United States District Court, E.D. Pennsylvania
MEMORANDUM WITH FINDINGS OF FACT AND CONCLUSIONS OF
appreciate the years of hard work and investment necessary to
succeed in selling cutting edge information technology to
cautious corporate buyers. Companies selling hardware,
software and end-to-end solutions may create a sales or
accounting formula which could possibly become its
confidential trade secret. The sales representative can also
employ his sales techniques and knowledge of the
customers' preferences without stealing his former
employer's trade secrets unless the former employer can
show evidence its knowledge of the customers' preferences
is a trade secret. In addition to protecting trade secrets,
sales companies wanting to protect their client base often
require incoming sales representatives agree not to compete
after leaving. Absent definitive agreed terms restricting
post-employment conduct, the sales representative can seek
the same customer business for a competing new employer.
accompanying Order, we deny an information technology
employer's motion to enjoin its former sales
representative's successful efforts with one of the
former employer's customers as the former employer did
not adduce evidence of definitive post-employment
restrictions or the former employee is improperly using trade
secrets. Under Rule 52, and after evaluating credibility of
witness testimony at our April 30, 2018 hearing on
Plaintiff's Motion for a preliminary injunction (ECF Doc.
No. 24), we today enter findings of facts and conclusions of
law supporting our accompanying Order.
Findings of fact
After graduating from the University of Delaware, Todd
Hendrickson began working as a sales representative for
value-added resellers in the Information Technology
(“IT”) hardware and software industry.
Value-added resellers connect end-user customers (e.g.,
banks, securities firms) with software and hardware
manufacturers to meet the customer's IT needs. The
manufacturers pay a commission to the value-added resellers.
Hendrickson worked for Atrion, a value-added reseller, from
2000 until January 2012. At Atrion, Mr. Hendrickson primarily
sold Hewlett-Packard products. Mr. Hendrickson wanted to move
a value-added reseller partnered with more manufacturers and
larger number of products sold.
Razor Technologies, LLC, founded in 2004 by George Sucher and
James Stillittano, competes with Atrion in selling software
and hardware. Razor claims it offers more than Atrion by
providing “full service, end-to-end, IT cloud
infrastructure services company with capabilities to meet all
of its customer IT needs, including architecture,
integration, deployment and managed
Razor contacted Mr. Hendrickson about joining Razor in 2009
and again in 2011. The 2009 discussions did not progress but
began again in later 2011.
Messrs. Sucher and Stillittano testified during their 2011
pre-employment discussions with Mr. Hendrickson, Mr.
Hendrickson stated he had a non-compete agreement with
Hendrickson testified he did not have a non-compete agreement
at Atrion because the owner did not believe in them.
Neither party produced a copy of a non-compete agreement
between Atrion and Mr. Hendrickson. We heard no testimony
Stillittano testified he and Mr. Hendrickson
“generally” discussed Razor requiring a
non-compete agreement with Mr. Hendrickson and may have
mentioned a two year restriction but he could not be sure.
Sucher testified he and Mr. Hendrickson discussed the client
accounts Razor would assign him because Mr. Hendrickson had a
two-year non-compete agreement with Atriano and could not
bring clients with him to Razor.
January 9, 2012, Razor extended an offer letter to Mr.
Hendrickson to begin work as a Senior Enterprise Account
Executive on January. Razor's offer letter does not
mention a non-compete agreement.
January 17-19, 2012, before agreeing to join Razor, Mr.
Hendrickson attended Razor's sales kickoff meeting in
Atlantic City with Razor's co-founding member Mr. Sucher.
During the sales kickoff, a human resources power point
presentation mentioned Razor's use of non-compete
agreements. After seeing this slide, Mr. Hendrickson told Mr.
Sucher he would not agree to a non-compete agreement with
Razor. Hendrickson testified Mr. Sucher did not reply, just
looked at Mr. Hendrickson. Mr. Hendrickson testified he took
this to mean Mr. Sucher and Razor understood his position he
would not sign a non-compete agreement. Mr. Hendrickson
testified he earlier told Razor he did not have a non-compete
with Atrion and would not sign one now.
Sucher disputed this account and testified Mr. Hendrickson
never said he would not sign a non-compete agreement at the
January 19, 2012, Mr. Hendrickson signed Razor's offer
letter which did not mention post-employment restrictions.
January 30, 2012, the Razor receptionist presented Mr.
Hendrickson his new hire paperwork including a non-compete
agreement. The document is formally called a Confidentiality
Agreement but all witnesses referred to it as a
“non-compete.” 17. Razor's non-compete
agreement prohibits former employees from engaging in
business competitive to Razor for 2 years in Pennsylvania,
New Jersey, New York, and Massachusetts and “related
Razor Technology customer regions.”
Hendrickson testified he was slightly surprised to see the
non-compete agreement included in his new hire paperwork but
assumed the receptionist just handed him the standard
paperwork and unaware of his refusal to sign the non-compete.
Hendrickson testified he did not sign the non-compete
agreement. Instead, Mr. Hendrickson kept it in his bag for a
few weeks. He recalled it began to get crinkled and he
eventually threw it out.
Almost six weeks later, on March 12, 2012, Mr. Hendrickson
signed the acknowledgement he received with Razor's
employee handbook. The handbook stated “In order to
protect the company from unauthorized release of
[confidential information], all salaried employees will be
required to sign [non-compete agreement]. This agreement will
be a condition of employment and continued
an affidavit filed before our hearing, Mr. Sucher swore he
“firmly believed (and still believes[s])” Mr.
