ADP, LLC v. TRUEIRA

Filing 48

REDACTED OPINION. Signed by Judge Kevin McNulty on 8/8/18. (cm, )

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

Civ. No. 18-3666

ADP, LLC,
Plaintiff,

OPINION
V.

DAVID TRUEIRA,
Defendant.

KEVIN MCMJLTY. U.S.D.J.:

Before the Court Is a motion for a temporary restraining order and a
preliminary injunction (ECF no. 3) brought on by order to show cause filed by

the plaintiff, ADP, LLC (“ADP”). The defendant, David Trueira, left his
employment at ADP and joined a rival firm. Ultimate Software Group. Inc.
(ultimate”). To simph1r a bit, ADP asks this Court to enjoin its former
employee, for a period of one year, from providing services for Ultimate in the
same geographic territory he covered for ADP, and from soliciting business
from any client of ADP or encouraging any clients to cease doing business with
ADP. The Complaint asserts causes of action for breach of contract, breach of
duty of loyalty. and unfair competition.1
On March 16, 2018, 1 denIed ADP’s request for a temporary restraining
order but ordered expedited discovery and scheduled the matter for a hearing
on the preliminary injunction application. On April 18, 2018. 1 held an
evidentiary hearing. The court heard live testimony from two witnesses: David

This Court exercises jurisdiction pursuant to 28 U.S.C. § 1332 as the parties
are of diverse citizenship and the alleged amount In controversy exceeds $75,000.

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Trueira, who testified on his own behalf, and Kate Whittier, the Vice President
of Sales for Major Account Services for ADP and Trueira’s former supervisor,
who testified on behalf of ADP. I accepted certifications and declarations from
witnesses in lieu of direct testimony. Trueira and Whittier were cross-examined
and also gave redirect testimony. The parties submitted documentary exhibits.
as well as deposition transcripts. After the hearing, the parties submitted
proposed findings of fact and conclusions of law.
For the reasons set forth below, the Court is persuaded that ADP has
met Its burden of showing that injunctive relief is warranted wiih respect to the
Sales Representative Agreement and the Non-Disclosure Agreement. but not
the Restrictive Covenant Agreements. ADP’s motion for a prellminan
injunction is therefore granted in part and denied in part.
I.

Findings of Fact
Introduction
In the course of the hearing. Iliad the opportunity to observe the

demeanor of the witnesses and assess their credibility. In doing so, I
considered such usual factors as the witnesses’ apparent ability to recall: their
general affect and demeanor; the apparent Influence of bias or Interest in
shaping the narrative: the inherent plausibility of the accounts: and the extent
to which their testimony fit with other evidence. I kept in mind that discovery.
to date, has necessarily been limited. I have accepted the bulk of both sides’
factual contentions. Ms. Whittier’s testimony, to be sure, had a pro-plaintiff
slant. I had more difficulty, however, with the credibility of Mr. Trueira, who
sometimes was evasive (employing such qualifications as “vaguely”) and
sometimes selective in what he remembered reading. The most stark factual
disputes. however, concerned the Restrictive Covenant Agreements. which I
have found unenforceable, and not the Sales Representative Agreement or the
Non-Disclosure Agreement.
A. Tmeira’s Employment before working at ADP
1. Prior to working at ADP, Trneira had been working as a sales person in
business marketing and advertising for about 7 years. (Trueira Cert. ¶ 19.)
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See (Tr. 50: 19-:22.) He had never before worked in the areas of payroll and
human capital management. (Id. at 50:14-: 17.)
2. MI of Trueir&s knowledge, training, and experience in the area of paoll
and human capital management began with ADP. (Id. at 50:25-51:2.)
B. ADP’s Business
3. ADP Is a Delaware limited liability company with Its principal place of
business in Roseland, New Jersey. (Compi. ¶ 2.)
4. It is a provider of “business outsourcing and software services to clients,
including human resources, payroll, tax, and benefits administration
services.” (IcL at 91 6.)
5. AEP offers its services internationally and across the United States,
including in New Jersey. (Id)
C. Trucira’s Employment with ADP
6. On August 6, 2012, Truelra began employment with ADP in its Salem, New
Hampshire Office. (Tmeira Ceri. 91 2.) On February 9, 2018, he resigned
from ADP and immediately began his employment with Ultimate. (Id. at ¶31
42, 45.)
1.

Employment in ADP’s Total Source Division

7. At the beginning of his employrrient with ADP, Tmeira sold ADP’s Total
Source products and services.2 (JO.. at ¶ 4j
In his Cerufication. Truelra generally describes his Initial Total Source position
as a “sales associate” position or “salesperson.” (Tmelra Cert. 913! 2, 6. 7.) His
subsequent position in Total Source was as a “Sales Executive.’ (Id. at 8.) At the
hearing. he specified that the positions he held while at Total Source were: ‘Total
Source disirici manager: Total Source senior district manager; Total Source sales
executive.” (Tr. 29:1-:2.)
Kate Whittier, the Vice President of Sales in ADP’s Major Accounts Sales
Division who supervised Trueira during the last 8 months of his employment.
describes Tmeira’s initial role as a “District Manager I” position. (Whittier Decl. ‘H 2.
3; Whitter Suppi. DecI. 31 2.) According to Whittier, Tnieira was subsequently
promoted to District Manager on or about May 20. 2013. (10. at 91 3). Moreover, on or
about June 30, 2014. Trueira “was promoted to Total-Source Senior District
Manager.” and on or about June 29. 2015. Tmeira “was promoted to Sales Executive”
In Total Source. (10.) See (Compl. 91 9) (providIng the same Information).

1

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8. Total Source is a professional employer organization program through
which ADP would provide human resource services, employee benefits
administration, and payroll services to employers. (Id.) Through
outsourcing. ADP would step into the role of co-employer of each client’s
personnel for the purposes of payroll, employee benefits, and other aspects
of employee management. (Id.) See (Tr. 28:13-: 17. 57:20-:25.)
9. When selling Total Source products and services, Tnieira focused on
employers of 25 to 75 employees. (Trueira Cert. 91 5.)
10.

Truelra recalls that he “rarely proposed and never sold Total Source

products and services to employers with 200 or more employees.” (Ed.)
11. Approximately 70% of Trueir&s business (solicitation and sales) was with
already-existing ADP clients. (Id. at 91 6). The remaining 30% of his
business was with new ADP clients. (Id.)
12.

Trueira solicited clients in two counties in northern Massachusetts and
certain areas of Boston. (Id. at 91 7).

13.

DudngTruelra’s time as a Total Source sales associate, AUP assigned
him an electronic database. (Ed.) Known as the “SalesForce database,” the
database contained client and prospective client information, including a
client’s name, contact information, number of employees, and telephone
numbers. (‘Fr. 32:16-33:6.)

14.

The SalesForce database identified approximately 200 prospective clients
for Tnielra. (Truetra Cert. ¶ 7.) Truetra was also referred leads by sales
associates in ADP’s Small Business Division and Major Accounts Division.
(Id.)

15.

In late June/early July 2015, about 3 years after Trueira began
employment with ADP as a sales associate, he was promoted to a Sales
Executive position in ADP’s Total Source Division. (Ed. at ‘1191 4, 8.; Whittier
DecI. 91 3.)

16.

For about 2 years, Trueira managed a team of approximately 6 sales
associates who sold Total Source products and services to ADP clients and

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prospective clients in northern Massachusetts and New Hampshire.
(Trueira Cert. ¶ 8.)
In this period, Truelra’s team “rarely made a proposal and never sold

17.

Total Source products and services to any employer having 200 or more
employees.’ (kL at ¶ 9.)
H.

Employment in ADP’s Comprehensive Services Division

In late June/early July 2017. Trucira transferred to a Sales position In

18.

AEP’s Comprehensive Services Division.3 (Id. at 9110.) Trueira was in that
position for approximately 7 months before he left AD?. (Id.)
19.

Tnaeira’s supervisor during his time In Comprehensive Services was Kate
Whittier. (Tr. 29:17-:19.)

20.

As a Comprehensive Services Manager. Trueira was considered an
“overlay” sales representative who worked with District Managers who sold
Workforce Now. (Trueira Cert. 91 13; Tr. 29:13-:16.)

21.

ADP’s Workforce Now isa technology platform for sothvare that provides
basic payroll and tax scivices. Jr. 29:20-:24.) Individual modules can be
added to that platform, including modules for applicant tracking.
performance management, analytics, document storage, human resources,

and time and attendance. (IcL at 29:5-30:16.) Each module is an add-on to
the basic Workforce Now product. (Ed. at 74:12-: 14.)
22.

Trueira never sold ADP’s Workforce Now product and services. (Tmeira
Cert. 9[ 17. SeeTr. 62:11-:12.)

23.

ADP’s Comprehensive Services division sells such individual modules

and services that function on the WorkForce Now platform.5 (Id. at 30:23—

The parties dispute whether this was a promotion. I make no finding. See
Whittier DecI. 91 3; Tmelra Cert. 91 10).
4
When aslced If Truelra ever attempted to sell Workforce Now. Whittier responded
“not to my knowledge.” (‘Fr. at 88:21-:23.)
As WhitLier describes the two. ADVs WorkForce Now product is a software
platform that clients
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31:10). Such services were sold individually, not as a bundled package.
(Trueira Cert. ¶ 11.)
24.

Comprehensive Services therefore required ADP’s
platform. (Tr. at 30:19-22, 31:7-:9;

25.

a

Workforce

Now as a

at 59:8-11).

Total Source, however, does not require Workforce Now as a platform. (Id
at 59:5-:7.)

26.

Comprehensive Senices is similar to Total Source, but lacks the
professional employer organization Feature. (Tmeira Ceft. ‘1 11. See Tr.
58: 18-:24 (describing Comprehensive Services as peopie support” without
the professional employee organization structure.)

Comprehensive Services is an outsourcing by the client/employer of

27.

payroll processing and other services. (Trueira Cert. ¶ 11. See Tr. 29:3-;7.
58:15-59:4. See also Whiltier DecI. 913) (describing Comprehensive Services
as “business process outsourcing services”).) AIJP would not, however,
become a co-employer, as It did with Total Source. (Trueira Ceit. 9111.)
28.

A Comprehensive Services client would be assigned a “dedicated person”
from ADP to assist it in a certain area or areas. (Tr. 29:8-: 11.)

29.

After Trueira sold clients Comprehensive Services products, he did not
remain responsible for managing clients. ADP would “routinely assign a
Relationship Manager with whom the client would deal concerning the
Comprehensive Services provided w IL” (Trneira Cert. 3 12.)

30.

Tmeira would, however. interact with Comprehensives Services clients
when they would request assistance with implementation Issues. (fri.)

31.

From July 2017 to December 2017. Trueira worked with four District
Managers, and from Januaiy 2018 to early Februaxy 2018, he worked with
two District Managers. (Id. at 3 13.)

purchase to manage payroll. beneflis. time arid attendance, etc. ADP’s
Comprehensive Services are an additional service offered, which provide
clients consulting services In such areas as payroll, employee benefits,
human resources, etc.
(Whittier Suppi. DecI. 9! 7.)

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Trueira would solicit business from the clients to which he was direeled

32.

by the District Managers. (Ed. at 1114; Tr. 32:4-:8.)
33. Trueira was not directly assigned a specific geographic territory. (Trueira
Cert. 9116.) Rather, his territory was the territory of the District Managers
for whom he sewed as an overlay. (Id. at ¶11 15-16.)
34.

