AMG NATIONAL TRUST BANK v. RIES
Filing
147
ORDER THAT PLAINTIFF'S SECOND MOTION FOR CONTEMPT IS GRANTED IN PART. PLAINTIFF'S MOTION FOR SANCTION IS GRANTED. DEFENDANT'S CROSS MOTION FOR SANTIONS IS DENIED; ETC.. SIGNED BY HONORABLE J. CURTIS JOYNER ON 7/20/11. 7/21/11 ENTERED AND E-MAILED.(jl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
AMG NAT’L TRUST BANK,
Plaintiff,
v.
STEPHEN C. RIES,
Defendant.
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CIVIL ACTION
NO. 06-CV-4337
(consolidated with
NO. 09-CV-3061)
ORDER
AND NOW, this
20th
day of July, 2011, upon
consideration of Plaintiff’s Second Motion for Contempt (Doc. No.
103), Defendant’s response in opposition thereto (Doc. No. 120),
and Plaintiff’s reply in further support thereof (Doc. No. 123);
Plaintiff’s Expedited Motion for Sanctions for Defendant’s
Destruction of Evidence (Doc. No. 101), Defendant’s response in
opposition thereto (Doc. No. 121), and Plaintiff’s reply in
further support thereof (Doc. No. 124); and Defendant’s CrossMotion for Sanctions (Doc. No. 106), Plaintiff’s response in
opposition thereto (Doc. No. 125), and Defendant’s reply in
further support thereof (Doc. No. 127); after a hearing at which
both sides appeared and a review of the parties’ supplemental
briefs (Docs. Nos. 141, 142-2, 143); and for the reasons set
forth in the accompanying Memorandum, it is hereby ORDERED that
1) Plaintiff’s Second Motion for Contempt is GRANTED IN PART
as follows:
a) Defendant Ries is adjudged in civil contempt of the
temporary restraining order issued on October 3, 2006
(Doc. No. 8), and the preliminary injunction issued on
September 13, 2007 (Doc. No. 38).
b) Defendant shall pay Plaintiff’s attorneys’ fees and
costs associated with the Second Motion for Contempt.
Plaintiff shall submit documentation of the costs and
expenses for which it seeks reimbursement within
fourteen (14) days of the entry of this Order.
c) Plaintiff’s request for imposition of a fine and
referral to the United States Attorney’s Office is
denied.
2) Plaintiff’s Motion for Sanctions is GRANTED as follows:
a) Defendant is compelled to pay for a forensic
examination and restoration of his Dell computer.
b) Defendant shall pay Plaintiff’s attorneys’ fees and
costs associated with the Motion for Sanctions.
Plaintiff shall submit documentation of the costs and
expenses for which it seeks reimbursement within
fourteen (14) days of the entry of this Order.
c) The Court will give an adverse-inference spoliation
instruction at trial.
3) Defendant’s Cross-Motion for Sanctions is DENIED.
BY THE COURT:
/s/ J. Curtis Joyner
J. CURTIS JOYNER, C.J.
2
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
AMG NAT’L TRUST BANK,
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Plaintiff,
v.
STEPHEN C. RIES,
Defendant.
CIVIL ACTION
NO. 06-CV-4337
(consolidated with
NO. 09-CV-3061)
MEMORANDUM AND ORDER
Joyner, C.J.
July
, 2011
Before this Court are (1) Plaintiff’s Second Motion for
Contempt (Doc. No. 103), Defendant’s response in opposition
thereto (Doc. No. 120), and Plaintiff’s reply in further support
thereof (Doc. No. 123); (2) Plaintiff’s Expedited Motion for
Sanctions for Defendant’s Destruction of Evidence (Doc. No. 101),
Defendant’s response in opposition thereto (Doc. No. 121), and
Plaintiff’s reply in further support thereof (Doc. No. 124); and
(3) Defendant’s Cross-Motion for Sanctions (Doc. No. 106),
Plaintiff’s response in opposition thereto (Doc. No. 125), and
Defendant’s reply in further support thereof (Doc. No. 127); as
well as supplemental briefings by both parties (Docs. Nos. 141,
142-2, 143).
