DIVERSANT, LLC v. CARINO

Filing 63

OPINION filed. Signed by Judge Anne E. Thompson on 9/24/2018. (km)

RECEIVED
NOT FOR PUBLICATION

SEP 2 ~ 20\8

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

AT 8:30
=M
WILLIAM T. WALSH
CL,ERK

DNERSANT, LLC,
Plaintiff,

Civ. No. 18-3155

v.
MITCHELLE CARINO,

OPINION

Defendant.

THOMPSON. U.S.D.J.

INTRODUCTION
This matter comes before the Court on a Motion for Summary Judgment brought by
Plaintiff Diversant, LLC ("Plaintiff'). (ECF No. 43.) Defendant Mitchelle Carino
("Defendant") opposes and requests further discovery pursuant to Rule 56(d) of the Federal
Rules of Civil Procedure. (ECF No. 48.) Defendant also cross-moves to dismiss (ECF No. 50),
which Plaintiff opposes (ECF No. 53). The Court has decided the motions after considering the
written submissions without oral argument pursuant to Local Civil Rule 7~.l(b). For the

following reasons, Defendant's Cross Motion to Dismiss is denied, Plaintiffs Motion for
Summary Judgment is denied, and Defendant's request for further discovery pursuant to Rule
56(d) of the Federal Rules of Civil Procedure is granted.

BACKGROUND
Plaintiff, a New Jersey limited liability company, provides information technology ("IT")
staffing services to mid-market and Fortune 500 companies nationwide. (Compl. Cf][ 1, 5, ECF
No. 1.) Plaintiff assists companies in identifying and recruiting "IT talent in the marketplace"
1

and thus maintains a large database of consultants in order to serve its clients. (Id. Tl[ 9, 11.)
Many of Plaintiffs larger clients, such as Wells Fargo, employ "hiring managers," individuals
who work for the client and have the authority to select consultants from staffing firms such as
Plaintiff. (Def.'s Resp. to Pl.'s Statement of Undisputed Material Facts ("Def.'s Resp. SMF") '][
3, ECF No. 48-3.)

In July of 2015, Plaintiff acquired Vircon, a competing IT staffing firm based in San
Francisco, California, consequently acquiring Vircon's client contracts and inheriting Vircon's
employees. (Compl. Tl[ 7, 15.) One such employee, Defendant, was a Business Development
Director in Vircon' s San Francisco office. (Def.' s Resp. SMF ']['][ 1-2.) Defendant developed
relationships with new clients and serviced existing clients by identifying and recommending
individuals with IT expertise, also known as consultants. (Id. '][ 2.) In this role, Defendant had
access to Plaintiffs client and consultant database. (Id.

<J[

6.) All of the clients that Defendant

serviced while employed by Plaintiff were existing clients that were either assigned to him by
Plaintiff (or Vircon before it was acquired by Plaintiff) or that Defendant sourced using
Plaintiffs resources. (Id. '][ 4.)
In the wake of Plaintiffs acquisition of Vircon, Defendant was required to enter into a
new employee agreement with Plaintiff. Defendant met with Plaintiffs Chief Operations
Officer, Jim Yoshimura, and discussed Defendant's potential employment. (Def.' s
Counterstatement of Undisputed Material Facts ("Def.'s Counter SMF") '][ 4, ECF No. 48-2.)
Mr. Yoshimura, on behalf of Plaintiff, eventually offered Defendant a job entailing more or less
the same responsibilities Defendant had while working for Vircon. (Id. Tl[ 4-7.)
On July 23, 2015, Defendant executed the "At-Will, Restrictive Covenant and Arbitration°
Agreement" (the "Agreement"), agreeing to several covenants of import here. (Def.'s Resp.

2

SMF TJ[ 7--8.) First, Defendant agreed never to use or disclose confidential information and/or
trade secrets ("Confidential Business Information") that includes the following:
information relating to [Plaintiffs]: actual or potential consultant information and
lists, actual or potential employee information that is of a personal nature ....
[and] any of [Plaintiffs] trade secrets, ... [which includes] a list of actual or
potential customers, consultants, employees, or suppliers which: (i) is not
commonly known by or available to the public; (ii) derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by other persons who can obtain economic value
from its disclosure or use; artd (iii) is the subject of efforts that arc reasonable
under the circumstances to maintain its secrecy.
(Agreement <J[ 2 (the "Non-Disclosure Clause"), Ex. C, ECF No. 43-3.)
Second, Defendant agreed that for a period of one year following the termination of his
employment with Plaintiff, Defendant would not compete with Defendant's business within a
fifty-mile radius of Plaintiffs business location. More specifically, Defendant assented that:
[Defendant] will not ... provide information technology staffing services, directly
or indirectly, whether as an employee, consultant, independent contractor, or
otherwise, similar to those [Defendant] provided to or for [Plaintiff], to or for any
corporation, individual, enterprise, entity, or association that competes with
[Plaintiff] in [Plaintiffs] Business.... [Defendant] shall not operate an
information technology staffing services business which competes with [Plaintiff]
in [Plaintiffs] Business.

(Id.

<J[

3 (the "Non-Compete Clause").)
Third, also for a period of one year following the termination of his employment with

Plaintiff, Defendant agreed not to "solicit or attempt to solicit any information technology
staffing services business" from any of Plaintiffs actual or prospective customers:
(i) with whom [Defendant] had direct contact on behalf of [Plaintiff] during the
most recent two years or his/her employment with [Plaintiff]; (ii) for whom
[Defendant] performed services, or directed the performance or services by other
employees of [Plaintiff], during the most recent two years of his/her employment
with [Plaintiff]; and/or (iii) about whom [Defendant] learned Confidential
Business Information.

