Paul v. ImpactOffice LLC

Filing 19

MEMORANDUM OPINION. Signed by Judge Theodore D. Chuang on 6/6/2017. (aos, Deputy Clerk)

UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND

ROBERT PAUL,
Plaintiff,
v.

Civil Action No. TDC-16-2686

IMP ACTOFFICE LLC,
Defendant.

MEMORANDUM OPINION
On July 26, 2016, Robert Paul filed a civil action against his former employer,
ImpactOffice LLC ("Impact" or "the Company") seeking a declaratory judgment that he may
work for W.B. Mason Company, Inc. ("W.B. Mason") without any restrictions and that the
restrictive covenants in any employment agreement he has with Impact are unenforceable as a
matter of public policy. On August 29,2016, Impact filed an Answer and Counterclaim alleging
that Paul breached the restrictive covenants in his employment agreement with Impact. Pending
before the Court is Paul's
Counterclaim.

Motion for Judgment

on the Pleadings

and to Dismiss the

For the reasons set forth below, the Motion is granted.
BACKGROUND

Impact is a supplier of office products, office furniture, printing services, and related
goods and services. Impact's service area centers on the Baltimore, Maryland and Washington,
D.C. metropolitan areas but includes other localities.
26 of whom are sales representatives,

Impact has approximately 140 employees,

and it generated approximately $60 million in sales in

2015. Impact alleges that its business is dependent on several important factors, including its
sales representatives'

personal relationships with customers.

Paul worked as a sales representative

for Impact, a various times, in the Baltimore,

Washington, D.C., Philadelphia, and New York City metropolitan areas between 2008 and 2016.
In the year prior to Paul's departure, his customers were responsible for approximately
million ofImpact's

$2.2

sales revenue.

While working at Impact, Paul signed a Proprietary and Non-Solicitation
("the Agreement") that includes post-employment
with Impact or its "Affiliates."

Agreement

restrictions relating to potential competition

Under the Agreement,

Impact's

Affiliates

consist of:

ImpactOffice Group, LLC; Impact Office Products, LLC; George W. Allen Co.; N.B.A.; and
Councell Computer Products.

The Agreement contains a customer non-solicitation provision,

under which the employee is not permitted to:
Solicit or accept, directly or indirectly, the business of any customer or
prospective customer of the Company, or its Affiliates, for the purpose of selling
or distributing office products or services sold by the Company, or its Affiliates,
within 6 months of the date of the cessation of the Employee's employment with
the Company.
Agreement ~ 2.2, Compi. Ex. A, ECF NO.1-I.

"Customer" is defined as:

any person or business to whom the Company, or its Affiliates, sold products or
rendered services during the last 12 months Employee was employed by the
Company and any person or business to or for which the Company, or its
Affiliates, submitted or presented, or was in the process of submitting or
presenting a bid, quote, proposal or agreement relating to the sales of any
products or services, within the 12 month period immediately prior to the date on
which Employee's employment with the Company terminated.

Id.
The Agreement also includes a non-competition

provision, which applies only if the

employee voluntarily leaves Impact. The provision states that a former employee may not:

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Become employed by a competitor ... of the Company or its affiliates, located
within a radius of ninety miles from any location of the Company or its Affiliates,
within 6 months of the date of the cessation of the Employee's employment with
the Company.
Id at ~ 2.3. "Competitor" is defined as companies that "sell office supplies, coffee & breakroom
supplies, computer supplies, office furniture, printer maintenance repair and service, and any
other products and services sold by the Company or its Affiliates." Id
The Agreement contains two other provisions relevant to the resolution of the Motion: a
choice-of-Iaw clause and a severability clause. The former states that the Agreement "shall be
governed by and construed and enforced in accordance with the laws of the State of Maryland."
Id at ~ 5.4. The latter provides that:
The Employee agrees that to the extent that any provision or portion of this
Agreement shall be held, found or deemed to be unlawful or unenforceable by a
court of competent jurisdiction, then any such provision or portion shall be
deemed to be modified to the extent necessary in order that any such provision or
portion shall be legally enforceable to the fullest extent permitted by applicable
law; and the Employee does further agree that any court of competent jurisdiction
shall, and the Employee does hereby expressly authorize, request and empower
any court of competent jurisdiction to, enforce any such provision or portion in
order that any such provision or portion shall be enforced by such court to the
fullest extent permitted by applicable law.

