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Paul v. ImpactOffice LLC

United States District Court, D. Maryland

June 6, 2017

ROBERT PAUL, Plaintiff,
v.
IMPACTOFFICE LLC, Defendant.

          MEMORANDUM OPINION

          THEODORE D. CHUANG, Judge

         On July 26, 2016, Robert Paul filed a civil action against his former employer, ImpactOffice LLC ("Impact" or "the Company") seeking a declaratory judgment that he may work for W.B. Mason Company, Inc. ("W.B. Mason") without any restrictions and that the restrictive covenants in any employment agreement he has with Impact are unenforceable as a matter of public policy. On August 29, 2016, Impact filed an Answer and Counterclaim alleging that Paul breached the restrictive covenants in his employment agreement with Impact. Pending before the Court is Paul's Motion for Judgment on the Pleadings and to Dismiss the Counterclaim. For the reasons set forth below, the Motion is granted.

         BACKGROUND

         Impact is a supplier of office products, office furniture, printing services, and related goods and services. Impact's service area centers on the Baltimore, Maryland and Washington, D.C. metropolitan areas but includes other localities. Impact has approximately 140 employees, 26 of whom are sales representatives, and it generated approximately $60 million in sales in 2015. Impact alleges that its business is dependent on several important factors, including its sales representatives' personal relationships with customers.

         Paul worked as a sales representative for Impact, a various times, in the Baltimore, Washington, D.C., Philadelphia, and New York City metropolitan areas between 2008 and 2016. In the year prior to Paul's departure, his customers were responsible for approximately $2.2 million of Impact's sales revenue.

         While working at Impact, Paul signed a Proprietary and Non-Solicitation Agreement ("the Agreement") that includes post-employment restrictions relating to potential competition with Impact or its "Affiliates." Under the Agreement, Impact's Affiliates consist of:

         ImpactOffice Group, LLC; Impact Office Products, LLC; George W. Allen Co.; N.B.A.; and Councell Computer Products. The Agreement contains a customer non-solicitation provision, under which the employee is not permitted to:

Solicit or accept, directly or indirectly, the business of any customer or prospective customer of the Company, or its Affiliates, for the purpose of selling or distributing office products or services sold by the Company, or its Affiliates, within 6 months of the date of the cessation of the Employee's employment with the Company.

Agreement ¶ 2.2, Compl. Ex. A, ECF No. 1-1. "Customer" is defined as:

any person or business to whom the Company, or its Affiliates, sold products or rendered services during the last 12 months Employee was employed by the Company and any person or business to or for which the Company, or its Affiliates, submitted or presented, or was in the process of submitting or presenting a bid, quote, proposal or agreement relating to the sales of any products or services, within the 12 month period immediately prior to the date on which Employee's employment with the Company terminated.

Id.

         The Agreement also includes a non-competition provision, which applies only if the employee voluntarily leaves Impact. The provision states that a former employee may not:

Become employed by a competitor ... of the Company or its affiliates, located within a radius of ninety miles from any location of the Company or its Affiliates, within 6 months of the date of the cessation of the Employee's employment with the Company.

Id. at ¶ 2.3. "Competitor" is defined as companies that "sell office supplies, coffee & breakroom supplies, computer supplies, office furniture, printer maintenance repair and service, and any other products and services sold by the Company or its Affiliates." Id.

         The Agreement contains two other provisions relevant to the resolution of the Motion: a choice-of-law clause and a severability clause. The former states that the Agreement "shall be governed by and construed and enforced in accordance with the laws of the State of Maryland." Id. at ¶ 5.4. The latter provides that:

         The Employee agrees that to the extent that any provision or portion of this Agreement shall be held, found or deemed to be unlawful or unenforceable by a court of competent jurisdiction, then any such provision or portion shall be deemed to be modified to the extent necessary in order that any such provision or portion shall be legally enforceable to the fullest extent permitted by applicable law; and the Employee does further agree that any court of competent jurisdiction shall, and the Employee does hereby expressly authorize, request and empower any court of competent jurisdiction to, enforce any such provision or portion in order that any such provision or portion shall be enforced by such court to the fullest extent permitted by applicable law.

Id. at ¶ 41.

         Paul is now employed by W.B. Mason, which also sells office supplies, office furniture, and related goods and services. Impact alleges that W.B. Mason is its direct competitor in Maryland and the Washington, D.C. metropolitan area and that Paul's new office is located within 90 miles of an Impact office. Impact also claims that Paul breached the Agreement by "knowingly connecting with and soliciting Impact's customers through Linkedln in the days following his resignation." Countercl. ¶ 44.

         DISCUSSION

         In his Motion for Judgment on the Pleadings, Paul argues that the restrictive covenants within his employment agreement with Impact are unenforceable because they are facially overbroad, such that he is entitled to a judgment as a matter of law. Specifically, Paul asserts that the non-competition provision is overbroad as written because the term "competitor" is defined too broadly and the geographic restriction and scope of proscribed activity are both unreasonable. He argues that the non-solicitation provision's prohibition on soliciting or even merely accepting business from any customers or prospective customers of Impact or its Affiliates, including those with whom he had no contact while employed by Impact and those who did not purchase any products from Impact, renders that covenant overbroad. Moreover, Paul contends that the Court cannot make these provisions enforceable by narrowing their scope through the use of "blue penciling" or the application of the severability provision in the Agreement.

         I. ...


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