(Id.

<J[

5 (the "Non-Solicitation Clause").)
3

4

a base salary and the ability to earn commissions."), and id.

<J[

15 ("The consideration for the

[Addendum] was the ability to earn a retention bonus if certain sales targets were met .... "),

with Def.' s Resp. SMF <J[ 10 (contending that "the promise to be paid the bonus was also
consideration for accepting the Agreement"), and id.

<J[

15 (arguing that "the consideration for the

[Addendum] was Defendant agreeing to be employed by [Plaintiff]").) Plaintiff paid Defendant
a bonus for his performance in his first year, but Plaintiff did not pay Defendant a bonus for his
performance in his second year. (Def. 's Resp. SMF <J[ 17.) Because of Plaintiffs failure to pay
the bonus in the second year, Defendant commenced a legal action in California seeking the
missed payment. (Id.

<J[

18.)

On January 3, 2018, Defendant resigned from his employment with Plaintiff and on the
same day began employment with Artech, a San Francisco-based firm that is located within fifty
miles of Plaintiff, services Wells Fargo, and, as Defendant admits, "is a competitor of [Plaintiff]
in the IT staffing industry." (Id.

<J[<J[

19, 23, 28-29, 32.) Defendant knowingly and intentionally

refused to tell Plaintiff that he was joining a competitor (id.

<J[<J[

30-31) and, in fact, Defendant

began soliciting and doing business with Wells Fargo immediately upon joining Artech (id.
35-38). Defendant admits that if the Agreement is enforceable, he breached it. (Id.

<J[<J[

<J[<J[

21-26;

see also Carino Dep. 63: 17-64: 19, Ex. B, ECF No. 43-2.)
On March 5, 2018, Plaintiff filed a Verified Complaint and a Motion for Temporary
Restraining Order, Preliminary Injunction, Expedited Discovery, and Preservation Order.
Plaintiff pleads two counts: ( 1) breach of contract, contending that Defendant breached the
Agreement in contravention of Paragraph 3 (working for a competitor within fifty miles of
Plaintiff) (id.

<J[

59), Paragraphs 4 and 5 (soliciting Plaintiffs clients and consultants) (id.

and Paragraph 15 (failing to inform Plaintiff of new employment) (id.

5

<J[

<J[

60),

62); and (2) injunctive

relief, seeking to enjoin Defendant from misappropriating Plaintiffs Confidential Business
Information, working for one of Plaintiffs competitor within one year of severance from
Plaintiff, and soliciting Plaintiffs clients (id.

CJ[

69). On April 2, 2018, the Court issued a

Memorandum Opinion determining that New Jersey law governs the dispute. (Mem. Op., ECF
No. 18.)
The parties agreed to expedite discovery in anticipation of a preliminary injunction
hearing (see generally ECF Nos. 21-26), but several issues occurred. On April 10, 2018,
Defendant served to Plaintiff a First Request for Production of Documents, First Set of
Interrogatories, and Rule 30(b)(6) Deposition Notice. (DiMaria Cert. CJ[ 2, ECF No. 48-4.)
Defendant requested, among other things, discovery relating to Plaintiffs failure to pay
Defendant the 2017 bonus under the Addendum and discovery relating to Plaintiffs relationship
with its client Wells Fargo. (Id.

<J[<J[

3-5.) The parties subsequently stipulated to several

extensions of time in order to respond to discovery requests (ECF Nos. 25, 28), and Plaintiff
ultimately even requested to reschedule the preliminary injunction hearing (ECF No. 30). On
May 7, 2018, Plaintiff served responses to Defendant's discovery requests. (DiMaria Cert. CJ[ 6.)
On May 10, 2018, Defendant sent a deficiency letter to Plaintiff identifying Plaintiffs failure to
produce documents relating to Plaintiff's failure to pay Defendant the 2017 bonus and Plaintiff's
relationship with Wells Fargo. (Id. «][ 7.) Plaintiff responded to the deficiency letter on May 14,
2018, and the parties participated in a meet a confer regarding the deficiency letter on May 17,
2018. (Id.«][<][ 8-9.) Although Plaintiff served supplemental interrogatory answers and responses
on May 18, 2018, Plaintiff again did not produce documents relating to Plaintiffs failure to pay
Defendant the 2017 bonus and Plaintiffs relationship with Wells Fargo. (Id.

CJ[

10.) Defendant

avers that he did not subsequently file a motion to compel between May 18 (date of Plaintiffs