Id at ~ 4.1.
Paul is now employed by W.B. Mason, which also sells office supplies, office furniture,
and related goods and services.

Impact alleges that W.B. Mason is its direct competitor in

Maryland and the Washington, D.C. metropolitan area and that Paul's new office is located
within 90 miles of an Impact office. Impact also claims that Paul breached the Agreement by
"knowingly connecting with and soliciting Impact's customers through LinkedIn in the days
following his resignation."

Countercl. ~ 44.

3

DISCUSSION
In his Motion for Judgment on the Pleadings, Paul argues that the restrictive covenants
within his employment

agreement with Impact are unenforceable

because they are facially

overbroad, such that he is entitled to a judgment as a matter of law. Specifically, Paul asserts
that the non-competition

provision is overbroad as written because the term "competitor"

is

defined too broadly and the geographic restriction and scope of proscribed activity are both
unreasonable.

He argues that the non-solicitation provision's prohibition on soliciting or even

merely accepting business from any customers or prospective

customers of Impact or its

Affiliates, including those with whom he had no contact while employed by Impact and those
who did not purchase any products from Impact, renders that covenant overbroad.

Moreover,

Paul contends that the Court cannot make these provisions enforceable by narrowing their scope
through the use of "blue penciling" or the application of the severability provision in the
Agreement.
I.

Legal Standards
Federal Rule of Civil Procedure 12(c) provides that "a party may move for judgment on

the pleadings" after the pleadings have been filed.

Fed. R. Civ. P. 12(c).

On a motion for

judgment on the pleadings, the court considers the pleadings, which consist of the complaint, the
answer, and any written instruments attached to those filings, as well as any documents that are
"integral to the complaint and authentic."

Occupy Columbia v. Haley, 738 F.3d 107, 116 (4th

Cir. 2013) (quoting Phillips v. Pitt Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009)).

In

resolving a Rule 12(c) motion on the basis of the underlying merits, the court assumes the facts
alleged by the nonmoving party to be true and draws all reasonable factual inferences in its
favor, and judgment is appropriate only if the moving party establishes that no genuine issue of

4

material fact remains to be resolved and that the party is entitled to judgment as a matter of law.
See, e.g., Sanders v. Mountain America Fed. Credit Union, 689 F.3d 1138, 1141 (10th Cir.
2012); United States v. Any & All Radio Station Transmission Equip., 207 F.3d 458, 462 (8th
Cir. 2000); Alexander v. City of Chicago, 994 F.2d 333, 336 (7th Cir. 1993); Bell AtlanticMaryland, Inc. v. Prince George's Cty., 155 F. Supp. 2d 465,473 (D. Md. 2001). Such a motion
can be used to obtain a declaratory judgment where the only dispute is the proper interpretation
of contractual terms. See Hous. Auth. Risk Retention Grp., Inc. v. Chi. Hous. Auth., 378 F.3d
596, 598 (7th Cir. 2004); A. S. Abell Co. v. BaIt. Typographical Union No. 12, 338 F.2d 190,
193-95 (4th Cir. 1964).
With respect to Paul's Motion to Dismiss the Counterclaim, the counterclaim must allege
enough facts to state a plausible claim for relief to defeat a motion to dismiss under Federal Rule
of Civil Procedure 12(b)(6).

See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

A claim is

plausible when the facts pleaded allow "the court to draw the reasonable inference that the
[counterdefendant]

is liable for the misconduct alleged."

Id. Legal conclusions or conclusory

statements do not suffice. Id. The Court must examine the counterclaim as a whole, consider the
factual allegations in the counterclaim as true, and construe the factual allegations in the light
most favorable to the nonmoving party.
Lambeth v. Bd. ofComm'rs
II.

See Albright v. Oliver, 510 U.S. 266, 268 (1994);

of Davidson Cty., 407 F.3d 266,268 (4th Cir. 2005).

Motion to Supplement
As part of the briefing on the Motion for Judgment on the Pleadings, Paul has also filed a

Motion for Leave to File Supplemental Points and Authorities in Support of His Motion for
Judgment on the Pleadings and Motion to Dismiss the Counterclaim ("Motion to Supplement").
In the Motion to Supplement, Paul asks the Court to consider a transcript from an October 24,

5

2016 motions hearing in the related cases of ImpactOjjice LLC v. Siniavsky, TDC-15-3481 (D.
Md. filed Nov. 16, 2015), and Chapman v. ImpactOjjice LLC, TDC-16-1851 (D. Md. Apr. 19,
2017).

