Ikon Office Solutions v. American Office, 00-64-JE.
| Decision Date | 26 April 2001 |
| Docket Number | No. 00-64-JE.,00-64-JE. |
| Citation | 178 F.Supp.2d 1154 |
| Parties | IKON OFFICE SOLUTIONS, INC., an Ohio corporation, Plaintiff, v. AMERICAN OFFICE PRODUCTS, INC., dba Associated Business Systems, Inc., an Oregon corporation; Larry Bradley, an Oregon citizen; Lesa Bergey, an Oregon citizen; and Craig Knouf, an Oregon citizen, Defendants. |
| Court | U.S. District Court — District of Oregon |
Mark E. Friedman, Kenneth L. Schubert, III, Michael R. O'Connor, Garvey, Schubert & Barer, Portland, OR, for Plaintiff.
Jeffrey M. Edelson, Matthew A. Levin, Markowitz, Herbold, Glade & Mehlhaf, P.C., Portland, OR, for Defendants.
Plaintiff Ikon Office Solutions, Inc. (Ikon) brings this action against defendants American Office Products, Inc. dba Associated Business Systems, Inc. (ABS), and three former employees of Ikon who now work for ABS: Larry Bradley, Lesa Bergey, and Craig Knouf. Plaintiff Ikon alleges that defendants Bradley and Bergey breached non-competition and confidentiality agreements with Ikon, that all defendants breached one or more fiduciary duties to Ikon, misappropriated Ikon's trade secrets, converted Ikon's documents and databases, and tortiously interfered with Ikon's contracts and economic relations. Ikon has moved for partial summary judgment, and defendants have filed a cross-motion for summary judgment against Ikon on all claims. For the reasons that follow, I deny plaintiff's motion, and grant defendants' cross-motion for summary judgment on all claims.
Plaintiff Ikon1 sells, leases, and services office machines, such as copiers, in a number of states including Oregon. Defendant ABS presently competes with Ikon in parts of Oregon. The President of ABS, defendant Knouf, is a former IKON employee.2
Ikon had hired Knouf away from a competitor in 1985. In December 1989, Knouf — then sales manager of Ikon's Eugene branch — hired defendants Bradley and Bergey away from their respective employers to work for Ikon. Bergey's former employer, Savin Corp. (Savin), sued Ikon and Bergey for violating a non-competition agreement, which action was later settled.
By 1999, Bradley was a very highly regarded sales representative in Ikon's Eugene branch, and Bergey was the sales manager for the Eugene branch. Bradley resigned from Ikon on July 29, 1999, and Bergey left on September 7, 1999. After a brief interval, each was hired by ABS, though both deny any pre-arranged agreement to come to work for ABS. Ikon contends that, after joining ABS, Bradley and Bergey induced many of Ikon's best customers and employees to defect to ABS. Ikon asserts that Bradley and Bergey accomplished that result by improperly using the relationships they cultivated with customers while employed at Ikon, in violation of non-competition agreements, and by using stolen trade secrets in violation of confidentiality agreements. Ikon also alleges that Bergey, while still employed at Ikon, failed to take appropriate steps to prevent the loss of these customer accounts to ABS. Ikon seeks over twenty million dollars in compensatory and punitive damages from defendants, plus injunctive relief and attorney fees.
The court should grant summary judgment if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed R Civ P 56(c). If the moving party shows that there are no genuine issues of material fact, the nonmoving party must go beyond the pleadings and designate facts showing an issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A scintilla of evidence, or evidence that is merely colorable or not significantly probative, does not present a genuine issue of material fact. United Steelworkers of Am. v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9th Cir.), cert denied, 493 U.S. 809, 110 S.Ct. 51, 107 L.Ed.2d 20 (1989).
The substantive law governing a claim determines whether a fact is material. T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). The court should resolve reasonable doubts about the existence of a material factual issue against the moving party. Id. at 631. The court should view inferences drawn from the facts in the light most favorable to the nonmoving party. Id. at 630-31.
