ADP, LLC v. LYNCH
OPINION. Signed by Judge William J. Martini on 7/17/17. (gh, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
Civ. No. 2:16-01053
Civ. No. 2:16-01111
WILLIAM J. MARTINI, U.S.D.J.:
Plaintiff ADP, LLC brings this action against its former employees Jordan Lynch
and John Halpin (collectively “Defendants”), alleging violations of restrictive covenants
contained in their employment agreements. This matter comes before the Court on
Defendants’ motion for reconsideration (ECF No. 87) of the Court’s Order and Opinion
issued on April 24, 2017 (ECF Nos. 84, 85), denying Defendant’s motion to vacate the
preliminary injunction (ECF No. 71). There was no oral argument. Fed. R. Civ. P. 78(b).
For the reasons set forth below, Defendants’ motion is DENIED.
The Court assumes the parties’ familiarity with the facts and will summarize below
only those facts relevant to the instant motion. On April 24, 2017, this Court denied
Defendants’ motion to vacate the preliminary injunction (the “Injunction”), which the
Court issued on June 30, 2016 (ECF No. 31), and which the Third Circuit affirmed on
February 7, 2017 (ECF No. 69-1). The Injunction enjoined Defendants from using or
disclosing any of Plaintiff’s proprietary information, from soliciting Plaintiff’s current
clients, vendors, employees or partners, and from soliciting Plaintiff’s prospective clients
that Defendants gained knowledge of during the course of their employment. Defendants
were not enjoined from working at Plaintiff’s competitor.
In addressing Defendants’ motion to vacate, the Court found that “Defendants
essentially [made] the same argument against the enforceability of the tolling provisions as
they did against the restrictive covenants as a whole in their previous motion to dismiss.”
See ECF No. 84 at 3. The Court noted that it and the Third Circuit expressly rejected the
argument that Plaintiff failed to notify Defendants of changes to their employment
agreements and held that the restrictive covenants were enforceable. Id. at 4. The Court
again rejected that argument in holding that the tolling provisions, also found in the
restrictive covenants, were enforceable. Id.
Defendants now move for reconsideration, arguing that the Court overlooked two
conditions precedent to the tolling provisions. See Defs.’ Br. in Supp. of Mot. for
Reconsideration (“Defs.’ Mot.”) 3–6, ECF No. 87-1. Defendants further argue that
manifest injustice will result if the Court’s ruling stands because Defendants will be unable
to effectively engage in their current employment for fear that they will unknowingly and
unwittingly violate the Injunction. See id. at 6–8. Plaintiff opposes, arguing that
Defendants failed to meet their high burden for reconsideration and that the Court correctly
interpreted the tolling provisions. See Pl.’s Br. in Opp’n to Defs.’ Mot. (“Pl.’s Opp’n”) 2–
6, ECF No. 93. Defendants timely filed a reply. Defs.’ Reply Br. to Pl.’s Br. in Opp’n
(“Defs.’ Reply”), ECF No. 94.
Local Civil Rule 7.1(i) provides that “a motion for reconsideration shall be served
and filed within 14 days after the entry of the order or judgment on the original motion by
the Judge or Magistrate Judge.” “A motion for reconsideration is properly treated as a
motion under Rule 59(e) . . . to alter or amend the judgment.” Koshatka v. Phila.
Newspapers, Inc., 762 F.2d 329, 333 (3d Cir. 1985). “[A] judgment may be altered or
amended if the party seeking reconsideration shows at least one of the following grounds:
(1) an intervening change in the controlling law; (2) the availability of new evidence that
was not available when the court granted the motion . . .; or (3) the need to correct a clear
error of law or fact or to prevent manifest injustice.” Max’s Seafood Cafe ex rel. Lou-Ann,
Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999).
“The word ‘overlooked’ is the operative term in [Rule 7.1(i)].” Lentz v. Mason, 32
F. Supp. 2d 733, 751 (D.N.J. 1999) (citation omitted). “Only dispositive factual matters
and controlling decisions of law which were presented to the court but not considered on
the original motion may be the subject of a motion for reconsideration.” Id. (quotation and
citation omitted). “[S]uch motions are not an opportunity to argue what could have been,
but was not, argued in the original set of moving and responsive papers.” Id. (quotation
and citation omitted).