Impact does not dispute the authenticity of the transcript but asks the Court to deny

Paul's request on the grounds that the transcript constitutes extrinsic evidence that was neither
integral to nor explicitly relied upon in the pleadings.

Because the hearing documented in the

transcript consisted solely of oral argument by counsel in different cases, the Court does not
consider the transcript to provide additional facts appropriate for consideration on a Motion for
Judgment on the Pleadings. The Motion to Supplement is therefore denied.
III.

Choice of Law
A federal court exercising diversity jurisdiction

state in which it sits.

applies the choice-of-Iaw rules of the

See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941).

Maryland law recognizes the "ability of contracting parties to specify in their contract that the
laws of a particular State apply in any dispute over the validity, construction, or enforceability of
the contract,"

with limited exceptions that do not apply here.

See Jackson v. Pasadena

Receivables, Inc., 921 A.2d 799, 803-04 (Md. 2007). Because the Agreement includes a choiceof-law provision selecting Maryland law, and neither party advocates for the application of a
different state's law, the Court applies Maryland law in resolving the Motion for Judgment on
the Pleadings.
IV.

The 2014 Agreement
Impact first argues that the Court cannot enter judgment in favor of Paul because a

genuine issue of material fact exists whether Paul signed an employment agreement in 2014,
whether any such agreement contains post-employment
2012 or 2014 agreement is the operative agreement.

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restrictive covenants, and whether the

In the Complaint, however, Paul does not

assert that he signed a 2014 agreement and challenges only the 2012 Agreement.
Impact denies asking Paul to sign a new post-employment
covenants in 2014.

In its Answer,

agreement with similar restrictive

Likewise, in its Counterclaim, Impact alleges only that Paul breached the

Agreement signed in December 2012, which it attached to the Counterclaim, and does not allege
that Paul signed any other binding agreement.

For purposes of this Motion, the Court assumes

the facts alleged by the nonmoving party to be true and draws all reasonable factual inferences in
its favor.

Accepting Impact's

allegations in its pleadings that the 2012 Agreement is the

operative agreement between the parties, and noting that Paul agrees with that position, the Court
concludes that any dispute whether another agreement was signed in 2014 is not material to the
resolution of this matter.

Because there is no genuine issue of material fact relating to a 2014

employment agreement, the Court will not deny Paul's Motion on this basis.

v.

Restrictive Covenants
In Siniavsky and Chapman, this Court has previously considered the enforceability of

substantially similar restrictive covenants contained in employment agreements between Impact
and other former employees now working for W.B. Mason.
Nos. TDC-15-3481,

TDC-16-185l,

ImpactOjfice, LLC v. Siniavsky,

2017 WL 1410773, at *1-2 (D. Md. Apr. 19, 2017)

("Siniavsky If'); ImpactOjfice, LLC v. Siniavsky, Nos. TDC-15-3481, TDC-16-1851, 2016 WL
8672916, at *1-2 (D. Md. Nov. 18, 2016) ("Siniavsky f').!

In those cases, after considering

arguments substantially similar to those provided here, the Court concluded that those specific
restrictive covenants were not enforceable as a matter of public policy. Siniavsky II, 2017 WL
1410773, at *4; Siniavsky I, 2016 WL 8672916, at *4, 8-9. Although there are minor factual

Siniavsky I addressed the enforceability of the non-competition provision in Chapman and the
non-solicitation provisions in Siniavsky and Chapman.
Siniavsky II further addressed the
enforceability of the non-solicitation provision in Chapman.
!

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distinctions

between the restrictive covenants in Paul and those at Issue in Siniavsky and

Chapman, the Court reaches the same conclusion here.
Under Maryland law:
[F]or a restrictive covenant to be enforceable (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) (citing Silver v.
...~

Goldberger, 188 A.2d 155, 158-59 (Md. 1963); Holloway v. Faw, Casson & Co., 572 A.2d 510,
515-16 (Md. 1990)). The "determination of enforceability should be made based on the scope of
each particular

covenant itself, and, if that, on its face, is not too broad, the facts and

circumstances of each case must be examined."

