ADP, LLC v. LYNCH
Filing
165
OPINION. Signed by Judge William J. Martini on 3/12/19. (gh, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
ADP, LLC,
Civ. No. 2:16-01053
Plaintiff,
v.
JORDAN LYNCH,
Defendant.
ADP, LLC,
Civ. No. 2:16-01111
Plaintiff,
v.
OPINION
JOHN HALPIN,
Defendant.
WILLIAM J. MARTINI, U.S.D.J.:
Plaintiff ADP, LLC (“Plaintiff” or “ADP”) 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 upon four motions for summary judgment. ECF Nos. [148], [149],
[150], & [151] (“the Summary Judgment Motions”). Also before the Court is Plaintiff
ADP’s letter filed February 1, 2019 in “supplemental support” of its motion for summary
judgment against Defendant Halpin alleging a violation of the Court’s preliminary
injunction order after Halpin communicated with an ADP client on October 18, 2018.
ECF No. [162]. Defendant Halpin in response acknowledges the communication but asks
the Court to “void the preliminary injunction.” ECF No. [163].
For the reasons set forth below, the Court STAYS the Summary Judgment
Motions pending disposition of two consolidated and related cases fully briefed and
argued before the Third Circuit. Defendants’ request to lift the preliminary injunction is
DENIED WITHOUT PREJUDICE and ADP’s request to provide supplemental
briefing as to the preliminary injunction is GRANTED IN PART. Accordingly, ADP
shall SHOW CAUSE why the preliminary injunction should not be lifted as specified in
the accompanying order.
I.
THE MOTIONS FOR SUMMARY JUDGMENT
The Court assumes the parties’ familiarity with the facts and will summarize
below only those facts relevant to the instant motions. Halpin and Lynch are former sales
employees of Plaintiff who voluntarily resigned from their positions on December 23,
2015, and January 4, 2016, respectively. During their employment Halpin and Lynch
each entered into an initial Sales Representative Agreement (“SRA”) and several
Restrictive Covenant Agreements (“RCAs”). These agreements contained non-compete,
non-solicitation, non-use, and non-disclosure provisions. The alleged breach of these
agreements is the subject of these lawsuits.
As the parties have informed the Court, currently pending in federal and state
court in this state are at least thirteen cases in various procedural postures challenging the
enforceability of the SRAs and RCAs. This includes six cases on appeal. Particularly
relevant to the pending motions are three appeals before the Third Circuit: consolidated
appeals in ADP, LLC v. Rafferty (Case No. 18-1796) and ADP, LLC v. Mork (Case No.
18-2603), and a third appeal in ADP, LLC v. Trueira (Case No. 18-2803). The appeal in
Trueira is stayed pending the outcome of the Rafferty/Mork appeal.
The Rafferty/Mork appeal seeks review of, inter alia, “[t]he enforceability of the
restrictive covenant agreements . . . .” See ADP, LLC v. Rafferty (Case No. 18-1796,
Concise Summary of the Case, Doc. 003112904133 at 2). 1 On appeal, ADP formulated
the issue presented in Rafferty as follows:
1
The appeal in Mork phrases the issue raised on appeal as “[t]he enforceability of the
RCAs.” ADP, LLC v. Mork (Case No. 18-2603, Concise Summary of the Case, Doc.
003112989330 at 2).
2
[W]hether the district court erred in failing to find a
likelihood of success on the merits of ADP’s claims under is
Restrictive Covenant Agreements and failing to enter a
preliminary injunction with respect to it, when (a) the same
district court in 2015 in ADP, LLC v. Jacobs found a
likelihood of success on the merits on similar claims under
ADP’s same Restrictive Covenant Agreements and granted a
preliminary injunction in favor of ADP, and (b) where
another district court in 2016 in ADP, LLC v. Lynch and ADP,
LLC v. Halpin, relying in part on Jacobs, also found a
likelihood of success on the merits on similar claims under
ADP’s same Restrictive Covenant Agreements and also
granted a preliminary injunction in favor of ADP, which
decision was affirmed by this Court in 2017.