Under the manifest injustice rationale, “reconsideration is proper if the contested
holding . . . would create manifest injustice if not addressed.” See Valcom, Inc. v.
Vellardita, No. 2:13-cv-3025, 2014 WL 2965708, at *2 (D.N.J. July 1, 2014) (quotations
and citation omitted). “Just what constitutes manifest injustice is not well defined by the
Third Circuit, but courts in this district have noted that other circuits look to the Black’s
law definition: an error in the trial court that is direct, obvious, and observable.” Id.
(quotations and citations omitted). “[A] district court has considerable discretion to decide
whether reconsideration is necessary to prevent manifest injustice.” Id. (quotation and
Defendants move under the clear error of law and manifest injustice rationales.
First, Defendants argue that the Court made a clear error of law by overlooking two
conditions precedent in the tolling provisions that must be satisfied before tolling is
available. See Defs.’ Mot. at 3. As a threshold matter, Defendants never expressly raised
the existence of conditions precedent in their original moving or reply papers that they do
now. Nevertheless, Defendants did argue in their original reply papers that the tolling
provisions require a determination “by a court of competent jurisdiction that Defendants
are in violation of the restrictive covenants.” See ECF No. 81 at 21. They also argued that
Plaintiff’s evidence did not support a finding that they violated the Injunction. Id. The
Court, therefore, will briefly address their arguments.
The contractual language in question reads as follows:
The restricted time periods in paragraphs three (3) through six (6) shall be
tolled during any time period that I am in violation of such covenants, as
determined by a court of competent jurisdiction, so that ADP may realize
the full benefit of the bargain. This tolling shall include any time period
during which litigation is pending, but during which I have continued to
violate such protective covenant and a court has declined to enjoin such
conduct or I have failed to comply with any such injunction.
Defs.’ Mot. at 1–2. According to Defendants, the first sentence contains a condition
precedent that the Court must make a final determination that Defendants violated the
covenants before tolling is available, something which this Court has not done. See id. at
3–4. On the contrary, in issuing the Injunction, the Court noted, “Defendants do not deny
that they have breached the Agreements by becoming employed with [Plaintiff’s
competitor].” See ECF No. 30 at 10. Likewise, in affirming the Injunction, the Third
Circuit noted, “It is undisputed that [Defendants] breached the noncompetes by joining
[Plaintiff]’s direct competitor and working in sales in the same territories they covered at
[Plaintiff].” See ECF No. 69-1 at 5. Thus, “a court of competent jurisdiction” determined
that Defendants violated the restrictive covenants. The Court easily rejects Defendants’
Defendants further argue that the second sentence contains a second condition
precedent, which is that once a court issues an injunction, then Plaintiff must make an
evidentiary showing that Defendants violated that injunction before tolling is available.
See id. at 5–6. The Court does not so interpret the second sentence. The language of the
first half of the sentence is plain: tolling shall include any time period during which
litigation is pending. The language of the second half is more confusing, but it cannot
reasonably be read to create more of a burden on Plaintiff to make additional and continued
evidentiary showings beyond which it has already established—i.e., a likelihood of success
on the merits of its case.
Finally, there is no manifest injustice present here. The Court specifically tailored
the Injunction to allow Defendants to continue working at Plaintiff’s competitor without
using Plaintiff’s proprietary information. If Defendants truly fear violating the Injunction,
they need only ask prospective clients whether Plaintiff currently engages them before
further soliciting their business. The Injunction only enjoins Defendants from soliciting
Plaintiff’s prospective clients of which they were aware while employed by Plaintiff.
Nothing in the Injunction restricts Defendants from competing against Plaintiff for
prospective clients that they did not know about prior to leaving Plaintiff’s employ.
Accordingly, Defendants’ motion is DENIED.
For the reasons stated above, Defendants’ motion for reconsideration is DENIED.
An appropriate order follows.
/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: July 17, 2017
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