Millward v. Gerstung Int'l Sport Educ., Inc.,

302 A.2d 14, 16 (Md. 1973).
Maryland courts have recognized an employer's legally protected interest in preventing
"diversion of ... business to the former employee who has had personal contacts with customers
which the employer lacks."

Tuttle v. Riggs-Warfield-Roloson,

246 A.2d 588, 590 (Md. 1968);

see Silver v. Goldberger, 188 A.2d 155, 158 (Md. 1963). "Persons in business have a protectable
interest in preventing an employee from using the contacts established during employment to
pirate the employer's customers."

Holloway v. Faw, Casson & Co., 572 A.2d 510, 515 (Md.

1990). The goal of preventing the departure of goodwill generated by the former employee is
distinguished

from that of preventing efficient competition, which is not a legally protected

interest. See Silver, 188 A.2d at 158. Here, Impact's sales representatives interact directly with
customers and may establish personal relationships with them.

Viewing the facts in the light

most favorable to Impact, the Court finds for purposes of the Motion for Judgment on the

8

Pleadings that Impact has a legally protected interest in its customer goodwill.

See Deutsche

Post Glob. Mail, Ltd., 116 F. App'x at 438 ("Restrictive covenants almost always serve a
legitimate employer interest when they restrict former salespersons who serviced, solicited, and
were in constant contact with customers." (citing Silver, 188 A.2d at 158)); Siniavsky I, 2016 WL
8672916, at *3. The restrictive covenants at issue will be analyzed in light of this interest.
A.

Non-Competition Provision

The non-competition covenant prohibits Paul, for six months after the termination of his
employment with Impact, from working for a competitor of Impact or its Affiliates at a location
within a 90-mile radius of any work location of Impact or its Affiliates.

The scope of the

proscribed activity is not limited to employment in positions similar to that which Paul held at
Impact but instead would prohibit employment in any capacity at a competitor, The restriction is
therefore wider than necessary and is not reasonably tailored to protect Impact's interest in
preventing the loss of customer goodwill.
In this District, similar non-competition
under Maryland law due to overbreadth.

provisions have been deemed unenforceable

For example, in Medispec, Ltd. v. Chouinard, 133 F.

Supp. 3d 771 (D. Md. 2015), the court held that a non-competition

covenant that prohibited a

former employee "from taking any job, no matter how unrelated to his prior sales work" with a
direct or indirect competitor of the company or its affiliates and subsidiaries was "overly broad
and not reasonably targeted to achieve Plaintiffs

stated interest in protecting its goodwill." Id. at

775; accord Seneca One Finance, Inc. v. Bloshuk, No. RWT-16-cv-1848, 2016 WL 5851626, at
*3 (D. Md. Oct. 5, 2016) (holding that a non-competition

provision prohibiting the former

employee from engaging in the "same or similar business" as the company was too "sweeping"
to be enforceable because the restriction "is not limited to the work" that the former employee

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performed at the company, "is far wider in scope than is reasonably necessary to protect the
goodwill that [she] may have created with Seneca One customers," and "serves only to limit her
potential employers"); MCS Servs. v. Jones, No. WMN-10-1042, 2010 WL 3895380, at *4 (D.
Md. Oct. 1, 2010) (finding overbroad a restriction that prevented the former employee, a
manager and sales representative, "from working for any competitor, regardless of whether his
new responsibilities seek to exploit [the employer's] goodwill").
The United States Court of Appeals for the Fourth Circuit has, in analogous contexts,
applied this same reasoning.

In applying Maryland law to a restrictive covenant prohibiting

former employees from engaging "in any activity which may affect adversely" the employer's
interests, the Fourth Circuit held that the provision was exceedingly overbroad because it
"seem[ ed] designed to prevent any kind of competition"

as opposed to being "specifically

targeted at preventing [the employees] from trading on the goodwill they created."

Deutsche

Post Glob. Mail, Ltd., 116 F. App'x at 437-38. In RLM Communications, Inc. v. Tuschen,831
F.3d 190 (4th Cir. 2016), the court applied this reasoning to a non-competition

agreement

governed by North Carolina law which forbade the former employee from "directly or indirectly
participat[ing] in a business that is similar to a business now or later operated by Employer in the
same geographical area."

Id. at 196. The court concluded that the prohibition was overbroad

because "[i]nstead of focusing on employment that raises the risk that [the former employee] will
use knowledge

obtained

from" the former employer

to that company's

detriment,

"the

Noncompete targets the similarity of a new employer" to the former employer. Id. at 197.
Based on this precedent, this Court concluded that the non-competition
Chapman was unenforceable.

