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NATIONAL BUS. SERVS. v. WRIGHT

April 21, 1998

NATIONAL BUSINESS SERVICES, INC., d/b/a ADVERTISING SPECIALTY INSTITUTE, Plaintiff,
v.
RONI S. WRIGHT, Defendant



The opinion of the court was delivered by: BRODY

MEMORANDUM AND ORDER

 Anita B. Brody, J.

 April 21, 1998

 Plaintiff seeks to enforce two restrictive covenants a non-compete agreement and a non-disclosure agreement entered into as part of an employment contract it made with defendant. Pursuant to the agreement of the parties, the trial of this action on the merits was consolidated with the preliminary injunction hearings held on April 7 and April 10, 1998. Fed. R. Civ. P. 65(a)(2). After thoroughly reviewing the evidence presented and the relevant law, I make the following findings of fact and conclusions of law. I shall grant plaintiff's request to enforce the restrictive covenants against defendant.

 I. Facts

 Plaintiff National Business Services ("NBS") d/b/a Advertising Specialty Institute ("ASI"), is a Pennsylvania corporation, with its principal place of business in Langhorne, Pennsylvania. ASI sells information products and services in print and electronic form to the advertising specialty and promotional product industry. ASI markets its products throughout the United States. Its customers include both suppliers and distributors of advertising products.

 Defendant Roni S. Wright ("Wright") is an individual citizen of the State of Florida, who resides in Crystal Beach, Florida. For the past thirteen years, Wright has worked in the advertising specialty industry. Wright was an employee of ASI from July 31, 1995 to March 17, 1998 (Ex. P-3; P-12; P-13). *fn1"

 The advertising specialty industry, also known as the promotional products industry, revolves around suppliers, who place slogans and insignias on merchandise, and distributors, who purchase products from suppliers, and sell them to consumers. (Cohn, p. 6; Klein, p. 218). There are approximately 1500 suppliers in the advertising specialty industry in the United States. (Hughes, p. 169). There are over 15,000 distributors in the United States that sell specialty products. (Hughes, p. 169). Two principal companies provide sales, marketing, and information services to suppliers and distributors in the advertising specialty industry: ASI and Impact. (Cohn, p. 12; Klein, p. 218).

 Impact, like ASI, sells information products and services in print and electronic form to the advertising specialty and promotional product industry. Impact and ASI have a history of aggressive competition: they produce and market similar products and serve the same customers. (Klein, pp. 218-20). *fn2"

 Wright was an employee of Impact Group ("Impact") for ten years prior to joining ASI, from 1985 to 1995. (Klein, p. 229). Wright worked her way up from selling catalogs to the position of Acting Vice President of Impact. (Wright, pp. 120-21). However, Peter Klein ("Klein"), the Chairman of Impact, told Wright that he would not make her a permanent Vice President, and demoted her from the position of Acting Vice President, because, although Wright is Jewish, she did not possess what he called the "Jew gene." Wright understood this comment to mean that Klein did not believe she was "management material." (Wright, pp. 74-75). During the time Wright worked for Impact, she worked only with print, not electronic, materials. (Wright, p. 76). When Wright left Impact, in early 1995, she did not have another job in the advertising specialty industry. (Wright, p. 76).

 Wright first discussed employment at ASI in May 1995 with the Chairman of the Board of ASI, Norman Cohn ("Cohn"). (Wright, pp. 79-80, 126-27; Cohn, pp. 15-17). Cohn emphasized to Wright that ASI could only offer her a job if she signed a non-compete agreement. (Cohn, p. 17). Wright understood that every ASI employee must sign a non-compete agreement. (Wright, p. 80). Wright agreed to sign the non-compete agreement and emphasized that she would never return to work for Impact. (Wright, p. 83).

 After discussing employment at ASI with Cohn, Wright traveled to ASI in Langhorne, Pennsylvania to further interview for a position at ASI. Wright was hired by ASI to launch a new Internet product, Promomart, to distributors. Wright had no prior Internet experience when she began working at ASI. (Wright p. 77; Lovell, p. 198).

 On August 1, 1995, Wright's second day of work for ASI, she signed an employment terms letter, which specified the compensation and benefits of her employment. (Ex. P-3; Wright, p. 129). Wright believed that the employment terms letter was the non-compete agreement that she and Cohn had discussed. (Wright, p. 86). The employment terms letter did not contain a non-competition or non-disclosure clause, but did expressly state that employee must sign the "NBS Covenant Agreement" and the "NBS Employee Agreement", in order to receive a "NBS Employee Manual." (Ex. P-3; Wright, p. 85).

 On August 8, 1995, Eli Lawrence, an in-house lawyer for ASI, called Wright and told her that he was sending her a document by express mail to which she should pay "very close attention," and which she should sign and return right away. (Wright, pp. 89-90).

 On August 9, 1995, Wright received a document entitled "Agreement." (Wright, pp. 90-91; Ex. P-1, P-3).

 The Agreement included the following covenants:

 
2.3 NONCOMPETITION. During the term of Employee's employment with NBS and for a period of 12 months thereafter, Employee shall not, except with NBS's express prior written consent, or except in the proper course of his employment with NBS, directly or indirectly, in any capacity, for the benefit of any Person:
 
2.3.1 Solicit, interfere with or divert any Person who is or during such period becomes a customer, supplier, employee, salesman, agent or representative of NBS, in connection with any business in competition with NBS.
 
2.3.2 Establish, engage, own, manage, operate, join or control, or participate in the establishment, ownership, management, operation or control or be a director, officer, employee, salesman, agent or representative of, or be a consultant to, any Person in any business in competition with NBS in any state where NBS now conducts or during such period begins conducting any material business.
 
2.3.3 Solicit, divert or induce any of NBS' employees to leave or to work for any person with which employee is connected.
 
2.2 NONDISCLOSURE. At all times during and after the term of Employee's employment with NBS, Employee shall not, except with NBS's express prior written consent, or except in the proper course of his employment with NBS, directly or indirectly, communicate, disclose or divulge to any Person, or use for his own benefit or the benefit of any Person, any confidential or proprietary knowledge or information, no matter when or how acquired, concerning the conduct and details of NBS's business including, without limitation, particular methods of operation, technical information, trade secrets, and confidential plans, practices and information relating to NBS's products, services, marketing and customers.

 The Agreement also contained a provision that made every idea Wright had about ASI's business during her employment the exclusive property of ASI (Ex. P-1, P2.1), a provision requiring Wright to return all ASI property on the termination of her employment (Ex. P-1, P2.4), as well as a provision that, in the event of a breach, ASI would be irreparably harmed and entitled to injunctive relief (Ex. P-1, P2.5).

 Wright signed the Agreement without reading it carefully. (Wright, pp. 90-91, 128). Wright signed the Agreement below the following statement: "Having read and understood this Agreement, the parties enter into and agree to the terms contained herein of their own free will and accord." (Ex. P-1). Wright realized that the agreement was something she needed to sign "for [her] employment." (Wright, p. 90). When Wright signed the agreement, on August 9, 1995, she had been an ASI employee for 10 days. (Wright, p. 130). The agreement read in part: "In consideration of Employee's promises and covenants contained herein, NBS [] agrees to hire employee." (Ex. P-3, § 1).

 The employment terms letter signed by Wright on August 1, 1995 required a countersignature by a Senior Vice President of ASI. (Ex. P-3). The Senior Vice President did not sign Wright's employment terms letter until August 9, 1995, when Wright signed the Agreement sent to her by Lawrence ...


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