For the reasons set forth in this Memorandum, the
Court grants Plaintiff’s Motions in substantial part and denies
Defendant’s Motion.
1
I.
BACKGROUND
Plaintiff AMG filed a Complaint on September 28, 2006,
alleging that Defendant Ries breached his Confidential
Information and Employment Agreement with Plaintiff, breached his
fiduciary duties, and violated the Uniform Trade Secrets Act by
contacting and providing services to Plaintiff’s clients after
resigning from Plaintiff’s employ.
(Doc. No. 1.)
Plaintiff then
moved for a temporary restraining order (TRO) and preliminary
injunction enjoining Defendant from directly or indirectly
contacting, soliciting, accepting business from, or performing or
offering to perform services in any capacity, for any client or
prospective client of Plaintiff, for a period of two years.
(Doc. No. 2.)
The Court issued the TRO on October 3, 2006,
enjoining such conduct until further hearing and decision by the
Court.
(Doc. No. 8.)
On September 13, 2007, the Court issued a preliminary
injunction enjoining Defendant from
(1) Directly or indirectly contacting, soliciting,
accepting business from, or performing or offering to
perform services in any capacity for any client or
prospective client as defined in the Confidential
Information and Employment Agreement or any
representative thereof of AMG for a period of two years
or until September 5, 2008;
(2) Using or disclosing Plaintiff’s trade secrets and
confidential or proprietary information, as defined in
the Confidential Information and Employment Agreement
in any manner whatsoever.
(Doc. No. 38.)
In arriving at its ruling, the Court found that
2
the evidence showed that Defendant had breached the Agreement and
that the Agreement was enforceable under both the management/
executive and trade-secrets exceptions to Colorado’s policy
disfavoring restrictive covenants.
(Id. at 19, 24.)1
also found Defendant in contempt of the TRO.
The Court
(Id. at 28-29.)
Defendant appealed the September 13, 2007, order to the
Third Circuit, which held that “[t]he District Court properly
concluded that the restrictive covenant falls under the trade
secrets exception to the policy,” affirmed the preliminary
injunction, and affirmed the finding of contempt.
AMG Nat’l
Trust Bank v. Ries, 319 Fed. App’x 90, 92-93 (3d Cir. 2008).
On remand, the parties proceeded with discovery, during
which Plaintiff uncovered evidence that (1) Defendant had
violated the TRO2 and preliminary injunction by contacting and
1
As this Court recognized, Colorado law provides that
Any covenant not to compete which restricts the right of any
person to receive compensation for performance of skilled or
unskilled labor for any employer shall be void, but this
subsection (2) shall not apply to:
. . .
(b) Any contract for the protection of trade secrets;
. . .
(d) Executive and management personnel and officers and
employees who constitute professional staff to executive and
management personnel.
Colo. Rev. Stat. § 8-2-113(2). For conciseness, the Court will use the term
“management exception” to refer to section 8-2-113(2)(d).
2
This evidence showed additional, previously unknown violations of the
TRO, including contacts with clients and provision of financial services to
AMG clients in May of 2007. See infra Section II.A. In issuing the September
3
providing services to Plaintiff’s clients and (2) Defendant had
destroyed computer files to cover up those contacts and services.
As a result of the former discovery, Plaintiff filed the instant
Second Motion for Contempt; as a result of the latter discovery,
Plaintiff filed a Motion for Sanctions for spoliation.
Defendant
responded to the two Motions and filed a Cross-Motion for
Sanctions, asserting that the TRO and preliminary injunction were
invalid because they had been based on Plaintiff’s
misrepresentations concerning Defendant’s status as an employee
falling under the management exception to the unenforceability of
restrictive covenants.
The court held a hearing on the Motions, after which they
were ripe for decision.
