want
to end up in a lawsuit with Premier Rides.

For the same reason,

he also turned down an offer from S&S, a roller coaster
manufacturer that he considered a Premier Rides’ competitor.
Stepanian continued to look for and apply for non-competitive
opportunities through online job-boards.
On June 1, 2017, Stepanian was contacted by Peter Schnable,
who identified himself as an investor in DreamCraft, to discuss
an opportunity to work at DreamCraft.

On June 7, 2017,

Stepanian entered into a contract with DreamCraft to be its
Director of Technical Services.

Stepanian works remotely from

his home in Virginia and reports directly to Ken Yao,
DreamCraft’s CFO. Within his first two weeks on the job,
Stepanian spent three days at CAVU’s Dallas, Texas office being
13

In the letter, Stepanian included a statement of his
position that the Agreement was not enforceable for lack of
consideration and failure to define a geographic scope. Pl.’s
Ex. 10

10

briefed by CAVU’s then-President on the scope of a CAVU project
that was being subcontracted to DreamCraft to incorporate
virtual reality hardware and software.

Shortly after, on June

26, 2017, Stepanian met with David Reitterer, CAVU’s former
technical director, in Guangzhou, China to evaluate a motionbase ride and determine how easily DreamCraft’s headsets could
be incorporated into the predesigned motion-base system.

On the

same trip, Stepanian visited the Genting Park rides in Malaysia,
including the CAVU rides in Genting Park.
Since leaving Premier Rides, Stepanian has corresponded
with some Premier Rides’ customers to inform them of his
departure.

During his job search, he interviewed with Six

Flags, a Premier Rides’ customer.

He has also kept in touch14

with Aileen Hu from Wanda, with whom he worked on the Premier
Rides’ project for Wanda.

Since working with DreamCraft, he has

attended meetings15 with companies who were customers of Premier
Rides, including Six Flags, Cedar Fair, Evergrande, Palace
Entertainment, Trans Studio, SeaWorld, Universal Studios, and

14

A phone conversation on May 25, June 28, and July 6, 2017,
a dinner meeting in the Guangzhou airport on July 13, 2017, a
September 3, 2017 conversation about the Mummy attraction, a
November 13, 2017 conversation about whether she would be
attending IAAPA (she did not attend).
15
These meetings were during the IAAPA conference and not
initiated by Stepanian. The discussion related to combining
DreamCraft’s virtual reality headsets into existing rides.

11

Busch Gardens.

Stepanian’s job at DreamCraft includes technical

sales support related to adding virtual reality to attractions.
Stepanian married in June 2016, and his current DreamCraft
salary of $120,000 per year is the family’s sole income since
his wife attends graduate school.

Stepanian is also attending

Johns Hopkins Carey Business School and has one more semester to
complete an MBA with a focus in finance and management.

III. LEGAL STANDARD
“The purpose of a preliminary injunction is merely to
preserve the relative positions of the parties until a trial on
the merits can be held.” United States v. South Carolina, 720
F.3d 518, 524 (4th Cir. 2013) (quoting Univ. of Tex. v.
Camenisch, 451 U.S. 390, 395 (1981)).

“A preliminary injunction

is an extraordinary remedy, to be granted only if the moving
party clearly establishes entitlement to the relief sought.”
Manning v. Hunt, 119 F.3d 254, 263 (4th Cir. 1997).
To obtain a preliminary injunction, a plaintiff must show
that:
1.

It will likely succeed on the merits;

2.

It is likely to suffer irreparable harm absent
preliminary relief;

3.

The balance of equities tips in its favor; and

4.

An injunction is in the public interest.

12

Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008);
Centro Tepeye v. Montgomery Cty., 722 F.3d 184, 188 (4th Cir.
2013)(en banc).

The plaintiff has the burden of establishing

that it meets the Winter factors.

Dewhurst v. Century Aluminum

Co., 649 F.3d 287, 293 (4th Cir. 2011).

IV.

DISCUSSION
A.

