King v. Pa Consulting Group, Inc.

• Decision Date: 08 May 2007
• Docket Number: No. 05-1460.,No. 05-1369.,No. 05-1351.,05-1351.,05-1369.,05-1460.
• Citation: 485 F.3d 577
• Parties: Michael J. KING, Plaintiff-Counter-Defendant-Appellant/Cross-Appellee, v. PA CONSULTING GROUP, INC., a New Jersey corporation, Defendant-Counter-Claimant-Appellee/Cross-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

485 F.3d 577

Michael J. KING, Plaintiff-Counter-Defendant-Appellant/Cross-Appellee, v. PA CONSULTING GROUP, INC., a New Jersey corporation, Defendant-Counter-Claimant-Appellee/Cross-Appellant.

No. 05-1351.

No. 05-1369.

No. 05-1460.

United States Court of Appeals, Tenth Circuit.

May 8, 2007.

David Charles Mastbaum, Law Office of David Mastbaum, Boulder, CO, for Plaintiff-Counter-Defendant-Appellant/Cross-Appellee.

Robert J. Stickles, Klett, Rooney, Lieber, & Schorling, P.C., Newark, NJ, (Christopher P. Dalton, Klett, Rooney, Lieber, & Schorling, P.C., Newark, NJ; Natalie Marie Hanlon-Leh, Christopher P. Beall, and Owen Borum, Faegre & Benson, LLP, Denver, CO, with him on the briefs) for the Defendant-Counter-Claimant-Appellee/Cross-Appellant.

Before KELLY, ALARCÓN,^* and LUCERO, Circuit Judges.

LUCERO, Circuit Judge.

Three cases are consolidated for purposes of this appeal, all arising from the acrimonious departure of Michael King from his former employer, PA Consulting Group, Inc. ("PA"). This dispute centers on a series of noncompete provisions contained in King's employment contract. A jury found against King on all but his invasion of privacy claim and for PA on its breach of loyalty counterclaim. King now appeals the district court's: (1) determination that the noncompete provisions were enforceable, (2) submission of his breach of contract claim to the jury, (3) eve of trial discovery ruling, and (4) denial of his motion for a new trial. PA cross-appeals the district court's denial of its motion for judgment as a matter of law, and its motion for attorneys' fees. For the reasons set forth below, we AFFIRM.

I

PA is a professional consulting firm with offices in 20 countries and over 3400 employees. Although it is a New Jersey corporation with a human resources office in that state, PA is headquartered in Washington, D.C. In 2000, PA successfully acquired Hagler Bailly, Inc. ("HB"), an energy consulting firm, in a cash transaction. At the time of the acquisition, King was a Senior Vice President ("SVP") in HB's Boulder, Colorado office. King was also an HB shareholder. As part of the merger, King sold his 10,000 HB shares for approximately $52,900. The merger was conditioned upon at least 75% of HB's SVPs signing PA employment agreements.

On June 5, 2000, in anticipation of the merger, King signed an employment contract (the "Agreement") governing his employment with PA. King lived and worked in Colorado, and the Agreement was signed in Colorado. PA drafted the Agreement, which it described as a "global agreement" used for approximately 200 partners around the world. Section 17.2 states: "This agreement and all matters arising in connection with it shall be governed by the law of the State of New Jersey and shall be subject to the jurisdiction of the New Jersey Courts." Simultaneous with the Agreement, the parties signed a "side letter" amending the terms of the Agreement, which notes that the "Agreement has been executed in anticipation of the execution of the Agreement and Plan of Merger among the Company, Hagler Bailly, Inc. and PA Consulting Group Inc. (the `Merger Agreement') and is conditional upon the consummation of the transactions authorized by such Merger Agreement."

King agreed to several post-employment restrictions. The Agreement establishes a one-year restricted period following termination, during which the following provisions would attach:

12.2 In respect of any client of [PA] for whom you have rendered any services on behalf of [PA] during the two years preceding the termination of your employment, you will not during the restricted period, directly or indirectly, unless authorized by [PA]:

(a) solicit business from a Client, whether on behalf of yourself or another person or entity, which business is of the same or similar nature to the services you provided on behalf of [PA].

(b) encourage any client not to do business with [PA].

(c) provide for such client (or offer to do so) services of the same or similar nature or assist or facilitate the provision of such services as an independent contractor or otherwise ... although notwithstanding the foregoing, you may accept full-time employment with any such client.

12.3 During the restricted period you will not ... solicit or entice away from [PA] (or attempt to do so) or accept for employment any employee of [PA] who entered employment with [PA] prior to the termination of your employment.