6

supplemental response) and May 28, 2018 (deadline for Defendant's opposition to Plaintiffs
motion for injunctive relief) because of "the expedited nature of discovery" and because
"Defendant's brief was due to the Court within a few days after receiving Plaintiffs
supplemental discovery responses." (Id. 'J[ 11.)
On June 11, 2018, the Court held a hearing regarding Plaintifrs Application for
Preliminary Injunction. (ECF No. 41.) On that same day, the Court issued a Preliminary
Injunction. (ECF No. 40.) The Court enjoined Defendant until January 3, 2019--one year after
Defendant's separation from Plaintiff-from misappropriating any of Plaintifrs Confidential
Business Information; providing IT staffing services to any of Plaintiffs competitors located
within fifty miles of Plaintifr s San Francisco office; soliciting any clients for whom he provided
services within the last two years on behalf of Plaintiff, including Wells Fargo; and hiring any of
Plaintiffs consultants. (Id. 'J[ 6.)
On June 24, 2018, Plaintiff filed a Demand for Arbitration with National Arbitration and
Mediation ("NAM"). (NAM Compl., Ex. F, ECF No. 48-5.) Although many of the allegations
in Plaintiffs NAM Statement of Claim mirrors the allegations pleaded in its Complaint, Plaintiff
seeks only damages in its Demand for Arbitration, while Plaintiff seeks injunctive relief from
this Court. (Compare id. at 18 (seeking damages), with Compl. at 17 (seeking "temporary,
preliminary, and permeant injunctive relief').) Defendant filed an Answer to the Demand for
Arbitration on July 24, 2018. (Koshy Cert. 'J[ 8, Ex. G, ECF No. 48-5.)
On July 25, 2018, Plaintiff filed the instant Motion for Summary Judgment. (Pl.'s Mot.,
ECF No. 43.) Plaintiff essentially seeks to convert the June 11 preliminary injunction into a
permanent injunction, arguing that (1) the Agreement is an enforceable contract; (2) the
Agreement and the Addendum constitute separate contracts, so Defendant's breach under the

7

Agreement is not excused by Plaintiffs alleged breach of the Addendum; and (3) even if the
Agreement and the Addendum did constitute a single contract, Defendant waived any argument
that Defendant's breach under the Agreement is excused. (Id. at 11-18.) On August 21, 2018,
Defendant timely filed a Response Opposing Plaintiffs Motion for Summary Judgment and also
a Cross Motion to Dismiss. (See ECF Nos. 48-50.) Defendant contends that dismissal is
warranted because Plaintiff waived its right to litigate in this Court once Plaintiff submitted its
Demand for Arbitration. (Def.'s Br. at 18-21, ECF No. 49.) In the alternative, Defendant

\
contends that Plaintiffs Motion for Summary Judgment is (1) premature under Rule 56(d) of the
Federal Rules of Civil Procedure as the parties have not completed essential discovery (id. at 2128) and (2) unpersuasive as disputes of material fact exist over whether the Agreement is
enforceable (id. at 28-38). On September 11, 2018, Plaintiff filed a Reply in Support of
Plaintiffs Motion for Summary Judgment and a Response Opposing Defendant's Cross Motion
to Dismiss. (Pl.'s Reply, ECF No. 53.) 1

LEGAL STANDARD
Summary judgment shall be granted if "the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P.
56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A dispute is "genuine" if it could lead

After briefing was completed, the parties filed several other items. On September 17, 2018,
Defendant filed a Motion for Leave to File a Reply Brief in Support of Defendant's Cross
Motion to Dismiss. (ECF No. 55.) On that same day, Defendant also filed a Notice of
Supplemental Authority, offering a citation to a case from the Massachusetts Supreme Judicial
Court with facts "strikingly similar to the facts in this case." (ECF No. 56.) On September 19,
2018, Plaintiff filed a Motion for Leave to File a Sur-Reply in Further Support of Plaintiffs
Opposition to Defendant's Cross Motion to Dismiss (ECF No. 57) and a Motion to Strike
Defendant's Statement of Supplemental Authority (ECF No. 58). On the same day, Defendant
filed a Letter in Opposition to Plaintiffs Proposed Sur-Reply (ECF No. 59), which prompted
Plaintiff to file a Response to Defendant's Letter Opposing Plaintiffs Proposed Sur-Reply (ECF
No. 60). Lastly, on September 20, 2018, Defendant filed another letter in response. (ECF No.
61.)
1

8

a "reasonable jury [to] return a verdict for the nonmoving party." Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248 (1986).· A fact is "material" if it will "affect the outcome of the suit
under the governing law." Id. When deciding the existence of a genuine dispute of material fact,
a court's role is not to weigh the evidence; all reasonable "inferences, doubts, and issues of
credibility should be resolved against the moving party." Meyer v. Riegel Prods. Corp., 720
F.2d 303, 307 n.2 (3d Cir. 1983). In resolving a motion for summary judgment, a district court
considers the facts drawn from "the pleadings, the discovery and disclosure materials, and any
affidavits." Curley v. Klem, 298 F.3d 271,

276~77

(3d Cir. 2002) (internal quotations omitted).

The court must determine "whether the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one party must prevail as a matter of law."

Anderson, 477 U.S. at 251-52. More precisely, summary judgment should be granted if the
evidence available would not support a jury verdict in favor of the nonmoving party. Id. at 24849. The Court must grant summary judgment against any party "who fails to make a showing
sufficient to establish the existence of an element essential to that party's case, and on which that
party will bear the burden of proof at trial." Celotex, 477 U.S. at 322.

DISCUSSION

Io

Plaintiff Is Not Required to Arbitrate Its Claim for Injunctive Relief
As a threshold matter, Defendant cross-moves to dismiss because, as Defendant contends,

arbitration is Plaintiffs exclusive remedy. (See Def.'s Br. at 18-21.) Where there is a contract
between the parties that provides for arbitration, there is "an 'emphatic federal policy in favor of
arbitral dispute resolution."' KPMG LLC v. Cocchi,

5~5

U.S. 18, 21 (2011) (per curiam)

(quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985)).
Under the Federal Arbitration Act, a district court may stay a proceeding pending resolution of