Likely Success on the Merits
1.

Enforceability of Non-Compete Agreement

In the context of preliminary injunctive relief, a
demonstration of success on the merits requires the plaintiff to
clearly establish that the agreement at issue is enforceable
under the governing law.

Cytimmune Scis., Inc. v. Paciotti, No.

PWG-16-1010, 2016 WL 4699417, at *2 (D. Md. Sept. 8, 2016),
reconsideration denied, No. PWG-16-1010, 2016 WL 6879942 (D. Md.
Nov. 22, 2016).

“Restrictive covenants in employment contracts

are in restraint of trade, and their validity depends on their
reasonableness.” Mansell v. Toys R Us, Inc., 673 F. Supp. 2d
407, 416 (D. Md. 2009)(citing Ruhl v. Bartlett Tree Co., 225
A.2d 288, 291 (Md. 1967)).
Under Maryland law,16 an employer seeking to enforce a
restrictive covenant must establish that the agreement was

16

The Agreement stipulates that its terms are to be
interpreted according to Maryland law. Agreement ¶ 14, ECF No.

13

supported by adequate consideration and that the following four
conditions are met:
(1) the employer must have a legally
protected interest; (2) the restrictive
covenant must be no wider in scope and
duration than is reasonably necessary to
protect the employer’s interest; (3) the
covenant cannot impose an undue hardship on
the employee; and (4) the covenant cannot
violate public policy.
Deutsche Post Glob. Mail, Ltd. v. Conrad, 116 F. App’x 435, 438
(4th Cir. 2004) (interpreting Maryland law); Simko, Inc. v.
Graymar Co., 464 A.2d 1104, 1106–07 (Md. Ct. Spec. App. 1983);
Becker v. Bailey, 299 A.2d 835, 838 (Md. 1973).
Enforceability depends upon the unique language of the
clause at issue.

MCS Servs., Inc. v. Jones, No. CIV.A WMN-10-

1042, 2010 WL 3895380, at *2 (D. Md. Oct. 1, 2010)(citing
Holloway v. Faw, Casson & Co., 572 A.2d 510, 515 (Md. 1990)).
“The test used for a restrictive covenant in an employment
contract is ‘whether the particular restraint is reasonable on
the specific facts.’” Intelus Corp. v. Barton, 7 F. Supp. 2d
635, 641 (D. Md. 1998)(quoting Ruhl, 225 A.2d at 291).
In Hekimian Labs., Inc. v. Domain Sys., Inc., the Court
summarized the analysis under Maryland law as follows:
In sum,
considered in
principles:

the following factors are
light of the aforementioned

2-1.

14

(1) whether the employee is a
employee whose services are unique;

skilled

(2) whether the covenant is necessary to
protect the misuse of trade secrets of
confidential information or to prevent the
unfair solicitation of customers;
(3) whether there is any unfair exploitation
of contacts between the employee and the
customer; and,
(4) whether enforcement would impose an
unfair hardship on the employee or would
disregard the public interest.
664 F. Supp. 493, 497 (S.D. Fla. 1987)(citing Budget Rent A Car
of Washington, Inc. v. Raab, 302 A.2d 11, 13 (Md. 1973);
Millward v. Gerstung Int’l Sport Educ., Inc., 302 A.2d 14, 16
(Md. 1973).

The Court noted that these factors represent a

summary, not a substitute, for the analysis required by Becker.

a.

Consideration

Stepanian contends that the Agreement cannot be enforced
because he received no consideration at the time he signed it.
Stepanian asserts that he began working for Premier Rides in
June 2013 but did not sign the Agreement until September 2013,
and at that time, he received no pay increase, no change in
duties, nor did he receive any assurance of job security,
continuing as an at-will17 employee.

17

Stepanian cites North

An at-will employment contract is one of indefinite
duration that can be legally terminated by either party at any

15

Carolina, South Carolina, and West Virginia law to support his
position that continued at-will employment is illusory
consideration for a covenant not to compete.

