Nortec Communications, Inc. v. Lee-Llacer

• Decision Date: 15 April 2008
• Docket Number: Case No. 1:08cv127 (GBL).
• Citation: 548 F.Supp.2d 226
• Parties: NORTEC COMMUNICATIONS, INC., Plaintiff, v. Carl LEE-LLACER, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

Page 226

548 F.Supp.2d 226

NORTEC COMMUNICATIONS, INC., Plaintiff, v. Carl LEE-LLACER, Defendant.

Case No. 1:08cv127 (GBL).

United States District Court, E.D. Virginia, Alexandria Division.

April 15, 2008.

Derek Lewis Burrows, Law Office of Mark R. Dycio PC, Fairfax, VA, for Plaintiff.

Timothy Brooks Hyland, Leffler & Hyland PC, Fairfax, VA, for Defendant.

MEMORANDUM OPINION

GERALD BRUCE LEE, District Judge.

THIS MATTER is before the Court on Defendant Carl Lee-Llacer's Motion to Dismiss Counts I (§ Breach of Contract), III (Breach of Fiduciary Duties), V (Tortious Interference with Contract), and VI (Statutory Conspiracy). This case concerns Mr. Lee-Llacer, a former employee of Nortec, and whether the nonsolicitation and non-competition clauses contained within his employment contract with Nortec are valid. There are four issues before the Court. The first issue is whether the non-competition and non-solicitation clauses of Mr. Lee-Llacer's employment agreement with Nortec are facially overbroad so as to render them unenforceable. The second issue is whether the allegations in the complaint support a claim of breach of fiduciary duty. The third issue is whether Nortec has properly pled that Mr. Lee-Llacer used improper means to tortiously interfere with the contracts of other Nortec employees. The fourth issue is whether Nortec has alleged that Mr. Lee-Llacer acted with the requisite intent to maintain a claim for statutory conspiracy. The Court holds that the restrictive non-competition and non-solicitation provisions in the Nortec employment contract are invalid and unenforceable because the provisions are not limited to the performance of the same work that Mr. Lee-Llacer did as a Nortec employee/ and there are several undefined key terms. The Court holds that the allegations in the complaint do not support a claim of breach of fiduciary duty because there is no allegation of conduct during the course of Mr, Lee-Llacer's employment with Nortec that would support such a claim. The Court also holds that Nortec has failed to sufficiently plead tortious interference with contract because it has not alleged the use of improper means. Finally, the Court holds that Nortec has alleged that Mr. Lee-Llacer acted with the requisite intent to maintain a claim for statutory conspiracy because Nortec is not required to prove that Mr. Lee-Llacer's primary and overriding purpose was to injure Nortec's business.

I. BACKGROUND

Defendant Carl Lee-Llacer was hired by Plaintiff Nortec Communications as a consultant in January of 2006. Nortec is engaged in the business of information technologies consulting. Upon being hired by Nortec, Mr. Lee-Llacer signed an Employment Agreement containing non-disclosure, non-compete, and non-solicitation agreements. The provisions of Mr. Lee-Llacer's employment contract that are at issue in this suit state the following

Non-Competition, The Employee agrees that he or she shall not, for a period of twelve (12) months after the termination of the employment relationship for any reason:

(a) become employed by or perform services for any existing customer or client of the Company for whom Employee has performed services while employed by the Company— other than on behalf of the Company — if such employment or services relates to the products or services offered by the Company;

(b) directly or indirectly ... engage in a business in direct competition with the Company within the State of Maryland, Commonwealth of Virginia or the District of Columbia.

Non-Solicitation. The Employee agrees that he or she shall not, for a period of twelve (12) months following the termination of the employment relationship for any reason, directly or indirectly:

(a) solicit orders for services, materials and/or equipment, of a kind and nature like or similar to services performed or materials or equipment provided, by the Company, from any party (i) that was a client of the Company, during the Employee's employment with the Company (ii) for whom the Employee performed services on behalf of the Company, or (hi) from whom the Employee solicited business, while employed with the Company;

(b) urge or suggest that any customer or client of the Company discontinue doing business with the Company; or

(c) solicit, encourage or induce any employee of the Company to terminate his or her employment, or otherwise interfere with or disrupt the Company's relationships with its employees.

Mr. Lee-Llacer resigned from Nortec in September, 2007. After terminating his employment with Nortec, Mr. Lee-Llacer performed services for a contractor providing services to The Peace Corps, who Nortec identifies as a client of theirs who Mr. Lee-Llacer was providing services for when he resigned.

Nortec's complaint alleges that Llacer is providing the same services to The Peace Corps as Nortec, in direct competition and to the detriment of Nortec. It is believed that Llacer is implementing the remaining phases of the Project designed by Nortec and using Nortec's work product to complete said implementation. Additionally, it is believed that Llacer is providing other services, including, but not limited to, systems maintenance, that Nortec provides in its ordinary course of business.