Siniavsky I, 2016 WL 8672916, at *4.

provision in

The non-competition

provision of the Agreement here contains identical language. As in Chapman, it focuses on the

10

nature of the competitor rather than the work performed by the former employee. The language
of the provision would bar Paul from working for an Impact competitor in any position, even if
that position afforded him no opportunity to take advantage of any personal relationships with
customers that he had developed while at Impact. Such a provision does not reflect a narrowly
tailored approach to safeguarding customer goodwill.

Instead, the exceedingly broad language

serves as a general hindrance to competition, an unprotected interest.

The Court therefore

concludes that the non-competition provision is facially overbroad and thus unenforceable.

See

Siniavsky I, 2016 WL 8672916, at *4; see also Medispec, Ltd., 133 F. Supp. 3d at 775. Having
so found, the Court need not address Paul's additional arguments that the provision's definition
of competitor and its geographic limitation are sufficiently overbroad as to render the provision
unenforceable.
B.

Non-Solicitation Provision

The non-solicitation provision in the Agreement prohibits Paul from:
Solicit(ing] or accept(ing], directly or indirectly, the business of any customer or
prospective customer of the Company, or its Affiliates, for the purpose of selling
or distributing office products or services sold by the Company, or its Affiliates,
within 6 months of the date of the cessation of the Employee's employment with
the Company.
Agreement ~ 2.2.
"customer,"

Other than the duration of this prOVISIOnand its broader definition of

it is identical to the non-solicitation

unenforceable in Siniavsky and Chapman.

provision

that this Court found to be

Siniavsky II, 2017 WL 1410773, at *4; Siniavsky I,

2016 WL 8672916, at *5, 8-9. In that instance, the Court found that this provision is facially
overbroad in two ways: by prohibiting a former employee from (l) "accept(ing]" business from
any Impact customer and (2) soliciting business from any "prospective customer" of Impact.

11

Siniavsky 1,2016 WL 8672916, at *8-9. The Court reaches the same conclusion about the nonsolicitation provision of Paul's Agreement.
First, the restriction

on accepting business from Impact customers is unreasonable

because an employer's protectable interest is in "preventing an employee from using the contacts
establishing during employment to pirate the employer's customers." Holloway, 572 A.2d at 515
(emphasis added).

A bar on mere passive acceptance of unsolicited business prohibits activity

that necessarily involved no use of prior customer relationships.

Under this provision, a former

employee would breach the agreement by taking an unsolicited telephone order from any
company that had previously bought office supplies from Impact, even if the former employee
had never interacted with that company and had no knowledge of its prior dealings with Impact.
Without any requirement that the former employee have such knowledge, the bar on accepting
business is not reasonably tailored to address that concern.
Second, the bar on soliciting Impact's "prospective customers," which includes those
with whom the former employee may have had no personal contact, further renders the nonsolicitation provision overbroad.

See Hebb v. Stump, Harvey & Cook, Inc., 334 A.2d 563, 570

(Md. Ct. Spec. App. 1975) (finding that the trial court correctly determined that a restriction on
solicitation of "prospective customers" was unenforceable); see also Seneca One Fin., Inc., 2016
WL 5851626, at *5 (finding a restriction on solicitation of individuals or entities who "have been
in contact" with the employer about potential business to be "breathtaking
overbroad).

in scope" and

A prospective customer, under the plain meaning of the term, has not previously

done business with Impact and thus would not have been the subject of customer goodwill
generated by a former Impact sales representative.

Moreover, the term "prospective customer"

of Impact would encompass virtually any company with a need to purchase office supplies, even

12

if the former employee had no knowledge that the company had ever interacted with Impact, and
even if the company had never interacted with Impact at all.
As in Siniavsky and Chapman, however, the Court does not conclude that the restriction
on soliciting all "customers" of Impact and its Affiliates is facially overbroad.

Agreements that

restrict former employees from soliciting all clients of a former employer, rather than only those
with whom the former employer worked directly, are generally disfavored by Maryland courts.
See PADCO Advisors, Inc. v. Omdahl, 179 F. Supp. 2d 600,608 (D. Md. 2002); see also Severn
Mktg. Assocs., Inc. v. Doolin, No. CCB-09-3295, 2010 WL 3834994, at *4 (D. Md. Sept. 29,
2010).