9

arbitrable issues if those issues are within the scope of a binding arbitration agreement. See 9
U.S.C. §§ 3, 4. But "[i]f all of the claims involved in the action are arbitrable, the court may
dismiss the federal action instead of staying it." Thompson v. Nienaber, 239 F. Supp. 2d 478,
482 (D.N.J. 2002) (citing Blair v. Scott Specialty Gases, 283 F.3d 595, 600--02 (3d Cir. 2002)).
However, arbitration agreements may be found unenforceable "upon such grounds as exist at law
or in equity for the revocation of any contract." AT&T Mobility UC v. Concepcion, 563 U.S.
333, 339 (2011) (citing 9 U.S.C. § 2).
Here, Paragraph 19 of the Agreement requires the parties to arbitrate all claims relating to
the enforcement of the Agreement, but Paragraph 20 of the Agreement provides an exception
allowing Plaintiff "in its sole discretion [to] seek and/or obtain temporary, preliminary and/or
final injunctive relief enforcing [the Agreement]." Defendant argues that "[a]lthough [Plaintiff]
had the option to seek a preliminary injunction with the District Court, which it initially did, after
the preliminary injunction was issued, [Plaintiff] voluntarily elected to pursue any further right to
relief in arbitration by filing a Demand for Arbitration." (Def.' s Br. at 19-20.) Defendant points
out that "[Plaintiffs] Demand for Arbitration states that it 'agrees that the decision and award of
the Arbitrator will be final and binding as to all claims relating to our employment relationship
with the Employee that have been or could have been raised under our Arbitration Agreement

with the Employee."' (Id. (emphasis removed in part).) Defendant concludes that because
Plaintiff elected to file a Demand for Arbitration that includes "all claims ... that have been or
could have been raised," Plaintiff precluded itself from litigating its existing claim for injunctive
relief in this Court. (See id.) The Court disagrees.
Defendant's contention seeks to disturb the primary intent of Paragraph 20 and thus the
c

Court is unwilling to confer the contention much weight. See Lukens Steel Co. v. United

10

1

!

. Steelworkers of Am., 989 F.2d 668, 672 (3d Cir. 1993) (explaining that a district court must

interpret the intent of the parties from the contractual language to determine whether or not a
dispute is arbitrable). Paragraph 20---which expressly limits the scope of Paragraph 19 by
exempting preliminary and permanent injunctive relief from arbitration-specifically
contemplates dual proceedings in front of both an arbitrator and a court of competent
jurisdiction. Plaintiff seeks, and has consistently sought up until this point, only injunctive relief
in this Court's proceedings. (See Compl. at 17; Pl.'s Mot. at 18.) In contrast, Plaintiff seeks only
compensatory damages in the arbitration proceedings. (See NAM Compl. at 18.) Other courts

have understood and respected such carve-out provisions. See, e.g., Aetrex Worldwide, Inc. v.
Sourcing for You Ltd., 555 F. App'x 153, 155 (3d Cir. 2014) (affirming that temporary and

permanent injunctive relief was adequately carved out of arbitration agreement); Shapiro v.
Baker & Taylor, Inc., 2009 U.S. Dist. LEXIS 48187, at *39 n.17 (D.N.J. June 9, 2009) (finding

that "[t]he parties remain free to pursue claims for money damages through arbitration, and to
appeal to the courts for equitable relief' where employee agreement carved out from mandatory
arbitration any claim "for specific performance and/or other injunctive relief'). 2
To contend that Plaintiff has now waived its right to pursue injunctive relief in this Court
is simply irreconcilable with the language in the Agreement. The language from the Demand for
Arbitration that Defendant identifies-that Plaintiff agrees to arbitrate "all claims ... that have

2

Although Plaintiff relies on Ortho Pharmaceutical Corp. v. Amgen, Inc., 882 F.2d 806 (3d Cir.
1989), for the proposition that "[c]ontracting parties routinely exempt requests for preliminary
and permanent injunctive relief from arbitration" (Pl.' s Reply at 5--6), that reliance is misplaced.
The court in Ortho explored a much narrower question than Plaintiff cares to admit: "whether the
district court has subject matter jurisdiction to entertain a motion for preliminary injunctive relief
in a dispute that the parties agree is arbitrable." 882 F.2d at 811 (emphasis added). Indeed,
subsequent courts have interpreted Ortho as a "limited exception" and have held that "[t]he Third
Circuit has not opened the door to allow the court to hear all equitable disputes" such as claims
for permanent injunctive relief. Thompson, 239 F. Supp. 2d at 484--86 (emphasis added).
11

been or could have been raised"-is buried within boilerplate on a NAM-sanctioned Arbitration
Request Form that was "Revised as of 7/1/16." (See NAM Compl. at 3.) This stock form does
not embody the parties' intent better than the Agreement as it does not include the parties'
language, it fails to require or even include a signature from Defendant, and it was not negotiated
at arm's length between Plaintiff and Defendant. Although an agreement to arbitrate is
presumed to be valid, the precise dispute or claim at issue must "fall[] within the scope of that
agreement" in order to require arbitration.. See Century lndem. Co. v. Certain Underwriters at
Lloyd's, London, 584 F.3d 513, 523 (3d Cir. 2009) ("[E]ven if a court finds that the parties have

agreed to arbitrate some disputes it must find, to order arbitration, that the parties have agreed to
arbitrate the dispute iri issue." (emphasis in original)). Accordingly, the Court denies
Defendant's Cross-Motion to Dismiss. 3
II.

Plaintiff's Motion for Summary Judgment Fails
In its Motion, Plaintiff requests that the Court ( 1) enter summary judgment for its breach

of contract claim and (2) convert the June 11, 2018 preliminary injunction to a permanent
injunction. (See Pl.'s Mot. at 18.) Defendant opposes both requests, and Defendant also moves
for further discovery pursuant to Rule 56(d) of the Federal Rules of Civil Procedure. (Def.' s Br.
at 21-28.)

