American Eutectic Weld. Alloys Sales Co., Inc. v. Rodriguez, No. 73-1048.

CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)
Writing for the CourtCOFFIN, , McENTEE and CAMPBELL, Circuit
Citation480 F.2d 223
Decision Date11 June 1973
Docket NumberNo. 73-1048.
PartiesAMERICAN EUTECTIC WELDING ALLOYS SALES CO., INC., et al., Plaintiffs-Appellants, v. Pablo Garcia RODRIGUEZ, Defendant-Appellee.

480 F.2d 223 (1973)

AMERICAN EUTECTIC WELDING ALLOYS SALES CO., INC., et al., Plaintiffs-Appellants,
v.
Pablo Garcia RODRIGUEZ, Defendant-Appellee.

No. 73-1048.

United States Court of Appeals, First Circuit.

Submitted April 30, 1973.

Decided June 11, 1973.


480 F.2d 224

Paul H. Blaustein, Sandoe, Hapgood & Calimafde, New York City, Guillermo A. Nigaglioni and Nigaglioni & Palou, Santurce, P.R., on brief, for appellants.

Before COFFIN, Chief Judge, McENTEE and CAMPBELL, Circuit Judges.

Levin H. CAMPBELL, Circuit Judge.

Plaintiffs appeal from the district court's refusal to issue a preliminary injunction forbidding defendant, a former employee,

from soliciting orders from the same customers Garcia solicited for plaintiff for selling welding products directly competitive with those he sold for plaintiff, for a period of two years from August 13, 1971, the date of termination
480 F.2d 225
of Garcia\'s employment with plaintiffs.

We reverse, for the reasons set forth below.

Plaintiffs filed an amended complaint on February 4, 1972 alleging that they are corporations engaged in the production and marketing of welding and soldering alloys and related products; that Garcia was hired on September 14, 1966, after entering into an employment contract1 in which he agreed that for a two-year period following termination of the agreement he would not work for any competitor in the same territory he covered for American Eutectic, during the last two years of his employment and within a 50 mile radius thereof; and that he agreed to maintain Eutectic's "customer lists and identifications" and other business secrets confidential.

Plaintiffs originally prayed for injunctive relief prohibiting Garcia from disclosing confidential customer information, from calling upon Eutectic's customers, and from employment in competition with plaintiffs for a period of two years from the date he left Eutectic. However, on April 27, 1972, plaintiffs moved for summary judgment, limited to the narrower issue of enjoining Garcia from soliciting customers as set forth above. The defendant opposed the motion on its merits and moved to dismiss the complaint. The matter was submitted on a record consisting of the pleadings, affidavits, depositions, and live testimony at a hearing held May 31, 1972. The district court, 353 F.Supp. 850, rendered its decision some seven months later, denying "plaintiffs' motion for summary judgment requesting a preliminary or permanent injunction"

480 F.2d 226
and also denying "defendant's motion for summary judgment requesting a dismissal."2 The plaintiffs appealed under 28 U.S.C. § 1292(a) from "the Order denying Preliminary Injunction."

The defendant, Garcia, was hired by Eutectic on September 14, 1966 as a salesman of welding materials. He was by then an experienced salesman, having worked in 1961 for Sears, Roebuck at Santurce selling household appliances, then for a Mr. Otero as a razor salesman, and finally for E. Leon & Company as a salesman of building materials. After a three-week training period at Eutectic's New York office, he returned to Puerto Rico and began selling Eutectic's products in the Northeast area.

Garcia was given a number of "customer cards" containing the names of Eutectic customers and additional data such as whom to contact, what the customer had previously ordered, and what the customer's special needs were. In the course of his employment, Garcia made periodic calls upon Eutectic customers to sell the company's welding products and to consult with and advise customers on welding problems. In this manner, he gained an intimate knowledge of the customer's needs and specialized requirements.

In 1968 Garcia was promoted to District Supervisor. He was then responsible for Eutectic's sales throughout Puerto Rico. He supervised two other salesmen, to whom he distributed all his customer cards except the most lucrative 20%; these he continued to service personally. In January 1971, Garcia became Regional Manager. Although his duties remained essentially what they had been as District Supervisor, Garcia was the highest-ranking Eutectic employee in Puerto Rico, with three salesmen under him.

On August 13, 1971, Garcia resigned from Eutectic to join a competitor, Anibal L. Arsuaga, Inc.3 As an ALA welding salesman, he now calls upon a substantial number of former Eutectic customers and undersells his former employer. Although Eutectic's sales in Puerto Rico had not declined eight months after Garcia began working for ALA, plaintiffs fear that Eutectic's sales will decline in the future because Garcia will take more and more of his former customers to ALA; Eutectic is exposed to a loss of customer goodwill due to Garcia's defection; and confidential data such as Eutectic's pricing policies will be used to benefit the competition.4

The party challenging a denial of a preliminary injunction "must show either a clear error of law or an abuse of discretion by the district court in denying the injunction." Automatic Radio Mfg. Co. v. Ford Motor Company, 390 F.2d 113, 115 (1st Cir. 1968), cert. denied 391 U.S. 914, 88 S.Ct. 1807, 20 L. Ed.2d 653 (1968). Appellants have, in our judgment, made such a showing.

