Saturn Wireless Consulting, LLC v. Aversa
| Decision Date | 12 October 2021 |
| Docket Number | Civ. 17-01637 (KM) (JBC) |
| Parties | SATURN WIRELESS CONSULTING, LLC, Plaintiff, v. FRANK AVERSA, Defendant. |
| Court | U.S. District Court — District of New Jersey |
Saturn Wireless Consulting, LLC, previously employed Frank Aversa. Saturn sued Mr. Aversa, alleging that he violated a non-compete agreement. I granted a preliminary injunction prohibiting certain actions by Mr. Aversa. Then, Saturn learned of actions by Mr. Aversa which, it contended violated the injunction. Saturn moved for an order to show cause why Mr. Aversa should not be held in contempt. (DE 40.)[1] I held an evidentiary hearing. Following supplementary briefing and a recent conference on the matter, I find Mr Aversa in contempt.
Saturn provides wireless communications support and training, particularly to businesses that use AT&T for their wireless network. Saturn Wireless Consulting, LLC v. Aversa, Civ. No. 17-1637, 2017 WL 1538157, at *1- 2 (D.N.J. Apr. 26, 2017). Saturn gets referrals from AT&T but also competes with other “solutions providers” for those referrals. Id. at *2. Saturn builds and maintains its relationship with AT&T by fostering individual relationships between Saturn's Regional Account Managers (“RAMs”) and AT&T sales representatives. Id. Mr. Aversa was a RAM, and as a condition of his employment with Saturn signed a provision prohibiting him from contacting or doing business with Saturn customers for one year following his departure from Saturn. Id. at *3-5.
Mr. Aversa eventually left Saturn and created a company that competed to serve as an AT&T solutions provider, Connected Communications Group (“CCG”). Id. at *5. Saturn learned that Mr. Aversa had been contacting Saturn customers, so Saturn sued Mr. Aversa, asserting claims for (1) breach of contract; (2) misappropriation and conversion of trade secrets and confidential information; (3) actual and threatened misappropriation under the New Jersey Trade Secrets Act, N.J. Stat. Ann. § 56:15-1 et seq.; (4) breach of fiduciary duty and duty of loyalty; (5) unjust enrichment; and (6) unfair competition. (DE 1.)
(PI Order.)[2]
A few months later, Saturn moved for an order requiring Mr. Aversa to show cause why he should not be held in civil contempt. (DE 40.) According to Saturn, AT&T gives its solutions providers sales reports that list monthly sales, including the AT&T sales representative involved in the deal, the end-user, and the solutions provider through which the sale was made. (Sood Decl. ¶ 3.) Sales reports reviewed by Saturn credited CCG with hundreds of activations involving individuals or entities on the prohibited list since the injunctive order. (Id. ¶ 4.)
I held an evidentiary hearing, where Mr. Aversa claimed that he did not disobey the Court's order because his wife Shawna (whom he hired as an employee) and an independent contractor (Jack Hostutler) conducted all business with those on the prohibited list. The hearing was adjourned so that Saturn could depose Mrs. Aversa and Hostutler. Following the depositions, the parties filed supplemental briefs.
Some time passed, and discovery continued. The COVID pandemic intervened. Recently, Saturn renewed its request for action on its contempt motion. (DE 172.) Given the passage of time, I allowed the parties to submit supplemental affidavits attesting to any changed circumstances. (DE 173.) Mr. Aversa did so. (DE 175.)
On August 11, 2021, I held a video status conference to ascertain whether a decision on the contempt motion was needed, and where the case stood. (DE 182.) It appeared to both counsel that further progress in the case depended on a decision on the contempt motion. Neither side, however, sought an additional evidentiary hearing; counsel consented to submit the matter on the record currently before the Court. Apparently, defendant, in whose favor the preliminary injunction had been entered, had neglected to post the required bond; it did so the day after the conference. (DE 183)
I find Mr. Aversa in contempt and then discuss appropriate sanctions.
