Elizabeth Grady Face First, Inc. v. Escavich

• Decision Date: 14 June 2004
• Docket Number: No. CIV.A. 3:04CV769(SRU).,CIV.A. 3:04CV769(SRU).
• Citation: 321 F.Supp.2d 420
• Parties: ELIZABETH GRADY FACE FIRST, INC., Plaintiff, v. Tanya ESCAVICH, Defendant.
• Court: U.S. District Court — District of Connecticut

321 F.Supp.2d 420

ELIZABETH GRADY FACE FIRST, INC., Plaintiff, v. Tanya ESCAVICH, Defendant.

No. CIV.A. 3:04CV769(SRU).

United States District Court, D. Connecticut.

June 14, 2004.

Derek T. Werner, Hugh F. Murray, III, Murtha Cullina LLP, Hartford, CT, for Plaintiff.

Louis W. Flynn, Jr., Hartford, CT, for Defendant.

RULING ON MOTION FOR PRELIMINARY INJUNCTION

UNDERHILL, District Judge.

Elizabeth Grady Face First, Inc. ("Elizabeth Grady") sued Tanya Escavich ("Escavich"), one of its former employees, for breach of a covenant not to compete. Elizabeth Grady now seeks a preliminary injunction to prevent Escavich from working for a competitor in the West Hartford area. On May 21, 2004, this court heard evidence on the merits of Elizabeth Grady's motion. For the reasons set forth in this opinion, a preliminary injunction substantially similar to the one requested by Elizabeth Grady will issue.

I. Facts

Based on the evidence presented at the May 21, 2004 hearing, I find the following facts.

In January 2002, Escavich was laid off from her job as director of marketing communications at Emhart Glass Manufacturing Inc. Rather than seeking a similar position with a different company, Escavich decided to pursue a career as an esthetician. Escavich applied for positions at various salons, including Elizabeth Grady, an established skin-care business based in Massachusetts with an office in West Hartford, Connecticut. After interviewing Escavich in both Massachusetts and West Hartford, Elizabeth Grady offered her a position as esthetician in its West Hartford branch. Escavich accepted, and, on March 30, 2002, signed an employment agreement ("the Employment Agreement").

The Employment Agreement contained the following provisions relevant to the instant dispute: (1) a clause prohibiting Escavich from directly or indirectly competing with Elizabeth Grady for a period of one year within a radius of twenty-five miles from the West Hartford branch (the "Non-Compete Clause"); (2) a clause prohibiting Escavich, for one year, from attempting to solicit the business of any person who was a customer of Elizabeth Grady, or who had been solicited by Elizabeth Grady, during the time Escavich was employed by Elizabeth Grady (the "Non-Solicitation Clause"); and (3) a clause prohibiting Escavich from disclosing any confidential information belonging to Elizabeth Grady, including customer lists ("the Non-Disclosure Clause"). In addition the Employment Agreement specified that it was governed by the laws of Massachusetts.

Shortly after signing the Employment Agreement, Escavich attended — at Elizabeth Grady's expense — training at Elizabeth Grady's school in Massachusetts, followed by a period of time during which she "shadowed" an esthetician in one of Elizabeth Grady's salons in Massachusetts. She then began her work at the West Hartford salon.

Escavich met with success as an esthetician and was, at some point, promoted to the position of Esthetics Supervisor. Nevertheless, after a time, she became dissatisfied with the "corporate" attitude of Elizabeth Grady. In late 2003, she discussed with a friend of hers the possibility of going to work at Nelson — The Spa ("Nelson"), another West Hartford salon only a few blocks from Elizabeth Grady's salon.

Around this time — the 2003 holiday season — Escavich began compiling a list of customers who had given her Christmas gifts. She entered the names and addresses of these people into a label-making program on her computer and then used the program to generate labels to put on thank-you notes and holiday cards. Escavich continued to add customers to this list until March 2004.

On April 2, 2004, Escavich left her job at Elizabeth Grady and accepted a position at Nelson. A few weeks after starting at Nelson, Escavich converted the names and addresses in her mailing label program into an Excel spreadsheet, printed out that spreadsheet, and gave it to her manager at Nelson. Nelson then sent out a mailing to all the customers on the list declaring, "We are happy to announce that Tanya Escavich, formerly of Elizabeth Grady, has joined our staff, and is ready to meet your skin care needs."

While working at Nelson, Escavich provided skin care to a number of people who had been her clients at Elizabeth Grady.