The four District Managers with whom Trueira initially worked sold
Workforce Now in Northern Massachusetts, New Hampshire, Maine, and

the greater Boston area. (fri. at 9116. See %ThittIer Decl. 91 3.)
35. While working with those District Managers. Tmeira sold Comprehensive
Services to two existing ADP clients in New Hampshire. (Tmeira Cert. INI
15, 16.)
36.

Trueira did not make any sales of Comprehensive Sources while working
with the two District Managers in January and Februaiy 2016. (Id. at 9113.)

37.

As a Comprehensive Services Manager, Tmeira met with approximately
50 clients. (Id. at ‘II 15.) The ADP clients and prospective clients that
Tmeira solicited were in Northern Massachusetts, New Hampshire, Maine.
and the greater Boston area. (Id.)

38.

More than 80% of the companies with whom he met were edsting ADP
clients. (Id.)

39.

During the sales process for Workforce Now or Comprehensive Services,
District Managers provide demonstrations of the products and sometimes
provide documents with product jnforniauon. (‘ft. 105:17-106:1). However,
ADP does not require the potential client to sign a confidentiality agreement
regarding the documents, demonstration, or pricing Information. (Id. at
106:2-; 17.)

40.

After a company signs onto ADP and becomes a client, It is provided a
sales order which incorporates a Master Service Agreement. (Id. at 120:15:17, 123:6-JO.) That Master Service Agreement includes a section guarding
ADP’s confidential and proprietary information. (Id. at 116:18-119:17.)

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a) Salesforce Database
4L

Trueira did not have a Salesforce database of prospective clients assigned
directly to him. (Tmeira Cert. ¶ 14.)

42.

Tweira did have access to the Salesforce database (or client list) of each
of the District Managers for whom he acted as an overlay. (Id. at 91 38.) See
(Tr. 32:19, 39:9-:10, 65:3-:4, 93:7-:lOj

43.
44.

Tmeira would access these databases, generally to make a note about a
meeting or discussion with a client. (Tnjeira Cert. 91 38.)

Tmeira did not have access to any type of database identifying all of
ADPs clients worldwide or all of ADP’s clients nationwide in one document.
(Tr. 93:15-:21.)

45.

Tmeira did not have his own access to a database that identified all of
ADP’s clients in a specific state, but did have access to the state-specific

information in his District Managers’ databases. (Id. at 93:22-94:10.)
46. Trueira sat in on feedback and roundtable discussions that were open to
all of Comprehensive Services’ District Managers. (Id. at 111:10-: 17.)
b) Pipeline
47.

During his time at Comprehensive Services, Tnieira created a “pipeline,”
an Excel spreadsheet that tracked and documented potential sales of
Comprehensive Services. (Id. at 33:7-: 10, 38:1-:3. See Whittier Suppi.
Dccl., Exh. 1.)

48.

The pipeline “show(edj what potential business may or may not be
coming in.” (Tr. at 33:17-:18).

49.

The information in the pipeline was a combination of information from
the District Managers and information from Trueira. (Id. at 34:22-35:1.)

50.

Trneira provided the pipeline to his supervisor. Whittier, on a weekly or
biweekly basis. (Id. at 33:10-:11).

51.

The pipeline included the following information: company name, location,
contact person. the title of the contact person. “roll call,” employee count,
product infonnatlon, information on the stage of the sales process, who

8.

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referred the company, and whether the company is a prospect or a client.
(Id. at 35:2-:14; 36:5-: 10. :21-37:12).

The “Roll call” column referred to the potential revenue that Trueira

52.

expected to generate from that particular client. (Id. at 35:15-36:4.)
The pipeline distinguished between “a pure prospect of ADP Major

53.

Accounts or.

.

.

a client ofADP Major Accounts.” (Id. at 36:12-: 14. See

Trueira Dep. 66:6-: 14) (explaining that the list includes ADP clients that
Trueira considers to be a prospect for Comprehensive Services, and
prospects that may be candidates for Comprehensive Services that are not
existing ADP clients).)
All of the companies Identified as existing ADP clients on the last pipeline

54.

Tmeira prepared were already on Workiorce Now. tTr. at 36:19-:20, 6L]0:20.)
55.

Two companies listed in the pipeline were identified not as existing ADP
clients but as “prospects.” (Id. at 61:13-: 15. :25-62:3.) One prospect
company was not an ADP client. The other was an ADP Total Source client,
but not a Workforce Now client. (Id. at 62:4-: 10.)

56.

The “product” column identified the particular product that Trueira and
the District Manager thought they could sell to the client or prospect. (Id. at
36:21-37:1.)

57.

The “product” column listings did not thc1ude WorkForce Now. (Id. at
92:19-:23.)

58.

The “stages” column identified the stage of the sales process, and the
“referred by” column identified the District Manager that Tnieira was
working with. (Id. at 37:2-;7.)

59.

The pipeline also included a “month” column which was an estimate of
when the business would come in for ADP, assuming ADP “won the
business.” (Id. at 37:15-: 18.)

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60.

The final column of the pipeline, “notes,” contained information on the
next steps that were going to be taken and where Tmeira and the District
Manager “were in the process.” (JO. at 37: 19-:25.J
The top portion of the pipeline identified companies that Trucira was

61.

actively soliciting. (Id. at 86:7-: 11.)
62.

The bottom portion of the pipeline identified ‘leads,” which were
companies that Tmeira and the District Manager considered to be potential
clients. (Id at 38:11-: 12.)

63.

Companies would appear on the ‘leads” list either because a meeting had
been held with that company or because someone at ADP had
recommended going after that account. (10. at 60:1 7-:2 1.)
D. Trueira’s Training while at ADP
When Tmeira began working in ADP’s Total Source Division, he received

64.

formal and informal new-hire training in the Total Source product. (Tr.
58:2-:11. See Tmeira Cert 91 19J The formal training consisted of classes,
while the informal training consisted of Trueir&s shadowing other
employees who were selling Total Source. (Tr. 58:2-: 11.)
65.

In the Total Source Division. Tnieira also had “several trainings,”
including a leadership development training in 2014 which was given by
Total Source group. (Id. at 58:12-: 14. 78:18-79:5.)
Through Blackboard Integration, a training site that ADP uses, Tmeira

66.

attended 13 or 14 different courses while he was selling Total Source. (Id.
at 79:9-: 18.)
Every time that Tmeira’s rolc at ADP changed, he would receive training

67.

specific to the new products and services he was dealing with. (Trueira Cert
qj

68.

19.)
When Tmeira began to work in the Comprehensive Services Division, he

did not receive any formal training. (Tr. 59:12-:14.) He recalled receiving
informal training by watching videos and observing demonstrations. (Id. at
59: 15-: 18.)

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69.

Whittier testified credibly that Tmeira did have formal training “in
certain aspects” of Comprehensive Services. (Id. at 82:11-:13.) She
explained that she had instructed Tmeira to participate in a series of
trainings that the Vice President of Computer Services had set up. (Ed. at
82:4-: 10.)

70.

She also testified credibly that Trueira had formal training in executive
conversations, “a training on gaining access at the C level and how a CFO
thinks and how to be effective at basically getting them to meet with you
and what was on top of their mind.” (Id. at 82: 18-:20.)

71.

As to WorkForce Now specifically, Trueira testified that he nevcr received
any formal training. (Id. at 59:19-:20.)

72.

Trueira also acknowledged, however, that when he first began to work in
Comprehensive Services, he had asked Whittier if he could attend some
demonstrations of WorkForce Now, a request which she granted. (Ed. at
31:14-:21.) Trueira recalled watching videos and observing live
demonstrations of the WorkForce Now product. (RI, at 31:1 i-:21, 59:22:25.)

73.

Whittier agreed that Tmeira had “on-the-Job training like watching
demonstrations” of WorkForce Now that were given to clients, and also
observed demonstrations of WorkForce Now in the office, as per his
request. (Ed. at 82:22-83:6-:8,)

74.

Whittier did not direct Trueira to get training in Comprehensive Services
or in Workforce Now through through the Blackboard Integration site. (Ed.
at 78:19-:22.)

75.

Whittier believed that Trueira ‘gained sufficient knowledge” to be able to
talk to a client about “some parts of’ WorkEorce Now. (Id. at 91:25-92:8.)

76.

While employed by ADP, Trueira also attended periodic, local sales
tralnings that all sales representatives were required to attend. (Trueira
Cert. 91 32.)

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When a person is hired by AIDE as a District Manager in its Major

77.

Accounts Division and does not have experience with Workforce Now, ADP
“typically” enrolls the person in new-hire training for Workiorce Now. (Tr.
76:9-: 17.) That training includes listening to product demonstrations,
shadowing different sales processes, meeting with ADP’s business
consultants who demonstrate the product, and engaging in discussions
regarding aspects of Worklbrce Now. (Id. at 76:9-:25).
E. Truelra’s Agreements with ADP
1. Sales Representative Agreement and Non-Disclosure
Agreement
As a condition of employment with ADP, new sales associates enter into a

78.

Sales Representative Agreement (“SRA”) and a Non-Disclosure Agreement
(“NDA”) before being exposed to ADP’s confidential information. (Whittier
DecI. 91 10.)
On July 12, 2012. nearly a month before his official start date, Tmeira

79.

electronically accepted a SRA and NDA. ISRA; NDA: Tnieira Cert. 91 3;
Whittier DecI. 919! 10. 11.)
80.

The SRA includes a “NON-SOLICITATION, NON-DISCLOSURE, NON-USE
AND NON-HIRE’ provision. (SRA ¶ 4.) The provision provides, in relevant
part:
(a) Employee agrees that during the period commencing the date
Employee becomes an employee of the Company and ending
one year after the date Employee ceases to be an employee of
the Company for any reason whatsoever (the ‘NonSolicitation Period”), Employee shall not, on Employees
behalf or on behalf of any other person, corporation,
partnership or other entity whatsoever (a ‘Person”), directly
or indirectly, solicit, contact, call upon, communicate with or
attempt to communicate with any Person which was a client,
bona fide prospective client or marketing partner of the
Company before the date Employee ceases to be an Employee
of the Company (the “Termination Date”) that (i) was located
in any territory Employee managed or to which Employee was
assigned or covered during the two-year period prior to the
Termination Dale and/or (ii) Employee was assigned,
managed and/or had knowledge of, contact or involvement
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with during the two-year period prior to the Termination Dale.
to sell, license or lease any software, product or service
competitive or potentially competitive with any software.
product or service sold, licensed, leased, provided or under
development by the Company during the two-year period
prior to the Termination Date, provided that the restrictions
setforth in this paragraph shall only apply to clients. bonafide
prospective clients or marketing partners of businesses of the
Company with which the Employee was involved or exposed.
(N During and after Employee’s employment with the Company,
Employee will not disclose to any Person any business
methods, procedures, pricing and marketing structure and
strategy, programs, forms, confidential information, trade
secrets, the names and addresses of current clients, former
clients and prospective clients of the Company, or other data
and information relating to the Company, its vendors,
licensors, marketing partners or clients, learned by Employee
at any time during Employee’s employment with the Company
(the “Information”), Upon termination of Employee’s
employment with the Company, Employee will return all
copies of all materials which belong to the Company (whether
or not such materials were prepared by the Company) and
which are in Employee’s possession or over which Employee
exercises any control.
(c Emp]oyee will not, during the Non-Solicitation Period, except
in the course of fulfillment of Employee’s duties as an
employee of the Company, use or act upon in any way,
directly or indirectly, any information which became known
to Employee during the course of Employee’s employment
with the Company concerning the identity or business activity
of any current clients, fonner clients, prospective clients
and/or marketing partners of the Company.
(Id. [emphasis added). “Client” and “prospective client” are defined as
“includ[ing] without limitalion any entity to or for whom the Company
provides or proposes to provide, as applicable, products or services either
directly or Indirectly, whether as a vendor. subconlractor to another
vendor or otherwise, whether or not priviLy of contract exists between the
Company and such cntily.” (Id. at 91 4(0).

