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Pulse Technologies, Inc. v. Notaro

Supreme Court of Pennsylvania

May 29, 2013

PULSE TECHNOLOGIES, INC., Appellant
v.
PETER NOTARO AND MK PRECISION LLC, Appellees

ARGUED: September 12, 2012

Appeal from the order of the Superior Court at No. 2424 EDA 2010 dated 5/23/2011, reconsideration denied 7/26/2011, which reversed, vacated, and remanded the order of the Bucks County Court of Common Pleas, Criminal Division, at No. 2010-02706-36-5 dated 7/29/2010.

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.

OPINION

MR. EAKIN JUSTICE

We granted allocatur to determine whether the Superior Court erred by declining to validate a restrictive covenant contained in an employment agreement, solely because the restrictive covenant was not expressly referenced in an initial offer letter which conditioned employment on the execution of the employment agreement. Upon concluding the Superior Court did not properly characterize the offer letter, we vacate and remand for further proceedings.

In 2005, Pulse Technologies, Inc. had an opening for an experienced Swiss Screw engineer (a machinist with special expertise in operating metalworking machines for the manufacture of high-precision components). Pulse hired MSK East, a national search firm specializing in recruiting technical and professional individuals for the Swiss Screw machine industry. MSK East identified Peter Notaro as a candidate for the Pulse position.

After a preliminary telephone interview, Pulse invited Notaro to its facility for a tour and an in-depth interview. On July 25, 2005, following two interviews, Joseph C. Rosato, Jr., President of Pulse, sent Notaro a two-and-one-half-page formal offer of employment letter, which contained a "summary" of Notaro's "intended position with [Pulse]." Offer Letter of Joseph C. Rosato Jr., President of Pulse, to Peter Notaro (Offer Letter), 7/25/05, at 1. The letter set forth a description of the position, responsibilities, location, base salary, benefits, effective date, and confidentiality. The letter also stated: "You will also be asked to sign our employment/confidentiality agreement. We will not be able to employ you if you fail to do so, " and "[i]n addition, the first day of employment you will be required to sign an Employment Agreement with definitive terms and conditions outlining the offer terms and conditions contained herein." Id., at 2, 3. The letter did not mention a restrictive covenant.

Notaro signed the letter as instructed, and sent it back to Pulse. Consistent with the offer letter, on the start date, August 15, 2005, Notaro was asked to sign an employment/confidentiality agreement, which contained a non-competition restrictive covenant. Notaro read and understood the non-competition covenant; he "did not voice any objection to his recruiter, human resources, or anyone else at Pulse." Trial Court Opinion, 11/17/10, at 6, 11. "Prior to this point, Notaro was not performing any work, nor was he receiving any benefits." Id., at 6.

In January, 2010, still employed at Pulse, Notaro learned of a position available at MK Precision, LLC, a competitor of Pulse. "Prior to his offer of employment with MK Precision, Notaro informed [MK Precision] of his non-compete. Based on MK Precision's promise to indemnify Notaro from all legal fees associated with the instant litigation, Notaro accepted [MK Precision's] offer." Id., at 7 (citations to record omitted). In February, 2010, Notaro resigned from Pulse. After several meetings with Pulse's human resources personnel, Notaro informed Pulse he would not take the job at MK Precision but would still resign from Pulse. In fact, Notaro accepted the position with MK Precision as general manager of Swiss Screw products, the same work he performed at Pulse. This litigation followed, in which Pulse sought a preliminary injunction enjoining MK Precision from employing Notaro.

The trial court granted Pulse's injunction. The Superior Court vacated the injunction and remanded for further proceedings. Applying the standard of review for preliminary injunctions, the Superior Court noted the trial court order lacked a bond requirement and addressed only four of the six prerequisites for the issuance of a preliminary injunction, as set forth in Summit Towne Centre, Inc., v. Shoe Show of Rocky Mount, Inc., 828 A.2d 995, 1001 (Pa. 2003). The Superior Court concluded the trial court erred in granting the relief, and remanded; it gave "only a brief outline of our additional reasons for reversal, reserving further discussion until appeal, should there be one, from final judgment or decree in law or equity." Pulse Technologies, Inc. v. Notaro, No. 2424 EDA 2010, unpublished memorandum at 12 (Pa. Super. filed May 23, 2011). Regarding the additional reasons for reversal, the Superior Court stated:

Most obviously, the restrictive covenant Pulse sought to impose on Notaro after he had commenced employment is precluded by the express limitation in the formal offer letter that the employment agreement to be signed on the first day of employment would only "outline[ ] the offer terms and conditions contained herein."

Id. (emphasis in original).

We disagree. First, the Superior Court's paraphrasing of the relevant language is misleading. The actual clause reads: "In addition, the first day of employment you will be required to sign an Employment Agreement with definitive terms and conditions outlining the offer terms and conditions contained herein." Offer Letter, at 3. The Superior Court added the word "only, " and disregarded the statement that the employment agreement would contain the "definitive terms and conditions" of the agreement.

Second, a review of the offer letter reveals it was part of the hiring process, and was not the employment contract. In George W. Kistler, Inc. v. O'Brien, 347 A.2d 311 (Pa. 1975), this Court held:

Under the law of this Commonwealth it has been held that even where a later formal document is contemplated, parties may bind themselves contractually prior to the execution of the written document through mutual manifestations of assent. Thus evidence of mutual assent to employ and be employed which contains all the elements of a contract may be construed as a binding contract of employment though not reduced to writing.

Id., at 315 (internal citations omitted). Under this authority, it is clear the offer letter was not intended as nor sufficient to ...


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