During this time, briefing on
Defendant’s motion for summary judgment also concluded.
Before
the Court could issue its rulings, Defendant unexpectedly filed a
“Supplemental Brief” in further support of his motion for summary
judgment and in further opposition to Plaintiff’s pending
Motions, claiming he had recently discovered new information that
helps his position.3
Plaintiff thereafter sought leave to respond
to Defendant’s supplemental brief, and Defendant filed a reply.
Now, the three Motions are (again) ready for decision.
13, 2007, order finding Defendant in contempt of the TRO, in contrast, the
Court found that, at that time, there was “no evidence on this record that the
defendant has rendered any financial services to any of his AMG clients since
November 2, 2006.” (Doc. No. 38, at 12.)
3
It does not.
4
II.
A.
DISCUSSION
Contempt of the TRO and preliminary injunction
“To prove civil contempt the court must find that (1) a
valid court order existed, (2) the defendant had knowledge of the
order, and (3) the defendant disobeyed the order.”
John T. v.
Del. County Intermediate Unit, 318 F.3d 545, 552 (3d Cir. 2003)
(internal quotation marks omitted).
These “elements must be
proven by ‘clear and convincing’ evidence, and ambiguities must
be resolved in favor of the party charged with contempt.”
Id.
“[W]illfulness is not a necessary element of civil contempt,”
however, so even “good faith is not a defense.”
Robin Woods Inc.
v. Woods, 28 F.3d 396, 399 (3d Cir. 1994) (internal quotation
marks omitted).
Defendant argues that the TRO and preliminary injunction
were not valid court orders because (1) Plaintiff allegedly
misrepresented Defendant Ries’s employee status such that Ries
did not truly fall under the management exception and (2) the
trade-secrets exception could not render the orders valid when
the management exception did not apply.
The Court disagrees.
Contrary to Defendant’s suggestion, only one exception need
apply.
See King v. PA Consulting Group, Inc., 485 F.3d 577, 587
(10th Cir. 2007) (“[T]he enforceability of the noncompete
provisions must stand or fall on the applicability of one or more
of the statutory exceptions.” (emphasis added)); id. at 588-89
5
(“Because we conclude that the Agreement’s noncompete provisions
fall within the business purchase exception, we need not review
the district court’s analysis of the trade secrets and management
exceptions.”); Phoenix Capital, Inc. v. Dowell, 176 P.3d 835, 840
(Colo. Ct. App. 2007) (“In the preliminary injunction context,
the employer has the burden to establish that the covenant not to
compete falls within one of those narrow exceptions.”); Porter
Indus. v. Higgins, 680 P.2d 1339, 1341 (Colo. Ct. App. 1984)
(“[T]he employer was required to show that the covenant fell
under one of the exceptions to the statute, i.e., either that the
covenant was for the protection of trade secrets or that the
employee was a member of executive or management personnel or was
an officer or employee constituting professional staff to
executive and management personnel.”).4
Both this Court and the
Third Circuit held that the trade-secrets exception applied and
rendered the restrictive covenant enforceable.
Thus, it is
irrelevant to the validity of the orders whether the management
exception also applied in this case.
The court orders were
valid, and the first element is satisfied.
4
Phoenix Capital v. Dowell does not support Defendant’s contention that
the trade-secrets exception is inapplicable. In Phoenix, the only argued
basis for the restrictive covenant was the management exception. See Phoenix
Capital, Inc. v. Dowell, 176 P.3d 835, 844 (Colo. Ct. App. 2007) (“In the
trial court, Phoenix initially alleged, but then determined not to pursue, a
claim of improper use of trade secrets by Dowell. Because, as Phoenix
conceded in its opening brief, this appeal does not present any issues
relating to trade secrets, we perceive no legal basis upon which to
distinguish the unenforceable noncompetition agreement from the agreement not
to solicit Phoenix’s customers.”)