3

As noted supra, Defendant filed a Motion for Leave to File a Reply Brief in Support of
Defendant's Cross Motion to Dismiss (ECF No. 55), which triggered a series of subsequent
filings: Plaintiffs Motion for Leave to File a Sur-Reply in Further Support of Plaintiffs
Opposition to Defendant's Cross Motion to Dismiss (ECF No. 57), Defendant's Letter in
Opposition to Plaintiffs Proposed Sur-Reply (ECF No. 59), Plaintiffs Response to Defendant's
Letter Opposing Plaintiffs Proposed Sur-Reply (ECF No. 60), and Defendant's Letter in
Response (ECF No. 61 ). In its decision, the Court considers all of these filings but nonethe.less
denies Defendant's Cross Motion to Dismiss.
12

A.

Request for Further Discovery Pursuant to Rule 56(d)

Defendant requests further discovery pursuant to Rule 56(d) and consequently contends
that Plaintiffs Motion for Summary Judgment is premature. Rule 56(d) of the Federal Rules of
Civil Procedure provides that "[i]f a nonmovant shows by affidavit or declaration that, for
specified reasons, it cannot present facts essential to justify its opposition, the court may: ( 1)
defer considering the motion or deny it; (2) allow time to obtain affidavits or declarations or to
take discovery; or (3) issue any other appropriate order." "[l]t is well established that a court 'is
obliged to give a party opposing summary judgment an adequate opportunity to obtain
discovery."' Doe v. Abington Friends Sch., 480 F.3d 252, 257 (3d Cir. 2007) (quoting Dowling

v. City of Phila., 855 F.2d 136, 139 (3d Cir. 1988)). District courts typically grant requests for
discovery under Rule 56(d) "as a matter of course" regardless of whether the request is made by
motion, affidavit, or declaration. Shelton v. Bledsoe, 775 F.3d 554, 566 (3d Cir. 2015) (quoting

Murphy v. Millennium Radio Grp. LLC, 650 F.3d 295, 309 (3d Cir. 2011)). "This is particularly
true when there are discovery requests outstanding or where relevant facts are under control of
the party moving for summary judgment." Id. The party seeking such a request must proffer
"( 1) what particular information is sought; (2) how, if uncovered, it would preclude summary
judgment; and (3) why it has not previously been obtained." Duran v. Warner, 2013 U.S. Dist.
LEXIS 117462, at *11-12 (D.N.J. Aug. 20, 2013)
Here, Defendant urges the Court to deny Plaintiffs Motion for Summary Judgment as
"the parties have not completed essential discovery." (Def.'s Br. at 21.) First, Defendant
identifies specific information that he deems necessary in order to respond to Plaintiffs Motion:
information and documents relating to [Plaintiffs] business with client Wells
Fargo (the only client at issue) including (1) the amount of business (i.e., revenue
and volume) [Plaintiff] has done with client Wells Fargo both before and after
Defendant's resignation from [Plaintiff] (including in the San Francisco area); and

13

(2) any scorecards, grades, ratings or other performance evaluations given to
[Plaintiff] from Wells Fargo both before and after Defendant's resignation from
[Plaintiff].
(DiMaria Cert. CJ[ 15. )4 Second, Defendant asserts that this discovery relates to Plaintiffs
"burden of proving irreparable harm" required for a permanent injunction. (Id. <][ 16.) Third,
Defendant proffers a legitimate reason as to why this discovery was not previously obtained.
Defendant explains that in May 2018, leading up to the preliminary injunction briefing,
Defendant sought this discovery but Plaintiff failed to produce it-despite a deficiency letter and
subsequent meet and confer. (Id. <fJ[ 5-10.) Although Defendant had an opportunity to file a
motion to compel during this time, "[g]iven the expedited nature of discovery, and [the fact] that
Defendant's brief was due to the Court within a few days after receiving Plaintiffs supplemental
discovery responses, Defendant did not file a motion to compel." (Id.<][ 11.) Defendant also
points out that no Rule 26 conference has been held since the Court issued the preliminary
injunction on June 11, 2018. (Id.

CJ[

12.) In fact, the Court is under the impression that no

discovery has been exchanged since the parties participated in expedited discovery leading up to
the preliminary injunction.

In response, Plaintiff characterizes Defendant's argument as a "delay tactic" that "seeks
to defer the inevitable." (PL's Reply at 8.) Plaintiff also argues that "Defendant chose not to file
a motion to compel'' and therefore lost the ability to obtain further discovery now. (Id. at 1112.)
The Court is satisfied that Defendant has met the relatively light standard set forth in
Rule 56(d). Although Defendant had an opportunity to file a motion to compel during expedited
discovery in May 2018, those circumstances-where Defendant received Plaintiffs

4

Plaintiff also requests further discovery regarding whether the Agreement and the Addendum
constitute a single contract. The Court rejects that request as further explained infra.
14

supplementary responses, the event triggering the opportunity to file the motion, roughly ten
days before his brief opposing Plaintiff's motion for preliminary injunction was due-should not
preclude Defendant from that discovery now. Cf. AstraZeneca AB v. Reddy's Labs. Inc., 2014
U.S. Dist. LEXIS 73111, at *8 (D.N.J. May 29, 2014) (allowing further discovery under Rule
56(d) to review documents that were received before the motion for summary judgment was
filed). The Court can imagine a scenario where a litigant may be precluded from Rule 56(d)
relief where that litigant failed to move to compel, sought to delay, and otherwise sat on his
hands during a discovery period. But Defendant did not do that here. On the contrary,
Defendant sought this discovery in his first request; promptly sent Plaintiff a deficiency letter
three days after receiving, what Defendant deemed to be, an inadequate response; and
participated in a meet and confer with Plaintiff regarding the issues raised in the deficiency letter.

