Ryan Pierce Group, Inc. v Brown (2010 NY Slip Op 51205(U))

Ryan Pierce Group, Inc. v Brown

2010 NY Slip Op 51205(U) [28 Misc 3d 1207(A)]

Decided on June 18, 2010

Supreme Court, Nassau County

Driscoll, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the printed Official Reports.

This matter is before the Court for decision on the Order to Show Cause filed by Plaintiffs Ryan Pierce Group, Inc. and Tower West Communications, Inc. on May 7, 2010, and submitted on June 11, 2010. For the reasons set forth below, the Court denies Plaintiffs' Order to Show Cause, except that the Court directs all Defendants to return to Plaintiffs any items in their possession, including but not limited to computers, telephones, Blackberries, and tools, provided by or received from RPG and TWC in the course of their employment at RPG and TWC, within thirty (30) days of this Decision. The Court vacates the Temporary Restraining Order issued on May 10, 2010.

Plaintiffs Ryan Pierce Group, Inc. ("RPG") and Tower West Communications, Inc. ("TWC") (collectively "Plaintiffs") move, pursuant to CPLR §§ 7101 and 6313, for an Order1) restraining and enjoining Defendants Michael Brown ("Brown") and Donald Johnson ("Johnson") from performing and soliciting any work directly or indirectly for Clearwire Communications ("Clearwire") either as a direct contractor or subcontractor; 2) restraining and enjoining all Defendants from working, whether directly or indirectly, for any person or corporation that is in direct competition with RPG and TWC; 3) restraining and enjoining all Defendants from having any contact with any employee currently working for RPG and TWC; 4) restraining and enjoining all Defendants from offering employment to any employee currently working for RPG and TWC; 5) restraining and enjoining all Defendants from continuing to employ all former RPG and TWC employees whom Defendants allegedly induced to abandon their positions at RPG and TWC; 6) requiring all Defendants immediately to return any property provided by or received from RPG and TWC in the course of their employment at RPG and TWC; 7) requiring all Defendants to return all property ^[FN1] allegedly retained by RPG and TWC employees whom Defendants allegedly improperly induced to abandon their positions at RPG and TWC; 8) restraining and enjoining all Defendants from altering, deleting, defacing and tampering with data files stored electronically on telephones, computers or other electronic devices or in physical hard copies on equipment provided by RPG or TWC or used in the business of RPG or TWC; 9) restraining and enjoining Defendant Thomas Nyiri ("Nyiri") from disclosing any program information concerning or relating to RPG's and TWC's business, including online and field training manuals and modules; 10) requiring Defendant Brown to appear for a deposition on May 12, 2010 and provide certain documents set forth on Exhibit A to the Order to Show Cause; and 11) requiring Defendant Donald Johnson ("Johnson") to appear for a deposition on May 13, 2010 and provide the documents set forth on Exhibit A to the Order to Show Cause.

B. Prior Court Orders

On May 10, 2010, the Court granted in part and denied in part Plaintiffs' application for injunctive relief pending the determination of this motion. Specifically, the Court issued a Temporary Restraining Order ("TRO") that directed that, pending further Order of the Court,

1) all Defendants are restrained and enjoined from having any business-related contact with any employee currently working for RPG and TWC; 2) all Defendants are restrained and enjoined from offering employment to any person or employee currently working for RPG and TWC;3) all Defendants are required to immediately return any property provided by or received from RPG and TWC in the course of their employment at RPG and TWC; 4) all Defendants are restrained and enjoined from altering, deleting, defacing and tampering with data files stored electronically on telephones, computers or other electronic devices or in physical hard copies on equipment provided by RPG or TWC or used in the business of RPG or TWC; and 5) Defendant Nyiri is restrained and enjoined from disclosing any program information concerning or relating to RPG's and TWC's business, including any online and field training manuals and modules. [*3]

RPG and TWC are Florida corporations with their principal places of business at 60 Cutter Mill Road, Great Neck, New York. RPG and TWC are wholly owned subsidiaries of Juniper Group, Inc ("Juniper"). Plaintiffs are engaged in the business of constructing and upgrading cellular communications towers. They act as contractors and subcontractors to cellular communications providers and to other companies engaged in the business of constructing or upgrading telecommunication towers. Clearwire, a cell communications upgrade and construction project contractor, is RPG's largest account.

