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Ardurra Group, Inc. v. Gerrity

United States District Court, E.D. Pennsylvania

December 9, 2019

ARDURRA GROUP, INC., Plaintiff/Counter Defendant,
v.
DANIEL GERRITY, Defendant/Counter Claimant.

          MEMORANDUM

          ROBERT F. KELLY, SR. JUDGE

         Plaintiff Ardurra Group, Inc. (“Ardurra”) filed a motion for preliminary injunction against Defendant Daniel Gerrity (“Gerrity”), a former employee, on July 25, 2019. (Doc. No. 2.) Ardurra sought to immediately enjoin Gerrity from (1) working for or on behalf of a directly competitive entity in violation of applicable restrictive covenants, (2) soliciting or attempting to solicit or induce current and prospective Ardurra clients and business partners, and (3) use of Ardurra's confidential and proprietary information for the benefit of third parties, namely Bernhard Capital Partners (“Bernhard Capital”) and associated entities. (Pl.'s Mem. Law in Supp. Mot. Prelim. Inj. 1.)

         On August 8, 2019, a hearing was held on Ardurra's motion for preliminary injunction. (Doc. No. 18.) At the hearing, Gerrity provided testimony and Ardurra submitted the declaration of Kevin Brown (“Brown”), Ardurra's Director of Human Resources, along with the relevant portions of the Unit Purchase Agreement (“Purchase Agreement”) and the King Engineering Associates Inc. Employee Propriety Information and Inventions Assignment Agreement (“Employee Agreement”). During the hearing, Ardurra argued that Gerrity breached the Purchase Agreement and Employee Agreement through his work for Bernhard Capital, an investment firm which Ardurra believes directly competes with, or provides assistance to entities that directly compete with, Ardurra in several aspects of its environmental engineering business. See, e.g., Hr'g Tr. 8/8/19, 6:3-7; 6:18-7:17. Gerrity contended that his work for Bernhard Capital was separate and distinct from his work at Ardurra and did not compete with Ardurra. See, e.g., id. at 24:2-4. Alternatively, Gerrity argued that the scope of both of the agreements was overbroad and should not be read to encompass his current role at Bernhard Capital. See, e.g., id.

         For the reasons discussed below, at the close of the August 8, 2019 Hearing, the Court entered an Order in favor of Ardurra enjoining Gerrity from working in any manner in breach of the Purchase Agreement and Employee Agreement. (Doc. No. 11.) Following a Motion for Reconsideration filed by Arudurra, the Court amended its Order on September 9, 2019, broadening the prohibition of Gerrity “from being employed by or performing work for or on behalf of Bernhard [Capital] and its portfolio and related companies and funds.” (Doc. No. 23.)

         I. BACKGROUND

         A. THE PARTIES AND RELEVANT AGREEMENTS

         1. Ardurra, formerly known as King Engineering Associates, Inc., is an engineering and construction services company that sells services to public and private entities throughout the United States and abroad. Ardurra's focus is infrastructure, including civil, water, wastewater, solid waste, transportation, traffic, land planning, ecological, landscape architecture, land surveying, and construction management. (Pl.'s Mot. Prelim. Inj., Decl. of Kevin Brown in Supp. Pl.'s Mot. Prelim. Inj. (“Brown Decl.”), ¶ 4.)

         2. Gerrity is the former Head of Sales at Ardurra and was a member of the Board of Directors. (Id. ¶ 10.)

         3. Gerrity was previously the CEO of Ardurra Group, LLC (“Ardurra Group”) and its second largest shareholder. (Id. ¶ 7.)

         4. On October 18, 2017, King Engineering Associates, Inc., Ardurra Group (through its holding company Ardurra Group Holdings, LLC), and Durra Holdings, LLC, entered into the relevant Purchase Agreement to sell Ardurra Group to King Engineering. (Id. ¶ 8.) Gerrity was instrumental in the decision to sell Ardurra Group and was intimately involved in the negotiation of the purchase price and terms of the transaction. (Id.)

         5. The purchase price was $19.2 million. (Id.) Gerrity received $4, 330, 854.00 from the sale proceeds. (Id.)

         6. Following the close of the sale, Gerrity signed the Employee Agreement with the new Ardurra entity in conjunction with starting his new position as Head of Sales. (Id. ¶ 10.)

         7. The Purchase Agreement contained a four-year non-compete and non-solicitation agreement. Hr'g Tr. 8/8/19, 5:10-15. The Employee Agreement contained a one-year non-compete and non-solicitation agreement, effective upon the end of employment at Ardurra. Id.

         8. Under the Purchase Agreement, Gerrity was prohibited from directly or indirectly engaging in or assisting others in engaging (whether through employment, consultation, advisory services, representation on a board of directors or other similar governing body or by any financial or other investment in) any line of business in which Ardurra or its related entities were engaged. Id. at 4:8-25.

         9. Under the Employee Agreement, Gerrity was prohibited from using or disclosing Ardurra's Proprietary Information for any purpose other than advancing Ardurra's interests. (Brown Decl. ¶ 15.) Proprietary Information included, without limitation, any and all confidential and/or proprietary knowledge, data, information, or trade secrets. (Id.) Such information included the identity of and information regarding Ardurra's vendors, suppliers, contractors, subcontractors, customers, identified prospective customers, the existence of any business discussions, negotiations, or agreements between Ardurra and any third party. (Id.)

         10. On March 28, 2019, Ardurra terminated Gerrity's employment. (Id. ¶ 21.)

         11. Shortly after his termination, and well within the restricted periods of the Purchase Agreement and the Employee Agreement, Gerrity began working at Bernhard Capital in June or July 2019. Hr'g Tr. 8/8/19, 36:4-7.

         12. Upon learning of Gerrity's new position, Ardurra filed suit for breach of contract and tortious ...


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