6
The second element is easily satisfied, as Defendant had
knowledge of the TRO and preliminary injunction.
(See, e.g.,
Ries Dep. 84:24-88:13, 130:10-24, Doc. No. 103-2 Ex. G.)
The final element is also satisfied, as the Court finds by
clear and convincing evidence, based on the documentary
submissions by the parties and the hearing, that Defendant Ries
violated the terms of the orders.
(See, e.g., Doc. No. 103-2
Exs. E, F (showing income forecasts prepared by Defendant for his
AMG clients in May and November of 2007); Ries Dep. 18:10-24:24,
73:4-96:25, 113:1-116:25, 129:1-132:25, Doc. No. 103-2 Ex. G.)
In sum, there is clear and convincing evidence that Defendant is
in civil contempt of the TRO and preliminary injunction.
B.
Sanctions for contempt
“Sanctions for civil contempt serve two purposes: ‘to coerce
the defendant into compliance with the court’s order and to
compensate for losses sustained by the disobedience.’”
Robin
Woods, 28 F.3d at 400 (citation omitted); see also Latrobe Steel
Co. v. United Steelworkers, 545 F.2d 1336, 1344 (3d Cir. 1976)
(“Remedial or compensatory actions are essentially backward
looking, seeking to compensate the complainant through the
payment of money for damages caused by past acts of disobedience.
Coercive sanctions, in contrast, look to the future and are
designed to aid the plaintiff by bringing a defiant party into
compliance with the court order or by assuring that a potentially
7
contumacious party adheres to an injunction by setting forth in
advance the penalties the court will impose if the party deviates
from the path of obedience.” (footnote omitted)).
“Trial judges have a variety of weapons with which they can
achieve these ends.”
Latrobe, 545 F.2d at 1344.
For example,
They may impose an indeterminate period of confinement
which may be brought to an end only by the contemnor’s
ultimate adherence to the court order. Alternatively,
the court may levy a fine of a specified amount for
past refusal to conform to the injunction, conditioned,
however, on the defendant’s continued failure to obey.
The court may also specify that a disobedient party
will be fined a certain amount for each day of noncompliance.
Id. (footnote omitted).
In this case, the Court will award Plaintiff, as
compensatory relief, the attorneys’ fees and costs that it
incurred in seeking Defendant’s compliance with the orders.
See
Robin Woods, 28 F.3d at 400 (affirming an award of attorneys’
fees to restore the plaintiff to the position it would have
occupied had the other side complied with the injunction);
Schauffler v. United Ass’n of Journeymen & Apprentices of
Plumbing & Pipe Fitting Indus., 246 F.2d 867, 870 (3d Cir. 1957)
(reaffirming that those in contempt of an injunction should pay
“a sum which represents expenses necessarily incurred by [the
plaintiff] in connection with the prosecution of the petition in
civil contempt, including counsel fees and other expenditures
incurred in the investigation, preparation, presentation and
8
final disposition of the petition” (internal quotation marks
omitted)).
The Court will not order the fine that Plaintiff seeks,
however.
Plaintiff states that it is seeking sanctions both “to
compensate AMG for the harm Ries caused AMG . . . and to punish
Defendant for his wrongdoing.”
(Mem. in Supp. of Pl.’s Second
Mot. for Contempt 2, Doc. No. 103-1.)
In contrast to criminal
contempt, civil contempt is not designed to punish the contemnor;
it is solely designed to compensate the plaintiff and coerce
future compliance.
A fine for past misconduct is not coercive.
Gregory v. Depte, 896 F.2d 31, 34 (3d Cir. 1990).
Though
monetary sanctions for past misconduct might in some cases be
appropriate as compensatory relief, the Court declines in this
case to issue such an award, predicated on a liquidated damages
clause, at this stage.