Hendrickson signed the Confidentiality
the hearing, Mr. Sucher changed his story and testified he
recalled seeing Mr. Hendrickson's signature on the
non-compete agreement when the receptionist brought him Mr.
Hendrickson's completed paperwork right after he started.
Mr. Sucher did not recall whether Mr. Hendrickson's
signed acknowledgement of receiving the handbook or other
paperwork was also in the file because he did not look that
the time, Razor maintained Mr. Hendrickson's personnel
file and all personnel files in hard copy.
January 2013, Razor presented Mr. Hendrickson with a 2013
Compensation Plan Terms & Conditions and Mr. Hendrickson
signed the document.
2013 Compensation Plan provides “This is not an
employment contract; rather, it is a description of terms,
policies, and procedures associated with your incentive
payment. Razor Technology, LLC may modify or amend this plan
at any time at its sole discretion.”
Sucher testified the 2013 Compensation Plan states it is not
an employment contract because he believes Pennsylvania is
right-to-work state and employment contracts are banned but
he believes it binds Mr. Hendrickson to the non-compete
2013 Compensation Plan provided, “By accepting any pay
under the Compensation Plan, you are automatically accepting
the Plan, agreeing to a full non-compete in your general
territory and Razor Technology, LLC territory and agreeing
that your compensation shall be determined in accordance with
the provisions of this Plan, as it is currently constituted
and as it may be changed from time to time by
Sucher testified the 2013 Compensation Plan increased Mr.
Hendrickson's commission rate increased for one area of
sales and Razor added a new item of sales for Mr.
March 2013, Razor hired Chris McGrath to handle its human
resources, first as the Controller and then as Chief
Sucher testified Razor brought Mr. McGrath on to “sure
up” the offer letter and non-compete agreements because
“a couple slipped through cracks.” Mr. McGrath
changed Razor's offer letters to include a non-compete
and a handbook acknowledgement as part of accepting
of Mr. McGrath's first projects was to convert the
employees' personnel files from hardcopy to digitized
versions. Razor no longer created hard copy files for new
employees and moved the hard copy files for existing
employees to a safe in Mr. Stillittano's office.
the first quarter 2014, Mr. McGrath directed his assistant
Amber Young to audit the employees' personnel files for
required documents including the non-compete agreement.
Young created an audit sheet marking whether each employee
had returned certain employment papers. One column is named
“non-compete.” The box for “non-compete
agreement” for Mr. Hendrickson's file is checked.
Mr. McGrath could not testify to why Ms. Young placed the
check in the box. Mr. McGrath was “sure” Ms.
Young reviewed Mr. Hendrickson's electronic personnel
file, not the hard copy version.
next year, Razor presented Mr. Hendrickson with the 2014
Compensation Plan which similarly stated it is not an
employment contract and also had non-compete language. Razor
also reserved the right to modify the terms of the agreement
at any time.
2014 Compensation Plan increased Mr. Hendrickson's
commission pay in two sales areas.
Hendrickson did not sign the 2014 Compensation Plan but
accepted payments from Razor under the Plan.
McGrath continued to direct a yearly audit of employees'
personnel files and the check for Mr. Hendrickson's
non-compete remained until he resigned in August 2017.
After Razor suspected Mr. Hendrickson allegedly violated the
non-compete agreement it believed he signed, Mr. McGrath
searched Mr. Hendrickson's personnel files.
Mr. Hendrickson's electronic personnel file, Mr. McGrath
discovered a signed non-compete agreement but the agreement
is between Razor and a former employee Mr. Kurik.
McGrath could not locate a non-compete agreement between Mr.
Hendrickson and Razor.
McGrath researched the personnel file's electronic
history and discovered Mr. Kurik's non-compete agreement
and handbook acknowledgement were digitally placed in Mr.
Hendrickson's file on May 26, 2015. No. party explains
how it got there. Mr. Hendrickson denies his access to either
the hard files or digitized copies and there is no contrary
Mr. Hendrickson's hardcopy personnel file, Mr. McGrath
did not find a signed non-compete agreement between Mr.
Hendrickson and Razor.
and Mr. Hendrickson's relationship with TD
While at Razor, Mr. Hendrickson acquired Goldman Sachs as a
client through his college fraternity friend Tom Scarpati who
worked in information technology there.
Fall 2015, Mr. Scarpati moved from Goldman Sachs to TD
Scarpati provided Mr. Hendrickson with “warm
introductions” to TD Ameritrade IT employees for Mr.
Hendrickson to try and compete for various portions of TD
Ameritrade's IT needs.
Ameritrade data storage team leader Bernie Castronovo hired
Mr. Hendrickson and Razor for a project. TD Ameritrade server
team leader Chibo Qian also hired Mr. Hendrickson and Razor
for a project.
While working with these teams, Mr. Hendrickson learned TD
Ameritrade needed assistance updating an existing virtual
desktop infrastructure (“VDI”), which is a system
allowing TD Ameritrade employees to remotely access their
work desktop computers.
Hendrickson asked Razor to hire Steve Wright to assist in
selling TD Ameritrade VDI implementation because he had
specialized knowledge in VDI technology.
Along with Mr. Wright, Mr. Hendrickson made a sales pitch to
TD Ameritrade to assist with their VDI implementation and TD
Ameritrade asked him to coordinate its ...