The terms of the contract provide that it is to be governed by the law of New York. Under New York law, as under the law generally prevailing in the United States, a restrictive employment covenant is enforceable to the extent reasonable,5 and "Will generally be

480 F.2d 227
found to be reasonable where it simply protects the legitimate interests of the employer, imposes no undue hardship on the employee, and is not injurious to the public." Solari Industries, Inc. v. Malady, 55 N.J. 571, 264 A.2d 53, 56 (1970)

The instant case presents a near-classic situation for enforcement. See Restatement of Agency, 2d § 396, Illustration 1, p. 224; Service Systems Corp. v. Harris, supra. Defendant salesman, having obtained an intimate knowledge of Eutectic's customers and their needs in the course of his employment, is exploiting his knowledge for the benefit of a competitor in violation of contract. Limited in duration, the restriction sought to be enforced would not prevent him from using his skills as a salesman, except to the narrow extent needed to protect Eutectic from obviously unfair competition. Whether the full range of restrictions in the contract are reasonable need not concern us. The only issue is the reasonableness of the requested injunction; even an overly-broad covenant is enforceable to the limited extent reasonable. Karpinski v. Ingrasci, supra; Premier Industrial Corporation v. Texas Industrial Fastener Company, supra; Solari Industries, Inc. v. Malady, supra.

The only aspect of the court's opinion requiring more extended consideration is its ruling that, although New York law is otherwise applicable, the public policy of the forum, as expressed in Article II...

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23 practice notes
  • Surgidev Corp. v. Eye Technology, Inc., Civ. No. 4-85-1376.
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • November 17, 1986
    ...211-12 (1972); Wessel Co. v. Busa, 28 Ill.App.3d 686, 329 N.E.2d 414, 416 (1975); American Eutectic Welding Alloys Sales Co. v. Rodriguez, 480 F.2d 223, 226 n. 4 (1st Cir.1973); H.B. Fuller Co. v. Hagen, 363 F.Supp. 1325, 1329 (W.D.N.Y. 6 Defendants argue that even assuming Surgidev's custo......
  • Holloway v. Faw, Casson & Co., No. 228
    • United States
    • Court of Special Appeals of Maryland
    • September 1, 1988
    ...their attention to the "blue pencil rule" itself and rejected it. American Eutectic Welding Alloys Sales Co. v. Rodriguez, 480 F.2d 223 (1st Cir.1973); Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971); Solari Industries, Inc. v. Malady, 55 N.J. 571, 264 A.2d 53 In light of......
  • Laidlaw, Inc. v. Student Transp. of America, Inc., No. CIV. 98-2241(WGB).
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • September 14, 1998
    ...employee's use of confidential information may properly be enjoined); American Eutectic Welding Alloys Sales Co., Inc. v. Rodriguez, 480 F.2d 223, 227-29 (1st Cir.1973) (employer would be irreparably harmed absent injunction prohibiting former employee from soliciting former customers); Eco......
  • Bayly, Martin & Fay, Inc. v. Pickard, No. 68700
    • United States
    • Supreme Court of Oklahoma
    • September 26, 1989
    ...there 20%, could constitute a sale of good will within the meaning of § 218. 4 American Eutectic Welding Alloy Sales Co. v. Rodriguez, 480 F.2d 223, 226 (1st Cir.1973) (applying New York law); Chapman & Drake v. Harrington, 545 A.2d 645, 647 (Me.1988); Appalachian Laboratories, Inc. v. ......
  • Request a trial to view additional results
23 cases
  • Surgidev Corp. v. Eye Technology, Inc., Civ. No. 4-85-1376.
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Minnesota
    • November 17, 1986
    ...211-12 (1972); Wessel Co. v. Busa, 28 Ill.App.3d 686, 329 N.E.2d 414, 416 (1975); American Eutectic Welding Alloys Sales Co. v. Rodriguez, 480 F.2d 223, 226 n. 4 (1st Cir.1973); H.B. Fuller Co. v. Hagen, 363 F.Supp. 1325, 1329 (W.D.N.Y. 6 Defendants argue that even assuming Surgidev's custo......
  • Holloway v. Faw, Casson & Co., No. 228
    • United States
    • Court of Special Appeals of Maryland
    • September 1, 1988
    ...their attention to the "blue pencil rule" itself and rejected it. American Eutectic Welding Alloys Sales Co. v. Rodriguez, 480 F.2d 223 (1st Cir.1973); Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971); Solari Industries, Inc. v. Malady, 55 N.J. 571, 264 A.2d 53 In light of......
  • Laidlaw, Inc. v. Student Transp. of America, Inc., No. CIV. 98-2241(WGB).
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • September 14, 1998
    ...employee's use of confidential information may properly be enjoined); American Eutectic Welding Alloys Sales Co., Inc. v. Rodriguez, 480 F.2d 223, 227-29 (1st Cir.1973) (employer would be irreparably harmed absent injunction prohibiting former employee from soliciting former customers); Eco......
  • Bayly, Martin & Fay, Inc. v. Pickard, No. 68700
    • United States
    • Supreme Court of Oklahoma
    • September 26, 1989
    ...there 20%, could constitute a sale of good will within the meaning of § 218. 4 American Eutectic Welding Alloy Sales Co. v. Rodriguez, 480 F.2d 223, 226 (1st Cir.1973) (applying New York law); Chapman & Drake v. Harrington, 545 A.2d 645, 647 (Me.1988); Appalachian Laboratories, Inc. v. ......
  • Request a trial to view additional results

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