However, the Court

must look to Maryland law to determine if the Agreement is
supported by adequate consideration.
“[Maryland] law clearly provides that continued employment
of an at-will employee for a significant period constitutes
sufficient consideration for a restrictive covenant where there
is no allegation of bad faith or other compromising
circumstance.”

Hearn Insulation & Improvement Co. v. Carlos

Bonilla, No. CIV. A. AW-09-990, 2010 WL 3069953, at *6 (D. Md.
Aug. 5, 2010) (citing Simko, 464 A.2d at 1107–08).

What

constitutes a significant period is dependent on the facts and
circumstances of a particular case.

Simko, 464 A.2d at 1107-08.

The court in Simko found that continued employment for a period
of ten years was sufficient consideration.

Id.

Courts have

also found that a year, specifically “almost a year,” of
continued employment is adequate consideration.

Mona Elec.

Grp., Inc. v. Truland Serv. Corp., 56 F. App’x 108, 110 (4th
Cir. 2003)(citing Maryland law).
Stepanian continued working at Premier Rides for more than
three years after signing the Agreement, and he continued to
receive raises and bonuses during that time.
time.

Therefore, the

Adler v. Am. Standard Corp., 432 A.2d 464, 467 (1981).

16

Court finds that the Agreement does not fail for lack of
consideration.

b.

Legally Protected Interest

“Employers have a legally protected interest in preventing
departing employees from taking with them the customer goodwill
they helped to create for the employer.” Deutsche Post, 116 F.
App’x at 438.

However, the scope of the proscribed activity

must be properly bounded; an overbroad covenant that simply
tries to prevent any kind of competition by the employee is not
legally enforceable.

Id.

An employer may seek to prevent a

former employee from “using the contacts established during
employment to pirate the employer’s customers.”

Holloway, 572

A.2d at 515. But a restrictive covenant is not enforceable if
its sole purpose is to prevent a company’s employees from
joining another company, thereby making the new company a more
efficient competitor. Id.; see also MCS Servs., 2010 WL 3895380
at *3 (“[M]ere protection from enhanced competition is not a
protectable interest.”).
A second protectable interest under which Maryland courts
will enforce a restrictive covenant is where the employee
provided unique services to the employer.
16; Becker, 299 A.2d at 838.

Millward, 302 A.2d at

“Unique or specialized skills or

services are those ‘that would make it difficult to find a

17

substitute employee.’”

Mansell, 673 F. Supp. 2d at 416 (quoting

Ecology Servs., Inc. v. Clym Envt’l Servs., LLC, 952 A.2d 999,
1009 (2008)).

While Stepanian cannot be considered an

“unskilled worker,” the work he performed for Premier Rides as a
project engineer was not overly specialized, and there was no
evidence that his position was difficult to fill upon his
termination. Stepanian was hired directly from engineering
school, and “skills acquired by an employee during his or her
employment do not warrant enforcement of a covenant not to
compete.”

Ecology Servs., 952 A.2d at 1010 (quoting Labor

Ready, Inc. v. Abis, 767 A.2d 936, 946 (2001)).
The Agreement’s stated purpose is to “protect[] its
Confidential Information, assets and goodwill . . . .”
Agreement 1, Compl. Ex. A, ECF No. 2-1.

Premier Rides contends

that the non-competition provision in paragraph 8 of the
Agreement prevents Stepanian from exploiting the customer and
potential customer contacts he developed while working for
Premier Rides on behalf of one of Premier Rides’ competitors.
As such, the Court finds that the Agreement has a legitimate
corporate objective—protecting its customer relationships and
trade secrets—provided that the language of the restrictive
covenant is narrowly tailored to achieve this purpose.

18

c.

Reasonable Scope and Duration

Stepanian contends that the Agreement’s scope is overly
broad and not narrowly tailored to meet Premier Rides’
legitimate corporate objective.