(See DiMaria Cert.«][«][ 2-10.) Accordingly, the Court grants Defendant's request for discovery
under Rule 56(d).
B.

Breach of Contract Claim

Notwithstanding Defendant's request for further discovery pursuant to Rule 56(d), the
Court is unable to enter summary judgment for Plaintiff at this time. Under New Jersey law, 5

5

On April 2, 2018, this Court issued a Memorandum Opinion regarding the governing state law
of this contract dispute. (See Mem. Op. at 3.) As explained in the Memorandum Opinion, the
Agreement contained a choice-of-law provision selecting New Jersey law; the Court ultimately
determined that the choice-of-law provision is enforceable and thus New Jersey law governs this
dispute. (See id. at 3, 7.) Defendant nonetheless argues that "it is clear that the Agreement must
be construed under California law" and that "there is absolutely no New Jersey interest protected
in this lawsuit" (Def.'s Br. at 29-30). In fact, Defendant filed a Notice of Supplemental
Authority, offering a citation to Oxford Global Resources, LLC v. Hernandez, 480 Mass. 462
(Sept. 7, 2018), which contains facts, as Defendant contends, "strikingly similar to the facts in
this case." (ECF No. 56.) In response, Plaintiff filed a Motion to Strike Defendant's Statement
of Supplemental Authority. (ECF No. 58.) Because the Court is not bound by the authority cited
in Defendant's Notice and because the court in that authority analyzed the parties' choice-of-law
contractual provision under Massachusetts law rather than New Jersey law, the Court grants
15

Plaintiff carries the burden to prove four elements to establish a breach of contract: ( 1) a valid
and enforceable contract, (2) a .breach of that contract, (3) damages flowing therefrom, and (4)
the plaintiff performed its own contractual duties. Nat'l Reprographics, Inc. v. Strom, 621 F.
Supp. 2d 204, 222 (D.N.J. 2008) (citing Hutchinson v. Del. Sav. Bank FSB, 410 F. Supp. 2d 374,
385 n.21 (D.N.J. 2006)). Defendant concedes that he breached the Agreement, but the parties
disagree as to whether the contractual provisions at issue are enforceable and, even if they are
enforceable, whether Defendant's breach is excused.
1.

Plaintiff Fails to Satisfy Standard for Summary Judgment

Defendant executed the Agreement on July 23, 2015. Although Plaintiff pleads just a
single count of breach of contract, Plaintiff alleges in the instant Motion that Defendant breached
the Agreement numerous times. (Compare Compl. ft 57-65 (pleading single count), with Pl.'s
Mot. at 1 (alleging four breaches).) Four restrictive covenants in the Agreement are of import
here. Plaintiff asserts that Defendant breached (1) the Non-Disclosure Clause (Agreement <J[ 2)
by using and disclosing Plaintiffs Confidential Business Information; (2) the Non-Compete
Clause (id.

<J[

3) by working for a direct competitor, Artech, located within fifty miles of Plaintiff;

(3) the Non-Solicitation Clause (id.

<J[

5) by soliciting business from Wells Fargo, one of

Plaintiffs clients; and (4) the Notification of Employment Clause (id.

<J[

15) by refusing to inform

Plaintiff where Defendant planned to work after resignation. (See Pl.'s Mot. at 1.)
In order to be enforceable, a post-employment restrictive covenant must be "reasonable

in view of all the circumstances of the particular case." Solari Indus., Inc. v. Malady, 264 A.2d
53, 56 (1970). Under New Jersey law, a restrictive covenant is enforceable only to the extent
that it (1) protects the legitimate interests of the employer, (2) imposes no undue hardship on the

Plaintiffs Motion to Strike and will not consider the materials in Defendant's Notice of
Supplemental Authority.
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employee, and (3) is not injurious to the public. Cmty. Hosp. Grp., Inc. v. More, 869 A.2d 884,
897 (N.J. 2005) (citing Karlin v. Weinberg, 390 A.2d 1161, 1166 (N.J. 1978)).
The parties disagree on whether the restrictive covenants at issue protect the "legitimate
interests" of Plaintiff. Plaintiff contends that its "customer relationships and confidential
information are worthy of protection." (Pl.' s Mot. at 11.) Defendant responds that the
Agreement is not necessary to protect the information sought to be protected by Plaintiff.namely, client contact information, consultant contact information, client notes, and candidates
notes. (Def.'s Br. at 36; Def.'s Resp. SMF 'J[ 6.) First, Defendant disclaims that he ever
misappropriated such information. (See Def.'s Br. at 36; Def.'s Resp. SMF 'f][ 6, 40-41.) But
Defendant contends that even if he did, Plaintiffs client and consultant contact information "is
not confidential because Artech had the contact information for many of the consultants and
Wells Fargo managers [Defendant] did business with at [Plaintiff] before [Defendant] joined
Artech" and thus the information "is readily ascertainable and well known within the industry."
(Def.'s Br. at 36-37; Def.'s Resp. SMF <J( 27.) In its reply brief, Plaintiff characterizes
Defendant's Brief as "disingenuous" as it contradicts Defendant's own deposition testimony.
(Pl.'s Reply at 15-17.) Indeed, Defendant seemingly concedes at one point in his deposition that
sharing Plaintiff's "database of information" with a competitor "would not be appropriate"

because it is Plaintiffs "confidential" information. (Carino Dep. 296:07-297:03.)
Notwithstanding Defendant's apparent concession, the Court finds that Plaintiff has
failed to carry its burden. It is not clear from the muddied record exactly what information
Defendant took with him to Artech. (See, e.g., Carino Dep. 183:20-187:7, 188:8-15 (discussing
Defendant's contact with Wells Fargo managers because Defendant "knew him already").
Compare PI.' s SMF 'J[ 40 (contending that "Defendant took contact information for almost 550