Impact argues that the Maryland Court of Appeals has upheld restrictive covenants

prohibiting solicitation of all customers of a company, without limitation.

The primary cases

supporting this proposition, however, did not actually involve such a broad non-solicitation
agreement.

In Tuttle v. Riggs-Warfield-Roloson,

Inc., 246 A.2d 588 (Md. 1968), although there

was a restrictive covenant barring a former employee "from engaging directly or indirectly, in
any insurance activities with customers" of Riggs- Warfield- Roloson, the basis for the action was
the alleged violation of a modification to that covenant that narrowed the restriction to a specific
former client company.

Id. at 589-90.

The court's holding that the former employee's

solicitation of that particular client breached the contract therefore does not support the broad
proposition that restrictions on solicitation of all customers cannot be deemed facially overbroad.
Id. at 590-91. Likewise, in Gill v. Computer Equipment Corporation, 292 A.2d 54 (Md. 1972),
the court upheld a restrictive

covenant

against "selling or servicing the products"

manufacturer represented by the company's Peripheral Systems Division.

Id. at 58-59.

of a
In so

doing, however, the court highlighted that the "scope of the limitation" was to customers of that

13

Division, which was "the narrow area" in which the former employee worked, not the entire
company. Id. at 59.
Rather, courts interpreting

Maryland law have adopted the View that a restrictive

covenant barring solicitation of all of a company's

customers must instead be reviewed with

consideration ofthe specific facts and circumstances at issue. See Fowler v. Printers II, Inc., 598
A.3d 794, 802 (Md. Ct. Spec. App. 1991); Holloway v. Faw, Casson & Co., 552 A.2d 1311,
1321 (Md. Ct. Spec. App. 1989), rev'd in part on other grounds, 572 A.2d 510 (Md. 1990). In
this District, courts have upheld certain non-solicitation clauses applying to all customers of a
company under the specific facts of the case. For example, in Severn Marketing Associates, Inc.,
the court held that a provision barring solicitation of any of the company's
consisting of manufacturing

"Principals,"

companies to whom the company provided sales and marketing

services, was not facially overbroad where there was an allegation that the former employee in
fact had had contact with all 16 of the company's

Principals.

2010 WL 3834994, at *4-5

(denying a motion to dismiss); see also Allegis Grp., Inc. v. Jordan, No. GLR-12-2535, 2014
WL 2612604, at *8 (D. Md. June 10, 2014) (finding a covenant barring solicitation of any
company client over the past two years to be "reasonable and enforceable" on the facts of the
case).

Thus, the Court declines to hold that the clause barring solicitation of all customers is

facially overbroad as a matter of law.
Nevertheless, the Court may consider, based on the facts and circumstances set forth in
the pleadings, whether the non-solicitation provision is overbroad and thus unenforceable.

Here,

the facts presented in the pleadings establish that the scope of the customer non-solicitation
provision is "wider ...

than is reasonably necessary to protect the employer's

interest."

Deutsche Post Glob. Mail, Ltd., 116 F. App'x at 438 (citing Silver, 188 A.2d at 158-59;

14

Holloway, 572 A.2d at 515-16). Impact does not assert in its Counterclaim that Paul had contact
with all ofImpact's

customers. To the contrary, it alleges that in the year prior to his resignation

from Impact, Paul's customers generated $2.2 million in sales, which was less than five percent
of the $60 million in Impact sales over the same time period. Paul was only one of 26 Impact
sales representatives.

Even viewed in the light most favorable to Impact, the allegations can only

be read to establish that Paul's customer base was only a limited portion of the customer base of
Impact and its Affiliates, and that there were segments of that customer base with which he never
interacted.

Thus, upon consideration of the undisputed facts, the restrictive covenant barring

solicitation of all Impact customers is not reasonably tied to Impact's interest in protecting
customer goodwill because it covers a significantly larger customer base than that with which
Paul could have developed personal relationships.
Courts applying Maryland law to the facts and circumstances

surrounding restrictive

covenants regularly deem those that restrict solicitation of customers beyond those with whom a
former employee engaged in direct business dealings to be overbroad and unenforceable because
they serve not to protect goodwill, but to restrict competition.

See, e.g., Deutsche Post Glob.