Stepanian also contends that

the lack of any geographic scope is unreasonable and, therefore,
unenforceable.
The duration of the restriction—12 months after termination
of employment—does not appear to be at issue and is within a
period of time routinely upheld by Maryland courts.

See, e.g.,

PADCO Advisors, Inc. v. Omdahl, 179 F. Supp. 2d 600, 606 (D. Md.
2002) (“Maryland has consistently upheld two year limitations on
employment with competitors as reasonable.”); Millward, 302 A.2d
at 17 (finding a two-year duration “reasonable on its face”).
Therefore the Court shall focus its analysis on the scope of the
Agreement, specifically the non-competition provision that
Premier Rides wishes to enforce.
The Agreement has no geographic restriction.

However,

“federal courts applying Maryland law have held that in
situations where the plaintiff competes for clients on a global
basis, a restriction limited to a narrow geographic area would
be meaningless; therefore, the absence of such a restriction is
reasonable.” Deutsche Post Glob. Mail, Ltd. v. Conrad, 292 F.
Supp. 2d 748, 756 (D. Md. 2003), aff’d, 116 F. App’x 435; see
also Hekimian Labs., 664 F. Supp. 493 (applying Maryland law,

19

the district court issued an injunction enforcing a restrictive
covenant that did not contain a geographic limitation).

Under

the circumstances herein—Premier Rides, like Hekimian Labs,
competes in a global market—the non-competition restriction that
is not limited to a specific geographic limitation is
reasonable.
Next the Court considers whether the scope of restrictions
are reasonable under the circumstances or if they are broader
than necessary to achieve Premier Rides’ legitimate objective of
protecting its goodwill and preventing Stepanian from exploiting
the customers and potential customer contacts he developed while
working at Premier Rides.
“[T]o be enforceable, restrictive covenants must be
specifically targeted at preventing former employees from
trading on the goodwill they generated during their former
employment.”

Ameritox, Ltd. v. Savelich, 92 F. Supp. 3d 389,

400 (D. Md. 2015)(quoting Allegis Grp., Inc. v. Jordan, Civil
No. GLR–12–2535, 2014 WL 2612604, at *9 (D. Md. June 10, 2014)).
“Maryland courts have recognized that covenants not to compete
are not justified ‘if the harm caused by service to another
consists merely in the fact that the former employee becomes a
more efficient competitor just as the former employer did
through having a competent and efficient employee.’”

Ecology

Servs., 952 A.2d at 1008 (quoting Holloway, 572 A.2d 510).

20

However, a non-competition provision may be justified under
circumstances where the former employee was compensated for
developing customer relationships18 such that the customers are
likely to follow the former employee.

Id.

See also Ruhl, 225

A.2d at 292 (recognizing the importance of the personal
relationship, and noting that restrictive covenants were held
valid “when the element of competition in the sale of the
product was less significant than the employee’s relationship
with the persons he served.”).
Here, the non-competition clause in the Agreement restricts
Stepanian from working “in a capacity the same as or similar to
the capacity he served” at Premier Rides “with any kind of
business or enterprise that competes directly or indirectly”
with Premier Rides’ business. Agreement ¶ 8.

The clause

specifies that the restrictions “are intended to limit
[Stepanian] from competing with [Premier Rides] in its role in
the design, fabrication, and construction of amusement rides and
attractions, and the sales of parts and services for existing
amusement rides and attractions.”
18

Id.

Further, the clause

Typically, salespersons, delivery personnel, or other
employees who create or have direct relationships with
customers. “The interest protectable by a non-compete provision
is the goodwill that the employee creates with the customer
while working for the employer. This guards against the risk
that the customer will be loyal to the employee with whom he has
a relationship, rather than the relatively impersonal employer.”
Seneca One Fin., Inc. v. Bloshuk, 214 F. Supp. 3d 457, 465 (D.
Md. 2016).

21

states that Premier Rides “is entitled to a court order
enjoining any violation of this paragraph even if [Stepanian]
has not solicited or serviced any of [Premier Rides’]
Customers.”