17

Wells Fargo hiring managers in his personal cell phone ... and a still unknown ... number of
client e-mails"), with Def.'s Resp. SMF <J[ 40 (denying such an allegation).)
Moreover, the Court is unable to distill whether the information Plaintiff seeks to protect
is, as Defendant contends, "readily ascertainable and well known within the industry." (Def.'s
Br. at 36-37; Def.'s Resp. SMF <J[ 27.) Of course, "[e]mployers have a right to contractually
protect their confidential information." Nat'l Reprographics, 621 F. Supp. 2d at 226 (citing
Ingersoll-Rand Co. v. Ciavatta, 542 A.2d 879, 892-93 (1988); Whitmyer Bros. v. Doyle, 274

A.2d 577, 581 (N.J. 1971)). But in order to be deemed "confidential" and consequently warrant
judicial protection, the information must be "unique and not generally known throughout the
industry" as opposed to "merely the knowledge, skill, or expertise learned or developed over an
employee's career or tenure with the employer." See id. (citing Ingersoll-Rand, 542 A.2d at 889,
892). Although a "relationship with customers" is a "legitimately protectible interest[]," the
information must "go[] beyond the mere identity of customers or general skills learned in the
trade." See, e.g., id. (protecting employer's "marketing plans, sales projections, product
strategies, customer buying habits, and internal methods to bring profitability to the company").
Because genuine disputes of material fact exist as to specifically what information is contained
within the database, what information Defendant misappropriated, and what information is
confidential, the Court is unable to enter summary judgment for Plaintiff at this time.
Accordingly, the Court denies Plaintiffs Motion as to its breach of contract claim.
2.

Defendant's "Single Contract" Argument Fails as a Matter of Law

Although the Court denies Plaintiffs Motion and need not go further, the Court finds it
appropriate to address one of Defendant's arguments in order to conserve the party's resources
during the impending discovery. Defendant unequivocally admits that if the Agreement is

18

enforceable, he breached it. (Def.'s Resp. SMF<J[<J[ 21-26; see also Carino Dep. 63:17-64:19.)
But Defendant puts forth an affirmative defense: Defendant contends that his breach of the
Agreement is excused because Plaintiffs alleged breach of the Addendum occurred before
Defendant's breach of the Agreement, rendering the Agreement unenforceable by Plaintiff. (See
Def.'s Br. at 3~35.) This contention necessarily presumes that the Agreement and the
Addendum comprise a single contract, over which the parties dispute.
Defendant correctly contends that the facts underlying whether the Agreement and the
Addendum comprise a single contract and whether Plaintiff breached the Addendum constitute
disputed material facts (Def.'s Br. at 31-35), but this affirmative defense is not available to
Defendant. As Plaintiff points out, even if the Agreement and the Addendum constituted the
same contract and even if Plaintiff breached that contract first, Defendant's excuse for nonperformance fails as a matter of law. (See Pl.'s Mot. at 17-18; Pl.'s Reply at 12-14.) Defendant
waived this excuse by commencing litigation but otherwise continuing to perform his duties
under the Agreement.
It is well-settled law in New Jersey that "a material breach by either party to a bilateral
contract excuses the other party from rendering any further contractual performance." Bright
Lights USA, Inc. v. Elecsys Inc., 2014 U.S. Dist. LEXIS 178663, at *29 (D.N.J. Dec. 31, 2014)
(citing Ross Sys. v. Linden Dari-Delite, Inc., 173 A.2d 258, 264--65 (N.J. 1961); Magnet Res.,
Inc. v. Summit MRI, Inc., 723 A.2d 976, 981 (N.J. Super. Ct. App. Div. 1998)). When a breach
occurs, the non-breaching party may elect one of two options: "the non-breaching party may
either stop performance and assume the contract is avoided, or continue its performance and sue
for damages." S & R Corp. v. Jiffy Lube Int'l, Inc., 968 F.2d 371, 376 (3d Cir. 1992); see also
Ramada Worldwide v. Clinton Commer. Dev., LLC, 2016 U.S. Dist. LEXIS 131014, at *5

19

(D.N.J. Sep. 26, 2016) ("[A] contracting party alleging material breach by the counterparty must
make 'a genuine election... of continuing performance or of ceasing to perform, and any action
indicating an intention to perform will operate as a conclusive choice.'" (quoting Frank Stamato

& Co. v. Lodi, 71A.2d336, 339 (N.J. 1950))). However, "[u]nder no circumstances may the
non-breaching party stop performance and continue to take advantage of the contract's benefits."