Brown is Vice President for Operations of RPG who allegedly attempted to terminate his position without notice, purportedly in violation of an oral contract, and "cease[d] to act in the interests of RPG, on April 2, 2010" (Compl. at ¶ 6). Johnson is a Construction Project Manager for RPG. Defendant William Furdock ("Furdock") was a Construction Project manager for RPG. Defendant Shanna Smith ("Smith") was employed by RPG as a Project Coordinator. Defendant Timothy Downs ("Downs") was a Construction Project Manager for RPG. Nyiri is the principal of Nyiri and Associates, an entity that provides information technology consulting and development services to RPG.

The Complaint alleges improper conduct by Defendants including but not limited to:

1) Brown permitted RPG to start work on several Clearwire projects ("Projects") without first securing required Purchase Orders ("POs"); 2) Brown improperly stopped work on the Projects, instead of directing a slowdown as directed by RPG, thereby alienating the Clearwire Project Manager; 3) despite accepting RPG's compensation package and agreeing to continue work for RPG, Brown abruptly resigned from his position with RPG; 4) Brown improperly deleted information from a Blackberry smartphone belonging to RPG; 5) Brown and Johnson solicited an RPG work crew to abandon a Project; 6) Brown and Johnson solicited RPG employees and project managers, including Furdock and Smith, to leave RPG and work for a new company operated by Brown; and 7) Nyiri expressed his intention to permit Brown to use a computerized training program regarding the installation and use of Dragon Wave cellular technology that was developed for RPG.

The Complaint contains four (4) counts ^[FN2] alleging 1) tortious interference with employment relations by Brown and Johnson, 2) breach of fiduciary duty by all Defendants,3) breach of the covenant of good faith and fair dealing by all Defendants, and 4) unfair competition by all Defendants.

In his Affidavit in Support dated May 7, 2010, Vlado P. Hreljanovic ("Vlado") affirms as follows:

Vlado is the President of RPG and TWC, as well as the President of Juniper. Vlado swears to the truth of the allegations in the Complaint, which the Court has outlined supra, and outlines his personal knowledge of the Defendants' allegedly improper conduct and its effect on RPG. Vlado's affirmations regarding his personal knowledge and involvement include 1) his ability to persuade Clearwire to issue POs for some of the work that RPG performed, 2) Brown's statements to Vlado that Brown believed he could earn more money working for a different [*4]company and was considering looking for a new job, and 3) Brown's oral acceptance of Vlado's offer to remain with RPG and sudden resignation from RPG following that acceptance.With respect to Plaintiffs' allegations that Brown permitted RPG to start work on Clearwire Projects despite the absence of POs, Vlado affirms that he "deferred to Brown's insistence that the work should continue" (Vlado Aff. at ¶ 30). Vlado affirms, further, that in an effort to avoid conflict with Clearwire and minimize the amount of unpaid work, he "instructed Brown to slow down the projects by slowly and systematically [emphasis in original] reducing the size of the work crews on these projects" (Vlado Aff. at ¶ 32). Vlado, while conceding that he directed Brown to reduce the size of RPG's work crews, submits that "Brown used this opportunity to abruptly stop substantially all work on all of the projects immediately and at once, and lay off substantially all of the workers [emphasis in original]" (Vlado Aff. at ¶ 33).

Vlado also makes reference to numerous other incidents alleged in the Complaint but does not specifically affirm his personal knowledge of these incidents. These include statements regarding 1) charges on an RPG credit card (¶¶ 46-48), 2) Brown and Johnson's alleged involvement in an RPG crew's abandonment of a Clearwire Project in North Carolina (¶¶ 52-54), and 3) Brown and Johnson's alleged solicitation of RPG employees and project managers to work with Brown in a new company (¶¶ 57-58).

Defendants provide Affidavits in Opposition of Brown, Johnson, Smith, Furdock and Downs.

Brown denies Plaintiffs' allegations that he worked in association with other Defendants to establish a business that would compete with Plaintiffs. Rather, Brown affirms that he was an at-will employee of RPG, had not entered into any oral or written employment agreement with RPG, and resigned on April 2, 2010. Brown also denies that he established a competing company and affirms that he remained unemployed for almost a month after he left RPG. OnMay 3, 2010, Brown began working for a company called Maxton Technologies, Inc. ("Maxton") for which he had worked prior to joining RPG.

Brown outlines his employment history in the wireless communications industry and affirms that his business relationship with Clearwire and Maxton predated TWC's association with Clearwire. Moreover, the project that Brown is currently working on for Maxton is in a geographical area that RPG does not service. Brown also denies being in possession of any property or confidential information belonging to Plaintiffs.