For the Court to find Mr. Aversa in contempt, Saturn must show “(1) that a valid order of the court existed; (2) that [Mr. Aversa] had knowledge of the order; and (3) that [he] disobeyed the order.” FTC v. Lane-Labs-USA, Inc., 624 F.3d 575, 582 (3d Cir. 2010) (citation omitted). Saturn must make this showing by clear and convincing evidence, id., that is, “the truth of its factual contentions are highly probable.” Araujo v. N.J. Transit Rail Operations, Inc., 708 F.3d 152, 159 (3d Cir. 2013) (citation omitted); see also Third Circuit Court of Appeals Model Civil Jury Instruction 1.11 (Aug. 2020) (“Clear and convincing evidence is evidence that produces in [the] mind a firm belief or conviction that the allegations sought to be proved by the evidence are true.”); United States v. Bayer Corp., Civ. No. 07-1, 2015 WL 5822595, at *11 (D.N.J. Sept. 24, 2015) (). This evidentiary standard “is the intermediate burden of proof, in between a preponderance of the evidence and proof beyond a reasonable doubt.” Araujo, 708 F.3d at 159 (quotation marks and citation omitted).
The first two elements are not in dispute. As to the third element, Saturn has produced sales reports from AT&T showing extensive business between Mr. Aversa's company, CCG, and individuals and entities on the prohibited list. The question, then, is whether such business suffices to show that Mr. Aversa himself violated the order.
As a general matter, Mr. Aversa can be liable for contempt if he “abet[ted], ” “instigated, endorsed, or ratified” another's conduct which violated the order. Max's Seafood Café ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 674 (3d Cir. 1999). But there must be “evidence of record that would permit a reasonable fact-finder to so conclude.” Id. I find that Saturn has made that showing and rely on the following factual findings.
First, even without direct evidence that Mr. Aversa ordered or controlled Mrs. Aversa's or Hostutler's conduct, the Court may easily infer such involvement. Mr. Aversa was the sole owner of CCG, which operated out of his house. (Sood Decl. ¶¶ 11-12.) Prior to the injunction, Mr. Aversa was also the sole employee of CCG. It was immediately after the Court entered its preliminary injunction that he hired Mrs. Aversa, and he hire Hostutler four months later. (Id.; Aversa Decl. ¶ 3.)[3] There is no evidence that Mr. Aversa ceased to control CCG, or in any way stepped back from management of CCG, during the relevant time period.
From these facts alone, one can draw a starting-line inference of Mr. Aversa's involvement with Mrs. Aversa and Hostutler. It is simply implausible that the founder and owner of a three-employee LLC run out of his house had no knowledge or involvement with the business conducted by his employees. Indeed, the Third Circuit held that facts similar to these supported a finding of contempt in Marshak v. Treadwell, 595 F.3d 478 (3d Cir. 2009). In that case, the district court enjoined a music promoter and his company from using a trademark. The promoter's wife then formed a company that operated out of their home, employed the promoter, and “picked up where [the old company] left off.” 595 F.3d at 483, 489. The Third Circuit upheld a finding that this continuation of business, with the promoter still in the mix, showed that the promoter had violated the injunction. Id. at 490. The facts here are similar: Mr. Aversa's wife picked up where Mr. Aversa left off, while Mr. Aversa stayed employed with CCG and CCG operated out of his home. As in Marshak, this scheme belies any assertion that Mr. Aversa was firewalled off from CCG's business with prohibited entities.
Second building on this natural inference is some more direct evidence of Mr. Aversa's involvement. All three-Mr. and Mrs. Aversa, and Hostutler- testified that Mr. Aversa provided customer contacts to Mrs. Aversa and Hostutler to get them started. Indeed, there is no other plausible explanation for how Mrs. Aversa and Hostutler could begin making sales. As a result, Mr. Aversa enabled and prompted his employees to do business with prohibited entities that he could not do himself. Saturn has also produced numerous instances of Mr. Aversa placing orders for entities on the prohibited list or making contact with them. (Saturn Supp. Br. at 5-7.) Finally, Mr. Aversa testified that he performed administrative tasks, like processing orders, for Mrs. Aversa and Hostutler. Although that may fall short of “doing business” with prohibited entities, he at the very least facilitated others' business,...
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