United States District Court, E.D. Pennsylvania
Decided: April 4, 2014.
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For OZBURN-HESSEY LOGISTICS, LLC, Plaintiff: BRIAN A. CASAL, LEAD ATTORNEY, ANDREW J. SHAPREN, MATTHEW FONTANA, BUCHANAN INGERSOLL & ROONEY PC, PHILADELPHIA, PA.
For 721 LOGISTICS, LLC, doing business as J & K FRESH EAST, LAWRENCE ANTONUCCI, EVAN MOSS, Defendants: STEVEN K. LUDWIG, LEAD ATTORNEY, ERIN FITZGERALD BENDER, FOX ROTHSCHILD LLP, PHILADELPHIA, PA.
For J & K FRESH, LLC, Defendant: BARBARA K. GOTTHELF, JOSHUA H. ROBERTS, MCCARTER & ENGLISH, PHILADELPHIA, PA.
For JOHN ANTONUCCI, JOHN ERCOLANI, WILLIAM FAGAN, HELENA MARTINS, MICHAEL MCLAUGHLIN, ANTOINETTE PANNEL, BARBARA ZIMMERMAN, MAURA MICELI, Defendants: STEVEN K. LUDWIG, LEAD ATTORNEY, FOX ROTHSCHILD LLP, PHILADELPHIA, PA.
For LYNNETTE KEFFER, RAYMOND KEFFER, Defendants: JOSHUA H. ROBERTS, MCCARTER & ENGLISH, PHILADELPHIA, PA.
For LAWRENCE ANTONUCCI, 721 LOGISTICS, LLC, EVAN MOSS, MICHAEL MCLAUGHLIN, JOHN ERCOLANI, LAWRENCE ANTONUCCI, JOHN ANTONUCCI, WILLIAM FAGAN, BARBARA ZIMMERMAN, MAURA MICELI, HELENA MARTINS, ANTOINETTE PANNEL, Counter Claimants: STEVEN K. LUDWIG, LEAD ATTORNEY, FOX ROTHSCHILD LLP, PHILADELPHIA, PA.
For OZBURN-HESSEY LOGISTICS, LLC, OZBURN-HESSEY LOGISTICS, LLC, Counter Defendants: BRIAN A. CASAL, LEAD ATTORNEY, BUCHANAN INGERSOLL & ROONEY PC, PHILADELPHIA, PA.
For J & K FRESH, LLC, LYNNETTE KEFFER, J & K FRESH, LLC, RAYMOND KEFFER, Counter Claimants: JOSHUA H. ROBERTS, MCCARTER & ENGLISH, PHILADELPHIA, PA.
For OZBURN-HESSEY LOGISTICS, LLC, Counter Defendant: BRIAN A. CASAL, LEAD ATTORNEY, ANDREW J. SHAPREN, BUCHANAN INGERSOLL & ROONEY PC, PHILADELPHIA, PA.
For EVAN MOSS, 721 LOGISTICS, LLC, Counter Claimants: STEVEN K. LUDWIG, LEAD ATTORNEY, ERIN FITZGERALD BENDER, FOX ROTHSCHILD LLP, PHILADELPHIA, PA.
For OZBURN-HESSEY LOGISTICS, LLC, Counter Defendant: BRIAN A. CASAL, LEAD ATTORNEY, ANDREW J. SHAPREN, MATTHEW FONTANA, BUCHANAN INGERSOLL & ROONEY PC, PHILADELPHIA, PA.
L. Felipe Restrepo, United States District Judge.
Ozburn-Hessey Logistics, LLC (" OHL" ), brings this suit against a new competitor in the customs brokerage industry, 721 Logistics, LLC (d/b/a J& K Fresh East) (" 721" ), and the individuals and corporate entities involved in its launch. Most centrally, OHL accuses the defendants of sabotage. According to its allegations, the defendants participated in a coordinated plan to cripple OHL's produce-clearing operations and convert its customers by arranging for OHL's entire perishables division to quit, and join 721, at precisely the moment when it would be most damaging to OHL. The defendants contend that they have engaged in nothing more than legitimate commercial competition. They have filed two motions for summary judgment, which I will address jointly. For the reasons that follow, the motions will be granted in part and denied in part.