Mail, Ltd. v. Conrad, 292 F. Supp. 2d 748, 755-56 (D. Md. 2003), aff'd 116 F. App'x 435 (4th
Cir. 2004) (concluding that a restrictive covenant barring solicitation of all company customers
was overbroad where the company had a global customer base and the former employees
"developed comparatively few customer relationships in the limited area of Maryland, Virginia,
and Washington, D.C."); Holloway, 552 A.2d at 1319-21 (holding that where a partnership had
six offices in Maryland and Delaware but the former employee worked out of only the Salisbury,
Maryland office, the partnership agreement was "unreasonable to the extent that it prohibits the
employee from soliciting the business of those clients with whom the former employee did not

15

himself have direct contact while employed by the partnership").

Likewise, the non-solicitation

clause of the Agreement, which restricts solicitation of all Impact customers without limitation,
is overbroad and unenforceable as applied to Paul. Having found that the scope of the restrictive
covenant is broader than is reasonably necessary, there is no need to consider additional factors.
See Siniavsky I, 2016 WL 8672916, at *9. Nor is it necessary to address Paul's additional
argument that the specific definition of customer, which is broader than the definition in
Siniavsky and Chapman in that it includes "any person or business to or for which the Company,
or its Affiliates, submitted or presented, or was in the process of submitting or presenting a bid,
quote, proposal or agreement relating to the sales of any products or services" within 12 months
of Paul's termination of employment with Impact, itself renders the non-solicitation

provision

overbroad.
VI.

Narrowing

the Restrictive Covenants

Impact argues that even if the restrictive covenants are deemed to be overbroad, they can
nevertheless be enforced to the limited extent of barring Paul from soliciting customers with
whom he had prior interactions while employed by Impact, whether based on the doctrine of blue
penciling the severability clause of the Agreement, or Maryland case law precedent.

The Court

considered and rejected these arguments in Siniavsky and reaches the same conclusion here. See
Siniavsky 1,2016 WL 8672916, at *6-9.
If a court finds that a restrictive covenant is overbroad, it may nevertheless preserve and
enforce the covenant by excising, or "blue penciling," unreasonable language.

Deutsche Post

Glob. Mail, Ltd., 116 F. App'x at 439 (citing Tawney v. Mut. Sys. of Md., 47 A.2d 372,379 (Md.
1946». "A court may only blue pencil a restrictive covenant if the offending provision is neatly
severable."

Id. In particular, a court may not excise "the dominant language or words" from a

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covenant that is part of a "single indivisible promise."

Id. at 440 (holding that excising an

overarching promise in a single-sentence restrictive covenant, "leaving only a narrower example
of the original, broader restriction," was impermissible).

Moreover, a court cannot supplement,

rearrange, or otherwise rewrite language. See Fowler, 598 A.2d at 802; see also Deutsche Post
Glob. Mail, Ltd., 116 F. App'x at 439. Although Impact urges the Court to apply the "flexible
approach" to blue penciling under which a court may add language or rewrite a covenant to
conform to the parties' reasonable expectations, the Maryland Court of Appeals has not adopted
the flexible approach.

Deutsche Post Glob. Mail, Ltd., 116 F. App'x at 440 (stating that the

Maryland Court of Appeals in Holloway expressly refused to address the validity of the approach
and noting that "no Maryland court has [since] endorsed or discussed the flexible approach").
Here, the non-competition covenant in the Agreement cannot be blue penciled to render it
reasonable.

There is no language that can neatly be stricken to address its overbreadth.

Instead,

preserving the non-competition provision would require supplementing the contract language to
narrow the scope of the proscribed activity. The Court might, for example, have to add language
limiting the restriction to certain types of positions consistent with Paul's prior work at Impact.
Such a change would constitute an impermissible rewriting of the contract.
As for the customer non-solicitation

restriction in the Agreement, the Court concludes

that the "or accept" and "or prospective customer" restrictions can be excised under the blue
pencil rule as applied under Maryland law.

In Hebb, the court rejected the argument that a

finding that a covenant's overbroad restriction on solicitation of prospective customers rendered
the entire agreement unenforceable

and instead upheld the blue penciling of a reference to

"prospective customers who were being actively solicited by us" at the time of termination and
the subsequent enforcement of the provision as to existing customers only. 334 A.2d at 570-71.

