Lasership Inc v. Watson

• Decision Date: 12 August 2009
• Docket Number: Case Number: CL-2009-1219
• Parties: Lasership Inc. v. Belinda Watson and Midnite Air Corp. d/b/a Midnite Express
• Court: Circuit Court of Virginia

Lasership Inc.

v.Belinda Watson and Midnite Air Corp. d/b/a Midnite Express

Case Number: CL-2009-1219

NINETEENTH JUDICIAL CIRCUIT OF VIRGINIA

COUNTY OF FAIRFAX

CITY OF FAIRFAX

August 12, 2009

JUDGES

DENNIS J. SMITH, CHIEF JUDGE

MICHAEL P. McWEENY

MARCUS D. WILLIAMS

STANLEY P. KLEIN

JANE MARUM ROUSH

LESLIE M. ALDEN

JONATHAN C. THACHER

R. TERRENCE NEY

GAYLORD L. FINCH, JR.

RANDY I. BELLOWS

CHARLES J. MAXFIELD

BRUCE D. WHITE

ROBERT J. SMITH

DAVID S. SCHELL

JAN L BRODIE

RETIRED JUDGES

BURCH MILLSAP

BARNARD F. JENNINGS

THOMAS J. MIDDLETON

THOMAS A. FORTKORT

RICHARD J. JAMBORSKY

JACK B. STEVENS

J. HOWE BROWN

F. BRUCE BACH

M. LANGHORNE KEITH

ARTHUR B. VIEREGG

KATHLEEN H. MACKAY

ROBERT W. WOOLDRIDGE, JR.

Randell C. Ogg, Esquire

Law Offices of Randell C. Ogg

Counsel for Defendants

Karen A. Doner, Esquire

Thomas J. Mckee, Jr., Esquire

Williams Mullen, P.C.

Co-Counsel for Plaintiff

Sean M. Gibbons, Esquire

Williams Mullen, P.C.

Two James Center

Co-Counsel for Plaintiff

Dear Counsel:

This matter came before the Court on Defendants' demurrer. After considering oral and written arguments, and reviewing the applicable legal authority, the Court finds that certain provisions in the employment agreement are overbroad and therefore the employment agreement is unenforceable as a matter of law. As a result Defendants' demurrer is sustained without leave to amend.

BACKGROUND

Plaintiff Lasership, Inc. (Lasership), is a Delaware corporation and is a full service messenger and delivery company with offices throughout Washington, D.C., and the surrounding metropolitan area. (Compl. ¶ 1.) Plaintiff filed the instant action against its former employee, Belinda Watson (Watson), and Watson's present employer, Midnite Air Corporation (Midnite), to enforce a covenant not to compete, a nonsolicitation clause, and a confidentiality agreement contained in an employment agreement signed by Watson on January 29, 2007, while in the employ of Lasership. (Compl. ¶¶ 14-17; Compl. Ex. A.)

Paragraph 8(d) of the employment agreement contains the covenant not to compete. It states:

Throughout any period during which Employee is an employee of the Company, and for a period of one (1) year from and after the date upon which Employee shall cease for any reason whatsoever to be an employee of the Company, Employee covenants and agrees that he will not directly or indirectly for himself or for the benefit of another engage, directly or indirectly, either as proprietor, stockholder, partner, officer, employee or otherwise, in any business which sells or distributes products or provides services substantially similar to those sold or provided by the Company ("Services") within a forty-five (45) mile radius of the Company's office or offices that employee was assigned to during the twelve (12) month period immediately preceding the date upon which Employee's employment with the Company ceased. However, for purposes of this paragraph, this restriction with respect to the Company's Services applies only to those services rendered by Employee or an office or unit of the Company in Which Employee worked or over which Employee had supervisory authority.

(Compl. Ex. A. ¶ 8(d).)

The solicitation clause is contained in paragraph 8(e) of the employment agreement and reads as follows:

Employee expressly covenants and agrees that, in addition to any other limitation contained herein, for a period of two (2) years after the termination of Employee's employment under this Agreement, Employee shall not, for himself or on behalf of any other person, firm, corporation, or other entity, contact in any manner, directly or indirectly, solicit, agree to perform or perform services of any type that the Company can render ("Services") for any of Company's Customers.

(Compl. Ex. A. ¶ 8(e).)

The confidentiality agreement is contained in paragraph 8(f) of the employment agreement:

Employee expressly covenants and agrees that Employee shall not at any time or in any manner, without consent by the company, regardless of the circumstances, either directly or indirectly, divulge, disclose or communicate to any person, firm, corporation or other entity in any manner whatsoever any information concerning any matters affecting or relating to the business of Company, including without limitation, any of its Customers, independent contractors or delivery network affiliates, the prices it obtains or has obtained from the sale of, or at which it sells or has sold, its products or services, trade secrets, advertising, or any other information concerning the business of Company, its manner of operation, its plans, processes, or other data without regard to whether all of the above-stated matters will be deemed confidential, material or important, and Employee specifically and expressly stipulates that as between them such matters are important, material and confidential and gravely affect the effective and successful conduct of the business of Company and Company's goodwill, and that any breach of the terms of this Section 8 shall be a material breach of this Agreement.