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81.

The NDA contains similar language as to non-disclosure of confidential
information and trade secrets. It provides, in relevant part:

During and at any time after (the employee’s) employment with
Automatic Data Processing, Inc. and/or any of Its divisions,
subsidiaries and affiliates (collectively “ADP”), (the employeeJ shall
not, except in connection with (his or hen duties as an ADP
employee, on (his or her] behalf or on behalf of any oLher person,
corporation, partnership or other entity whatsoever (each, a
“Person”), access, use, or disclose to any Person any confidential
information, trade secrets, or other propdetaiy information of ADP,
its vendors, licensors, marketing partners, business partners. or
clients (including. bul not limited lo, (I) ADP’s business methods,
procedures. pricing and marketing structure and strategy which are
not publicly available and which (the employee) did not learn from a
public source, (ii) ADP’s source and object codes, computer screens,
programs and forms, experimental or research work, methods,
processes, formulas, or drawings, (hi) the names, addresses and
business acLMties of ADP’s current, former and prospective clients,
and (iv) the names, addresses, and personal information of ADP’s
and ADP’s current, former, and prospective clients’ employees),
learned by (the employee) at any lime during (his or her] employment
with ADP (collectively, the “ADP information”).
(NDA9T 3(b). See Id. at9! 2.)
82.

As to post-ADP employment, the NDA also includes a non-solicitation
provision. It provides, in relevant part
(b) During the period commencing on the date (the employee]
ceasejs) to be an ADP employee for any reason whatsoever (such
date, being the “Termination Date”) and ending on the date that is
twelve months thereafter, (the employee] shall not, on (his or her]
behalf or on behalf of any other Person, directly or indirectly, solicit,
contact, call upon. communicate with or attempt to communicate
with any Person that was a client, bona ficle prospective client,
marketing partner or business partner of ADP before the
Termination Date to sell, market, license, lease or provide any
software, product or service competitive or potentially competitive
with any software, product or service sold, marketed, licensed.
leased, provided or under development by ADP during the two-year
period prior to (the employee’s! Termination Date, provided that the
restrictions set forth in this paragraph 3(b) shall only apply to
clients, bona fide prospective clients, marketing partners or
business partners of businesses of ADP with which [the employee]
was involved.
14

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(Id. at ‘11 SW). See Id. at ¶ 3(c) (defining ciient” and ‘prospective client” as
“includjingi. without limitation, any Person to or far whom AD? provides
or proposes to provide, as applicable. products or services, either directly
or indirectly, whether as a vendor, subcontractor to another vendor or
otherwise, and whether or not pdvity of contract exists between AD? and
such Person].
2. Restrictive Covenant Agreement
83.

The Restrictive Covenant Agreement (“RCA”) is associated with ADP’s
restricted stock award program. An AD? employee must electronically
accept the terms of an RCA before he or she can receive restricted stock
through ADP’s restricted stock award program. (Donahue Deci. 91 7;
Whittier Dccl. ¶ 13.)

84.

AD? limits participation in the stock award program to certain highperforming employees. (Whittier Decl. ¶ 13J Restricted stock is offered
annually to sales employees who meet their annual sales targets. CM.)

85.

Unlike the SRA and the NDA. which must be signed by employees before
they officially begin their employment and before they have access to
confldential information. RCAS are optional agreements which are provided
to employees during their employment.

86.

Although newly hired District Managers are provided with AD?
confIdential and proprietary information, they are not required to sign
RCAs when they are first employed. (7Th. 112:5-: 17).

87.

ADP’s restricted stock award program was serviced through Morgan
Stanley until 2014. Since 2014, it has been serviced through Fidelity.
(Donohue Deci. ¶ 3.)

88.

Since 2014. an employee who is offered a stock award logs into a Fidelity
website and must select “Restricted Stock Awards Plan.” (Ic!. at 91 8.) The
employee then sees a list of stock awards for which he or she is eligible.
lId.) To accept a stock award, the employee must select “Begin
Acceptance.’” (Id.) The employee is then shown a new screen, titled
15

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“‘Accepting Your Grants,’” which Identifies the number of stock grants a
particular employee may accept. (Id.)
Next, the employee is provided a link to the Grant Agreement, which

89.

includes an RCA. The employee is provided a link to open and/or save the
Grant Agreement. The employer must then check a box which states: “I
have read and agree to the terms of the Award Agreement and the
Restrictive Covenant Agreement.” (Id. at ¶ 9.)
After checking the box, the employee has three options: 1) “Accept Your

90.

Grant” to submit the stock award acceptance, 2) “‘Decline Grant” to
decline the award, or 3) “Cancel.” (Id. at 9110.)
91.

If the employee selects the “Accept Your Grant’ option, acceptance of
the RCA is not optional. The system is set up in a manner that requires
either acceptance or rejection of the entire set of agreements associated
with the award. (Id. at9T 11.)
While Trueira worked in ADP’s Total Source Division, he was awarded

92.

restricted stock on 3 occasions: September 3. 2013, September 2. 2014.
and September 1,2015. (Donohue Dccl. 915.; Tr. 10:23-:25. See Donohue
Supplemental Deci,, Exhs. 1 and 2) (Grant Acceptance documents from
Morgan Stanley and Fidelity which show Trueira’s Award Dates).)
93.

In February 2018, shortly after leaving ADP, Trueira was served with a
letter from ADP’s attorneys which attached copies of the RCAs. (Tmeira
Cert. 91 25.)

94.

On Fehruaiy 20, 2018, counsel for ADP sent Trueira a letter that
reminded Tmeira of his obligations under the RCAs. (Compl. Exh. 1-1.) The
letter enclosed a copy of the RCAs and stated:
Please provide to me in witing, on or before February 28, 2018
confirmation that you will abide by your contractual obligations to AD? and
that you have returned all of ADP’s property. Further please include in your
response the identity of your new employer, a description of your job
duties, and the geographic territory for which you are responsible.
(Id. at 4) (emphasis In original. See 2013 RCA ¶ 7, 2014 RCA 91 7. 2015
RCA 91 8.) Trueira “vaguely” recalled having received the letter. (Tr. 23:2416

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24:1.) He also recalled reading the RCAs attached to the letter, but not in
their entirety, and in particular lie claimed he did not read paragraph 7.
(Ed. at 27:15.)
The 2013 RCA associated with Tmeira’s 2013 stack award was

95.

electronically accepted on September 19, 2013. (Donahue Supplemental
Dccl., Exh. 1).
96.

The 2014 RCA associated with Tmeir&s 2014 stock award Indicates an
acceptance date and time of September 30. 2014 at 10:40 AM Eastern
Standard Time. (Donahue Dccl. Exh. B at 6)

97.

The 2015 RCA associated with Trueira’s 2015 stock award indicates an
acceptance date and time of September 30, 2015 at 11:10 AM Eastern
Standard Time. (Donohue Dccl. Exh. C at 8. See Donohue Supplemental
Dccl., ExIt 2).

98.

Trueira clearly remembers accepting the stock awards. He claims to have
no memoxy, however, of “ever being asked to sign or to acknowledge the
acceptance of a restrictive covenant as a condition of receiving the incentive
stock award.” fTmeira Cert. ¶ 30.)

99.

Trueira also claims that he cannot recall: 1) anyone at ADP ever
providing him with copies of ihe RCAs, 2] anyone at ADP advising him that
he was bound by RCAs because he accepted an incentive stock award, 3)
anyone at ADP telling him that if he accepted an incentive stock award, a
condition of accepting the award was that he would have to agree to be
bound to a RCA, 4) going onto a third-party portal to accept his stock
awards, 5) whether the portal was from Morgan Stanley or Fidelity, and 6)
whether anything on the portals stated the words “restrictive covenant.”
fTr. 55:15-56:14. See (Tmeira Cert. 1Nt 26, 27).

100. The Court does not find Truelra’s claim to lack any memory of accepting
restrictions in connection with the stock awards to be credible.
101. The 2013, 2014 and 2015 RCAs bind Tnaeira to substantially similar
provisions. See (2013 RCA 9191 3, 4, 6; 2014 RCA 9191 3, 4, 6: 2015 RCA 9F11 3,
4, 6).
17

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102. The RCAs contain provisions that are not found in the SRA and NDA,
including a non-compete provision, an attorneys’ fee provision, and a
contractual tolling provision.
103. The 2015 RCA6 includes the following non-compete provision:
(the employee) agree[s] that during Ihis or her] employment and for
a period of twelve (12) months from the voluntary or involuntary
termination of [his or her] employment for any reason and with or
without cause, [he or she] will not, directly or indirectly, own.
manage, operate, join, control, finance, be employed by or with, or
participate in any manner with a Competing Business anywhere in
the Territory where doing so will require (the employee] to (1) provide
the same or substantially similar services to a Competing Business
as those which I provided to ADP while employed, or (ii) use or
disclose ADPs Confidential Information or trade secrets. However.
after [his or her] voluntary or involuntary termination of [his or her)
employment for any reason and with or without cause, nothing shall
prevent Ithe employee] from owning, as an inactive investor,
securities of any competitor of PLOP which is listed on a national
securities exchange.
(2015 RCA ¶ 3) (emphasis added). See id. at ¶ l(j) (defining ‘Tenitoiy” as
“the geographic area where [the employee] worked, represented ADP, or had
Material Business Contact with ADP’s Clients in the two (2) year period
preceding the termination of [the employee’s] employment with ADP9; Id. at 91
1(d) (defining “Competing Business”): (itt. at ¶ 1(e) (defining “Confidential
Information”),)
104. The 2015 RCA also includes a non-solicitation and non-interference
provision as to ADP’s clients, business partners, and vendors. The
provision related to “Clients” states:
[The employee] agrees that during [his or her] employment and for a
period of twelve (12) months following the voluntary or involuntan’
termination of [his or her] employment for any reason and with or
without cause, (the employee] will not, either on (his or her] own
behalf or for any Competing Business, directly or indirectly, solicit,
I here quote the 2015 RCA, the
similar.

