Informix, Inc. v. Rennell, 94-P-1601

• Decision Date: 21 August 1996
• Docket Number: No. 94-P-1601,94-P-1601
• Citation: 41 Mass.App.Ct. 161,668 N.E.2d 1351
• Parties: , 12 IER Cases 63 INFORMIX, INC. v. Michael W. RENNELL.
• Court: Appeals Court of Massachusetts

Page 1351

668 N.E.2d 1351

41 Mass.App.Ct. 161, 12 IER Cases 63

INFORMIX, INC. v. Michael W. RENNELL.

No. 94-P-1601.

Appeals Court of Massachusetts,

Norfolk.

Argued Dec. 13, 1995.

Decided Aug. 21, 1996.

William J. LeDoux, Worcester, for defendant.

Roger S. Davis, for plaintiff.

Before SMITH, LAURENCE and LENK, JJ.

LENK, Justice.

This case arises out of alleged postemployment violations by the defendant, Rennell, of confidentiality and noncompetition provisions in a confidentiality agreement entered into with the plaintiff, Informix Inc. (Informix), his former employer, at the beginning of, and as part of, the employment relationship between them. After trial before a Superior Court judge, judgment entered enjoining Rennell from violating the agreement and awarding Informix its costs and counsel fees pursuant to G.L. c. 93A, §§ 2 and 11. ¹ It is from the award of costs and counsel fees that Rennell appeals, contending that G.L. c. 93A, §§ 2 and 11, have no application to the postemployment breach of a noncompetition agreement arising out of an employer-employee relationship. We agree with Rennell and reverse the judgment in this regard.

The trial judge found that Informix is a so-called "value-added reseller" of integrated barcode scanning systems and that its president solicited Rennell to work for Informix as vice-president of sales. After negotiation, Rennell entered into a confidentiality agreement which provides, among other things, that Rennell would preserve the confidential information of Informix and not compete with Informix in certain geographic areas for two years following termination of his employment.

After less than one year together, Informix terminated Rennell's employment and Rennell found employment in the proscribed geographic area in a sales capacity with an employer engaged in a business similar to that of Informix. The judge found that, while Rennell had not disclosed to unauthorized third parties any trade secrets, confidential information, or computer source code information, had not attempted to solicit Informix's employees from Informix, and had not appropriated or attempted to appropriate any of Informix's customer good will, Rennell had nevertheless "intentionally disregarded known contractual arrangements with Informix" by his new employment and his solicitation for his new employer of Informix's customers. The judge determined that both Rennell and Informix were engaged in the conduct of trade or commerce as defined by G.L. c. 93A. She found that Rennell's conduct was "unethical and unscrupulous and ... had the potential to cause [Informix] substantial injury." She then concluded that Rennell had engaged in an unfair or deceptive trade practice proscribed by G.L. c. 93A, §§ 2 and 11.

It is firmly established that disputes between employers and employees fall outside the scope of § 11. Second Boston Corp. v. Smith, 377 Mass. 918 (1979); Manning v. Zuckerman, 388 Mass. 8, 14, 444 N.E.2d 1262 (1983); Weeks v. Harbor National Bank, 388 Mass. 141, 144, 445 N.E.2d 605 (1983). Employment agreements between an employee and his employer do not constitute either "trade" or "commerce." "[D]isputes arising from an employment relationship between an employee and the organization that employs him ... are not covered by the c. 93A remedies afforded in commercial transactions.... Contract disputes between an employer and an employee ... are principally 'private in nature' and do not occur in the ordinary ' "conduct of any trade or business" ' as contemplated by the statute." Manning, supra at 14, 444 N.E.2d 1262.

The contractual undertakings here were entered into as part of the employment relationship between Rennell and Informix. Had Rennell violated the...