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The Court of Special Appeals has also concluded that language extending non-solicitation
restrictions beyond existing customers to businesses who "shall have submitted a bid" or were
"in the process of submitting a bid" could be blue penciled "entirely in accord with Maryland
law."

Fowler, 598 A.2d at 802.

The potential excisions in this case are likewise "not so

interwoven as to be logically inseparable."

Hebb, 334 A.2d at 569; cf SNS One, Inc. v. Hage,

No. L-10-1592, 2011 WL 2746713, at *2 (D. Md. July 11, 2011) (excising, from a covenant
barring a former employee from working for or associating with other businesses "competitive"
with the company, a restriction on such activities with companies that were "the same as" or
"similar to" the company).

Notably, these limited excisions would not remove the dominant

language in the provision. See Deutsche Post Glob. Mail, Ltd., 116 F. App'x at 440.
The severability clause of the Agreement does not provide a basis to go any further. That
provision states that any unenforceable provision "shall be deemed to be modified to the extent
necessary ...

[to] be legally enforceable to the fullest extent permitted by applicable law" and

that the former employee "authorize[s],

request[s], and empower[s] any court of competent

jurisdiction" to enforce any provision or portion of the agreement found to be unenforceable "to
the fullest extent permitted by applicable law."

Agreement ~ 4.1 (emphasis added).

Because

Maryland law provides that alterations to the contract are limited by the blue penciling doctrine,
and this provision does not authorize severance that goes beyond the bounds of Maryland law, it
does not provide a basis to permit any modifications beyond the blue penciling described above.
Thus, the Court utilizes blue penciling to excise language that renders the non-solicitation
provision facially overbroad and is left with the following provision stating that the former
employee may not:
Solicit or accept, directly or indirectly, the business of any customer 6f
prospective customer of the Company or its Affiliates, for the purpose of selling
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or distributing office products or services sold by the Company or its Affiliates,
within 6 months of the date of the cessation of the Employee's employment with
the Company.
It may not and does not go further to re-write the provision to narrow its enforcement to
customers with whom Paul had prior sales relationships.
Finally, Impact claims that even if the non-solicitation

clause is overbroad, because

Impact seeks injunctive relief and monetary damages relating only to clients with whom Paul had
worked, the Court should construe the Agreement as applying only to this subset of Impact
customers.

Such a rule, however, would conflict with the limits on judicial modification of a

restrictive covenant delineated in the blue penciling doctrine.

Indeed, in Deutsche Post Global

Mail, the employer made essentially the same request, to narrow the scope of review to instances
of solicitation of customers with whom the former employee had prior contact and to "focus
solely on the facts of each alleged breach to determine whether an award of damages would be
reasonable."

116 F. App'x at 441. The Fourth Circuit rejected the employer's approach in part

because under that proposed interpretation of Maryland law, "an employer could draft a covenant
that is unreasonably broad in scope, knowing that it could recover damages for any breach held
to violate an interest that was reasonably deserving of protection," thereby giving "employers no
incentive to negotiate reasonable restrictive covenants in the first place."

Id.

The court

distinguished the Maryland Court of Appeals decision in Holloway, relied upon by Impact here,
as not having applied such a judicial narrowing but. instead having simply noted in dicta that the
damages awarded in that case were limited to those arising from solicitation of persons actually
served by the former employee at his former company. Deutsche Post Glob. Mail, Ltd., 116 F.
App'x at 441 (discussing Holloway).

Here, to permit Impact to reframe the non-solicitation

provision so as to avoid a finding of overbreadth would likewise provide no incentive for Impact

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or other employers to tailor their restrictive covenants narrowly to those reasonably protectable
interests.

The Court therefore declines to narrow the non-solicitation provision on this basis in

order to render it enforceable.
VII.

Counterclaim
Based

on the

overbreadth

of the restrictive

covenants,

the

Court

finds

them

unenforceable, such that Paul is entitled to the declaratory judgment he seeks in the Complaint.
In tum, because the restrictive

covenants are unenforceable,

Impact's

breach of contract

counterclaim, based on those provisions, cannot succeed. Accordingly, the Court will grant the
Motion for Judgment on the Pleadings and to Dismiss the Counterclaim.
CONCLUSION
For the foregoing reasons, Paul's Motion for Judgment on the Pleadings and to Dismiss
the Counterclaim is GRANTED. A separate Order shall issue.

Date: June 6, 2017

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