Many litigators of non-competition agreement cases in Massachusetts would reflexively answer “state court” to the above question. That is, given the choice (if jurisdictional principles permit) of bringing an action to enforce a non-compete or non-solicitation provision in state or federal court in Massachusetts, the conventional wisdom would be to avoid what has been perceived as the more exacting scrutiny of the judges in the U.S. District Court in Boston.
But some recent trends might suggest otherwise. Many state court non-compete cases are now heard in the Business Litigation Session (BLS) of Suffolk Superior Court, which although located in Boston, is authorized to hear cases brought in other counties. That court has developed a body of non-compete jurisprudence that includes a healthy degree of skepticism about enforcement of traditional non-competes (as opposed to customer non-solicitation agreement, which are more easily enforced). At the same time, the federal court in Boston periodically will issue a preliminary injunction decision that would suggest a greater willingness to enforce restrictive covenants than has been expressed in the BLS. One example is the recent decision by U.S. District Judge Nathaniel M. Gorton in Bio-Imaging Technologies, Inc. v. Marchant and M2S, Inc., in which Judge Gorton preliminarily enjoined an individual, Marchant, from assuming a position as director of business development with M2S, a competitor of Marchant’s former employer, Bio-Imaging. The decision is notable in that Judge Gorton somewhat summarily dismissed a number of potentially viable defenses to enforcement of the non-compete and non-solicitation clauses at issue.
For example, the court gave short shrift to the defendants’ argument that enforcement of the restrictive covenants at issue (one-year non-compete and non-solicitation provisions) was not necessary to protect Bio-Imaging’s confidential information. Judge Gorton found that Marchant had access to and knowledge of pricing, sales strategies and customer relationships, presentations and proposals, and found that the fact that some such information was available from public sources did not undermine enforceability of the restrictive covenants.
Perhaps most notably, the court rejected a “change of circumstances” defense. Marchant had argued that the restrictive covenants, signed at hire, were no longer enforceable because both Marchant’s position at Bio-Imaging, as well as the company’s business in the medical imaging industry itself, had changed dramatically since he was hired. The “changed circumstances” defense has received a fair amount of attention in recent years as a result of several Massachusetts Superior Court decisions in which judges found their way out of enforcement of restrictive covenants based on the concept that material changes in an employee’s job following the execution of the non-compete might undermine the legal “consideration” that is necessary to enforce a restrictive covenant. (See this article for a description of those cases.) Judge Gorton spent no time on the legal backdrop to this argument and rejected the defense on the facts, finding that Marchant’s role at Bio-Imaging had not undergone any “dramatic” change despite the change in his title from Manager of Clinical Trial Services to Director of Business Development. But he also suggested that a more dramatic change might not have mattered, because the restrictive covenants were not limited to a specific job title but rather applied during and after the employee’s “period of employment with the company” in any capacity. It is unclear whether Judge Gorton had in front of him the recent Massachusetts cases, but his decision suggests that he would give them little weight.