Nordson Corp. v. Plasschaert
| Decision Date | 06 May 1982 |
| Docket Number | No. 80-7855,80-7855 |
| Parties | NORDSON CORPORATION, Plaintiff-Appellee, v. Joseph PLASSCHAERT and Ranier Corporation, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Edward J. Bauer, Decatur, Ga., for defendants-appellants.
Alston, Miller & Gaines, Franklin R. Nix, Atlanta, Ga., Wood, Herron & Evans, J. Robert Chambers, Cincinnati, Ohio, for plaintiff-appellee.
Appeal from the United States District Court for the Northern District of Georgia.
Before GODBOLD, Chief Judge, TJOFLAT and VANCE, Circuit Judges.
In this diversity action the District Court, N.D. Ga., issued a preliminary injunction enjoining Joseph Plasschaert, a former employee of Nordson Corporation, from using or disclosing confidential information concerning Nordson's processes and products. The court ordered Plasschaert to return to Nordson all records of confidential information in his possession. It further enjoined him from engaging in any work until May 15, 1982 involving: (1) research, development or engineering relating to hot-melt 1 application equipment, (2) the promotion or sale of hot-melt application equipment in the United States, Canada, and Western Europe, or (3) situations in which loyal fulfillment of his duties and responsibilities would inherently call upon him to reveal or otherwise to use proprietary or confidential information or trade secrets acquired from Nordson or relating to Nordson's activities.
Plasschaert appeals, and we affirm.
Nordson, an Ohio corporation headquartered in Amherst, Ohio, is the world's leading manufacturer of application equipment for hot-melt adhesives. Plasschaert, a Dutch subject, was employed in 1972 to serve as an area sales manager of hot-melt adhesive equipment in southern Holland. In 1975 he transferred to Brussels, Belgium, to become marketing coordinator of the European market, and there in 1977 he was promoted to marketing manager. In November 1978 Nordson transferred Plasschaert to its Norcross, Georgia, Packaging and Assembly Division office as a marketing specialist-product assembly. In this capacity he was to ascertain new uses for hot-melt equipment but was not to sell or engineer the products.
In connection with this last transfer Plasschaert executed an "Employee Agreement" on November 15, 1978, in Doraville, Georgia, which contained the following excerpts:
I am employed or desire to be employed by Nordson in a capacity in which I may receive or contribute to confidential information. In consideration of such employment or continued employment, and in consideration of being given access to confidential information, I agree to the following:
1. In this agreement:
b. Confidential Information means information, not generally known and proprietary to Nordson, about Nordson's processes and products, including information relating to research, development, manufacture, purchasing, accounting, engineering, marketing, merchandising and selling. All information disclosed to me, or to which I obtain access, during the period of my employment, which I have reasonable basis to believe to be Confidential Information, or which I have reasonable basis to believe Nordson treats as being Confidential Information, shall be presumed to be Confidential Information.
2. Except as required in my duties to Nordson, I will never, either during my employment by Nordson or thereafter, use or disclose any Confidential Information as defined above. Upon termination of my employment with Nordson, all records of Confidential Information including copies thereof in my possession, whether prepared by me or others, will be left with Nordson.
4. I promise that during my employment and for a period of two (2) years immediately following the termination of my employment with Nordson or for such part of the two (2) years as may be found lawful, I will not, either as principal, agent, consultant, employee, or otherwise, engage in any work involving any of the following:
a. Research, development or engineering relating to items similar to or competitive with the products I have been assigned to work on or the products I actually do work on at Nordson;
b. The promotion and/or sale of any similar product in direct competition with the line of Nordson which I have promoted and/or sold in the same territory or any part thereof during any part of the two-year period immediately preceding the termination of my employment with Nordson;
c. Situations in which the loyal fulfillment of my duties and responsibilities would inherently call upon me to reveal or otherwise to use proprietary or confidential information or trade secrets acquired while at Nordson and relating to Nordson activities.
