DE LAGE LANDEN FINANCIAL SERVICES, INC v. THOMASIAN

Filing 53

ORDER THAT THE PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION IS DENIED. SIGNED BY HONORABLE RONALD L. BUCKWALTER ON 5/1/2013. 5/2/2013 ENTERED AND COPIES E-MAILED.(kk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

DE LAGE LANDEN FINANCIAL
SERVICES, INC.,
Plaintiff,
v.
THOMAS THOMASIAN,
Defendant.

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CIVIL ACTION

NO. 13-852

OPINION
BUCKWALTER, S. J.

May 1, 2013

This opinion is filed because after the court announced its decision denying plaintiff’s
motion for preliminary injunction on April 30, 2013, plaintiff notified the court that it intended to
appeal.
Primarily in the interest of the parties having an expeditious decision, the court had
announced earlier that it would not request proposed findings of fact and conclusions of law from
either side – an exercise that would add considerable delay to the determination of the issue of
vital importance to both sides.
The following is a combination of findings of fact and conclusions of law.
On August 20, 2000, defendant entered into an Employee Agreement With Restrictive
Covenants (P-1).
Defendant terminated his employment with plaintiff on February 10, 2013. Prior to that
date, on January 4, 2013, he had accepted an offer to work for CoActiv.

On February 11, 2013, defendant was officially welcomed to CoActiv (P-11). In the
February 11, 2013 letter (P-11), CoActiv made it clear that they were aware of the Employee
Agreement, stating:
We understand that you are or may be party to an Employment Agreement with
your former employer, De Lage Landen Financial Services, Inc., which may include
certain restrictive covenants and/or obligations to protect De Lage Landen Trade Secrets
and/or Confidential Information.
While we do not believe that the restrictive covenants set forth in your Agreement
with De Lage Landen Financial Services, Inc. are enforceable under law for a variety of
reasons, we do believe that you should take very seriously and fully comply with your
obligations thereunder regarding the protection of De Lage Landen Confidential
Information and/or Trade Secrets.
CoActiv Capital Partners, Inc. has hired you not because you may possess any
particular information, much less Confidential and/or Trade Secret Information of De
Lage Landen or any other prior employer, but rather because of your unique and ample
skills developed over time.
CoActiv Capital Partners, Inc. expects that you will not breach any Agreement or
obligation that you have to refrain from disclosing or using confidential or proprietary
information, and you will not disclose to CoActiv or use on CoActiv’s behalf any
confidential or proprietary information or material belonging to De Lage Landen.
Further, you will not use in your work for CoActiv any property of De Lage Landen.
Defendant had already breached paragraph IV of the Employee Agreement on or about
January 23, giving plaintiff’s laptop and security credentials to CoActiv. He subsequently
returned his laptop and Blackberry to plaintiff on or about February 20, 2013, five days after
plaintiff had initiated this present lawsuit.
On February 25, 2013, the parties appeared before this court on a TRO hearing, which
ultimately resulted in a hearing for a preliminary injunction, before which the parties engaged in
extensive discovery. At or about the time of the TRO and subsequently, the court expressed its
concern regarding the element of irreparable harm and the difficulty in showing that damages are

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such that can only be adequately compensated by granting an injunction and are not readily
susceptible to reducing to a monetary amount.
Aware of this concern, both parties filed numerous briefs on the subject of irreparable
harm.
Before getting to the evidence relative to irreparable harm, it should be noted that while
the evidence that defendant has breached paragraph IV and paragraph VII (defendant appears to
have encouraged a plaintiff’s employee to work for CoActiv), the evidence presented with
respect to V (non-compete) and VI (non-solicitation) falls short of showing likelihood of success
of plaintiff in these two areas, in several respects:
1.

The evidence supports a finding that CoActiv does not compete with plaintiff on a

national basis at this time; the difference in sales, sales coverage and CoActiv’s year-to-date sales
suggest that these two companies are not presently in the same ballpark.
2.

Defendant has established an office about 40 miles from any of plaintiff’s regional

3.