S & R Corp., 968 F.2d at 376 (emphasis added); see also Ramada Worldwide, 2016 U.S. Dist.
LEXIS 131014, at *1-2 (precluding defendants from utilizing excuse as affirmative defense in
summary judgment posture because defendants took no action to repudiate the contract after
plaintiffs alleged breach and instead "elected to continue to perform under the contract," which
"deprived [defendants] of any excuse for ceasing performance" months later).
Here, Defendant alleges that Plaintiff breached the Addendum by failing to pay
Defendant a bonus. Defendant contends that Plaintiff met its revenue goals as outlined in the
Addendum, so he was entitled to a bonus of up to $100,000 to be paid by August 31, 2017.
(Def.'s Counter SMF<J[<J[ 9, 17.) But on August 31, Plaintiff failed to pay Defendant that bonus
or any other bonus. (Id. TJ( 18-20.) At this precise moment, believing that Plaintiff materially
breached the employment contract, Defendant had a binary choice: Defendant could have either
continued performance under the contract or ceased performance under the contract. Aettex

Worldwide, Inc v. Sourcing for You Consulting, Ltd., 2013 U.S. Dist. LEXIS 54943, at *14
(D.N.J. Apr. 16, 2013) (characterizing the choice as "continue to perform or cease to perform").
Defendant elected to continue performance. Indeed, Defendant maintained his employment
relationship with Plaintiff by performing work for Plaintiff, earning a salary and commissions,
and even attending work functions such as a company trip to Mexico paid for by Plaintiff.
(Def. 's Resp. SMF TJ( 18-20.) Although Defendant commenced litigation regarding Plaintiffs

20

alleged breach on September 18, 2017, neither Plaintiff nor Defendant indicated any intention to
repudiate or renounce the remainder of their employment relationship or the terms of the
Agreement. Both parties continued to perform under the Agreement until Defendant resignedand, as he admits, simultaneously breached the Agreement by starting his new job with Artechon January 3, 2018. (Id.

<J[<J[

19, 21.)

Defendant contends that "an employee who is forced to bring an action against his
employer to collect earned but unpaid wages should not be required to quit his job and/or waive
all other rights or arguments he has with regard to the employment relationship." (Def.' s Br. at

37 n.4.) But Defendant misunderstands his election. Defendant's election to continue
performance under the Agreement "operated as a conclusive choice, not indeed depriving him or
a right of action for the breach which has already taken place, but depriving him of any excuse
for ceasing performance on his own part." Aextrex, 2013 U.S. Dist. LEXIS 54943, at *14
(quoting Frank Stamato, 71 A.2d at 339). Plaintiffs alleged breach does not confer upon
Defendant a proverbial get-out-of-jail-free card for an indefinite period of time. Nearly four
months elapsed between the time Plaintiff allegedly breached the Addendum and Defendant
breached the Agreement. Moreover, Defendant admitted in his deposition that he resigned
effective immediately on January 3, 2018 in order to start a new job with Plaintiff's competitor
that very same day-despite accepting that job offer two weeks earlier on December 19, 2018fully aware and actually intending to breach numerous provisions of the Agreement. (See Carino
Dep. 84:21-85: 16, 139: 1-9, 148: 1-21.) Therefore, even if the Court were to determine that the
Agreement and the Addendum comprised a single contract, and even if the Court were to
determine that Plaintiff breached that contract, Defendant waived his right to declare a forfeiture
of the Agreement and thus excuse his violations.

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C.

Request for Permanent Injunction

Plaintiff also requests that the Court convert its June 11, 2018 preliminary injunction to a
permanent injunction. (Pl.'s Mot. at 18.) Plaintiff complains that "[a]lthough Defendant was
enjoined from engaging in certain conduct until January 3, 2019, the preliminary injunction also
only prohibits [Defendant] (and Artech) from using and disclosing [Plaintiffs] confidential
information until that date." (Pl.'s Reply at 18.) Indeed, "[t]he Agreement sets no such limit on
the use or disclosure of [Plaintiffs] confidential information, so at the very least a permanent
injunction is warranted to address that issue." (Id.)
At this stage of the proceedings, Plaintiff must show that there is no genuine dispute as to
any material fact concerning the required elements for a permanent injunction.
In order to obtain a permanent injunction, Plaintiff[] "must demonstrate: (1) that
[Plaintiff has] suffered an irreparable injury; (2) that remedies available at law,
such as monetary damages, are inadequate to compensate for that injury; (3) that,
considering the balance of hardships between [Plaintiff] and [Defendant], a
remedy in equity is warranted; and (4) that the public interest would not be
disserved by a permanent injunction."
Sano.ft-Aventis Deutschland Gmbh v. Glenmark Phann. Inc., USA, 821 F. Supp. 2d 681, 693
(D.N.J. 2011) (quoting eBay Inc., et al. v. MercExchange LLC, 541 U.S. 388, 391 (2006)).
However, "[o ]nly a plaintiff who has achieved actual success on the merits may obtain a
permanent injunction." Port Drivers Fed'n 18, Inc. v. All Saints Express, Inc., 757 F. Supp. 2d
443, 460 (D.N.J. 2010) (citing Shields v. Zuccarini, 254 F.3d 476, 482 (3d Cir. 2001)). Because,
as discussed supra, the Court grants Defendant's request pursuant to Rule 56(d) and denies
Plaintiffs Motion as to its breach of contract claim, the Court also denies Plaintiffs request for
permanent injunction.

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CONCLUSION
For the reasons stated herein, Defendant's Cross Motion to Dismiss is denied, Plaintifrs
Motion for Summary Judgment is denied, and Defendant's request for further discovery pursuant
to Rule 56(d) is granted. An appropriate order will follow.

01i'r' S-01 s

Date: - - 1 - - - - - ~ /.::._

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