most

recent. The 2013 and 2014 RCAs are

18

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divert, appropriate, or accept any business from, or attempt to
solicit, divert, appropriate, or accept any business from any Client
for the purposes of providing products or services that are the same
as or substantially similar to those provided in the Business ofAD?.
for any Client; (I) whom ADP provides products or services in
connection with the Business of ADP; (II) whom AUP has provided
products or services in connection with the Business of ADP within
the one (1) year period prior to [his or her] voluntary or Involuntary
termination of employment, for any reason, with or without cause,
from ADP; (iii) whom ADP has provided products or services in
connection with the Business of ADP and with whom ADP
reasonably expects business within the two (2) year period following
my voluntary or involuntary termination of employment, for any
reason, with or without cause, from ADP; (iv) whom ADP has
solicited in connection with the Business of ADP within the two [2)
year period prior to my voluntary or involuntary termination of
employment, for any reason, with or without cause, from ADP; or (v)
about whom (the employee] hals] any Confidential Information or
trade secret information. IThe employee] also agree(s) that [he or she]
will not wrongfully induce or encourage or attempt to wrongfully
Induce or encourage any Clients to cease doing business with ADP
or materially alter their business relationship with ADP.
(Id. at ¶ 4(a)) (emphasis added). A “Client” is defined as “any individual,
corporation, limited liability company. partnership, Joint venture, association,
or other entity, regardless of form, or government entity for whom ADP
provided or provides products or services in connection with the Business of
ADP or whom ADP has actively solicited in connection with the Business of

ADP.” (Id. at91 1(c). See also id. at 91 1(a) (defining “Business of ADP1.)
105. Additionally, the RCA contains a “Non-Disclosurc and Non-Use of
Confidential Information and Trade Secrets” provision. (See Id. at 91 6.)
F. Trueira’s Resignation and Employment with ultimate
106. In late December 2017, Trueira began the interview process with
Ultimate, a direct competitor of ADP. (Tr. 13:l-;9, 41:6-:7.)
107, During the interview process, persons at Ultimate told Trueira that ADP
might “come after (himi for violation of a non-compete.” and put him in
touch with an attorney. (Id. at 13—18)

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108. Around the time of his departure, Trueira stated, he discussed the
potential of litigation with Nicole Rafferty, a former ADP employee who now
works for Ultimate, but only “vaguely.” (Ed. at 18—19)
109. Nevertheless, Tnjeira took no steps to find out if he had any contractual

obligations not to compete or to inform ADP of the identity of his new
employer. (Ed. at 20. 27)
110. On or about January 26, 2018, Trueira accepted a position with
Ultimate. (Ed. at 12:18-:21).
111. Tmeira resigned from ADP on Friday. February 9, 2018, after working for
approximately 7 months In ADP’s Comprehensive Services division, and
working br ADP for a total of about 5 ½ years. (Truetra Cert. ¶ 42.)
112. Tmetra represented that he returned “everything” to ADP, including
handwritten notes from his time with the Total Source Division. (Tr. 70:10:16, 106:18-:20. See Trueira Cert. ¶42,)
113. Trueira did not provide any ADP employees, including his supervisor,
Whittier, with any information identifying his new employer,
notwithstanding their direct questions about his post-ADP employment.
(Tr. 11:23-12:14, 19:19-:22).
114. Tnielra testified that he was unaware that he had a contractual
obligation to disclose information about his new employer to ADP. (Ed. at
20:16-:19. See Tnieira Cert. ¶ 44.)! did not find Tnieira credible on this
point, finding at the yen’ least that he consciously avoided learning of the
contents of the agreements.
115. Trueira began employment with Ultimate as a Strategic Development
Manager on the following Monday, February 12. 2018. (Tnieira Cert. ¶T 45.
46.)
116. As a Strategic District Manager, Trueira sells ULTIPRO to businesses
with 200 to 500 employees, and has bcen assigned to scil ULTIPRO In
Rhode Island, Massachusetts, Maine, Vermont, and New Hampshire. (Ed. at
‘1 46.)

20

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117. ULTIPRO is a software platform that is a unified, bundled package of
payroll and human resources information systems. (Id. at ¶ 45.)
118. Ultimate does not oiler professional employer organization services to its
clients. (Id.)

119. Ultimate’s ULTIPRO software platform is directly competitive with ADP’s
Workforce Now software platform. (Tr. 42:9-: 11, 42:15-: 19).
120. Tmeira stated, however, that he believes Ultimate’s ULTIPRO is not
competitive with ADP’s Comprehensive Services, the product he previously
sold atADP, (Id. at 67:10-:12.)
121. ADP’s Comprehensive Services is at least generally competitive with
Ultimate’s “managerial services.” (Whittier Suppl. DecI. 91 8.) Trueira
maintains, however, that Ultimate’s managerial services are sold not by
himself but by other sales representatives with whom he has no contact or
relationship. (Trueira Cert. 91 45.) 1 make no factual finding on the point.
122. At Ultimate, Trueira has about 400 accounts assigned him. (Tr. 47:7-:9.)
Trueira estimated that approximately 40% of those accounts currently use
ADP products. (Id. at 47:10-48:18.)

123. Trueira’s territory as an Ultimate employee overlaps with his former AUP
territory of Northern Massachusetts, the greater Boston area, New
Hampshire, and Maine except for some areas in Massachusetts, Rhode
Island, and Vermont. lId. at4l:15-:18.)
124. At the hearing, Trueira testified that if he were restricted from selling
ULTIPRO in Northern Massachusetts, the greater Boston area, Maine, and
New Hampshire, he could still sell ULTiPRO in other parts of
Massachusetts, Rhode Island, and Vermont. (Id. at 43:17-:21). He
acknowledged that such a restriction would “drastically limit” his account
base and while he could still work, he would not be able to work as
“fruitfully.” (Id. at 43:21-:23.)

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G. Tnefra’s Interaction with ADP Clients While at Ultimate
125. At Ultimate. Tweira has approximately 400 prospects in his sales force
database. He estimated or gucsscd that approximately 10% were ADP
clients in fact. (Id. at 47—48)
126. As an Ultimate employee. Truelra had contact with
*

an ADP client in Rhode Island with

about 400 employees. (Id. at 45:2-: 19.)
127. He testified that he “solicited that entity, (Id. See Trueira Dep. 124:10125:2.)
at an

128. He also acknowledged that he met a representative from

Ultimate event. When he introduced himself to all of the attendees, Trueira
slated that he had about 6 years of experience In human capital business.
the majority of which was with ADP and now with Ultimate. (Yr. at 45:13:25. 66:24-:25.)
has been a

129. The only further contact Tmeira has had with
phone call and e-mail. (Id at 67:1-:5.)
130.

was not Trueira’s client or prospective client when he was

employed by ADP. (Id. at 46:11-: 13. 67:6-:9.)
131. As an Ultimate employee, Truelra considers himself to be in the
prospecting stage with

.

(Trueira Depo. 128:12-: 14.)

132. Moreover, at Ultimate, Tnieira is assigned to work with

.

a

company which appeared under “leads” on Trucira’s ADP pipeline.
133. As an Ultimate employee, he sent

an e-mail and invited it to an

event. The company later declined the invitation. (Tr. at 49:12-50:8.)
under the “leads” secuon of

134. Trueira explained that he placed

his ADP pipeline because an PLOP District Manager had bId him that he
wanted to talk to him about that account. (Id. at 49:23-:24j
135. Tmeira never personally contacted
ADP. (it!. at 61:1-:9j

22

while he was employed at

Case 2:18-cv-03666-KM-CLW Document 48 Filed 08/08/18 Page 23 of 46 PageID: 1631

remains an account assigned to Truetra at Ultimate. (fri. at

136.
50: 12-: 13.)

137. As an Ultimate employee. Trueira has not had any contact with the
prospects listed on the top of his ADP pipeline, or the leads in the bottom of
the pipeline, aside from
U.

.

(fri at 64:4-: 13.)

Analysis/Conclusions of Law

“A plaintiff seeking a preliminary injunction must establish (1) that he is
likely to succeed on the merits, (2) that he Is likely to suffer irreparable harm in
the absence of preliminaiy relief. (3) that the balance of equities tips in his
favor, and (4) that an injunction is in the public interest.” Winter v. Natural Res.
Def. Council. Inc., 555 U.S. 7. 20 (2008) (numbering added); accord American
Express Travel Related Sen,s.. Inc. u. Sidamon-Eristoff. 669 F.3c1 359, 366 (3d
CIr. 2012). Because a preliminary injunction is “an extraordinary and drastic
remedy,” the plaintiff must establish each element by a “clear showing.”
Mazureic a Armstrong. 520 U.S. 968. 972, 117 S. Ct. 1865, 1867 (1997)
(quoting 1 1A C. Wright, A. Miller. & M. Kane, Federal Practice and Procedure §
2948, pp. 129—30 (2d ed. 1995)). Even then, a trial court’s decision to issue a
preliminary Injunction Is “an act of equitable discretion.” eBay Inc.

ii.

MercExcttange, LLC., 547 U.S. 388, 391 (2006)]
A Court will consider all four factors, but the first two are essential. See
Adams v. Freedom Forge Corp.. 204 F. 3d 475. 484 (3d Or. 2000): accord
Hoxworth a Blinder. Robinson & Co., 903 F.2d 186. 197 (3d Cir. 1990) (placing
particular weight on the probability of irreparable harm and the likelihood of
success on the merits, stating: “IWle cannot sustain a preliminary Injunction
ordered by the district court where either or both of these prerequisites are
absent.” (quoting In re Arthur Treacher’s Franchisee Litigation. 689 F.2d 1137,
1143 (3d Or. 1982)); Morton a Beyer, 822 F.2d 364, 367 (3d Cir. 1987);

In a diversity case, a federal court applies the federal standard to the question
of whether a prdilnunary injunction Is warranted, pursuant to Fed. R. Clv. P. 65.
InstantAir Freight Co. v. C.F. Air Freight Inc.. 882 F.2d 797. 799 (3d Cir. 1989).

7

23

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Fretvenet, SA. v. Admiral Wine & Liquor Co., 731 F.2d 148. 151 (3d Cir. 1984):
American Express. 669 F.3d at 366. 374. But see Conestoga Wood Specialties
Corp.

Secretary of U.S Dept. of Health and Human Services, 724 F.3d 377 (3d
CIr. 2013) (debating whether there is a “sliding scaie of the four factors).
ii.

ADP argues that the four preliminary injunction factors weigh in Its favor
and that, pursuant to the non-solicitation and non-compete provisions in the
RCAs, the SPA, and the NDA, this Court should, inter alto., enjoin Tnieira for a
one-year period from 1) providing services for Ultimate in the same geographic
territory as he covered for ADP, and 2) soliciting business from “any Client” of
AD? or encouraging “any Clients” to cease doing business with AD?, with the
exception of prospective clients that Trueira had no knowledge of while working
at AD?.
For the reasons explained below. I find that AD? Is entitled to injunctive
relief under the SPA and the tWA. but not the RCAs.
A. Likelihood of success on the merits
To show a likelihood of success, ADP must establish “a reasonable
probability, not the certainty, of success on the merits.” 5K & F. Co. v. Premo
Pharm. Labs., Inc.. 625 F.2d 1055. 1066 (3d Or. 1980).
AD? bring claims against Tateira for: (1) breach of contract; (2) breach of
duty of loyalty; and (3) unfair competition. (Compi. qqj 64-88). As to Count 1,
breach of contract. AD? alleges that Trueira has breached “all or some of the
Agreements,’ collectively referring to the SPA, the NDA, and the three RCAs.
(Id. at 9(914, 69-70.) It is fair to say that the main goal of ADP’s request for
injunctive relief, however, is to enjoin Trueira from violating the RCAs.
To establish a breach of contract claim, a plaintiff must demonstrate (1)
the existence of “a valid contract between the parties”; (2) the defendant’s
“failure to perform a defined obligation under the contract”; and (3) that the
plaintiff “sustained damages” as a result. EnuiroFinance Grp., LW u. Envil.
Barrier Co., LLC. 440 N.J. Super. 325. 345 (App. Dlv. 2015) (cIting Murplt

24

U.