Id. (emphasis added). The provision’s wording

clarifies that Stepanian may work for an end user of amusement
rides or for a subcontractor of Premier Rides “provided the
subcontractor does not compete with” Premier Rides.

Id.

The

restriction “does not prevent [Stepanian] from accepting
employment or otherwise becoming involved with entities which
solicit Customers of [Premier Rides] for services or products
other than the kinds of services or products provided by
[Premier Rides] to any entity.”

Id.

The restriction does not prevent Stepanian from working in
the industry, but it does restrict him from working for a
competitor.

Stepanian worked for Premier Rides as a project

engineer, not in a sales capacity.

Although he necessarily was

introduced to and worked with customers, the customer
relationship was with Premier Rides, not Stepanian.

Premier

Rides’ President testified that customers make their buying
decisions based on two key factors: first, budget, and second,
the impact that the attraction will have on increasing
attendance.
The Court finds the circumstances similar to the line of
cases where the non-competition restriction is not justified

22

because it is trying to prevent competition rather than protect
goodwill. Premier Rides’ non-competition provision prohibits
more activity than needed to protect Premier Rides’ legally
protected interest. See, e.g., Becker, 299 A.2d at 838
(comparing cases in which restrictive covenants were deemed
enforceable with those that were not); MCS Servs., 2010 WL
3895380 at *3 (finding that the language of the restrictive
covenant was overbroad because it was constraining the list of
potential employers “instead of targeting possible goodwillthieving activities”); Seneca One Fin., Inc. v. Bloshuk, 214 F.
Supp. 3d 457, 462 (D. Md. 2016)(“The non-competition provision
in the Contract is designed more to prevent former employees
from working for any competitor of Seneca One than to prevent
the employees from taking advantage of customer goodwill created
while employed at Seneca One. This is not a legally protected
interest.”).
Further, the Agreement contains separate provisions to
protect against the solicitation of Premier Rides’ customers and
to prevent disclosure of confidential information.

The Court

notes that neither the non-solicitation nor the non-disclosure
clauses are the restrictive covenants that Premier Rides alleges
that Stepanian has violated.

Rather, Premier Rides alleges that

Stepanian has violated the Agreement simply by accepting
employment with DreamCraft.

Compl. ¶ 20, ECF No. 2; see also

23

Mem. in Support of Plaintiff’s Request for Injunctive Relief 7,
ECF No. 3-1 (“By working for DreamCraft during the 12-month
period after his resignation from Premier Rides, Stepanian is
engaging in conduct prohibited by paragraph 8 of the Agreement.
Thus, Stepanian is in direct and material breach of his
covenants in the Agreement.”).
Further, Premier Rides’ request is that the Court enjoin
Stepanian “from serving DreamCraft or any affiliated entity as
an owner, officer, director, shareholder, partner, employee,
agent, advisor, consultant, manager, licensor, or in any other
capacity.”

Compl. Prayer for Relief (a), ECF No. 2.

While

recognizing that this request is inconsistent with the language
of the non-competition clause itself, it is notable that some
courts have ruled that a covenant prohibiting the former
employee from working for a competitor “in any capacity” is
impermissibly overbroad and invalid per se.

See, e.g., Gen.

Parts Distribution, LLC v. St. Clair, No. 11-CV-03556-JFM, 2011
WL 6296746, at *4 (D. Md. Dec. 14, 2011)(finding the scope
properly bounded because it did not seek to prohibit the
employee from working “in any capacity” with any competitor);
Avion Sys., Inc. v. Thompson, 666 S.E.2d 464, 468 (Ga.
2008)(holding that restricting employment “in any capacity” is
impermissibly overbroad and not reasonably necessary to protect
the employer’s interests); Arpac Corp. v. Murray, 589 N.E.2d 640

24

(Ill. 1992) (restricting an employee from working “in any
capacity” was held void as against public policy because it did
not serve to protect employer’s interests in its customers, but
rather was designed to stifle any competition employee might
offer).
Accordingly, the Court finds that the Agreement’s Paragraph
8 non-competition restrictive covenant is wider in scope than
reasonably necessary and is therefore, not enforceable.