On May 7, 2004, Elizabeth Grady sued Escavich and sought, among other things, a temporary restraining order. On May 11, 2004, after hearing from counsel for both parties, I issued a Temporary Restraining Order prohibiting Escavich from servicing or soliciting customers of Elizabeth Grady within a 25 mile radius of the West Hartford salon and from disclosing confidential information of Elizabeth Grady's. The Temporary Restraining Order did not require her to cease working at Nelson. That Order is still in effect.

In its motion for preliminary injunction, however, Elizabeth Grady seeks to enforce more of the Employment Agreement. Specifically, it seeks, in addition to the restrictions contained in the Temporary Restraining Order, to: (1) prohibit Escavich from working at Nelson; (2) prohibit her from competing with, or working for any competitor of, Elizabeth Grady; and (3) prohibit her from soliciting any person who was an Elizabeth Grady customer when Escavich worked there.

II. Discussion

A. Choice of Law

As a preliminary matter, Escavich argues that, despite the language of the Employment Agreement providing that the agreement should be governed by Massachusetts law, Connecticut law applies. Under section 187 of the Restatement (Second) Conflict of Laws — which has been adopted by Connecticut, see Elgar v. Elgar, 238 Conn. 839, 850, 679 A.2d 937 (1996) — a contract's choice of law provision will be ignored if "the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice." Massachusetts, Escavich contends, has no substantial relationship to the parties or the transaction at issue. She is incorrect. Elizabeth Grady is incorporated, and has its principal place of business, in Massachusetts. That alone is sufficient to justify the choice of law. See RESTATEMENT (SECOND) CONFLICT OF LAWS, § 187, cmt. f. Moreover, Escavich interviewed and was trained in Massachusetts. There is no question that these facts give rise to a substantial relationship between the parties and Massachusetts. Massachusetts law, therefore, applies.

B. Standard for Issuing a Preliminary Injunction

A party seeking a preliminary injunction must show that: (1) it is likely to suffer irreparable injury if the injunction is not granted and (2) either (a) a likelihood of success on the merits of its case or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in its favor. Reuters Ltd. v. United Press Intern., Inc., 903 F.2d 904, 907 (2d Cir.1990).

C. Irreparable Harm

The parties do not dispute the issue of irreparable harm. Escavich has already serviced the same customers she serviced at Elizabeth Grady. If not enjoined, she is likely to continue to solicit and service Elizabeth Grady's customers and to aid her employer in doing so as well. She has also disclosed customer lists to her employer and may do so in the future. Those things are likely to diminish Elizabeth Grady's existing customer base and decrease its goodwill. Such damage cannot be repaired with money. Jacobson & Co., Inc. v. Armstrong Cork Co., 548 F.2d 438, 444-45 (2d Cir.1977) (party's "ample evidence" of threatened loss of goodwill and customers supported finding of irreparable harm that could not be rectified by money damages).

D. Likelihood of Success on the Merits

1. Breach

Escavich argues that she is not in breach of contract because she does not actually compete with Elizabeth Grady. Her argument is that she is now a "holistic esthetician," using organic products when providing skin-care services. Elizabeth Grady, by contrast, is in the field of traditional esthetics, using conventional products. This argument is unpersuasive. Nelson — Escavich's current employer — solicited and serviced former Elizabeth Grady customers. Escavich herself testified that customers would be unlikely to seek skin-care at both places. The fact that Escavich now offers "holistic" services shows nothing more than that she provides her skin-care services in a different manner than Elizabeth Grady. The service that she ultimately supplies, however, is the same one Elizabeth Grady provides — skin-care. Accordingly, I find it beyond doubt that Escavich and her employer, Nelson, compete directly with Elizabeth Grady.

Given that Nelson is in competition with Elizabeth Grady, there is no dispute that Escavich has not complied with the terms of the agreement. Only a few weeks after leaving Elizabeth Grady she took a position with a competitor located only a few blocks from the Elizabeth Grady salon in West Hartford. The work she performs is substantially the same as the work she performed at Elizabeth Grady. Moreover, Escavich has disclosed the names and addresses of Elizabeth Grady customers to her employer, has aided in the solicitation of those customers, and has provided those customers with skin-care services.

E. Validity of the Contract

Escavich argues that, even if she is not in compliance with the terms of the Employment Agreement, the agreement is no longer valid because her promotion to Esthetics Supervisor created a new contract superceding the Employment Agreement. In support of this argument, Escavich relies on the cases of F.A. Bartlett Tree Expert Co. v. Barrington, 353 Mass. 585, 233 N.E.2d 756 (1968), and AFC Cable Systems, Inc. v. Clisham, 62 F.Supp.2d 167 (1999) — cases in which a change in employment status was deemed to have voided a prior non-compete agreement. She contends that, like the employees in those cases, her change in employment status created a new agreement...