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IrnpUcito, 392 N.J. Super. 245, 265 (App. Div. 2O07fl. The panics dispute the

first two elements: whether the non-solicitation and non-compete provisions of
the RCAs are enforceable (and if so, to what extent they are enforceable).° and
whether ADP can establish a breach or likely breach of the RCAs, SRA. and
NDA.
As to the RCAS, Tmeira argues that ADP is unlikely to succeed on the
merits because 1) ADP is barred from enforcing the RCAs by the doctrine of
issue preclusion (also known as collateral estoppel). 2) the RCAs are
unenforceable restraints on trade, and 3) in the alternative, ADP fails to
establish breach or likely breach of any enforceable provisions of the RCAs. As
to the SRA and NDA, Trueira argues that ADP fails to establish breach or likely
breach.

1. Issue preclusion
Tnieira argues that three prior New Jersey decisions estop ADP from
relitigating the issue of whether the RCAs are enforceable. Those three prior
decisions were rendered by Judge Donald A. Kessler of the Superior Court of
New Jersey, Chancexy Division.’0 (Def. Br. 7-10; Def. Cone. Law ¶ 20). 1 am

The parties agree that New Jersey law applies In this action, pursuant to the
choice of law provision in the RCAs, SRA, and NDA. See (2013 RCA 91 9; 2014 RCA 91 9;
2015 RCA 1 9; SRA 9! 7; NDA 91 9.) “In evaluating whether a contractual choice-of-law
clause is enforceable, federal courts sitting in diversity apply the choice-of-Jaw rules of
the forum state, Generally, when parties to a contract have agreed to be governed by
the Jaws of a particular state, New Jersey courts will uphold the contractual choice jilt
does not violate New Jersey’s public policy.’ Nuzzt ii. Aupaircare, Inc., 341 F. App’x.
850, 852 (3d Cm. 2009) Unternal quotation marks omitted) (clUng Homa ii. Ant.
Express Co., 558 F.3d 225. 227 (3d Cm. 2009)). NeIther party asserts that the choice of
law provision in the agreements violates public policy, and I see no reason why It
would (unless of course it were applied overbroadly). Therefore. I will apply New Jersey
law to the parties’ dispute over the RCAs, SRA, and NDA.
8

Counsel for Truetra concedes that the SRA and NDA “contain fair and
reasonable restrictive covenants’ (Def. Conc. of Law 91 9). and “does not dispute their
enforceability.” (Def. Brf. 11 n.6,)
1
The three Judge Kessler decisions are AD?. LLC v. Kusins, Dkt. ESX-C-264-15
(Ch. Div. 2017) (ECF no. 2 1-2, Exh. 20 at 1-75, Letter Opinion); AD)’, LLC v. DeMarco,
Dkt. ESX-C-120-16 (Ch. Div. 2016) (ECF no. 21-2, Exh. 21, HearIng Transcript); and
AD!’, LLCvHobaica, Dkt. ESX-C-118-16 (Ch. Div. 2018).
25

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unpersuaded by this argument. Among other things. I note that the Judge
Kessler decisions selected by Trucira are three among many; other relevant
prior decisions xvent the other way, and are adverse to Trueira’s position. Thus
I decline to hold thai the matter Is settled and cannot be relitigated.
Whether a state court judgment should have a preclusive effect In a
subsequent federal action depends on the law of the state that adjudicated the
original action, See Greenleaf v. Garlock, Inc., 174 F.3d 352, 357 (3d dr. 1999)
(“To determine the preclusive effect of [the plaintifl’sJ prior state action we must
look to the law of the adjudicating state.”); Bouriea v. Carnegie Mellon
University, 430 F. App’x. 182, 186 (3d dir. 2011) (applying Pennsylvania law to
decide whether to give preclusive effect to a Pennsylvania state court decision).
The judgments as to which Tmeira Invokes collateral estoppel are New Jersey
state court decisions. I must thcrcfore determine whether and to what extent
New Jersey law would give those rulings preclusive erect.
“‘New Jersey courts follow the doctrine of collateral estoppel or the nile of
Issue preclusion described In the Restatement of Judgments.’” Barker u.
Brmegar. 346 N.J. Super. 558, 566 (App. Div. 2002) (quoting Hernandez v.
Region Nine Hous. Corp.. 146 N.J. 645, 659 (1996)). Under New Jersey law,
collateral estoppel (also known as issue preclusion) “bars relitigation of any
issue which was actually determined in a prior action, generally between the
same parties. involving a different claim or cause of action.” State v. Gonzalez.
75N.J. 181, 186 [1977).’
The primary purpose of collateral estoppel is lo promote cificient
jusilce by avoiding the re-litigation of matters which have been fully
and fairly litigated and fully and fairly disposed of.’ Kortenhaus v. EU
Lilly & Co., 228 N.J. Super. 162. 166 (App. Div. 1988). Another is to
protect individuals from ‘vexatious repetitious litigation.’ LubUner v.
Bd. of Alcoholic Beverage Control. 33 N.J. 428, 435 (1960).

LI
There Is no need to resort to broader doctrines, such as New Jersey’s entire
controversy rule, which encompass issues that could have been. bul were not, raised
in the prior action. There Is no dispute that the Issue in controversy here was actually
raised and decided In the prior cases.

26

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Lopez v. Patel, 407 N.J. Super. 79, 93 (App. Div. 2009). The party seeking to
invoke collateral estoppel must show that
(1) the Issue to be precluded is identical to the issue decided in Lhe
prior proceeding: (2) the issue was actually liligaled in the prior
proceeding; (3) the court in the prior proceeding issued a final
Judgment on the merits; (4) the determination of the issue was
essential to the prior Judgment: and (5) the party againsi whom the
doctrine is asserted was a party to or in privily with a party to the
earlier proceeding.
Olivieri v. Y.M.F. Carpet, Inc., 186 N.J. 511, 521 (2006) (quoting In re Estate of
Dawson, 136 N.J. 1. 20—21 (1994) (citations and parentheticals omitted)).
Notably, “[ajlthough the essential elements of the federal and state tests
are similar, they are not identical because New Jersey will not apply collateral
estoppel if it would be unfair to do so.” In re Liquidation of Integrity Ins.
Ca/Celotex Asbestos Tr., 214 N.J. 51, 67 (2013). The New Jersey Supreme
Court has recognized that collateral estoppel “is a doctrine designed to
accomplish various goals, a nile not to be applied if there are sufficient
countervailing Interests.” In re CoruzzL 95 N.J. 557, 568 (1984). Accordingly, in
addition to the five criteria outlined above, a court must consider more
generally whether preclusion would be fair, and the court retains discretion to
grant or deny preclusion. See Kortenhaus, 228 N.J. Super. at 165 (recognizing
that New Jersey adopted a “more flexible” collateral estoppel rule “which
emphasized a discretionary weighing of economy against fairness”).
Fundamental to the application of estoppel is an assessment of
considerations such as finality and repose: prevention of needless
litigation: avoidance of duplication; reduction of unnecessary
burdens of time and expenses; elimination of conflicts, confusion
and uncertainty; and basic fairness. Indeed, such broader notions
about fairness and finality echo in the variety of considerations that
equity applies in estoppel-like circumstances.
Winters v. N. Hudson Reg’l Fire & Rescue, 212 N.J. 67, 85 (2012) (internal
quotations and citations omitted).
Efficiency and fairness are both important goals. Nevertheless,
“[e]fficlency is subordinated to fairness and, consequently, if the court is
27

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satisfied that efficiency would lead to an unjust result,” application of the
equitable doctrine of collateral estoppel “should not be tolerated.” Barker, 346
N.J. Super. at 566. SeeAllenv. V&Aflros.. 208 N.J. 114,138(2011) (quoting
OlWierL 186 N.J. at 52 1-22) (noting that “because (collateral estoppelj is an
equitable doctrine, even if all five elements coalesce. it ‘will not be applied when
It is unfair to do so’”); Kortenhaus, 228 N.J. Super. at 166 (quoting Blonder—
Tongue Labs v. University Foundation. 402 U.S. 313, 334 (1971)) (stating that
application of collateral estoppel ‘“necessarily restis] on the trial courts’ sense
ofjustice and equity”).
Here, the issue sought to be precluded is the enforceability of the RCAs.
That is an issue of law. In accordance with the above-mentioned fairness
concerns, even where the prerequisites for issue preclusion are satisfled, courts

can allow reiltlgation, particularly of a legal issue, In City of Plainfield

ti.

Pub.

Sew. Liec. & Gas Co., the New Jersey Supreme Court explained this equitable
proviso:
The ability of a court to readdress previously adjudicated issues may
under appropriate circumstances be exercised despite the narrow
confines of issue preclusion or res judicata. This is especially true
where, as in this case, the issue is purely one of law and a new
determination is warranted to avoid inequitable administration of
the law.
82 N.J. 245, 258-59 (1980) (citations omitted),’2

When a defendant, like Tnieira, raises the collateral estoppel bar against
a plaintiff who previously lost the same issue against another defendant, the
See Dawson, 136 N.J. at 22—23 (1994) (followIng Plathfield and noting that even
If all the elements of collateral estoppel existed, the Court would not apply the doctrine
to the pure question of law before it); see also Restatement (Second) of Judgments §
28(2) (observing an exception to the doctrine where the Issue “Is one of law9, But see
Restatement (Second) of Judgments § 27 cmt. c (recognizing that “Lain Issue on which
litigation Is foreclosed may be one of evldenuaxy fact, of ‘ultimate fact’ (i.e.. the
application of law to fact), or of law if the Issue [Isl one of law, new arguments may
not be presented to obtain a different determination of that issuc”).
...

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application of the doctrine is described as “defensive” collateral estoppel. Id. at
164; see also Parldane I-Iosienj Co. v. Shore, 439 U.S. 322, 329 (1979). In Mann
v. Estate of Meyers, I cited the well-established benefits of the doctrine:
Defensive collateral estoppel promotes judicial economy and
fairness by denying a plaintiff the opportunity to serially relitigate
identical issues by simply switching defendants. Viewed
prospectively, it gives the plaintiff an incentive to join all defendants
in a single lawsuit for fear of losing the ability to sue them separately
later.

61 F. Supp. 3d 508, 523 (D.N.J. 2014) (internal citations omitled).
“Fundamental to the theory of collateral estoppel.” however, “is the
notion that the earlier decision is reliable, an underlying confidence the result
was substantially correct.” (P1. Cone. of Law ¶ 60) (citing Kortenhaus, 228 N.J.
Super. at 166 (citing Restatement (Second) of Judgments

§

29 cmt. f. (1982))).

Under Section 29 of the Second Restatement of Judgments, a plaintiff, in order
to avoid the preclusion bar, must demonstrate that he or she “lacked full and
fair opportunity to litigate the issue” in the prior proceeding, or that “other
circumstances justiI’ affording lplaintiffl an opportunity to relitigate the issue,”
Restatement (Second) of Judgments

§

29 (1982).