The

Court notes that it may be possible to use the “blue pencil”
doctrine19 to excise the overbroad portion and then determine if
the remaining restrictive language in the Agreement is
enforceable.
“If
a
restrictive
covenant
is
unnecessarily broad, a court may blue pencil
or excise language to reduce the covenant’s
reach to reasonable limits.”
However, “[a]
court [may] only blue pencil a restrictive
covenant if the offending provision is
neatly
severable.”
Although
“offending
provision[s]” may be stricken, “Maryland
courts have excised restrictions that render
a covenant overbroad only in circumstances
in which the restrictions are contained in a
separate clause or separate sentence.”
Ameritox, 92 F. Supp. 3d at 400 (quoting Deutsche Post, 116 F.
App’x at 439).
19

See Fowler v. Printers II, Inc., 598 A.2d 794, 802
(1991)(“[T]he court takes its pen and draws a line through the
offending restriction. If the covenant is still enforceable
after the applicable language is removed, then the remaining
portions of the contract are enforceable.”).

25

The current state of the record does not, however, present
a potentially viable editing of the Agreement to render it
enforceable against Stepanian for actions he has taken and/or is
likely to take justifying a preliminary injunction.
Nevertheless, the possible editing of the Agreement will be
considered in light of the evidence in a later phase of the
instant case.

d.

Hardship on Employee

Restrictive covenants can also be unenforceable if they
pose an undue hardship on the former employee. Stepanian asserts
that if the injunction requested by Premier Rides’ is issued, he
will lose his job.

As a young, newly-married, sole breadwinner

for his family, losing his salary would be a severe hardship.
He has substantial student loans to repay and the couple is
currently living paycheck to paycheck.

His wife is in graduate

school pursuing a degree, so she is unable to contribute
financially.

Stepanian adds that he would also likely have to

drop his current pursuit of an MBA at Johns Hopkins University
Carey Business School due to an inability to continue making
payments.
However, the Court has found that the non-competition
clause, as well as the injunctive relief wording requested by
Premier Rides, is overly broad.

If any injunction were to be

26

issued, it would necessarily be tailored to protect only against
Premier Rides’ legitimate interest in protecting its customer
relationships and confidential information.

If such were

issued, Stepanian need not cease his employment with DreamCraft,
and any restrictions imposed by the requirement to honor the
Agreement’s enforceable covenants are unlikely to cause undue
hardship.

e.

Public Policy

“[T]he public has an interest in the enforcement of
reasonable restrictive covenants.” Intelus, 7 F. Supp. 2d at
642.

But “stifl[ing] healthy competition,” has been held

contrary to “broad public policy.”

Deutsche Post Glob. Mail,

292 F. Supp. 2d at 756.
To the extent that the non-competition restrictive clause
has been found to target competition rather than to protect a
legitimate interest, public policy considerations weigh against
enforcement.

2.

Summary

The Court has found that the non-competition clause is
unenforceable as written.

Assuming, without determining, that

the Agreement could be blue-penciled to be enforceable, the
Court’s next inquiry would be whether Premier Rides has shown

27

that it is likely to succeed on the merits of proving that
Stepanian has breached the Agreement.
Stepanian’s having accepted employment with DreamCraft is
not, of itself, a violation of the Agreement.

Further, it is

not clearly established that the work Stepanian is doing for
DreamCraft is in competition with Premier Rides.

While the

Court accepts that Premier Rides does incorporate certain
virtual reality elements into its rides, it does not manufacture
nor design virtual reality headsets, which is the work that
Stepanian is currently engaged in.

It does appear, however,

that Stepanian has engaged in similar project management and
design work in China for DreamCraft subcontracting to CAVU,
which may be considered in competition to Premier Rides.