Brown provides a copy of a letter from Vlado dated August 15, 2009 (Ex. A to Brown Aff.) in which Vlado offered Brown the position of Vice President of Juniper. Brown affirms that Vlado sent this letter to Brown while Brown was employed at Maxton, and avers further that he was ultimately hired by RPG. Brown notes that Vlado's letter makes no reference to any restrictive employment limitations or confidentiality provisions as a condition to the offer of employment. In January of 2010, RPG provided Brown with a proposed employment agreement. Brown rejected the proposal as written and sent a counterproposal to Vlado on February 17, 2010 with a cover e-mail (Ex. B to Brown Aff.) that included the sentence "I have attached a summary of my notes and exceptions to the employment contract that you have offered." Brown affirms that he and RPG never reached an agreement regarding the terms of a proposed employment contract.

Brown also affirms that, notwithstanding the terms of a Master Service Agreement that relieved Clearwire of its obligation to pay for work in the absence of a PO, Vlado directed that [*5]RPG begin work on a Clearwire project without a PO. Brown provides e-mails (Ex. C to Brown Aff.) that, he submits, demonstrate Vlado's appreciation of the risk that RPG would not be paid for work performed in the absence of a PO and affirms that Vlado persisted in proceeding without POs.

Brown recommended to Vlado that he reduce RPG's workforce. In early March of 2010, Vlado directed Brown to reduce RPG's workforce to a greater extent than Brown suggested, despite Brown's concern that this reduction could damage RPG's relationship with Clearwire. Brown provides e-mails regarding this issue (Ex. F to Brown Aff.) which includes an e-mail dated March 4, 2010 from Brown to Vlado which read as follows:

Brown also denies Plaintiffs' allegations regarding his allegedly improper removal of certain information from a company Blackberry. Brown affirms that he was in possession of an RPG Blackberry after he left RPG, and subsequently returned that Blackberry to RPG. Before he returned the Blackberry to RPG, Brown erased his personal and family contacts, photographs and account information. Brown submits that RPG did not lose any proprietary information and intellectual property because the contact and e-mail content of the Blackberry should still be available to RPG because it was linked to RPG's shared e-mail server. Brown affirms that he is not in possession of any equipment or materials belonging to Plaintiffs.

Brown also affirms that, since the termination of his employment with RPG, he has not encouraged any employee to leave RPG or TWC. Moreover, he is not responsible for the hiring and firing of employees at Maxton, as Maxton's Human Resources Department handles those matters. Brown submits that RPG and TWC's loss of employees may be attributable to 1) RPG and TWC's recent decision to require employees to enter into restrictive employment contracts, and 2) RPG and TWC's delay in paying employee salaries.

Brown also affirms that he is unaware of RPG developing any software as a training safety tool, as Plaintiffs allege. Brown denies being in possession of any equipment or Dragonware software belonging to RPG.

Johnson worked as a construction manager and foreman for Plaintiffs as an at-will employee who was not subject to any contractual non-competition or confidentiality limitations. Johnson left his employment with Plaintiffs on April 29, 2010 and began working for Maxton, [*6]for whom Johnson previously worked. Johnson is not involved in soliciting business for Maxton.

Johnson denies soliciting any employees of Plaintiffs or otherwise interfering with Plaintiffs' operations. Johnson stopped working for Plaintiffs because Vlado failed to compensate him properly for his services.

Johnson affirms that he has been working in the wireless communication field since 1989, during which time he established numerous contacts with companies including Clearwire. He obtained his employment with Maxton as a result of a conversation with an individual who has been a long-standing friend and colleague of Johnson. Johnson also denies soliciting Plaintiffs' work crews to leave the employment of Plaintiffs. Finally, Johnson denies being in possession of any property, equipment or proprietary or confidential information belonging to Plaintiffs.

Smith affirms that she worked from RPG and TWC from September of 2009 to April of 2010. Smith avers, inter alia, that 1) in April of 2010, she participated in a conference call during which Vlado advised certain RPG employees that the number of work crews were going to have to be cut drastically and other employees advised Vlado that they disagreed with this course of action; 2) on April 28, 2010, RPG and TWC circulated an e-mail that advised all employees that they would be required, within one week, to sign a non-compete agreement to retain their employment; 3) Smith is unaware of any company that Brown or Johnson has formed that is working for Maxton as a sub-contractor; 4) she has not yet received payment for her last week of employment with Plaintiffs; 5) in her resignation letter to RPG/TWC, Smith agreed to return all equipment, including a Blackberry and laptop computer, when Plaintiffs provided her with a pre-paid shipping label with her final check; Plaintiffs have not provided Smith with the requested shipping label; and 6) she was never involved in any agreement with the Defendants to usurp any corporate opportunities properly belonging to Plaintiffs.

