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Cunningham Lindsey U.S., Inc. v. Bonnani

United States District Court, Third Circuit

November 19, 2013

CUNNINGHAM LINDSEY U.S., INC. and CL ACQUISITIONS HOLDINGS LIMITED, Plaintiffs,
v.
PAT BONNANI, DALE FOHL, and VERICLAIM, INC., Defendants.

MEMORANDUM

CHRISTOPHER C. CONNER, Chief District Judge.

Presently pending before the court is the motion (Doc. 5) for preliminary injunctive relief filed by Cunningham Lindsey U.S., Inc., and CL Acquisition Holdings Limited (collectively "Cunningham Lindsey") on October 8, 2013. For the reasons that follow, the court will deny Cunningham Lindsey's motion.

I. Background

Cunningham Lindsey commenced this matter with the filing of a ten-count complaint (Doc. 1) on October 8, 2013. Cunningham Lindsey alleges that two of its former employees, Pat Bonanni ("Bonanni") and Dale Fohl ("Fohl"), together with officers of Vericlaim, Inc., ("Vericlaim"), implemented a scheme designed to eliminate Cunningham Lindsey's regional presence by orchestrating a mass exodus of all Cunningham Lindsey employees at its Camp Hill, Pennsylvania, office during the late summer of 2013. (See Doc. 1 at ¶ 2). Specifically, Cunningham Lindsey asserts the following claims: breach of contractual confidentiality and non-solicitation covenants against Bonanni and Fohl (Count I); breach of fiduciary duty against Bonanni and Fohl (Count II); aiding and abetting breach of fiduciary duty against Bonanni, Fohl, and Vericlaim (Count III); misappropriation and/or misuse of trade secrets and confidential information in violation of the Pennsylvania Unfair Trade Secrets Act, 12 Pa. Cons. Stat. § 5301 et seq., against Bonanni, Fohl, and Vericlaim (Count IV); tortious interference with existing/prospective contractual and business relationships against Bonanni, Fohl, and Vericlaim (Count V); civil conspiracy against Bonanni, Fohl, and Vericlaim (Count VI); unfair competition against Bonanni, Fohl, and Vericlaim (Count VII); unjust enrichment against Bonanni, Fohl, and Vericlaim (Count VIII); violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, against Bonanni and Fohl (Count IX); and breach of contract for failure to pay for preference shares of CL Holdings against Fohl (Count X).

Contemporaneously with the complaint, Cunningham Lindsey filed the presently pending motion for preliminary injunctive relief (Doc. 5) and supporting documents (Docs. 6-9), asking the court to enjoin the defendants from virtually all direct and indirect competition with Cunningham Lindsey pending final resolution of this litigation. The parties fully briefed the motion (Docs. 9, 39, 44), and the court held a preliminary injunction hearing on October 31, 2013, taking evidence in the form of documentary exhibits and witness testimony. Consistent with the court's oral directive at the close of the hearing, both parties have filed proposed findings of fact and conclusions of law (Docs. 54-55) and jointly submitted relevant exhibits and deposition transcripts. (Doc. 56). With briefing concluded and the record now closed, this matter is ripe for disposition.

II. Findings of Fact[1]

Cunningham Lindsey and Vericlaim are both in the business of claims adjustment and loss management for insurers and large self-insured clients. (Doc. 40 at ¶ 25). The parties do not dispute that Cunningham Lindsey and Vericlaim directly compete with one another in this highly competitive business. (Id.) In late 2010 or early 2011, Cunningham Lindsey acquired a company known as "GAB Robins, " an entity also engaged in the business of loss adjustment. (Tr. at 198:8-9, 199:2-6). Cunningham Lindsey offered employment to all GAB employees, including Bonanni and Fohl. (Tr. 94:18-24; 95:1-23; 130:1-10). Cunningham Lindsey delivered its offers of employment to Bonanni and Fohl by letter agreements with effective dates of January 1, 2011. (Ex. P-8, P-25). Each letter agreement contained the following non-solicitation provision:

While employed by Cunningham Lindsey, and for one year after termination of my employment for whatever reason, I will not directly or indirectly solicit or recruit, nor take any action to assist any other person to solicit or recruit for employment, any employee of Cunningham Lindsey. Such assistance includes, without limitation, identifying employees of Cunningham Lindsey who have special knowledge of the trade secrets and/or business of Cunningham Lindsey. Because damages for violation of this provision would be difficult to measure, the parties mutually agree that if I violate this provision, I will be liable for liquidated damages in an amount equal to the annual salary of any employee as to whom I am proven to have violated this paragraph.

(Ex. P-8 at 2, P-25 at 2). The letter agreements also contained confidentiality provisions, as follows:

At all times, both during and after termination of employment, I shall keep and retain in confidence and shall not disclose, except as required in the course of my employment with [Cunningham Lindsey], to any person, firm or corporation, or use for my own purposes, any Confidential Information. For purposes of this paragraph, such information shall include, but is not limited to, material, data, and information of [Cunningham Lindsey] and/or its customers or clients that is confidential, proprietary and/or a trade secret ("Confidential Information").

(Ex. P-8 at 2, P-25 at 2). Bonanni and Fohl executed their agreements on January 5 and 6, 2011, respectively. (Ex. P-8 at 2, P-25 at 2).

Fohl was eventually offered an opportunity to become a shareholder of CL Acquisition Holdings Limited ("CL Acquisitions"). On June 21, 2013, Fohl signed a Subscription Agreement providing that he would pay $50, 000 in exchange for 500 preference shares of CL Acquisitions. (Ex. P-21). In addition to the provisions governing confidentiality and non-solicitation of employees, Fohl's Subscription Agreement prohibited him from soliciting Cunningham Lindsey customers for a six month period following termination for any reason. (Id. at 6). Both Bonanni and Fohl were subject to the terms of Cunningham Lindsey's non-disclosure and confidentiality policy, which defined "confidential information" to include, inter alia, customer lists and preferences, financial information, compensation data, and salary information. (Ex. P-11). Fohl testified that while he disagreed with the definition of "confidential information, " he understood that Cunningham Lindsey viewed these items as confidential and agreed, as a condition of his employment, to comply with the policy. (Tr. at 289:18-291:2).

The parties do not dispute that on September 5, 2013, Bonanni, Fohl, and all Cunningham Lindsey employees working at the Camp Hill, Pennsylvania, office resigned simultaneously and without notice. (Tr. at 59:18-60:3). It is not the fact of the employees' mass resignation but rather the circumstances surrounding their decisions to leave that are at issue in this litigation. The following facts which pertain to that time period are relevant to the court's analysis.

On July 30, 2013, Bonanni, Fohl, and other Cunningham Lindsey employees met with Vericlaim's chief executive officer, Thomas Simoncic ("Simoncic") and discussed the potential recruitment of all employees at Cunningham Lindsey's Camp Hill office to Vericlaim. (Tr. at 188:21-196:17 (Bonanni); 298:10-305:14 (Fohl); 327:11-331:15 (Simoncic)). During that meeting, Bonanni, Fohl, or one of two other Cunningham Lindsey employees in attendance disclosed salary information of all employees then working at Cunningham Lindsey's Camp Hill office. (Tr. at 188:21-196:17 (Bonanni); 298:10-305:14 (Fohl); 327:11-331:15 (Simoncic)). After the meeting, Simoncic documented the substance of the conversation in an email to his Vericlaim colleagues. Therein, Simoncic advised that he met with Bonanni, Fohl, and other Cunningham Lindsey employees and indicated that Bonanni and Fohl "are interested in moving (at the right price) and bringing their remaining team with them, " noting that this recruitment would be "all or nothing." (Hr'g Ex. 46B at 2). Simoncic testified that these demands were made during the July 30, 2013 meeting (Tr. at 327:11-329:2); Bonanni ...


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