Again,

however, competition is not the evil to be avoided here, but
rather the improper taking of Premier Rides’ goodwill and
confidential information.
In his role, Stepanian was introduced to Premier Rides’
customers, and he had access to customer lists and other
confidential information such as pricing.

Stepanian admits that

he has been in contact with companies who are customers of
Premier Rides, and he has maintained contact with at least one
individual, Aileen Hu, whom he met while working on a Premier
Rides’ project.

However, because all Premier Rides’ competitors

compete for the same set of customers, it is not evident that

28

Stepanian retained or used any Premier Rides’ customer lists.
Stepanian’s testimony, which the Court found credible, is that
he was brought into meetings with those customers at the IAAPA
conference, not that he initiated those meetings, and his role
therein was to provide technical explanations.

The Court finds

that it is highly probable that the customers who attended the
IAAPA conference were there to meet and obtain information from
all the companies displaying their competing products and
services.

There is no evidence that Stepanian divulged

confidential customer information to DreamCraft or any other
third party.

The Court finds that Stepanian has not been

engaged in pirating customers.
Premier Rides provided evidence that Stepanian had retained
a confidential maintenance manual in his personal email account.
However, there was no evidence that it was used or revealed to
any third party, and it has subsequently been deleted.
Based on the testimony and other evidence considered by the
Court, it is not evident that Stepanian has violated any
reasonable restrictions contained within the Agreement.

Premier

Rides has failed to establish a likelihood of success on the
merits.

29

B.

Other Winter Factors

Because the Court has found that Premier Rides has failed
to establish a likelihood of success on the merits, the Court
must deny preliminary injunctive relief.

See CytImmune Scis.,

Inc. v. Paciotti, No. PWG-16-1010, 2016 WL 6879942, at *2 (D.
Md. Nov. 22, 2016).

However, the Court notes that Premier Rides

also fails to establish the requisite irreparable harm.
“Although irreparable harm may be found when the failure to
grant preliminary relief creates the possibility of permanent
loss of customers to a competitor or the loss of goodwill, harm
is not ‘irreparable’ if it can be compensated by money damages.”
Ameritox, 92 F. Supp. 3d at 403 (citations omitted).

Premier

Rides was unable to identify any lost customers or projects
resulting from Stepanian’s termination or subsequent employment
with DreamCraft.

According to the testimony of Premier Rides’

president, no contracts have been lost, and the lawsuit is based
on unsupported suspicions that there is a threat to Premier
Rides’ goodwill.
Mere speculation is insufficient for the Court to find
irreparable harm. See De Simone v. VSL Pharm., Inc., 133 F.
Supp. 3d 776, 799 (D. Md. 2015)(“The ‘irreparable harm’ to be
suffered must be ‘neither remote nor speculative, but actual and
imminent.’ quoting Direx Israel, Ltd. v. Breakthrough Med.
Corp., 952 F.2d 802, 812 (4th Cir. 1991)). Further, Maryland

30

does not recognize the “inevitable disclosure” doctrine that
would support an injunction to prevent “threatened future
disclosure or use of a trade secret.”

Ameritox, 92 F. Supp. 3d

at 404.
Accordingly, Premier Rides has failed to show that it is
likely to suffer irreparable harm.

And under the circumstances

of the instant case, the balance of equities and public interest
would not weigh in favor of enjoining Stepanian from continuing
his employment with DreamCraft.

V.

CONCLUSION
For the foregoing reasons:
1.

Plaintiff’s Request for Preliminary Injunctive
Relief [ECF No. 3] is DENIED.

2.

Defendant shall fully comply with the Standing
Order Concerning Removal [ECF No. 5] by March 2,
2018.

3.

Defendant’s Answer to the Complaint shall be
filed by March 9, 2018.

4.

Plaintiff shall arrange a Case Planning
Conference to be held by March 16, 2018.

SO ORDERED, on Friday, February 23, 2018.
/s/__________
Marvin J. Garbis
United States District Judge

31