Factors to be considered, in addition to those enumerated in Section 28,
Include whether “[tihe determination relied on as preclusive was itself
inconsistent with another determination of the same issue.” Id. § 29(4).
Comment (0 to Section 29 further elaborates on the effect of inconsistent prior
determinations:
Inconsistent prior determination. Giving a prior determination of an
issue conclusive effect in subsequent litigation is justified not merely
as avoiding further costs of litigation but also by underlying
confidence that the result reached is substantially correct. Where a
determination relied on as preclusive is itself inconsistent with some
other adjudication of the same issue, that confidence Is generally
unwarranted. The inference, rather, is that the outcomes may have
been based on equally reasonable resolu Lions of doubt as to the
probative strength of the evidence or the appropriate application of
a legal rule to the evidence. That such a doubtful determination has
been given effect in the action in which It was reached does not

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require that it be given effect against the party In litigation against
another adversaxv.
Id

29 cml. f (emphasis in original). See Kortenhaus, 228 N.J. Super. at 166
(stating that ft1he considerations enumerated by the Restatement are largely

§

tests by which confidence in the earlier decision maybe measured”).’3
As noted above, Tmeira cites three prior decisions by Judge Kessler (hilly
cited at n. 10, supra). The first, ADP. LLC u. Kusths, is a letter opinion. The
second, ADP. LLC v. DeMarco. is an oral, on-the-record opinion, relying on
Kus ins. The third, ADP, LLC v Hobaica, likewise relies on Kusins. None are
reported. 14
ADP does not really argue that Judge Kessler’s three decisions would not
meeL the five enumerated prerequisites for issue preclusion. See Olivieri. 186
N.J. at 521. Rather, relying on principles of equity, fairness and reliability. ADP
asserts that Judge Kessler’s decisions are outliers, Ic., decisions which are
inconsistent with numerous other court rulings on the same issue. There have
been, says ADP, “three federal court cases and an affirmance by We Third
Circuit, and a Tennessee court applying New Jersey law and an affirnnnce by
the Tennessee Court of Appeals.” (P1. Conc. of Law ‘IN1 6 1-63. See P1. Reply Br.
4.) Those cases, likewise unreported. are ADP, LLC

L’.

Jacobs (“Jacobs”), Civ. No.

2:15-3710, 2015 WL 4670805 (D.N.J. Aug. 5. 2015] (Linares, J.) (finding RCA
enforceable except as to clienis defendant did not gain knowledge of through
his emp]oyment at ADP); ADP, LLC v. Manchir (“Manthir”), Case No. 14-14043
çrenn. Ch. Ct., 20th Jud. DisL, August 11, 2016). affd, No. M2016-02541-

‘

See also BaLson v. Lederle Labs., a Div. ofAm. Cyanamid Co.. 290 N.J. Super.
49. 52 (App. Dlv. 1996), affd in part as modified, 152 N.J. 14 (1997)(clting Kortenhaus,
228 N.J. Super. at 166. 168) (9’he inconsistent verdicts erode a lundamental tenet on
which the doctrine is based because the court can no longer rely on the presumption
that the earlier decision was reliable and substantially correct.”).
‘4

AccordIng to ADP, all three are or shortly will be on appeal. (P1. Conc. of Law ‘H
61). That circumstance alone, however, would not deny them preclusive eflèct. See
Comm’r New Jersey Dept of Banking & Ins. v. Budge, No. A-0938-0T12, 2009 WL
2245764. at 7 (N.J. Super. Ct. App. Div. July 29, 2009 (cIting cases and Restatement
(Second) of Judgments § 13 comment g).
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COA-R3-CV, 2017 WL 5185458 (Term. App. Sept. 6. 2017); am] ADP. LLC. a
Lynth and ADP, LLC v. Halpth (“Lynch/HaIpin”), Civ. Nos. 2:16-01053, 2:16-

01111, 2016 WL 3574328 (D.N.J. June 30, 2016) (MartinI, J.) (denying
enforceability of RCA as to prospective clients as to which defendants did not
gain knowledge atADP), affd, 67SF. App’x 77 (3d Cir. Feb. 7, 20l7fl.1
Jacobs, Manthir, arid Lyrtch/HaIp(n, interpreting the same ADP

agreement, reached a result contrary to that reached by Judge Kessler. As a
matter of equity and common sense, I cannot confidently state that Judge
Kessler’s decisions settle the issue, or that their correctness is manifest. In that
conclusion, I am supported by ADP, LLC v. Rafferty, No. CV 18-1922, 2018 WI.1
1617705 (D.N.J. Apr. 3, 2018) (internal citations omitted). There. Chief Judge
Jose L. Linares (the author, as it happens, of Jacobs). considered the
preclusion issue, presented as here in the context of a preliminary injunction
application, and denied the application of collateral estoppel:
The Court is also not convinced of the success, or lack thereof, of
the argument that the RCAs are unreasonable restraints on trade
under collateral estoppel. which was discussed in the parties’ briefs
and at oral argument. The fact that there are decisions both
upholding and rejecting the RCAs does not make it any more likely
that Plaintiff shall succeed on the merits, which is all the Court is
currently considering.
2018 WL 1617705 at

*416

I cannot consider Judge Kessler’s decisions in a vacuum. It would be
inappropriate for this Court to give preclusive effect to three cherry-picked
decisions, in light of the substantial contrary authority, some of it from this
very District.

Qf

Parldane Hosiery. 439 U.S. at 330 n. 14 (in context of offensive

It also points out that three rulings by Judge Thomas Moore of the Superior
Court of New Jersey, Chancery Division, Essex County, which post-date Judge
Kessler’s Kusins decision, enforced the RCAs “albeit with some blue-penciling.” (Pt.
Conc, of Law 64.) Those decisions are pending before the New Jersey Superior Court,
Appellate Division. (Id.)
‘5

16
Rafferty Is currently on appeal to the United States Court of Appeals for the
Third Circuit.

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collateral estoppel. citing potential unfairness of claiming estoppel effect of a
single favorable case among other unfavorable ones); see also Restatement
(Second) of Judgments

§

88(4).

I therefore conclude that ADP is likely to succeed in showing that it is not
estopped from litigating whether the RCAs are enforceable.
2. Validity of the RCAs, NDA, and SRA
Restrictive covenants, such as the agreements at issue here (the RCAs,
the NDA, and the SPA) may in general be enforced. Such restrictive covenants,
however, must be scrutinized closely, because they have the potential to stifle
free competition and restrict the indMdual’s right to exploit his or her skills
and labor. See Saturn Wireless Consulting, LW v. Auersa, No. CV 17-1637
(KM/JBC), 2017 WL 1538157 at 12 (D.N.J. Apr. 26, 2017) (citing case law).
Under New Jersey law, a restrictive covenant is enforceable to the extent that it
is reasonable under the circumstances of the case. Solari Indus., Inc. v. Malady,
55 N.J. 571, 585 (1970); Karlin v. Weinberg, 77 N.J. 408, 417 (1978). More
specifically, a restrictive covenant will be found reasonable if it “Ill protects the
legitimate interests of Lhe employer, 1 2] imposes no undue hardship on the
employee, and

[31

is not injurious to the public.” Karitn, 77 N.J. at 417

(numbering added; internal quotations and citations omitted). As to the
“legitimate interests” prong. ii is well-established that a restrictive covenant is
not valid if its sole purpose is to restrict competition, but may be valid to the
extent it furthers some other legitimate goal of the employer. See SolarL 55 N.J.
571; Whumyer Bros. u. Doyle, 58 N.J. 25. 33 (1971) (slating that an employer
“has no legitimate interest in preventing competition as such,” but nevertheless
has “a patently legitimate interest in protecting his trade secrets as well as his
confidential business information and he has an equally legitimate Interest In
protecting his customer relationships”).’7

See also Ingersoll-Rand Co. ii. Ciavatla. 110 N.J. 609. 635 (1988) (“Courts will
not enforce a restrictive agreement merely to aid the employer in extinguishing
competition, albeit competition from a former employee. Ultimately, the consuming
public would suffer from judicial nurturing olsuch naked restraints on competition.”);
‘7

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“Even if the covenant Is found enforceable, it may be limited in its
application concerning its geographical area, its period of enforceability, and 115
scope of activity.” Coskey’s Television & Radio Sales & Seru., Inc. v. FoIL 253
N.J. Super. 626. 634 (App. Div. 1992) (citing SolarL 55 N.J. at 585).I8 New
Jersey law therefore authorizes the Court to modit,. or ‘blue pencil” a
restrictive covenant’s geographic scope. temporal scope, or “scope of activity” to
the extent it crosses the line into unreasonableness. See Karlin, 77 N.J. at 421
n.4 (recognizing that courts “may compress or reduce the geographical areas or
temporal extent of their impact so as to render the covenants reasonable”).’9
The agreements at issue here are the SRA. NDA, and RCAs. Before
discussing the validity of each agreement, I will briefly review the relevant
provisions. The focus of the preliminary injunction application is on the nonsolicitation provisions of these agreements.
The SRA includes a non-solicitation provision. It provides that for a oneyear period after ceasing employment, Trueira cannot solicit “clients, bona fide
prospective clients or marketing partners of businesses of IADP] with which
[he) was involved or exposed.” (SRA ¶ 4(a).) Similarly, the NDA’s nonsolicitation provision provides, in relevant part. that for a one-year period after
ceasing employment, Tnieira cannot solicit “clients, bona fide prospective
clients, marketing partners or business partners of businesses of ADP with
which [he] was involved.” (NDA 91 3(b).) See Section T.E.1, supra (quoting the
relevant SRA and NDA language at greater length).

Id. [acknowledging that “In cases where the employer’s Interests do not rise to the level
of a proprietary Interest deserving of judicial protection, a court vIil conclude that a
restrictive agreement merely stifles competition and therefore Is unenforceable”).
See The Cmty. Hosp. Grp., Mc. a More, 183 N.J. 36, 57—58 (2005) (cIting
Whitmyer, 58 N.J. at 32, and stating that “[d]epending upon the results of (the
Sotari/Whltmyerj analysis, the restrictive covenant may be disregarded or given
complete or partial enforcement to the extent reasonable under the circumstances”).

See also Id. at 62 (finding that the Appellate Division should have decreased the
geographical limitation of the restrictive covenant, and stating that iwihen it Is
reasonable to do so. courts should not hesitate to partially enforce a restrictive
covenant”).
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As compared with the SRA and NDA, the RCA is far broader. It includes a
one-year non-compete provision within a defined territory. It also imposes
broader non-solicitation and non-disclosure obligations provisions. (Fl.
Findings of Fact 9! 28. See also Section l.E.2, supra (quoting relevant RCA
language at greater length).) The RCA’s20 non-compete clause states that
Trueira shall not “participate in any manner with a Competing Business
anywhere in the Territory where doing so Iwouldi require [Tmeira] to

(0 provide

the same or substantially similar services 10 a Competing Business as those
which heI provided to ADP while employed, or (ii) use or disclose ADP’s
Confidential Information or trade secrets.” (20th RCA ¶ 3.) The RCA defines
‘Territory” as “the geographic area where lTruelra] worked, represented ADP, or
had Material Business Contact with ADP’s Clients in the two (2) year period
preceding the termination of Ihis] employment with ADP.” (fri. at 911(j).) The
RCA’s non-solicitation clause also restricts Trueira from soliciting business
from any current or prospective ADP client for a one-year period after Trueira
stops working for ADP. (See Id. at 9! 4(a) (using phrase “any Client”).)
ADP concedes that as to prospective ADP clients, the RCA’s nonsolicitation clause should be blue penciled to cover only those about which
Trueira had knowledge while employed by ADP. (P1. Conc. of Law 91 82,) As to
ADP’s current clients, however, ADP maintains that the clause should be
enforced as written. (Id.) Accordingly, a major dispute between the parties is
whether, pursuant to the RCAs, Tweira can be broadly enjoined from soliciting
any party which is in fact an existing ADP client, or whether, per the SRA and
NDA. Trueira can only be enjoined from soliciting existing ADP clients as to
which he had knowledge or involvement during his employment with ADP.
1.

