Federal Court Denies Injunction on Procedural and Substantive Grounds

This decision from the United States District Court in Boston, denying a request for a preliminary injunction to enforce non-competition and other restrictive covenants, is notable for a few reasons. First, the federal court in Massachusetts issues relatively few decisions involving requests to enforce noncompete and/or nonsolicitation agreements; a published decision from a federal judge — in this case from Judge George A. O’Toole, Jr. — is inherently of interest. More importantly, the decision, Maine Pointe, LLC v. Starr and Gestion Velocitas, Inc., addresses several procedural and substantive issues that arise with regularity in the world of noncompete litigation.

The plaintiff, Maine Pointe, filed suit and immediately sought to enjoin competitive activities by its former consultant, Peter Starr, a Canadian who operated through his own company, Gestion Velocitas (also sued as a defendant).  The restrictive covenants at issue were in an agreement between Maine Pointe and the Starr’s company, but not with Starr himself (although he signed for the company). 

The defendants sought to derail the injunction request first by raising a procedural barrier: that the court lacked jurisdiction to hear the case, because Starr and his company were based in Canada and never engaged in sales or other activities in Massachusetts. Maine Pointe responded by pointing to a provision in the agreement stating that Massachusetts law would apply and that litigation relating to the agreement would occur exclusively in Massachusetts. Judge O’Toole did not fully decide the jurisdictional issue, but stated that he was sufficiently doubtful about the court’s jurisdiction over Starr — notwithstanding the forum selection provision — that he would deny the injunction request against Starr on that basis alone. The lesson for employers seeking to enforce noncompetes? Be sure that you have a strong basis for suing in the particular court you choose. Creating judicial doubt about jurisdiction is a sure way to take the wind out of the sails of your injunction request.

Judge O’Toole also denied the injunction request against the company defendant, this time on substantive grounds. Maine Pointe’s main complaint was that the defendants had violated the non-disclosure and non-solicitation restrictions by soliciting business from two entities they previously solicited — unsuccessfully — while engaged by Maine Pointe. Judge O’Toole was unconvinced. He found that the evidence did not sufficiently demonstrate that the contact information defendants used to contact the prospective customers was protected “trade secrets” or “confidential information,” noting that Massachusetts courts in previous cases had held that “general information and routine data” of a company is not protectable. As to the non-solicitation issue, Judge O’Toole found that there was no legitimate interest justifying enforcement of the restriction, because there was no evidence that defendants developed any meaningful relationship with these entities — that is, "good will" — while engaged by Maine Pointe. 

As a result, Judge O’Toole refused to give Maine Pointe any of the relief it sought.

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