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PERIPHERAL DYNAMICS v. JOSEPH S. HOLDSWORTH AND TRUE DATA (04/13/78)

decided: April 13, 1978.

PERIPHERAL DYNAMICS, INC., APPELLANT,
v.
JOSEPH S. HOLDSWORTH AND TRUE DATA, INC.



COUNSEL

Andrew B. Cantor, Norristown, with him Alan B. Rubenstein, Philadelphia, for appellant.

Abraham A. Hobson, III, King of Prussia, submitted a brief for appellee, Joseph S. Holdsworth.

Brian E. Appel, Philadelphia, for appellee, True Data, Inc.

Watkins, President Judge, and Jacobs, Hoffman, Cercone, Price, Van der Voort and Spaeth, JJ. Spaeth, J., files an opinion in support of affirmance in which Jacobs, P. J., joins. Hoffman, J., files a concurring opinion. Van der Voort, J., files an opinion in support of reversal in which Cercone and Price, JJ., join. Watkins, former President Judge, did not participate in the consideration or decision of this case.

Author: Per Curiam

[ 254 Pa. Super. Page 312]

The six Judges who heard this appeal being equally divided, the order is affirmed.

HOFFMAN, Judge, concurring:

Appellant contends that the lower court erroneously refused to grant a preliminary injunction enforcing a restrictive employment covenant between appellant and its employee, appellee.*fn1 I disagree and, therefore, would affirm the lower court.

The following facts were adduced at a hearing before the Court of Common Pleas of Montgomery County pursuant to appellant's request for a preliminary injunction. Appellant, Peripheral Dynamics Inc. (P.D.I.), a corporation located in Montgomery County, is in the business of designing, manufacturing, and selling computer peripheral equipment, specifically card readers, throughout the world. Although hundreds of companies manufacture and deal in other types of computer peripheral devices, appellant P.D.I. is one of the four companies that manufacture peripheral card readers. From August, 1973, until November, 1975, appellee, Joseph H. Holdsworth, served as national or international sales

[ 254 Pa. Super. Page 313]

    manager. In that capacity, Holdsworth used his expertise in card readers, marketing, and engineering, and travelled throughout the world in an effort to sell P.D.I's card readers. Specifically, Holdsworth's job took him throughout the United States, as well as to Europe and Japan.

In May, 1974, Holdsworth submitted his resignation to P.D.I., effective June 13, 1974, in order to accept a similar position with one of P.D.I.'s competitors, Documation, Inc. However, prior to the effective date of his resignation, Holdsworth changed his mind and informed P.D.I. that he would continue as its employee. P.D.I. agreed to retain Holdsworth as an employee, provided that he sign an agreement in which he promised to refrain from working for P.D.I.'s competitors. Holdsworth agreed and in a letter to P.D.I., dated June 7, 1974, he stated that he was withdrawing his resignation and desired to continue his employment with P.D.I. The letter also contained the following provisions:

5. For a period ending one year after the end of my employment with PDI, for any reason whatsoever, I shall not either directly or indirectly, as proprietor, partner, stockholder, director, agent, principal, agent, employee, consultant or lender, become associated with Documation, Inc., True Data, Inc., Oki Bridge Data Products, Inc., Mohawk Data Sciences, Inc., or any other person, firm corporation or other entity which manufactures, sells or otherwise deals in computer peripheral card readers.

6. In furtherance of, and without in any way limiting the restriction in paragraph 5 above, for the period specified in paragraph 5, I shall not directly or indirectly,

(a) request any customers of PDI to curtail or cancel their business with PDI;

(b) solicit, canvas or accept, or authorize any person or entity to solicit, canvas or accept, from customers or potential customers of PDI, any business for myself or for the companies specified in paragraph 5 or for any other person, firm, corporation or other entity which manufactures, sells or otherwise deals in peripheral card readers.

[ 254 Pa. Super. Page 314]

As used in this paragraph, "potential customer" shall mean possible customers with which PDI has had some business contact.

After signing the letter, Holdsworth continued to work for P.D.I. until November, 1975, when he gave the company notice that he would be leaving. In November, 1975, Holdsworth went to work for True Data, a competitor of P.D.I., in a job involving the sale of True Data card readers.

On January 20, 1976, P.D.I. filed a complaint in equity, requesting a preliminary injunction to enjoin Holdsworth from continuing his employment with True Data and to comply otherwise with the terms of the agreement contained in the letter of June 7, 1974. On January 26, 1976, the Court of Common Pleas of Montgomery County issued a rule to show cause why a preliminary injunction should not be issued and set a hearing for February 10, 1976. However, on February 10, 1976, after a brief discussion with counsel in chambers, the court refused to hold a hearing and denied P.D.I.'s request for a preliminary injunction. P.D.I. appealed to our Court from this order. On April 10, 1976, pursuant to a stipulation among the parties, our Court vacated the lower court's order and remanded the case to the Court of Common Pleas of Montgomery County and directed a prompt hearing on P.D.I.'s request for a preliminary injunction.

The lower court held hearings on May 13, May 14, and June 9, 1976. At the close of appellant's case, appellees moved to dismiss appellant's request for a preliminary injunction, stating that the motion was in the nature of a demurrer. Appellees maintained that P.D.I. had not met its burden of establishing a restrictive covenant with a geographic limitation and of showing that the covenant, as written, was reasonably related to protecting P.D.I.'s interest. Moreover, appellees urged that the extensive enforcement P.D.I. sought would work a severe hardship on appellee ...


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