Validity of the RCAs

Trueira appears to be asserting that he is not bound by the RCAs
because he has no memory of agreeing to them when he accepted the stock

Actually there Is more than one RCA. For simplicity. I use the term “the RCA” to
refer to the 2015 RCA, the most recent version potentially applicable toTrueira.

20

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awards. I do not tarry over that argument. First, I did not find Trneira credible
on this point. Second, his assent would bind him as a matter of law. New
Jersey recognizes that “(wihen a party enters into a signed, written contract,
that party is presumed to understand and assent to its terms, unless
fraudulent conduct is suspected.” Stelluti v. Casapenn Enterprises, LLC, 203
N.J. 286, 305. Here, Tmelra electronically checked a box affirming that he had
read the documents and clicked the “accept grant” link. The grant of the stock
options may well have been of primary interest, but he makes no allegations of
fraudulent conduct as to the PEAs.
More substantial is Truelra’s argument that the RCAs are unenforceable
as an undue restraint of trade. Citing the first prong of the Karith test, ADP
maintains that the non-solicitation and non-compete provisions of the RCAs
serve three legitimate interests”: (1) protection of ADP’s relationships with its
clients; (2) protection of its proprietary information, including trade secrets and
client lists; and (3) protection of confidential information about its clients
beyond their identities, including the clients’ purchasing habits, service
requirements, and ADP’s marketing and sales strategies for those clients. (P1.
Brf. 17-18.)
Trueira does not dispute that ADP has a legitimate interest in protecting
confidential information and customer relationships. (Def. Br. 11.) However, he
argues that ADP’s legitimate interests were already adequately protected by the
SPA and NDA: therefore, as to those legitimate interests, the RCAs are
superfluous. (Id.) Therefore, says Trueira, the RCAs are unenforceable
restraints of trade. (Ed. at 1041.) In the alternative. Trueira argues, the RCAs
should be blue-penciled to limit their scope. (Ed. at 17-24.)
I will follow recent case law in this District, with which I agree, I find that
the RCAs are not necessary to protect the legitimate interests of ADP as
employer. See ADP, LW a Morlc No. CV 17-4613 (CCC-MF), 2018 WL 3085215

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(D.N.J. June 22. 20181; Rafferty, 2018 WL 1617705.2! As held in Rafferty by
Chief Judge Linares, the RCAs appear to protect against the same harms

already covered by the SNA and NDA. Citing L&cllaw, Inc. v. Student Transp. of
Arm, Inc., 20 F. Supp. 2d 727 {D.N.J. 1998), Judge Linares found It highly

significant that ADP does not require all of its employees to enter into the RCAs
and does not even offer the RCAs to all of its employees. Rafferty, 2018 WL
16 17705, at 3.
ADP argues that Judge Linares’s reliance on Lnidlaw was misplaced,

because its holding is premised on the fact that Laidlaw historically did
nothing to protect its confidential information.” (P1. Cone. of Law 91 79). 1
disagree. Laidlaw stands for the proposition that where 1) select employees are
presented with a stock-option non-compete agreement, 2) those employees
have already received confidential information and developed customer
relationships before signing the agreement. and 3) no adverse action is taken
against employees who do not sign the agreement, a legitimate purpose will not
be found. Rather, under those circumstances, “the primary purpose of the
stock-option non-competes is not to protect Ithe employer]’s legitimate
interests, but to buy out potential competition.” 20 F. Supp. 2d at 763.
Here, the SRA and NDA were already in place before Tmeira was asked
to sign the RCA. The legitimate concerns said toJustil5r the RCAs were
adequately vindicated by those prior agreements. Other employees were not
required to sign RCAs, and indeed were not even asked to do so unless they
were receiving bonuses in the form of stock awards. It therefore appears likely
that through these RCAs, ADP sought to handcuff, and minimize the

competitive clout of, a small class of particularly successful sales people, The
case for the legitimacy of the RCAs is therefore weak. I find that Tmelra is
likely to prevail on his contention that RCAs’ non-solicitation provisions are an
undue restraint on trade and their purpose “is not to protect Plaintiff’s

Moth and Rafferty are currently on appeal to the United States Court of Appeais
for the Third Circuit.

21

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legitimate interests but rather to decrease competition.” Rafferty, 2018 WL
1617705, at

á3

I briefly consider the second, Thndue hardship” prong of Karlin. In the
alternative, I would also find that the RCAs are overbroad. They impose an
undue hardship on Trueira to the extent they apply to all of ADP’s existing
clients, regardless of whether Tnaeira had any prior contact with them.
Rafferty, 2018 \‘JL 1617705, at *4, if I found the NCAs to be valid overall, I
would be inclined to blue-pencil them to reduce their scope.22
ADP has not shown a substantial likelihood of success on the merits as
to its claims under the RCAs. Tmeira therefore will not be prohibited from
working for Ultimate. He will be prohibited from soliciting ADP’s clients only
insofar as he may have known about them or had involvement with them
through his employment at ADP. (See following section, discussing SRA and
NDA.) In addition, I find the prohibition against use of AiDE’s proprietary
information to be reasonable and enforceable.
U.

Validity of the SRA and NDA
The SRA and the NDA impose separate and independent limits.

These, however, seem to be less controversial. ADP’s claims under the SRA and
NDA axe likely to succeed on the merits because those agreements a) serve
legitimate interesis, b) impose no undue hardship, and c) are not injurious to
the public. Indeed, counsel for Tnaeira now appears to concede that the SRA
and NDA are reasonable and enforceable (Del Cone. of Law LII 9; DeC Brf. 11
n.6.) I will nevertheless briefly discuss the relevant Karlth factors.
First, the SRA and NDA axe in tended to protect AD P’s legitimate
employer interests: ADP’s confidential and proprietary Information and client
*4 (citing
relationships. Moric, No. CV 17-4613 (CCC-MF), 2018 WL 3085215, at
Rafferty, 2018 WL 1617705, at *4). Rafferty. 2018 WL 1617705, at 4 (citing

Given ADP’s failure to satisl’ 2 out of the 3 applicable factors of the conjunctive
test, the “legitimate interests” factor and the “hardship” factor, I will not address the
third factor: whether the RCAs are Injurious to the publIc. See KarUn, 77 N.J. at 417.

22

37

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HR Staffing Consultants, LLC v. Butts, Civ. No. 2:15-3155, 2015 WL 3492609,
at 8 (D.N.J. May 29, 2015)).
Second, enforcement of the SRA and NDA would not impose an undue
hardship on Tmeira. They are “narrowly tailored” to reach clients that Trueira
dealt with or was exposed to. Rafferty. 2018 WL 1617705. at 4. See (SRA 91
4(a); NDA ¶ 3(b)).
Third, the public interest factor weighs in favor of enforcing the SRA and
NDA. See Wright Med. Tech., Inc. u. Somers, 37 F. Supp. 2d 673, 684 (D.N.J.
1999) (“Judicial enforcement of non-competition provisions of employment
contracts serves the public interest by promoting stability and certainty in
business and employment relationships.”). The public has an interest in
protecting ADP’s confidential information and business goodwill. See Ingersoll.
110 N.J. at 639 (recognizing the public’s interest “in safeguarding fair
commercial practices and in protecting employers from theft or piracy of trade
secrets, confidential information, or. more generally. knowledge and techniques
in which the employer may be said to have a proprietaiy interest”).
MI three Karlth requirements are met (or rather. ADP has demonstrated a
likelihood of success in demonstrating that they are met). The SRA and NDA’s
non-solicitation provisions are enforceable by preliminary injunction.
3. Breach of the SRA and NDA
The question, then, is whether ADP is likely to prevail on its contention
that the non-solicitation provisions of the SRA and NDA, which I have found
enforceable, have been breached or will be breached.
New Jersey courts tasked with interpreting a contract must “examine the
plain language of the contract and the parties’ intent, as evidenced by the
contract’s purpose and surrounding circumstances.” State Troopers Fraternal
Ass’n of New Jersey, Inc.

ii.

State, 149 N.J. 38, 47 (1997). “Contracts should be

read as a whole in a fair and common sense manner.” Manahawkth
Convalescent v. O’Neill, 217 N.J. 99, 118(2014) (quoting Hardy exrel DowdeU
I,.

AbduL—Matin, 198 N.J. 95, 103 (2009)).

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Tmeira maintains that “the non-solicitation provisions of the SRA and
NDA (as correctly interpreted) only preclude Truetra from soliciting ADP clients
or prospects with whom he dealt with [sic} at ADP.” (Def. Br. at 26) (emphasIs
added). Therefore, because ADP “has not identified a single ADP client or
prospective clienL that Trueira had dealings with at ADP that he has solicited
since joining Ultimate,” says Trneira, ADP is unlikely to establish a breach of
the SRA and NDA. (Id. at 26-27).
First, I reject Trueira’s attempt to confine the scope of this provision to
“solicitation” (as he conceives of it). First, the agreements do not contain any
indication that the term “solicit’ is intended to depart from the ordinary
meaning of the word. I therefore find the dictionary definition of”solicitation” to
be instructive. iSlolicitation” is defined, in part, as “lain attempt or effort to
gain business.” Black’s Law Dictionary. p. 1520 (9th ed. 2009). Second, the
reach of these agreements is not confined to solicitation. The SRA, for example,
states thai the employee may not “directly or indirectly, solicit, contact, call
upon. communicate with or attempt to communicate with” a client. Thus I do
not find convincing Trucira’s apparent belief that he may speak to or otherwise
contact customers, with the object of gaining their business, without crossing
the line to “solicitation.”
More fundamentally, however, I do not accept the premise of Truetra’s
argument: that the non-solicitation provisions are confined to clients or
prospects “with whom [Trueira} dealt” at ADP—Le., Tmeira’s own clients. The
plain language of those agreements is enough to refute it. The NDA’s nonsolicitation clause applies to ADP clients and prospective ADP clients with
which Trueira “was involved,” while the SRA’s non-solicitation clause similarly
applies to ADP clients and prospective clients with which Truelra “was involved
or exposed.” (SRA 91 4(a); NDA 91 3(b).)
The terms ‘involved” and “exposed,” in my view, broaden the scope of
these provisions to include parties other than Tweira’s own clients while he
was at ADP. “Ilinvolved” is defined, in part. as “having a part in something,”
“actively participating in something.” and “being affected or implicated.”
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See Merriam-Webster Online Dictlonaiy, www.men-iam-webstereorn.
“[E]xpose” is defined, in part. as “to submit or make accessible to a
particular action or influence.” Id.
The evidence placed before the Couri shows a likelihood that Trueira
breached the proscription on soliciting at least one ADP client with which he
was “Involved” or to which he was “exposed” while at ADP. There Is a
reasonable probability that since leaving ADP. Trueira has violated the nonsolicitation provisions. As stated in Section l.G, supra. Tntelra, after joining
Ultimate, sent an e-mail to

Inviting it to attend an event.23 Although

declined the invitation, it continues to be assigned to Tmeira as a
client at Ultimate. Previously, as an ADP employee, Tmelra apparently did not
contact

however, he learned of

through a conversation

with an ADP District Manager. and Tmeira then added

lo his

pipeline as a “lead” (I.e., a company which Tmelra and the District Manager
considered to be a poLential client for ADP’s Comprehensive Services). (Tr.
38:l1-:12). Trueira testified that the companies would appear on the “leads”
list either because a meeting was held with that company or because someone
at ADP recommended going after thai account. (Id. at 60:1 7-:2 1.)
On redirect examination, Tateirn testified:
Ithe District Managerj had told me he wanted to talk tome about
th[ej [
J [accounLj because he thought we should discuss it,
but thai was the end of it, and then I left. I never had any contact or
anything with him.