OHL is an international logistics company " in the business of providing global supply chain management solutions." Am. Compl. at ¶ 1. Its business " includes customs brokerage, ecommerce fulfillment, freight forwarding, network design and consulting, warehouse management, supply chain management technology and related services." Id. OHL currently employs
thousands of people worldwide and approximately 139 in Philadelphia. Dep. of OHL corporate designee Brian Patrick Riley (" OHL Dep." ) 15.
Lawrence (" Larry" ) Antonucci served as President of OHL's Global Freight Management and Logistics Division for the Americas from 2006 to 2009. Am. Compl. ¶ 16; Answer (Doc. 14) ¶ 4; OHL Dep. 59; Dep. of L. Antonucci (" L.A. Dep." ) 29-33. His employment agreement contained a one-year non-compete provision, which expired on December 31, 2010, and a two-year non-solicitation provision, which expired on December 31, 2011. Doc. 14-1. In January of 2011, Larry contacted Lynette Keffer to explore the possibility of starting a new business together. L.A. Dep. 51-52. Lynette is the sole owner and principal of J& K Fresh, LLC (" J& K" ), a California customs brokerage firm with a focus on perishables. Dep. of L. Keffer (" L.K. Dep." ) 7, 13-18. Until that point, J& K had operated on the West Coast exclusively. Id. 18.
Larry and Lynette  decided to arrange an in-person meeting, and on February 4, 2011 Larry came to J& K's California offices. L.A. Dep. 68-69; L.K. Dep. 36-38; Ex. 10, Doc. 82. He brought his cousin, John Ercolani, then employed by OHL as Assistant Manager of Operations. Id. Raymond Keffer, Lynette's son and the Vice President of Operations at J& K, also attended. At the meeting, Lynette and Larry discussed the possibility of a joint venture, which would have required Lynette to buy out her then-partner and operate an East Coast office. L.K. Dep. 69-71. Larry suggested that he might loan her the money to make it possible. Id. The parties dispute the extent to which Raymond and Ercolani participated in the substantive business discussion.
In the weeks after, Larry and Lynette corresponded about the " deal" discussed. Ex. 11, Doc. 84. The original plan did not come to fruition. L.K. Dep. 44. Instead, the two eventually arrived at another arrangement: J& K would license its brand to 721, which would remain an independent enterprise but do business as " J& K Fresh East" (" JKE" ). L.K. Dep. 75-76, 103-07. In October of 2011, Lynette and Larry signed a Licensing, Collaboration and Alliance Agreement (" Licensing Agreement" ), which licensed the J& K brand to 721 in return for a share of profits. Ex. 13, Doc. 85. It also granted each party a right of first refusal in the event that the other wished to sell a portion of its business. Id. § VI. The right was subject to exceptions: J& K could sell to Raymond or Robert Lee Hoy, and 721 could sell to Ercolani or John Antonucci -- Larry's brother, then a Vice President of Global Account Management at OHL -- without triggering the provision. Id. & Ex. A.
During the remainder of 2011, Lynette and Larry corresponded at length about the JKE launch, set for January 2012, and the hiring of employees. See Ex. 31, Doc. 84; Ex. 23, Doc. 84; Ex. 44, Doc. 84. Lynette " knew [that Larry] was going to make job offers to people he knew in the industry with experience," and " could assume" they would be OHL employees, but aside from Ercolani and John Antonucci she did not know who they would be. Id. 31, 78, 88, 93-98. Larry informed her that he expected " to have the core team members give two weeks' notice to their current employer on January 3." Ex. 22, Doc. 85.