See id. at 34-35 (vacating a supposedly
compensatory fine for past misconduct because the evidentiary
basis for the figure was lacking and a compensatory sanction
“must not exceed the actual damages caused the offended party”);
see also Ries, 319 Fed. App’x at 93 (“Because the determination
of the revenues lost as a result of Ries’ contempt is speculative
to some extent and is intertwined with the merits of AMG’s
action, the issue is best left until a final determination on the
merits.”).5
5
The Court also declines Plaintiff’s invitation to refer the case to
the United States Attorney’s Office.
9
C.
Spoliation
“A party that reasonably anticipates ensuing litigation has
an affirmative duty to preserve evidence that may be relevant,
and failing to do so constitutes spoliation.”
Travelers Prop.
Cas. Co. v. Cooper Crouse-Hinds, LLC, No. 05-6399, 2007 WL
2571450, at *4 (E.D. Pa. Aug. 31, 2007); see also Paramount
Pictures Corp. v. Davis, 234 F.R.D. 102, 111 (E.D. Pa. 2005) (“A
litigant is under a duty to preserve evidence which it knows or
reasonably should know is relevant to the action.” (internal
quotation marks omitted)); id. at 110 (“Spoliation is the
destruction or significant alteration of evidence, or the failure
to preserve property for another’s use as evidence in pending or
reasonably foreseeable litigation.” (internal quotation marks
omitted)).
“A showing of spoliation may give rise to a variety of
sanctions,” including “[1] dismissal of a claim or granting
judgment in favor of a prejudiced party; [2] suppression of
evidence; [3] an adverse inference, referred to as the spoliation
inference; [4] fines; [and] [5] attorneys’ fees and costs.”
Paramount, 234 F.R.D. at 110-11 (internal quotation marks
omitted) (alterations in original).
“There is no rule of law
mandating a particular sanction upon a finding of improper
destruction or loss of evidence; rather, such a decision is left
10
to the discretion of the Court.”
Id. at 111.
In determining whether entry of judgment or suppression of
evidence is an appropriate sanction, however, the Court is to
consider
(1) the degree of fault of the party who altered or
destroyed the evidence; (2) the degree of prejudice
suffered by the opposing party; and (3) whether there
is a lesser sanction that will avoid substantial
unfairness to the opposing party and, where the
offending party is seriously at fault, will serve to
deter such conduct by others in the future.
Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir.
1994).
“When determining the degree of fault and personal
responsibility attributable to the party that destroyed the
evidence, the court must consider whether that party intended to
impair the ability of the other side to effectively litigate its
case.”
Paramount, 234 F.R.D. at 111 (internal quotation marks
omitted).
“When considering the degree of prejudice suffered by
the party that did not destroy the evidence, the court should
take into account whether that party had a meaningful opportunity
to examine the evidence in question before it was destroyed.”
Id. at 112 (internal quotation marks omitted).
Moreover, “a
court should resort to the drastic sanction of entering judgment
against a spoliating party only when ‘no alternative remedy by
way of a lesser, but equally efficient sanction is available.’”
Travelers, 2007 WL 2571450, at *4 (citation omitted).
A lesser sanction, “[t]he spoliation inference[,] permits a
11
fact finder to infer that the ‘destroyed evidence might or would
have been unfavorable to the position of the offending party.’”
Paramount, 234 F.R.D. at 112 (citation omitted); see also Schmid,
13 F.3d at 78; Brewer v. Quaker State Oil Ref. Corp., 72 F.3d
326, 334 (3d Cir. 1995).
Levying the spoliation inference against a party
accused of failing to preserve integral evidence is
appropriate when: (1) the relevant evidence was within
the accused party’s control; (2) the party’s conduct
resulted in the suppression, withholding, or
destruction of the evidence; (3) the evidence was
relevant to the opposing party’s claims or the accused
party’s claims; and (4) it was reasonably foreseeable
that the evidence would later be discoverable by the
opposing party.
Travelers, 2007 WL 2571450, at *7; see also Brewer, 72 F.3d at
334.