For purposes of defendants' motion for summary judgment, I must assume that Bergey and Bradley did sign the non-competition agreements as Ikon alleges, and that those documents were signed on the dates that appear on the face of the respective agreements.3 For purposes of this motion, defendants further assume that the scope and duration of the non-competition agreements are reasonable. The dispositive question is whether the non-competition agreements comply with ORS 653.295(1), which provides that:
A noncompetition agreement entered into between an employer and employee is void and shall not be enforced by any court in this state unless the agreement is entered into upon the:
(a) Initial employment of the employee with the employer; or
(b) Subsequent bona fide advancement of the employee with the employer.
Defendant Bergey argues that her non-competition agreement is void because she began working for IKON on December 1, 1989, but did not sign a non-competition agreement until December 18, 1989. I agree. The term "initial employment" in ORS 653.295 "means when the employee starts work." Olsten Corp. v. Sommers, 534 F.Supp. 395, 398 (D.Or. 1982). Cf. Perthou v. Stewart, 243 F.Supp. 655, 659 (D.Or.1965) ();4 Pacific Veterinary Hospital, PC v. White, 72 Or.App. 533, 696 P.2d 570 (1985) ().
The parties have cited no published Oregon case enforcing a non-competition agreement signed more than three days after the employee commenced work or was promoted. See Bouska v. Wright, 49 Or.App. 763, 621 P.2d 69 (1980). If 17 days after is timely, as Ikon contends, then why not 20 or 30 or even 60 days? I decline Ikon's invitation to embark on that path, particularly when the Oregon Legislature has declared that a noncompetition agreement is void unless it complies with the statutory requirements. Under Oregon law, the right not to be subjected to a non-competition agreement, except as authorized by ORS 653.295, is an "important employment-related statutory right." Dymock v. Norwest Safety Protective Equip. for Oregon Industry, Inc., 172 Or.App. 399, 405-06, 19 P.3d 934 (2001).5
Ikon attempts to create a material factual dispute by speculating that Bergey may not have commenced working for Ikon until December 18, but Ikon offers no evidence to support that theory, and Ikon's designated corporate representative, Ronald McGee, recently conceded at deposition that Ikon has no such evidence.6 I hold that Bergey's non-competition agreement is void as a matter of law.
I reach the opposite conclusion with regard to Bradley. His non-competition agreement is dated December 4, 1989, and he did not begin working for Ikon until December 11, 1989. Defendants have suggested that the document might have been backdated, but offer no evidence that occurred. While there is a considerable range of dates on various documents signed by Bradley (from December 4 through December 18), that does not establish that the non-competition agreement was backdated. Defendants also have suggested that the document proffered by Ikon may have been forged, and have questioned Ikon's failure to produce the original and also the circumstances under which the copy was discovered. It is not necessary to decide whether that evidence is sufficient to create an issue for trial because I conclude, for different reasons, that Ikon is barred from enforcing the agreement against Bradley.
Defendants argue that Ikon is estopped from enforcing the non-competition agreements against Bergey and Bradley, or has waived those rights. I agree.
Less than a year before he decided to leave Ikon, Bradley requested and was given a copy of his personnel file.7 It did not contain a non-competition agreement. When Bradley resigned on July 29, 1999, he specifically asked his supervisor, Bergey — who was then sales manager of Ikon's Eugene branch — whether he was subject to a non-competition agreement. Bergey telephoned Gina Salt at Ikon's Tigard office, who was responsible for maintaining the personnel files of all sales representatives in Oregon, including Bradley. It is undisputed that, if Bradley had a non-competition agreement with Ikon, it should have been in Bradley's personnel file. With Bradley listening on the speaker phone, Bergey told Salt that Bradley was resigning, and asked whether there was a non-competition agreement with respect to Bradley.8 Salt says she checked Bradley's personnel file, determined that "there wasn't a non-competition in the file," and told Bergey9 that "we have no non-competition on file."10 Neither Salt nor anyone else at Ikon suggested to Bradley that there might be a non-competition agreement in some other location, or that Ikon considered Bradley to be bound by a non-competition agreement even though Ikon could not presently locate that contract. Ikon also did not advise Bradley of the scope and duration of any restrictions to which he allegedly was subject. Ikon's designated corporate representative, Ronald McGee, testified at deposition that — if an employee has a non-competition agreement — Ikon's policy is to review the terms of that agreement with the employee during an exit interview. No such discussion occurred when Bradley resigned.
The day after Bradley left Ikon, he met with Knouf to discuss...
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