Lanier Professional Serv. v. Ricci

• Decision Date: 08 June 1999
• Docket Number: No. 99-1534,99-1534
• Citation: 192 F.3d 1
• Parties: (1st Cir. 1999) LANIER PROFESSIONAL SERVICES, INC., PLAINTIFF, APPELLANT, v. EILEEN M. RICCI AND BOMONT GRAPHICS TECHNOLOGY, INC., DEFENDANTS, APPELLEES. Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1

192 F.3d 1 (1st Cir. 1999)

LANIER PROFESSIONAL SERVICES, INC., PLAINTIFF, APPELLANT, v. EILEEN M. RICCI AND BOMONT GRAPHICS TECHNOLOGY, INC., DEFENDANTS, APPELLEES.

No. 99-1534

U.S. Court of Appeals, First Circuit

Heard June 8, 1999.

Decided September 15, 1999.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. Joseph L. Tauro, U.S. District Judge

Daniel M. Shea, with whom Smith, Currie & Hancock, Llp, Harry T. Daniels, and Hale & Dorr, Llp, were on brief, for appellant.

Barry Ravech for Eileen M. Ricci.

Cheryl Pinarchick, with whom James W. Stoll, and Brown, Rudnick, Freed & Gesmer were on brief, for Bomont Graphics Technology, Inc.

Before Selya, Boudin, and Lipez, Circuit Judges.

Lipez, Circuit Judge.

Plaintiff-appellant Lanier Professional Services, Inc. ("Lanier"), brought this action against its former employee Eileen M. Ricci and her new employer, Bomont Graphics Technology, Inc. ("Bomont"). Lanier requested, inter alia, a preliminary injunction barring Ricci from working for Bomont in violation of a non-competition provision in Ricci's employment agreement with Lanier. That provision requires that Ricci not sell "Facilities Mgmt [Management] Services" for one year after her employment with Lanier, which ended in November 1998. Lanier also sought to enjoin both defendants from using confidential information and trade secrets that Ricci had allegedly misappropriated from Lanier. The district court denied the motion for a preliminary injunction, concluding that Lanier had not shown a likelihood of success on the merits. We affirm.

I.

Ricci was employed by Copytech Printing, Inc. ("Copytech"), from 1991 to 1996. She sold printing and copying services to various clients including members of MASCO, a consortium of colleges and hospitals located in Boston's Longwood Medical Area. She also supervised a printing and copying center operated by Copytech at a facility in Boston leased from MASCO. In February 1996, Lanier purchased Copytech. As a condition of continued employment with Lanier, Ricci was required to sign a standard-form Lanier Employment Agreement that included the following provision: "During the term of employment with the Company and for a period of one (1) year after termination of employment hereunder... Employee will not, directly or indirectly, on Employee's own behalf or for others, demonstrate, service, or sell products or perform services in the Territory¹ that are competitive with the Products...." The "Products" were defined by checking the appropriate items from a list; on Ricci's agreement, only "Facilities Mgmt Services" was checked.

Ricci performed the same type of work for Lanier that she had for Copytech, selling off-site printing and copying services and overseeing the copy center. Ricci resigned from Lanier on November 30, 1998, and began working for Bomont in December 1998 as its sole outside salesperson. A small printing shop specializing in large-format, full-color printing, Bomont to some degree competes with Lanier (and many others) in the Boston printing market. In her new job Ricci has won at least two former Lanier accounts for Bomont.

Lanier filed suit against Ricci and Bomont in the United States District Court for the District of Massachusetts in February 1999, seeking damages and a preliminary and permanent injunction. After reviewing the affidavits submitted by the parties and hearing argument, the court denied the motion for a preliminary injunction. This appeal followed.

II.

We review the denial of a request for a preliminary injunction for abuse of discretion, see Hiller Cranberry Products, Inc. v. Koplovsky, 165 F.3d 1, 4 (1st Cir. 1999), but "rulings on abstract legal issues remain reviewable de novo, and findings of fact are assessed for clear error," Ocean Spray Cranberries, Inc. v. PepsiCo, Inc., 160 F.3d 58, 61 n.1 (1st Cir. 1998). "The appealing party bears the considerable burden of demonstrating that the District Court flouted the four-part test for preliminary injunctive relief." Used Tire Int'l, Inc. v. Diaz-Saldana, 155 F.3d 1, 4 (1st Cir. 1998) (internal quotation marks omitted). That familiar four-part test requires the plaintiff to show: "(1) it is substantially likely to succeed on the merits of its claim; (2) absent the injunction there is a significant risk of irreparable harm; (3) the balance of hardships weighs in its favor; and (4) the injunction will not harm the public interest." I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27, 33 (1st Cir. 1998) (internal quotation marks omitted). We apply the federal preliminary injunction standard in a diversity case, at least where the parties have not suggested that state law supplies meaningfully different criteria. See Ocean Spray, 160 F.3d at 61. We have also noted that "Massachusetts standards for a preliminary injunction do not seem markedly different" than ours. Id. (citing Packaging Indus. Group, Inc. v. Cheney, 405 N.E.2d 106, 111-12 (Mass. 1980)).

III.

The primary issue in this appeal involves the interpretation of the term "facilities management services," which the non-competition agreement bars Ricci from selling until November 30, 1999. The district court found that term ambiguous, construed the agreement against the drafter, Lanier, and concluded that Lanier had not demonstrated a substantial likelihood of success in proving that Ricci had violated the agreement.²

There appears to be no dispute that facilities management services refers primarily to support services that the client wishes to "out-source" to an outside provider who works on-site at a client's place of business. Facilities management services are an important and growing part of Lanier's business in Boston. The dispute in this case relates to off-site printing services, not performed at the client's place of business, which Ricci sold for Copytech and Lanier, and now sells for Bomont. Ricci and Bomont contend that such off-site services are not facilities management services as that term is used in the printing and copying industry, and as it was used at Lanier while Ricci worked there. Lanier, on the other hand, asserts that facilities management services include off-site printing.

Under Massachusetts law, a contract term is ambiguous when its language is "reasonably prone to different interpretations" or "susceptible to differing, but nonetheless plausible, constructions." Alison H. v. Byard, 163 F.3d 2, 6 (1st Cir. 1998); see also Bercume v. Bercume, 704 N.E.2d 177, 182 (Mass. 1999). Whether a term is ambiguous is a question of law. See Alison H., 163 F.3d at 6.

We agree with the district court that the term "facilities management services," undefined in the agreement, is inescapably ambiguous as a matter of law. When contractual language is ambiguous, its meaning is a question of fact. See Den norske Bank AS v. First National Bank, 75 F.3d 49, 52 (1st Cir. 1996). The resolution of the ambiguity turns on the parties' intent, as "discerned by the factfinder from the circumstances surrounding the ambiguity and from such reasonable inferences as may be available." Colasanto v. Life Ins. Co. of N. Am., 100 F.3d 203, 211 (1st Cir. 1996). Extrinsic evidence is admissible to assist the factfinder in resolving the ambiguity, including evidence of, in descending order of importance: (1) the parties' negotiations concerning the contract at issue; (2) their course of performance; and (3) trade usage in the relevant industry.³ See Den norske, 75 F.3d at 52-53; see also Keating v. Stadium Management Corp., 508 N.E.2d 121, 123 (Mass. App. Ct. 1987). In support of their competing...