The side letter includes a limited exception to the post-employment restrictions: "Notwithstanding the provisions of Section 12 of the Agreement, should you terminate your employment during the 180-day period commencing 18 months following the completion of the transactions authorized by the Merger Agreement, [PA] shall waive the non-compete provision contained in Section 12.2(c) of the Agreement." Section 9.6 of the Agreement provides that "[w]here you do not provide the appropriate notice [of resignation], salary equivalent to the amount payable for the shortfall in notice will be forfeited in lieu of notice, as appropriate." The side letter sets a notice period of three months for "all Partner ranks."

King's precise job title upon joining PA is unclear. The Agreement merely states that he was appointed as a "Consultant" with PA's energy group. A document incorporated into the Agreement, entitled "Your Career as a Consultant in PA," lists "five consulting ranks: analyst, consultant analyst, consultant, principal consultant and managing consultant." It describes "consultant" as a relatively low-level position.

However, PA's head of Human Resources, James Cullens, stated in deposition testimony that King (along with the other HB SVPs) entered the company as an "associate partner." In explaining the inconsistency, Cullens noted that, as a consulting firm, PA had two types of agreements: a consultant agreement and an administrative staff agreement. The "consultant" designation, he stated, simply distinguished King from PA's administrative staff. Cullens further testified that PA's employment agreements do not use the term "partner" because PA is not a partnership. The Agreement also incorporated a document titled "The Partner at PA," which describes the associate partner designation as follows: "All external entry candidates into the Partner Group will be designated `as' Associate Partners. They will serve an initial period during which their track record within PA is built up, so that the Partner Election Committee has the information base it needs to confirm their Partnership." King also listed his initial position with PA as "Associate Partner" on his resume.

Upon joining PA in October 2000, King provided energy consulting services, with a focus on business development. He had several layers of management above him, but also had a group of employees working under him. King could not hire or fire workers, but was empowered to enter contracts on behalf of PA on a limited basis. PA's January 1, 2001 organizational chart indicates that King was an Associate Partner in the Energy Group — one of approximately 190 Partners at PA. It also lists King as Chairman of the Committee for Regional Development in the Americas and Canada. His total compensation in 2000 (including both HB and PA pay) was slightly over $1 million. King rose quickly through the ranks at PA; by July 2002, he was one of twelve Managing Partners worldwide and head of PA's Global Wholesale Energy Markets Practice. His anticipated compensation in 2001 was $1.3 million.¹

On July 28, 2002, King sent an email to Bruce Tindale, PA's COO, and Jon Moynihan, PA's CEO, informing them of his plans to "pursue the options" with National Economic Research Associates ("NERA") — a PA competitor. Shortly thereafter King sent a fax entitled "Confirmation of my resignation of July 29, 2002," indicating he believed his last day of employment would be October 26, 2002. PA acknowledged his resignation that same day, but noted "[t]here may be a couple of things to sort out, such as your leaving date (which we believe is November 2nd 2002 under the terms of your contract), but that is something we can get mutual clarity on over the coming weeks as we work together to sort out the handover arrangements etc."

On September 12, 2002, King emailed Tindale and Cullens, in an effort to "close the loop on [his] departure." King stated that he provided notice on July 29, 2002, and, calculating a 90-day notice period, his final day would be October 26, 2002. By providing notice within the 180-day window period, per the terms of the side letter, he believed he was relieved of the noncompete restrictions listed in § 12.2(c) of the Agreement. PA disagreed with King's characterization. Cullens asserted that King's July 29 email was not an effective notice of resignation under the Agreement because it was unclear and was not delivered in the proper form as specified in the Agreement (via hard copy, mail, or fax). Adding three months to the date of King's August 2, 2002 fax, Cullens tabulated a final day of November 2, 2002. He also indicated that the 180-day window period ran from April 28 to October 24, which would require an employee to provide notice of termination by July 24, 2002 in order to take advantage of the § 12.2(c) waiver. King claims this was the first time PA informed him of its calculation of the window period.

King responded through counsel on September 26, 2002. He argued that PA was required to waive the § 12.2(c) restrictions as long as he terminated his employment within the window period, and amended his date of termination to October 24, 2002. Although King acknowledged he was bound by the three-month notice period, he claimed that § 9.6 of the Agreement — which states "[w]here you do not provide the appropriate notice [of resignation], salary equivalent to the amount payable for the shortfall in notice will be forfeited in lieu of notice, as appropriate" — amounted to a...