In this case, the first Schmid factor points in favor of a
strong sanction:
Defendant bears personal responsibility for the
deletion of his computer files, and the evidence strongly
suggests that his purpose in deleting the files was to prevent
their discovery.
(See, e.g., Ries Dep. 81:4-84:23, 113:2-116:25,
Doc. No. 103-2 Ex. G.)
known, however.
The extent of prejudice is not fully
While Plaintiff was fortunate enough to learn of
the spoliation from another witness in discovery, (see Doc. No.
103-2 Exs. E, F), there may be additional files and contacts that
have not come to light and that cannot be recovered.
Considering
the present uncertainty, the Court declines to enter judgment in
favor of Plaintiff as a sanction.
12
Instead, the Court will order
Defendant to pay for a forensic examination of his computer in
order to determine what, if any, evidence can be recovered.
The Court will also give a spoliation inference at trial,
with the language to be determined after the results of the
forensic examination, when Plaintiff and this Court have a better
basis for determining the amount of prejudice to Plaintiff.
Such
a sanction is appropriate under the Travelers/Brewer factors:
The evidence was certainly within Defendant’s control, on his
Dell computer.
G.)
(See, e.g., Ries Dep. 82:2-17, Doc. No. 103-2 Ex.
Defendant’s conduct resulted in the destruction of the
evidence, as admitted by Defendant.
(See, e.g., id. at 81:4-
84:23; see also Yarnall Decl., Doc. No. 101-2 Ex. D (attesting
that a computer clean-up was performed shortly before the
computer was handed over to Plaintiff’s expert).)
The evidence
was relevant, as it showed financial information prepared for
former AMG clients during the pendency of the court orders and
restrictive covenant.
(See, e.g., Ries Dep. 81:4-86:21, 113:2-
116:25, Doc. No. 103-2 Ex. G.)
Fourth, it was more than
reasonably foreseeable that the computer files would be
discoverable, as Plaintiff specifically and repeatedly requested
documentation of Defendant’s contacts with Plaintiff’s clients.
(See, e.g., Pl.’s Expedited Req. for Produc. of Docs., Doc. No.
103-2 Ex. A.; Pl.’s Third Req. for Produc. of Docs., Doc. No.
103-2 Ex. B; Pl.’s Req. for Supplemental Disc. Resps., Doc. No.
13
103-2 Ex. C.)
Moreover, while even “negligent destruction of
relevant evidence can be sufficient to give rise to the
spoliation inference,” MOSAID Techs. Inc. v. Samsung Elecs. Co.,
348 F. Supp. 2d 332, 338 (D.N.J. 2004), Defendant’s conduct is
very suspect.
(See, e.g., Ries Dep. 113:2-116:25, Doc. No. 103-2
Ex. G (admitting that he deleted information necessary for a
financial projection after he created the projection,
subsequently re-sought the information so that he could prepare
another report, and again deleted the information).)
See also
Travelers, 2007 WL 2571450, at *5-7 (granting an adverseinference instruction when a party had control over evidence that
deteriorated before being provided to opposing counsel, even
though the party did not appear to have acted intentionally or
maliciously); Paramount, 234 F.R.D. at 111 (giving an adverseinference instruction when the defendant “knew or should have
known that the computer’s memory was relevant to the lawsuit
against him because he received notice of the action against him
. . . sixteen days before he wiped the hard drive clean,” and
stating that the argument that he wiped it in preparation for
selling it did “not obviate his duty to preserve the computer’s
memory”); MOSAID, 348 F. Supp. 2d at 339 (affirming the
magistrate judge’s imposition of a spoliation inference when the
defendant did not retain emails); Howell v. Maytag, 168 F.R.D.
502, 506 (M.D. Pa. 1996).
14
The Court will also award Plaintiff its attorneys’ fees and
costs as compensatory relief.
See, e.g., MOSAID, 348 F. Supp. 2d
at 339 (affirming the magistrate judge’s imposition of monetary
sanctions “to compensate MOSAID for the time and effort it was
forced to expend in an effort to obtain discovery it was entitled
to”); see also Gordon Partners v. Blumenthal (In re NTL, Inc.
