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HomeMy WebLinkAbout98-4329 equityPlaintiff Ve J. MICHAEL JOSEPH, AND INTEGRITY UNDERWRITERS, INC. Defendants IN THE' COURTr OF 'c'OMMON'PLEASr-O~'~ CUMBERED COUNTY, PENNSYLVg2qIA NO. 98-4329 EQUITY TERM IN RE: PT.~INTIFF'S MOTION FOR PRELIMINARY INJUNCTION BEFORE GUIDO, J. for a AND NOW, ORDER OF COURT this ~~~ day of SEPTEMBER.~ , Plaintiff's Preliminary Injunction is DENIED. By the Edward E. Guido, J. Joseph L. Hitchings, For the Plaintiff Esquire Richard B. Swartz, For the Defendants Esquire request :sld ...... INS. U~CE & SURETY., INC., Plaintiff .: .... I~_~H_~E_E_~OURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA : V. : J. MICHAEL JOSEPH, AND : NO. 98-4329 EQUITY TERM INTEGRITY UNDERWRITERS, INC. · Defendants : IN RE: PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION BEFORE GUIDO, J. OPINION AND ORDER OF COURT Plaintiff filed a complaint in this matter alleging, in~er · ' ' n " alia, that Defendant Joseph had misappropriated certal trage secrets" while he was employed by Plaintiff. Plaintiff has requested a preliminary injunction to prevent Defendants from contacting its customers pending final resolution of the lawsuit. A hearing on the preliminary injunction was held before this Court on September 8, 1998. Both parties have filed briefs. This matter is now ready for disposition. FINDINGS OF FACT Plaintiff is in the business of selling ~nsurance to 1) / businesses. 2) Defendant Joseph began working for Plaintiff in July of 1989. 3) The last position he held was that of a producer. His function was to develop new clients and to call on existing clients. 4) The information contained in a client's file would include the insurance contract, policy premium, expiration date, and NO. 98-4329 EQUITY TERM~-~' bac ~gro~nd 'i'n f'~t-~o-~-~--~-~-~i .... i~'t' ...... _ 5) Any information contained in a client file can be obtained directly from the client or from the Worker's Compensation Bureau.~ 6) Plaintiff purchased the "book of business" of the Beckley Detweiler Agency in May of 1986 for approximately $269,000.00.~ This represented two times the yearly commissions. 7) At least twice during the term of his employment, Defendant Joseph was asked to sign an employment contract that contained a covenant not compete. He refused to do so. 8) The covenant not to compete which Plaintiff had requested Defendant Joseph to sign would have allowed him to contact Plaintiff's clients after termination. However, he would have had to pay money damages for any business he took from Plaintiff during the non-compete term. 9) Defendant Joseph was fired in January of 1998. 10) Aside from the knowledge in his head, he did not take any information or documents with him. 11) Defendant Joseph has only contacted twelve to fourteen of the clients he serviced while in Plaintiff's employ. These are ~The Plaintiff's President indicated that the most significant information in the client file is the expiration date of the policy. However, we are satisfied that this information can be garnered from other sources, including the client and the Worker' s Compensation Bureau. 2Defendant Joseph was assigned to service some of these clients. NO. 98-4329 EQUITY TERM clients ~ith ~0m he had d~~0pe~-~-~~~-~-~~~~shiP' 12) The insurance business is very competitive and~ customers do not let everyone quote their business.~ DISCUSSION The standards for granting a preliminary injunction are extremely high. All-Pak, Inc. v. Johnston, 694 A.2d 347 (Pa. Super. Ct. 1997). This is because "a preliminary injunction is somewhat like a judgment and execution before trial." Herman v. Dixon, 393 Pa. 33, 36, 141A.2d 576, 577 (1958). It will not be granted unless the Defendant's conduct is manifestly actionable and the Plaintiff's right to relief is clear. Sin~zon v. Dept. of Public Welfare, 496 Pa. 8, 436 A.2d 125 (1981). In the case at bar we are far from convinced that Defendant's conduct is actionable or that the Plaintiff's right to relief is clear. Since there is no restrictive covenant involved, Plaintiff's right to relief hinges upon the question of whether or not the identity of its clients, and certain background information regarding their policies, may be protected as trade secrets. We recognize that there are certain circumstances in which customer lists might be protected as trade secrets. Morqan's Home Equip. Corp. v. Martucci, 390 Pa. 618, 136 A.2d 838 (1957). 3Plaintiff's President testified that the most important factor in getting business is to know the individual who makes the decisions in order to be able to get inside the door to make a quote. NO. 98-4 329 EQUITY TERM ~?~ H6~e~er~ .... ~-h-e~ ~-~h~~i-~~q-~--~h'a~ ..... e-q~u'i~ will not- p'~t~ct~'m'er~ names and addresses, or other knowledge gained through _ employment, unless it was gained through confidential sources. Sprin~ Steels, Inc. v. Mollo¥, 400 Pa. 354, 162 A.2d 370 (1960). Furthermore, the use of customer names retained solely by mental processes cannot be properly enjoined. Carl A. Colteryhan Dairy, Inc. v. Schneider Dairy, 415 Pa. 276, 203 A.2d 469 (1964). Finally, the Plaintiff would have no protectable interest in customers developed by Defendant during his employment. Fidelity Fund, Inc. v. DiSanto, 347 Pa. Super. 112, 500 A.2d 431 (1985). However, even if Defendant's conduct were clearly actionable, and Plaintiff's right to relief clear, a preliminary injunction would still be inappropriate. Our Supreme Court has stated on many occasions that such an injunction should not issue unless all of the following essential prerequisites are present: first, that it is necessary to prevent immediate and irreparable harm which could not be compensated by damages; second, that greater injury would result by refusing it than by granting it; and third, that it properly restores the parties to their status as it existed immediately prior to the alleged wrongful conduct. (emphasis added) (citations omitted) John G. Bryant Co. v. S linq Testinq and Repair, Inc., 471 Pa. 1, 7, 369 A.2d 1164, 1167 (1977). In the instant case, we are satisfied that Plaintiffs have failed to meet the very first prerequisite. The testimony clearly shows that any loss 4As noted above, we are satisfied that all information in the client files can be obtained from other sources. NO. 98-4329 EQUITY TERM ~-~~~ed' ~"~"~ainti f-~---~an' ~e~ '~mP~ns~~-d ..... ~-~~~~ ..... Pl-a~-nt iff~ ~'~ has specific clients it wishes to protect. If Defendants lure any of those particular clients away with actionable conduct, the clear measure of damages is the lost commissions,s For the above reasons, we must deny Plaintiff's request for a preliminary injunction. AND NOW, this ORDER day of SEPTEMBER, Plaintiff's request for a Preliminary Injunction is DENIED. By the Court, Joseph L. Hitchings, Esquire For the Plaintiff Richard B. Swartz, Esquire For the Defendants :sld /s/ Edward E. Guido Edward E. Guido, J. SThe testimony of Plaintiff's President is instructive on this point. He indicated that if Defendant had signed the employment contract with the restrictive covenant, he would not have been precluded from contacting the~-agency's clients upon termination. He would merely have had to pay money damages to the agency for any business he wrote for its clients during the non-compete period. Clearly, the Plaintiff feels that its damages can be quantified. We agree.