See ADP, LLC v. Rafferty (Case No. 18-1796, Doc. 003112942253 at 12). 2 On
September 6, 2018, the parties presented oral argument on the enforceability of the SRAs
and RCAs under New Jersey law, including whether the agreements as written
categorically violate New Jersey law or whether a fact specific-inquiry with “bluepencilling” is required to determine the agreements’ enforceability for each ADP sales
representative who signed RCAs. 3
The parties now request the Court to decide nearly identical questions in the
Summary Judgment Motions. While the Court notes the fact-specific nature of ADP’s
claims against Halpin and Lynch and the procedural posture of the Rafferty/Mork appeal,
the legal questions under consideration by the Third Circuit significantly overlap those
now ripe in the motions. It is well-established in this Circuit that a district court
maintains “broad power to stay proceedings” before it. Bechtel Corp., v. Local 215
Laborers’ Int’l Union of N. Am., 544 F.2d 1207, 1215 (3d Cir. 1976). The Third Circuit
has explained that “[t]he power to stay proceedings is incidental to the power inherent in
every court to control the disposition of the causes on its docket with economy of time
and effort for itself, for counsel, and for litigants. How this can best be done calls for the
exercise of judgment, which must weigh competing interests and maintain an even
balance.” Id. (quoting Landis v. N. Am. Co., 299 U.S. 248, 254–55 (1936)). “In the
exercise of its sound discretion, a court may hold one lawsuit in abeyance to abide the
2
The question on appeal in Mork is similarly phrased, but also references the district
court’s decision in Rafferty. See ADP, LLC v. Mork (Case No. 18-2603, App. Br., Doc.
003113000460 at 8).
3
The Court takes judicial notice of the recording of the oral argument available on the
Third Circuit’s website. See Oral Argument Recordings, available at at
https://www2.ca3.uscourts.gov/oralargument/audio/18-1796ADPLLCvRafferty.mp3.
3
outcome of another which may substantially affect it or be dispositive of the issues.”
Bechtel, 544 F.2d at 1215.
Here, the Court finds that a stay is warranted. The unique inquiry at the
preliminary injunction stage requires the district court—and, subject to the standard of
review, the Third Circuit—to weigh the likelihood of success on the merits of Plaintiff’s
claims. 4 Because further guidance from the Third Circuit may substantially affect the
ultimate decision in these cases, the Court finds that a brief stay of the Summary
Judgment Motions pending the outcome of the Rafferty/Mork appeal is appropriate.
II.
THE CONTINUING INJUNCTION
Although the Court has determined that a stay of the motions for summary
judgment is required here, this decision does not alter the preliminary injunction entered
by this Court on June 30, 2016. While the Summary Judgment Motions were pending,
ADP informed the Court that it believed that Defendant Halpin had again violated the
preliminary injunction. ECF Nos. [162] & [164]. In response, Defendant Halpin
concedes that he communicated with an ADP client, but asks the Court to lift the
preliminary injunction because over three years have passed since Halpin left ADP. ECF
No. [163]. Halpin does not appear to argue that the conduct identified by ADP did not
violate the injunction.
As this Court has previously held, to determine whether a violation occurred,
“[t]he only relevant question is whether Halpin solicited any of Plaintiff’s clients after the
Court’s issuance of the Injunction on June 30, 2016.” ECF No. [132]. Here, ADP has
supplied a copy of a LinkedIn communication between Halpin and an ADP client, United
Methodist Retirement Communities, and counsel for Defendant Halpin acknowledges
Halpin sent the communication. ECF No. [163]. Halpin’s continued disregard for this
Court’s preliminary injunction order need not go unchecked. ADP may, should it choose,
move once again for sanctions against Defendant Halpin.
However, the Court is cognizant that, three years after their departure, Halpin and
Lynch remain subject to restrictive covenants that are contractually limited to one year,
subject to tolling. Accordingly, ADP shall SHOW CAUSE on the narrow questions of
whether the tolling provision as applied in this case continues to comply New Jersey law
and whether the one-year restrictive covenant has expired as to either Defendant. The
parties shall adhere to the briefing and hearing schedule set for in the accompanying
order.
4
The Court notes that in this district, The Honorable Esther Salas has stayed a related
matter, ADP, LLC v. Prossen (Case No. 15-cv-06309), pending the outcome of these
consolidated appeals.
4
III.
CONCLUSION
For the reasons stated above, the Motions for Summary Judgment are STAYED.
Defendants’ request to lift the preliminary injunction is DENIED WITHOUT
PREJUDICE. ADP’s request to provide supplemental briefing is GRANTED IN
PART and ADP shall SHOW CAUSE why the preliminary injunction should not be
lifted. An appropriate order follows.
/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Dated: March 12, 2019
5
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