If I am unable to obtain employment consistent with my abilities and education within one month after termination of my employment with Nordson, because of provisions of this paragraph, such provisions shall thereafter continue to bind me only as long as Nordson shall make payments to me equal to three fourths of my monthly base pay at termination (exclusive of extra compensation, bonus or employee benefits) for each month of such employment, commencing with the second month after termination of my employment with Nordson.
5. It has been explained to me and I agree that because Nordson has various divisions throughout the country and the world, these obligations will be interpreted and construed in accordance with the laws of the State of Ohio so that everyone will be treated fairly should disputes ever arise.
Plasschaert became disenchanted with his prospects with Nordson and in late 1979 made plans to return to Europe to compete against Nordson. To this end he contacted Peter Dittberner, head of Dittberner, Gmbh, a German competitor of Nordson, in an effort to become a distributor of its hot-melt application equipment. No agreement was reached at that time. In February 1980 Plasschaert incorporated Ranier Corporation. In late April or early May 1980 he prepared the Ranier Plan, a document containing a variety of information on the hot-melt equipment market in general and on Nordson's business in particular. Plasschaert took the Ranier Plan to Europe in early May and showed at least two pages of it to Peter Dittberner during one of two meetings in which Plasschaert again sought to become a distributor for Dittberner's hot-melt equipment. Again no firm agreement was reached. During this trip Plasschaert obtained financing for his new business and arranged to move his family back to Europe.
Nordson found out about the Ranier Plan because, on this same trip to Europe, Plasschaert showed the plan to a fellow Nordson employee who photocopied and gave it to his superiors who forwarded it to Nordson's management in Ohio. Plasschaert resigned May 12. Nordson filed suit May 14 against Plasschaert and Ranier Corporation alleging that they violated Nordson's common law protection of trade secrets, that Plasschaert breached the employee agreement with regard to disclosure of confidential information and the covenant not to compete, and that Plasschaert engaged in unfair competition with Nordson by his alleged attempt to solicit Nordson employees to join Ranier through use of the Ranier Plan.
The Georgia district judge analyzed this case with care and precision. He recognized that if he applied Georgia principles concerning covenants not to compete Plasschaert's covenant would be unenforceable because two of the subparagraphs contained no limitations on their territorial scope. However, Nordson and Plasschaert specified in paragraph 5 of the agreement that their obligations under the contract would be governed by Ohio law. The court found that under Georgia's conflict of laws rules Georgia would honor this choice by the parties of Ohio law as controlling. Then, applying the law of Ohio, which will enforce a covenant not to compete to the extent necessary to protect the employer's legitimate interests, the court declined to limit the injunction to only one line of hot-melt equipment, limited the geographical scope of the injunction to Western Europe, the United States and Canada (while refusing to limit it to only the United States as Plasschaert urged), and reformed the continued compensation provision upwardly to reflect the higher cost of living in Belgium, where Plasschaert intended to (and did) return. Also, the court upheld without modification a contract provision prohibiting the use or disclosure of confidential information as defined in the agreement.
Plasschaert challenges the district court's decision to apply Ohio law rather than Georgia law and also challenges the district court's enjoining him from selling all hot-melt equipment and from competing against Nordson in Western Europe. We affirm the district court.
Plasschaert asserts that despite the provision for governance by Ohio law the district court sitting in Georgia must as a matter of Georgia public policy apply Georgia law. As a federal court in a diversity case we must follow Georgia conflict of laws rules. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Absent the choice of law provision in the agreement Georgia courts would not enforce this covenant not to compete, see, e.g., Puritan/Churchill Chemical Co., 245 Ga. 334, 265 S.E.2d 16 (1980); Howard Schultz & Assoc. v. Broniec, 239 Ga. 181, 236 S.E.2d 265 (1977). Even when the contract provides for a choice of law under which the covenant would be enforceable, Georgia may elect not to enforce it. See, e.g., Dothan Aviation Corp. v. Miller, 620 F.2d 504 (5th Cir. 1980); Nasco, Inc. v. Gimbert, 239 Ga. 675, 238 S.E.2d 368 (1977).
Though our analysis is somewhat different from that of the district court, we consider essentially the same factors that it examined, and we agree with the district judge that under the facts of this case a Georgia court would honor the parties' choice...
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