Defendant has not solicited former customers. His contact with them has been

offices.

either by customers calling him directly or the customers talking first to Patrick Neary and
requesting that defendant call them directly. (Patrick Neary left plaintiff after many years of
working for it. He joined CoActiv shortly before defendant but apparently had no enforceable
non-compete contract with plaintiff). [The notion that this lawsuit is really aimed at Neary is
mere speculation].
Nevertheless, as previously stated, defendant violated the agreement (P-1) and paragraph
IX makes it clear that such an event entitles plaintiff to injunctive relief.
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The issue in this regard is irreparable harm, injury of “a peculiar nature” which
“compensation in money alone cannot atone.”
In support of its argument, plaintiff argues that money damages cannot adequately be
determined. Robert J. Hunter, Senior Vice-President in Charge of U.S. Sales, testified as
follows:
In our business if you sell it for $25,000, we’re not going to know for five years
whether it cost us $27,000, $20,000, $18,000 or $16,000 because it’s not that we’re
selling a tangible asset. We’re selling a behavior for the next five years plus beyond that
five years. So there’s no way to quantify that – that actual whether you made money or
lost money until you look back at it – seven years later and say, “Okay. Here’s how many
customers actually paid. Here’s how many went bad that we didn’t get any money on.
Here’s how much it cost us to go out and originate the relationship.”
Rene Paradis, the CFO of CoActiv testified to the effect that she did not agree with this
inability to determine loss until five or seven years down the road.
In this regard, my impression of Mr. Hunter as a knowledgeable and savvy businessman
made me somewhat dubious of his inability to spot a loser before five to seven years.
Secondly, plaintiff argues that the loss of good will cannot be calculated. In this regard,
the court mistakenly made the comment that plaintiff never introduced any testimony regarding
whether defendant was good at his job or not. In fact, Mr. Hunter testified that defendant was a
very valuable employee of plaintiff and spoke highly of him at several times in his testimony.
The problem with plaintiff’s case is that it has offered nothing concrete to show what
effect defendant’s leaving has had to date. The only evidence in this area was to the contrary.
An e-mail that Hunter, among others received from District Sales Manager Nick Santoro three
days before this lawsuit was filed stated:

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Equally important, Pat Neary is already calling these Vendors, on behalf of both
Thomasian and Hart. He stated that neither of them can call them at this point, but that
they are “on board” there, so they can send business to them right away! What they
didn’t count on, is me calling these same dealers today, advising them of my working
with them going forward.
I have already contacted the major Producing Vendors, and will work on the
smaller ones the rest of today. While most of them cannot believe Thomasian would
leave a company of our caliber, and a job like the one he had, not a single one of them
will pull any business away from us.
Finally, there is the “balance of harms” issue in determining whether a preliminary
injunction should issue. Defendant testified that he had a wife and two children, one attending
Brown University (tuition over $60,000 per year) and losing his paycheck would be devastating.
This is true in any case of this nature, but this case has an additional twist. Defendant testified
that his home in Oceanport was devastated by Hurricane Sandy and the insurance shortfall to date
is in the neighborhood of $60,000. Such an unexpected event cannot in any way be attributed to
defendant.
Plaintiff, on the other hand, is doing quite well and doesn’t even know if defendant’s
working for a competitor will hurt it beyond speculation that is more confusing than helpful to
the court. For example, see N.T. 4/18/13 at 68.
As I suggested earlier, the mere loss of salary would not alone balance the harm in favor
of defendant, nor would the large tuition expense. But a totally unforseen expense beyond
defendant’s control is another matter. I find that on this issue as well as failure to show
irreparable harm, plaintiff is not entitled to an injunction.
There are no novel issues in this case and no reason to enjoin defendant pending appeal.
To summarize, the court has found:

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1.

The plaintiff will likely succeed on the merits with respect to breach of the

contract, specifically, paragraphs IV and VII.
2.

The public interest favors enforcement of written contracts entered into willingly

and knowingly by the parties thereto.
3.

The plaintiff has failed to produce evidence that irreparable harm will occur as a

result of the breach or even if such harm has or will occur what has been caused by defendant’s
conduct.
4.

The balance of harm weighs in favor of defendant for the reasons stated.

Accordingly, the following order is entered:
AND NOW, this 1st day of May, 2013, it is hereby ORDERED that Plaintiff’s Motion
for Preliminary Injunction is DENIED.

BY THE COURT:

s/ Ronald L. Buckwalter
RONALD L. BUCKWALTER, S. J.

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