(Compl. ¶ 20). Nortec goes on to allege that, "since leaving his employment with Nortec, Llacer has contacted Nortec employees, and former employees within the scope of the non-solicitation agreement, to solicit them to leave Nortec in violation of the agreed upon terms of the non-solicitation agreement," (Compl. ¶ 22). Nortec asserts five claims in their complaint: I) breach of contract; II) violation of the Virginia Trade Secrets Act; III) breach of fiduciary duties: IV) tortious interference with business expectancy; V) tortious interference; and VI) statutory conspiracy.

II. DISCUSSION

A. Standard of Review

In a recent decision, the supreme Court held that a Federal Rule of Civil Procedure 12(b)(6) motion should be granted unless an adequately stated claim is "supported by showing any set of facts consistent with the allegations in the complaint." Bell Atlanta Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955. 1969, 167 L.Ed.2d 929 (2007); sec FED.R.CIV.P. 12(b)(6). In considering a Rule 12(b)(6) motion, the Court must construe the complaint in the light most favorable to the plaintiff, read the complaint as a whole, and take the facts asserted therein as true. Mylan Labs., Inc. v. Matkan, 7 F.3d 1130, 1134 (4th Cir.1993). In addition to the complaint, the court may also examine "documents incorporated into the complaint by reference, and matters of which a court may take judicial notice" when ruling on a Rule 12(b)(6) motion to dismiss. Tellabs. Inc. v. Makor Issues & Rights. Ltd., ___ U.S. ___, 127 S.Ct. 2499. 2509, 168 L.Ed.2d 179 (2007). Conclusory allegations regarding the legal effect of the facts alleged need not be accepted. See Lobram v. Havel, 43 F.3d 918, 921 (4th Cir.1995). Because the central purpose of the complaint is to provide the defendant "fair notice of what the plaintiffs claim is and the grounds upon which it rests," the plaintiffs legal allegations must be supported by some factual basis sufficient to allow the defendant to prepare a fair response. Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

B. Analysis

Enforceability of non-solicitation and non-compete agreements

Defendant's Motion to Dismiss Count I (Breach of Contract) is granted because the functions that are proscribed by the non-compete agreement are not limited to the functions that were performed by Mr. Lee-Llacer when he was a Nortec employee, and because the nonsolicitation clause contains ambiguous language susceptible to interpretation rendering it functionally overbroad. "With respect to employment with a direct competitor, non-compete clauses that `restrict the former employee's performance of functions for his new employer [are upheld] only to the extent that the proscribed functions are the same functions as were performed for the former employer.'" Lanmark Tech., Inc. v. Canales, 454 F.Supp.2d 524, 528 (E.D.Va.2006) (quoting Cantol, Inc. v. McDaniel, No. 2:06cv86 2006 WL 1213992 at *4 (E.D.Va. April 28, 2006)); see also Roanoke Eng'g Sales Co. v. Rosenbaum, 223 Va. 548, 553, 290 S.E.2d 882 (Va.1982) (finding noncompetition covenant reasonable because employment restriction was limited to activities similar to business conducted by former employer). Additionally, when "the non-compete clause is ambiguous and susceptible to two or more differing interpretations, at least one of which is functionally overbroad, the clause is unenforceable." Lanmark, 454 F.Supp.2d at 531; see also Omniplex World Servs. Corp. v. U.S. Investigations Servs., Inc., 270 Va. 246, 249, 618 S.E.2d 340 (Va.2005). In order the determine the enforceability of a non-compete agreement, the Court must evaluate whether the restraint is: (1) reasonable in that it is no greater than necessary to protect the employer's legitimate business interest; (2) is not unduly harsh and oppressive in it's impact on an employee's legitimate efforts to earn a living; and (3) reasonable from a public policy perspective. Foti v. Cook, 220 Va. 800, 263 S.E.2d 430 (1980).¹ "[S]olicitation clauses are reviewed under the same standards as those developed for non-competition clauses because solicitation is a form of competition." Strategic Res. Inc. v. Nevin, No. 1:05cv992, 2005 WL 3143941, at *2 (E.D.Va. Nov. 23, 2005).

The first step of the three-part analysis is a two-fold determination of whether the restrictive covenants at issue are sufficiently narrowly drawn to protect Nortec's legitimate business interests. Blue Ridge Anesthesia & Critical Care, Inc. v. Gidick, 239 Va. 369, 371, 389 S.E.2d 467 (Va.1990)(setting forth the three-part analysis for determining the validity of noncompete agreements). It is not unreasonable to conclude that Nortec has a legitimate interest in...