Furdock affirms, inter alia, that 1) his employment with Plaintiffs was never subject to a confidentiality or restrictive employment covenant; 2) he stopped working for RPG on May 2, 2010 for several reasons including concerns about his job security and information he received about certain employees not receiving their paychecks; 3) after he left on May 2, 2010, he unloaded certain electronic equipment and tools belonging to Plaintiffs and placed those items into secure locations belonging to Plaintiffs; 4) he later discovered other items belonging to Plaintiffs, consisting of bolt cutters and a Verizon computer access card, which he has delivered to his attorney to return to Plaintiffs; and 5) he is not in possession of any property that RPG or TWC provided to him during his employment.

Downs affirms, inter alia, that 1) during his brief employment by Plaintiffs, he was never subject to any confidentiality or restrictive employment covenant; 2) he never solicited any employee to cease working for Plaintiffs; 3) he does not possess any property or confidential or proprietary information belonging to Plaintiffs; 4) he was never involved in the preparation or submission of POs; 5) in March of 2010, he received an e-mail advising him that Vlado decided to reduce drastically the staff working on Clearwire Projects; 6) he spoke with Brown only once after he stopped working for Plaintiffs, regarding a matter unrelated to business; 7) he learned that a stop payment order had been issued as to his April 30, 2010 paycheck from Plaintiffs, and Plaintiffs owed him approximately $4,500 in unpaid salary and unreimbursed expenses; and8) he does not possess any property or information belonging to Plaintiffs, as he previously returned to Plaintiffs all tools and equipment that were in his possession. [*7]

Plaintiffs submit that it has demonstrated its right to injunctive relief by demonstrating1) its likelihood of success on the merits by establishing, inter alia, a) Brown's securing work for a new company after he orally accepted RPG's offer to remain employed by that entity,b) Brown and Johnson's involvement in persuading RPG crew members to abandon work on an RPG Project and inducing RPG employees to leave RPG and join Brown's new company, and 2) irreparable harm to Plaintiff without injunctive relief because of the danger of RPG losing the balance of its work from Clearwire.

Defendants oppose Plaintiffs' application, submitting that the documentation before the Court establishes that 1) the Defendants were not subject to restrictive covenants in connection with their employment by Plaintiffs; 2) Brown and Johnson had a prior relationship with Maxton, the company for which they worked after leaving Plaintiffs; 3) Plaintiffs have provided no credible proof of their allegation that Brown, Johnson or Downs actively solicited current employees of Plaintiffs to terminate their employment relationships with Plaintiffs; 4) Plaintiffs have not provided proof that Brown, Johnson and Down have proprietary materials or property of Plaintiffs that they are using for their own benefit; and 5) even if Plaintiffs have proprietary materials of Plaintiffs, it is unlikely that these materials qualify as trade secrets in light of Brown, Johnson and Downs' extensive knowledge regarding the workings of the wireless communications servicing and construction industry. Thus, Plaintiffs have not demonstrated a likelihood of success on the merits.

Defendants also submit that Plaintiffs have not demonstrated irreparable harm without injunctive relief, noting that Plaintiffs have provided no support for their claims that their reputation with Clearwire has been adversely affected by Defendants' alleged conduct, or that Plaintiffs are in danger of losing the balance of their work for Clearwire. Defendants make reference to 1) a press release issued by Juniper on May 19, 2010 (Ex. 6 to Sheridan Aff.), titled "Juniper Group Announces New Contract with Industry Leader," which discusses the award of a substantial contract for tower modifications to a subsidiary of Juniper, and 2) a press release dated May 14, 2010 (Ex. 7 to Sheridan Aff.) titled "Juniper Group Rebuilding Continues; Company Closes in on $1 Million in Quarterly Revenues," which states that Juniper reported nearly $1 million in revenue for the first quarter of 2010. In the latter press release, Vlado is quoted as saying that "We will do everything in our power to build on the positive trends which started in late 2009 and which we expect will continue throughout the remainder of 2010." In light of the foregoing, even assuming that Plaintiffs have submitted evidence of harm, they have failed to establish that the harm suffered is not compensable by money damages.

Finally, Defendants submit that the equities weigh in favor of Brown, Johnson and Downs because the proposed injunctive relief would interfere with their ability to earn a living.

Defendants also submit that Plaintiffs have not provided support for their request that they be permitted immediately to conduct the depositions of Brown and Johnson. Defendants contend that Plaintiffs should be bound by the requirements of the CPLR regarding notice and priority of depositions.