AL the hearing. in response to a question of whether he believed he solicited
Truetra answered: “I wouldn’t say solicited. I sent them an email and
Invited them to an event to an event, and they replied that they couldn’t make it.”
(Tr. 50:4-:6). The relevant question is whether Tntelra’s behavior qualifies as
“solicitation” under the terms of the NDA and SPA, not whether Truelm considers it to
be “solicitation.” It may not ultimately matter, however, because the email surely falls
under the broader category of contact.”

2U

--

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(Id. at 49:23-50: II. He also stated that he did not have any discussions or
contact MW
about

.

but acknowledged that the District Manager talked

being a client he should target. (Id. at 60:25-61:9).
The record before me demonstrates that I) while at ADP, Trueira had
and was implicated in ADP’s goal of gaining

access to ADP client

as a Comprehensive Services client; and 2) since leaving ADP,
Trueira has at least “contacted’
Tnieira’s Interaction with

.

,

1 therefore conclude that as to

there Is a reasonable likelihood that

Trueira has violated the non-solicitation provisions In the SRA and NDA.2’l
To summarize. I find thai as to the NDA and SRA, ADP has established a
likelihood of success on the merits on Its breach-of-contract claim. Those
agreements are enforceable and there is a probability that Truetra has
breached or, unless enjoined, will breach the non-solicitation provisions in the
NDA and SRA. I also find reasonable the RCAs’ restricuon on use of ADP’s
propñelaty information.
I will therefore address the two remaining elements necessaxy for the
issuance of a preliminary injunction: whether ADP is likely to suffer irreparable

a Rhode
1 note that there is also evidence that Tnieira contacted
Island-based ADP client, by phone and e-mail. (Tr. 67:l-:5). Trueim emphasizes that
was never his client or prospective client when he was employed by ADP,
which makes sense given that Tmeir&s tenitoty did not include Rhode island. (H. at
46:ii-:13, 67:6-:9.)
The relevant Inquiry, however, is not whether an entRy was Trueira’s client or
prospective client. Rather, the relevant inqutty is whether an entity was 4DP’s client or
prospective client before the date that Truelra ceased his employment with ADP. and
whether Tnieira was invoived or exposed” to that client.
21

,

identified itself as an ADP client to Tnieira. it is unclear
Although
was anADP client during the relevant time period, and Trueira’s
whether
is also unclear. Accordingly. at this stage. I do not
level of exposure to
opine as to whether there is a reasonable likelihood that Trueira has violated the nonsolicitation provisions in the SRA and NDA on the basis of his inLeractions with
—

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harm in the absence of preliminary relief, and whether the balance of equities
tips in ADP’s favor.25
B. Irreparable harm
1-larm is considered “irreparable” if it is not redressable by money
damages at a later date, In the ordinary course of litigation. Instant AU- Freight
Co. v. C.F. Air Freight. Inc., 882 F.2d 797, 801 (3d Cir. 1989) (citing Sampson a
Murray. 415 U.S. 61. 90 (1964)). ADP has the burden of proving a “clear
showing of immediate irreparable harm” absent injunctive relief. ECRI a
McGraw-Hill, Inc., 809 F.2d 223, 225 (3d Cir. 1987). See also Winter, 555 U.S.
at 21 (holding it was error to water down the irreparable harm requirement
from “likelihood” to “possibility.” even where likelihood of success was strong).
Here, ADP argues that the irreparable harm it will suffer is the loss of
current and prospective clients, employees, marketing partners. confidential
and propdetazy information, and customer goodwill. (P1. Br. 23-24; Compl. PH
57-62; Findings of Fact, supra. Section l(E)(lfl.
Courts in the Third Circuit and this District have repeatedly recognized
that the loss of business opportunities and goodwill constitutes irreparable
harm.26 Likewise, New Jersey courts recognize that “the diversion of a
company’s customers may

11 constitute irreparable harm, land that) (t}his is so

because the extent of the injury to the business as a result of this type of
conduct cannot be readily ascertained, and as such, does not lend itself to a
straightforward calculation of money damages.” Fluoramics, Inc.

ii.

Trueba, No.

The fourth preliminaiy Injunction factor requires that ADP establish that an
injunction Is in the public Interest. See Winter, 555 U.S. at 20. That factor duplicates
one I have already addressed. I.e.. the “public interest” factor of the agreementenforceability test. See Section fl(A)(21111). supra I do not repeat that discussion here.

25

See. e.g., Pappan Enterprises. Inc. a (lattice’s Food Sys., inc., 143 F.3d 800. 805
(3d Cir. 1998) (“Grounds for Irreparable injury include loss of control of reputation,
loss of trade, and loss of goodwill.”); LcucUaw, 20 F. Supp. 2d at 766 (Generally, the
loss of good will, the disclosure of confidential and proprietary information, and the
Interference with customer relationships may be the basis for a finding of irreparable
harm.”); Thco Equip., Inc. a Manor, No. 08-5561, 2009 WL 1687391, at 8 (D.N.J.
June 15. 2009) (iwlhere an employcc solicits customers of his former employer on
behalf of his new employer.” there Is irreparable harm).

20

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BER-C-408-05, 2005 WL 3455185. at *8 (N.J. Super. Ct. Ch. Div. Dec. 16.
2005) (citation omitted).
I find that at a minimum 1) there is overlap between the two companies’

lines of business, 2) ULTIPRO and WorkForce Now are similar products, 31
Ultimate is a direct competitor of AD?, and 4) Tmeira works in his former ADP
tenltonj. See Findings of Fact, supra. Section 1(F).
Record evidence shows thai since resigning from ADP. Trneira has
contacted at least one ADP client to which he was exposed or with which he
was involved while at AD?. I readily surmise that he did so with the goal of
having that company leave AD? and instead become a client of Ultimate.
Trueira’s geographic territory as an Ultimate employee includes Rhode Island,
Massachusetts, Maine, Vermont, and New Hampshire; that geographic area
overlaps with Trneira’s former AD? teniton’ of Northern Massachusetts, the
greater Boston area. Maine, and New Hampshire.
That violation Is not such a blatant or severe one. I cannot ignore.
however, that Trneira has adopted the incorrect position thai he has the right
to contact any entity provided that it was not his own client while he was at
ADP, and he adheres to a personal, narrow definition of “solicitation” that does
not comport with the wording of the NDA and SRA agreements. He is at least in
a position to violate the SRA and NDA. and his demeanor while testifying
conveyed a sense of entitlement to do so. Under the circumstances, I do not
think that the agreements themselves are a sufficient constraint. In addition,
dealing with clients he learned about or had involvement with while at AD?
would place him in a position to misuse proprietary Information.
Taking these facts together, I find that AD? has made a clear showing
that Trucim’s behaviors establish a strong likelihood of Irreparable harm to
ADP that is independent of competitive harm. Such harm consists of misuse of
confidential information, lass of business opportunities, and impairment of
business goodwill.
The “irreparable harm” prong favors granting a preliminary injunction.

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C. Balancing the equities and the public interest
The final two prongs, balancing of the harms and the interest of the
public, require little addluonal discussion. They also weigh in favor of granting
injunctive relief.
I have discussed Trueira’s hardship in Section lI(A)(2)Oi). supra. Here, I
add only that the alleged hardship to him is not a cognizable one; it consists
only of requiring him to adhere to something well short of what he agreed to in
the RCAs, SHA and NDA.
Within the next year, Trueira may continue working for Ultimate. During
thai time, he may not solicit, contact, call upon, communicate with or attempt
to communicate with ADP’s clients and prospective clients that he was involved
with or exposed to while at ADP. He also may not disclose or exploit ADP’s
confidential or proprietary information. The opportunities still available to
Tnieira remain substantial, and the period of limitation is only one year.
As 1 have explained in Section Il(Afl2)(ii), supra. the public Interest
warrants enforcement of the NDA and SRA.
In sum, all four preliminary injunction factors tip in favor of ADP, and
the preliminary injunction will be granted.
D. Duration of the Injunction
The SRA and NDA provide that the duration of the non-solicitation
provisions shall run for one year after the date employee ceases to be an
employee.” (He resigned on February 9, 2018.) ADP’s proposed order would run
for one year after the court’s entry of a preliminary injunction.
I consider the competing equities, and adopt a middle position. I am
cognizant, or course, that an ex-employee in a case like this may run out the
clock by opposing the entry of preliminary relief, while remaining free (at least
in his own mind) to violate an agreement in the interim. On the other hand,
however, the proven violation of the agreements is not severe, and I have also
found that ADP overreached in attempting to hold him to the more stringent
non-solicitation provisions of the RDA.

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Under the circumstances. I will make an equitable ruling that the period
of the Injunction shall run for eight months from the entry of this order.
E. Attorney’s Fees
As recognized by Mork, ‘“interim awards of attorney’s fees
are inappropriate where the only relief obtained is a preliminary injunction

which may be subsequently overturned on the merits.” 2018 WL 3085215, at
*5 (quoting Tarabour v. Twp. of Livingston. No. 10—32 13, 2011 WL 855312, at
‘4 (D.N.J. Mar. 9, 2011)). In addition, ADP seeks attorney’s fees and costs in
connection with enforcement of the RCA, a claim on which it has not (at least
as yet) prevailed. I will therefore deny ADP’s request for attorney’s fees.

m.

Conclusion
For the foregoing reasons, ADP’s motion for a preliminary injunction

(ECF no. 3) Is granted in part and denied in part. Pursuant to the terms of the
SRA and NDA, I will grant ADP prcllmlnaiy injunctive relief. Defendant David

Trueira shall be restrained, for a period of eight months after the date of entry
of this preliminary injunction, from violating the agreements to the extent
stated above.
Within live days. the parties shall submit an agreed form of preliminary
injunction, which shall specify the relief granted to implement the above
rulings, and shall include the amount of bond, which shall be posted within 15
days. See Fed. R. Civ. P. 65(c) (providing that this Court “may issue a
preliminary injunction

...

only if the movant gives security in an amount that

the court considers proper to pay the costs and damages sustained by any
party found to have been wrongfully enjoined

). If agreement cannot be

reached, the areas of dispute shall be identified and the Court will rule. Within
five days, counsel shall jointly propose an agreed set of redactions so that a
version of this sealed Opinion may he filed publicly.

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An appropriate Order follows.

Dated: August 2, 2018

-

/4

/i(

KVW MCNULIT
‘ J
United States District Judge

46