Sec. Litig.), 244 F.R.D. 179, 181 (S.D.N.Y. 2007) (awarding costs
and fees when the defendant did not retain electronic
information).
D.
Misrepresentation
Though Defendant does not provide the precise legal basis on
which he is requesting sanctions for Plaintiff’s purported
misrepresentations to the Court, it is well-established that a
court may sanction a party or counsel for misrepresentations.
See generally Apoian v. Am. Home Prods. Corp., 108 F. Supp. 2d
454, 459-60 (E.D. Pa. 2000) (setting forth various sources of
power to sanction for misrepresentations).
The Court is not convinced that Plaintiff misrepresented
Defendant’s employment status when arguing that Defendant fell
under the management exception.6
For example, despite Defendant’s
6
As this Court recognized when issuing the preliminary injunction,
whether an employee is executive or management personnel or professional
staff, such that he falls under the management exception, is a question of
fact for the trial court. Phoenix, 176 P.3d at 841. “[T]he Colorado Supreme
Court has not considered this exception, and the other courts that have
considered the exception have not provided a clear definition for who
qualifies as ‘executive and management personnel.’” DISH Network Corp. v.
Altomari, 224 P.3d 362, 366 (Colo. Ct. App. 2009) (internal quotation marks
15
contention that Plaintiff misrepresented Defendant’s initial
position as being that of a Financial Counselor when he was
actually hired as a Financial Counselor in Training, both the
Complaint and the motion for a TRO and preliminary injunction
acknowledged that Ries had training before being a financial
counselor.
(Compl. ¶ 7, Doc. No. 1; Mem. in Supp. of Mot. for
TRO and Prelim. Inj. 2, Doc. No. 2.)
Perhaps most significant,
the Agreement classified Ries as a member of the executive/
management team.
(Doc. No. 38, at 23.).7
Additionally, Plaintiff
had the sworn affidavit of Masood Dhunna, Regional Vice President
and Financial Counselor for AMG, who stated that “Stephen Ries
was a management employee.”
(Dhunna Decl., Doc. No. 2.)
That
Defendant subsequently gathered and presented statements from
other employees disputing Defendant’s job responsibilities does
not mean that Plaintiff was dishonest at the earlier stage.
See
generally New Life Homecare, Inc. v. Blue Cross of Ne. Pa., No.
06-2485, 2008 WL 534472, at *4-5 (M.D. Pa. Feb. 20, 2008)
(denying Rule 11 sanctions because the alleged misrepresentation
in the complaint was “not conclusively a misleading statement”
but rather seemed to be a characterization of facts).
omitted).
7
The Agreement stated that “[t]he undersigned employee (Employee) is a
member of AMG’s executive or management team or professional staff supporting
such team and works in a capacity in which Employee may obtain or contribute
to confidential information that is the property of AMG.” (Compl. Ex. A at 1,
Doc. No. 1.) The Court expressly relied on this evidence, among other things,
in deciding to issue the preliminary injunction. (Doc. No. 38, at 23.)
16
Thus, Defendant’s position is unpersuasive, and the crossmotion is denied.8
III.
CONCLUSION
For the foregoing reasons, Defendant Ries is adjudged in
civil contempt of the TRO and preliminary injunction, and the
above-described sanctions are ordered.
The Court also finds that
Defendant destroyed evidence, for which conduct the abovedescribed sanctions are ordered.
Finally, Defendant’s cross-
motion for sanctions is denied.
8
In any event, the sanctions Defendant seeks–dismissal of the case
against Defendant, a return of all attorneys’ fees Defendant was previously
ordered to pay for his contempt of the order, and payment of Defendant’s
attorneys’ fees incurred in this action–would be inappropriate, as there was a
valid alternate ground for issuance of the TRO and preliminary injunction.
See supra Section II.A.
17
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