(Compl. Ex. A. ¶ 8(f).)

In addition to the preceding provisions, the employment agreement also contains a severability clause. The clause reads:

Effect of Partial Invalidity. The invalidity of any portion of this Agreement shall not be deemed to affect the validity of any other provisions. In the event that any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision. Further, if any part on any provision of this Agreement shall be determined to be invalid or unenforceable by reason of the extent, duration or geographical scope thereof, or otherwise, then the parties agree that the court making such determination may reduce such extent, duration or geographical scope, or other provisions thereof, and in its reduced form such part or provision shall then be enforceable in the manner contemplated hereby.

(Compl. Ex. A. ¶15.)

Watson was employed as a Lead Dispatcher for Lasership's Global Critical Deliveries division in the company's office in Sterling, Virginia. (Compl. ¶¶ 6-7.) The Global Critical Deliveries division provides expertise in same-day worldwide shipping for customers. (Compl. ¶ 7.) Watson was responsible for overseeing hundreds of Lasership contractors and was privy to weekly management conferences and strategy sessions regarding Lasership's competitors, including Midnite. (Compl. ¶ 8.) Watson regularly had direct contact with Lasership's customers, was aware of Lasership's management process and techniques, was involved in high level management and business decisions, and had access to confidential information, including business strategies, policies, accounts, customer lists, trade secrets, procedures and methods. (Compl. ¶¶ 8, 11, 12.) Furthermore, Lasership specifically trained and tested Watson in industry-specific TSA guidelines and regulations. (Compl. ¶ 10.)

Watson resigned from her employment with Lasership on January 3, 2009. (Compl. ¶ 6.) Immediately after her resignation, Midnite employed Watson. (Compl. ¶ 9.) Midnite is a direct competitor of Lasership and offers the same services to its customers that Lasership offers to its customers. (Compl. ¶¶ 9, 13.) Watson works in Midnite's office located in Chantilly, Virginia, which is within a 45 mile radius of the Dulles Office where she was assigned during the twelve month period immediately preceding her resignation from Lasership. (Compl. ¶¶ 13, 20.) Watson provides products and services to Midnite that are substantially similar to the duties she performed while employed with Lasership. (Compl. ¶¶ 13, 20.) She has also contacted, solicited and/or performed services for Lasership "Customers" in the scope of her employment with Midnite and has allegedly communicated and/or disclosed Lasership's confidential information to Midnite. (Compl. ¶¶ 21, 23.) Lasership has suffered and will continue to suffer unspecified damages and harm to its business in an amount no less than $50,000. (Compl. ¶¶ 26, 40, 47, 50.)

The Complaint asserts a breach of contract claim against Watson (Count I), a tortious interference with contract claim against Midnite (Count II), and a claim of statutory business conspiracy against both defendants (Count III). In addition to the compensatory and liquidated damages Lasership requests in Counts I and III, Count II requests an award of $100,000 in punitive damages against Midnite for its willful misconduct, malice, fraud, wantonness, oppression and/or such gross indifference and recklessness as to amount to a wanton or willful disregard of the rights of Lasership. (Compl. ¶ 47). Lastly, Lasership requests its costs and attorneys' fees from both Defendants in the action. (Compl. ¶¶ 40, 47, 50).

Defendants' demurrer challenges all three counts.

APPROPRIATENESS OF DEMURRER AND LEGAL STANDARD

As a preliminary argument, Plaintiff asserts that "a demurrer is a poor vehicle for resolving the fact intensive inquiry necessary in evaluating the validity of any restrictive covenant." (Pl's Mem. in Opp'n to Defs.' Demurrers at 3-4.) Plaintiff relies on the Supreme Court of Virginia's decision in Renner v. Stafford, 245 Va. 351, 352, 429 S.E.2d 218, 219 (1993), for the proposition that a trial court should not decide disputes "without permitting the parties to reach a trial on the merits" and thereby "short-circuit litigation pretrial" by considering on demurrer factual challenges to restrictive covenants. (Pl's Mem. in Opp'n to Defs.' Demurrers at 3-4.) However, Renner did not deal with either a demurrer or a restrictive covenant. The case offers nothing more to the instant action than a cautionary statement regarding a court's premature conclusions of fact without permitting the parties a trial on the merits. See Renner, 254 Va. at 351.

While the cautionary reminder of Renner...