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Bindagraphics, Inc. v. Fox Group, Inc.

United States District Court, D. Maryland

March 27, 2019

BINDAGRAPHICS, INC.,
v.
FOX GROUP, INC., And ERIC RODGERS

          MEMORANDUM

          Catherine C. Blake United States District Judge.

         This employment contract dispute arises out of Eric Rodgers's decision to leave his job as a Sales Representative in the plaintiffs trade binding division and to take a position with Fox Group, Inc., a company similarly engaged in commercial bindery services. Count I alleges breach of contract and is brought against Mr. Rodgers alone. Count II, brought against Fox Group, Inc., alleges tortious interference with contractual relations. Count in, levied against both defendants, alleges misappropriation of trade secrets. Both defendants have moved for dismissal as a matter of law. (Fox Group, Inc. Mot. Dismiss, ECF No. 11; Rodgers's Mot. Dismiss, ECF No. 13.) The briefing is complete. The motions to dismiss will be granted. The plaintiffs noncompete contract claim will be dismissed with prejudice; all other claims will be dismissed without prejudice. The plaintiff, who asks to amend its tort claim if held to be insufficiently pleaded, may do so. Similarly, it may seek to amend its complaint to provide specific facts pertaining to the confidential information or trade secrets allegedly taken and/or misused. If the plaintiff decides to file an amended complaint, it may plead facts, if any exist, relevant to whether Mr. Rodgers was the sole sales representative in the sales territory or the extent of his contact with customers in the sales territory.

         BACKGROUND

         Mr. Rodgers took a sales position in Bindagraphics's trade binding division in November 2013. Compl. ¶ 6. This was a customer-facing position within a specific geographic region called "Eric's Territory," constituted of forty-six customers roughly located in the geographic triangle between New York, NY; Harrisburg, PA; and Wilmington, DE. Compl. ¶ 11; Compl. Ex. 4. Mr. Rodgers was provided confidential customer lists and other proprietary information. Compl. ¶ 9. Upon joining Bindagraphics, Mr. Rodgers signed an employment contract, which, as relevant here, included a non-solicitation clause, a covenant not to compete, and a provision pertaining to trade secrets and confidential information. The precise language of these promises bears directly on the merits inquiry to follow. Therefore, the relevant sections are set forth here in full:

5. Covenants Against Competition. The Employee acknowledges that his employment with Employer will, of necessity, provide him with specialized knowledge and customer contacts, which, if used in competition with Employer, could cause serious harm to Employer. Accordingly, Employee hereby expressly covenants and agrees that during the term of this Agreement, and for a period of one (1) year immediately following the date on which he is no longer, an Employee of Employer, he will not, directly or indirectly, for himself, or on behalf of any other person, corporation or other entity (except Employer):
a. Call upon or otherwise contact any Customer of Employer for the purpose of soliciting the purchase by, or selling to, any such Customer, trade binding, folding and/or finishing services, or other products or services identical or similar to the products or services now or hereafter sold by Employer through its trade binding division; or make sales, or assist in making sales, of any of the aforementioned services or products to any such Customer; or receive or process orders, expedite production, resolve problems or otherwise service any such Customer in connection with such Customer's purchase of any of the aforementioned service or products. For purposes of this Paragraph 5, a "Customer" of Employer shall mean any person, corporation, governmental body or department or other entity located in the Sales Territory to which Employer, through its trade binding division, has rendered services or sold products at any time within the twelve (12) month period immediately preceding the date of the termination of Employee's employment with the Employer, or the date of the call, contact or sale by Employee if such call, contact or sale takes place prior to termination of Employee's employment with the Employer.
b. Call upon or otherwise contact any Prospective Customer of Employer for the purpose of soliciting the purchase by, or selling to, any such Prospective Customer, trade binding, folding and/or finishing services, or other products or services, identical or similar to the products or services now or hereafter sold by Employer; or make sales or assist in making sales, of any of the aforementioned services or products to any such Prospective Customer; or receive or process orders, expedite production, resolve problems or otherwise service any such Prospective Customer in connection with such Prospective Customer's purchase of any of the aforementioned products or services. For purposes of this Paragraph 5, a "Prospective Customer" of Employer shall mean any person, corporation, governmental body or department or other entity located in the Sales Territory, that is called upon or otherwise contacted, or to which a bid or proposal is submitted, by Employer or Employee, for the purpose of soliciting the purchase by, or selling to, such person, corporation, governmental body or department or other entity any products or services, at any time within the twelve (12) month period immediately preceding the date of the termination of Employee's employment with Employer.
d. Render services to, promote or become employed by, any person, corporation or other entity which: (i) is engaged in the business of rendering, producing or selling trade binding, folding and/or finishing services, or other products or services identical or similar to any products or services now or hereafter rendered produced or sold by Employer through its trade binding division at any location within the Sales Territory; and (ii) sells such products, or renders such services, to any Customer or Prospective Customer of Employer at any time during which Employee is rendering services to, promoting or is employed by such person, corporation or other entity.
6. Trade Secrets Customer Lists etc. Employer has disclosed, and will disclose to Employee, various business methods, binder and folder manufacture and production processes, trade secrets, customer lists, supplier lists and other information which will benefit Employee and which, if used by or disclosed to Employer's competitors, would injure Employer and its business. Employee, therefore, covenants not to use, or to publish or disclose, or authorize anyone else to publish or disclose, to any person, corporate or other entity, other than to an authorized employee, officer or director of Employer, at any time subsequent to the signing of this Agreement, any information relating to Employer's business methods, manufacturing and production methods, finances, pricing, marketing methods, customer-lists, suppliers or supplier lists, or any other Confidential Information of Employer. All information regarding Employer's business, including information regarding customers, customer lists, suppliers, supplier lists, marketing or business plans, employees, wage and salary information, financial information, trade secrets, costs, prices, earnings, products, know-how, secret formula or processes, machinery and equipment and prospective and executed contracts, orders and other business arrangements, are presumed to be "Confidential Information" of Employer for purposes of this Agreement, except to the extent such information may be lawfully and readily available to the general public. Employee further agrees that he will, upon termination of his employment with Employer, return to Employer in good order and condition any and all books, records, lists and other written, typed or printed materials, and all computer discs, tapes, or other electronic information storage media whether furnished by Employer or prepared by Employee, which contain any information relating to Employer's business or customers, and Employee agrees that he will not retain any copies of any such materials after termination of his employment.

Compl. ¶¶ 14-15.

         The defendants mount several related arguments in favor of dismissal, chief among them the contention that this contract language is not enforceable as a matter of law. Fox Group, Inc. levies additional challenges, to the tort claim, asserting that damages have been insufficiently pled and the term "Sales Territory" is illusory. (Fox Group, Inc. P&A Mot. Dismiss at pp. 1-2, ECF No. 1 l-1.)[1] Mr. Rodgers argues that the plaintiff has failed to identify a protectable trade secret. (Mr. Rodgers P&A Mot. Dismiss at pp. 1-2, ECF No. 13-1.) The plaintiff has responded to these arguments (ECF No. 15) and the defendants have filed a consolidated reply. (ECF No. 17). This opinion disposes of the defendants' pending motions to dismiss.

         ANALYSIS

         I. Standard of Review

         When ruling on a motion under Rule 12(b)(6), the court must "accept the well-pled allegations of the complaint as true," and "construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff." Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). "Even though the requirements for pleading a proper complaint are substantially aimed at assuring that the defendant be given adequate notice of the nature of a claim being made against him, they also provide criteria for defining issues for trial and for early disposition of inappropriate complaints." Francis v. Giacomelli,588 F.3d 186, 192 (4th Cir. 2009). "The mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6)." Walters v. McMahen,684 F.3d 435, 439 (4th Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). To survive a motion to dismiss, the factual allegations of a complaint "must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic Corp. v. Twombly,550 U.S. 544, 555 (2007) (internal citations omitted). "To satisfy this standard, a plaintiff need not 'forecast' evidence sufficient to prove the elements of the claim. However, the complaint must allege sufficient facts to establish those ...


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