On January 1, 2012, Larry contacted nine OHL employees and invited them to
attend an open house at 721 the following day. Two of the employees were John Ercolani and John Antonucci. The other seven were non-management employees in OHL's produce division: William Fagan, Helena Mateus-Martins, Michael McLaughlin, Maura Miceli, Evan Moss, Antoinette Pannell, and Barbara Zimmerman (hereinafter " the former OHL perishables employees" or " 721 employees" ). All of the group, save Moss, came to the meeting, where Larry offered them each employment with 721. As a condition of employment, Larry required that each person resign on January 6, using a form letter that he had drafted. He made the same offer to Moss by phone on January 3. See L.A. Dep. 140-52; Fagan Dep. 57; McLaughlin Dep. 27-29, Ercolani Dep. 90-92, J. Antonucci Dep. 11, Moss Dep. 77-83, 86-87, 93; Ex. 30, Doc. 84; Ex. 59, Doc. 85.
All nine OHL employees accepted. The group submitted their resignations on January 6. OHL Dep. 45-46, 119-121. They had all been employed at will. Id. 37, 46-47. Moss, Ercolani and John Antonucci had signed limited contracts with OHL; the others had not. See Exs. 39-41, Doc. 85.
The departing employees complied with OHL's notice requirements and worked diligently during the remainder of their tenure there. OHL Dep. 38-39, 47, 49, 206-07; Ercolani Dep. 181-84; Moss Dep. 137-38; Fagan Dep. 76-77. Nonetheless, the loss of the team was a profound blow to OHL. Although the senior leadership and administrative staff of the Philadelphia perishables division remained intact, the employees who left to join 721 were the only ones who had been in regular contact with OHL's perishables clients. OHL Dep. 64, 90-91, 142; Ercolani Dep. 167; OHL Aff., Ex. 63, Doc. 85, ¶ ¶ 3-5. As a result of the group resignation, OHL could not " effectively and efficiently clear produce shipments" for several months. OHL Aff. ¶ 6; see also Ex. 46, Doc. 84 (email from Raymond to Larry and Ercolani reporting that " OHL is paying demurrage for Naturipe/Hortifruit." ). This allegedly caused OHL to lose clients and millions of dollars in revenues. See Ex. 49, Doc. 85.
On February 17, 2012, OHL filed suit against 721, J& K, Larry Antonucci and Evan Moss. OHL's Amended Complaint, filed September 9, 2012, added ten individual defendants: John Antonucci, John Ercolani, Lynette and Raymond Keffer, and the 721 employees. The Amended Complaint contains six substantive claims: (1) misappropriation of trade secrets in violation of the Pennsylvania Uniform Trade Secret Act, against all defendants; (2) unfair competition, against all defendants; (3) breach of contract, against Moss and Ercolani; (4) tortious interference with contractual relations, against 721, J& K, Larry, Ercolani, and the Keffers; (5) civil conspiracy, against the same group; and (6) breach of the duty of loyalty, against the 721 employees.
By two separate motions, the defendants now move for summary judgment in their favor.
II. Jurisdiction and Standard of Review
This Court has jurisdiction pursuant to 28 U.S.C. § 1332, and Pennsylvania law applies. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-80, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Where the law is unclear and there is no controlling decision by the Pennsylvania Supreme Court, this Court must " predict" how it would rule, giving " due regard, but not conclusive effect, to the decisional law of lower state courts." Nationwide Mut. Ins. Co. v. Buffetta, 230 F.3d 634, 637 (3d Cir. 2000).
In ruling on a motion for summary judgment, a court must " construe the evidence in the light most favorable" to the non-moving party, Zimmerman v. Norfolk S. Corp., 706 F.3d 170, 176 (3d Cir. 2013), and grant summary judgment " if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). " A 'genuine dispute' exists if a reasonable jury could find for the nonmoving party." Zimmerman, 706 F.3d at 176. Once the moving party has carried its burden, the non-moving party " must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). It must, instead, identify evidence sufficient to support a verdict in its favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); C. Wright, A. Miller, & M. Kane, 10B Fed. Prac. & Proc. Civ. § 2734 (3d ed.). " Rule 56(c) mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
A. Count II:
Misappropriation of Trade Secrets (All ...