A preliminary injunction is a drastic remedy and will only be granted if the movant establishes a clear right to it under the law and upon the relevant facts set forth in the moving papers. William M. Blake Agency, Inc. v. Leon, 283 AD2d 423, 424 (2d Dept. 2001); Peterson v. [*8]Corbin, 275 AD2d 35, 36 (2d Dept. 2000). Injunctive relief will lie where a movant demonstrates a likelihood of success on the merits, a danger of irreparable harm unless the injunction is granted and a balance of the equities in his or her favor. Aetna Ins. Co. v. Capasso, 75 NY2d 860 (1990); W.T. Grant Co. v. Srogi, 52 NY2d 496, 517 (1981); Merscorp, Inc. v. Romaine, 295 AD2d 431 (2d Dept. 2002); Neos v. Lacey, 291 AD2d 434 (2d Dept. 2002). The decision whether to grant a preliminary injunction rests in the sound discretion of the Supreme Court. Doe v. Axelrod, 73 NY2d 748, 750 (1988); Automated Waste Disposal, Inc. v. Mid-Hudson Waste, Inc., 50 AD3d 1073 (2d Dept. 2008); City of Long Beach v. Sterling American Capital, LLC, 40 AD3d 902, 903 (2d Dept. 2007); Ruiz v. Meloney, 26 AD3d 485 (2d Dept. 2006).

A plaintiff has not suffered irreparable harm warranting injunctive relief where its alleged injuries are compensable by money damages. See White Bay Enterprises v. Newsday, 258 AD2d 520 (2d Dept. 1999) (lower court's order granting preliminary injunction reversed where record demonstrated that alleged injuries compensable by money damages); Schrager v. Klein, 267 AD2d 296 (2d Dept. 1999) (lower court's order granting preliminaryinjunction reversed where record failed to demonstrate likelihood of success on merits or that injuries were not compensable by money damages).

First, it is well settled that, absent an agreement establishing a fixed duration, an employment relationship is presumed to be a hiring at will, terminable at any time by either party, for any reason or even for no reason. DeSimone v. Supertek, Inc., 308 AD2d 501 (2d Dept. 2003), citing, inter alia, Lobosco v. New York Tel. Co./NYNEX, 96 NY2d 312, 316 (2001).

Second, even when there is a restrictive covenant, where the employer's past or prospective customers' names are readily ascertainable from sources outside its business, trade secret protection will not attach and their solicitation by the employee will not be enjoined. H & R Recruiters, Inc. v. Kirkpatrick, 243 AD2d 680, 681 (2d Dept. 1997). A trade secret is any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to gain an advantage over competitors who do not know or use it. Ashland Mgt. v. Janian, 82 NY2d 395, 407 (1993), citing Restatement of Torts Section 757, comment b. In deciding a trade secret claim, the court should consider the following factors:1) the extent to which the information is known outside of the business, 2) the extent to which it is known by employees and others involved in the business, 3) the extent of measures [*9]taken by the business to guard the secrecy of the information, 4) the value of the information to the business and its competitors, 5) the amount of effort or money expended by the business in developing the information, 6) the ease or difficulty with which the information could be properly acquired or duplicated by others. Id.

In light of, inter alia, 1) the absence of any non-compete or restrictive employment agreement between Plaintiff and any of the Defendants, 2) the factual disputes regarding the circumstances under which Plaintiffs' work force for Clearwire Projects was reduced, and documentary evidence suggesting that Vlado proposed and implemented that work force reduction, 3) the numerous affirmations by Defendants regarding the reasons for their departure from Plaintiffs, including concerns about salary and newly-implemented requirements that employees execute restrictive employment agreements, 4) the absence of an affidavit from any employee of Plaintiffs attesting to improper solicitation by Defendants, 5) the press releases submitted by Defendants reflecting Plaintiffs' financial viability, and 6) Plaintiffs' failure to demonstrate Defendants' improper possession of proprietary information of Plaintiffs, particularly in light of Defendants' extensive experience in the cellular communications field which provided Defendants with access to relevant information from sources other than Plaintiffs, the Court concludes that Plaintiffs have not demonstrated their right to the requested injunctive relief.

Accordingly, the Court denies Plaintiffs' Order to Show Cause, except that the Court directs all Defendants to return to Plaintiffs any items in their possession, including but not limited to computers, telephones, Blackberries, and tools, provided by or received from RPG and TWC in the course of their employment at RPG and TWC, within thirty (30) days of this Decision. The Court vacates the TRO. The Court also denies Plaintiffs' application for the immediate depositions of Defendants Brown and Johnson.

The Court reminds counsel for the parties of their required appearance before the Court on July 16, 2010 at 9:30 a.m.