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New England Controls, Inc. v. Pilsbury

United States District Court, D. Massachusetts

June 27, 2018



          Denise J. Casper United States District Judge

         I. Introduction

         Plaintiff New England Controls, Inc. (“NEC”) moves for a preliminary injunction against Defendant Joseph Pilsbury (“Pilsbury”), a former employee of POND Technical Sales, Inc. (“POND”), NEC's wholly-owned subsidiary. D. 9 at 1. NEC seeks to enjoin Pilsbury from soliciting NEC customers on behalf of a direct competitor and disclosing NEC's confidential business information in violation of his non-solicitation and nondisclosure agreements with NEC. D. 10 at 5. Pilsbury has also moved the Court to order that NEC disclose all alleged confidential information relevant to the case. D. 19. For the reasons discussed below, NEC's motion for preliminary injunction, D. 9, is ALLOWED. Pilsbury's motion for disclosure, D. 19, is DENIED.

         II. Standard of Review

         To obtain a preliminary injunction, the Court must consider: (1) the movant's likelihood of success on the merits; (2) the likelihood of the movant suffering irreparable harm; (3) the balance of equities; and (4) whether granting the injunction is in the public interest. Corp. Techs., Inc. v. Harnett, 731 F.3d 6, 9 (1st Cir. 2013). NEC “bears the burden of establishing that these four factors weigh in its favor.” Esso Standard Oil Co. (P.R.) v. Monroig-Zayas, 445 F.3d 13, 18 (1st Cir. 2006).

         III. Factual Background

         Pilsbury, a Maine resident, began working for POND as an outside sales engineer in 2003. D. 16 ¶¶ 1, 5. POND, a Connecticut company, was acquired by NEC, a corporation based in Massachusetts, in 2008. D. 10-1 ¶ 5; D. 16 ¶ 14. In January 2018, Pilsbury resigned from POND and began working for TriNova, Inc. (“TriNova”). D. 10-1 ¶¶ 17-18.

         According to the affidavit provided by Thomas Ramundo, NEC's president, NEC is a company that “provides process control equipment and related services for the life sciences, gas distribution and transmission, power, food and beverage, pulp and paper, water and wastewater and chemical industries, ” including valve packages, among other instruments. D. 10-1 ¶¶ 2, 4. “POND is a sales organization for certain products and services.” D. 10-1 ¶ 5. Since NEC acquired POND, the two have “operate[d] as affiliates, ” and their sales teams “work collaboratively.” D. 10-1 ¶¶ 5-6. TriNova, an Alabama company that “has recently expanded into New England, ” “offers valves and instruments in competition with NEC.” D. 10-1 ¶ 7.

         Pilsbury describes NEC/POND and TriNova as “independent manufacturer representative[s] that specialize[] in technical engineered equipment.” D. 16 ¶ 6. Each company serves as certain manufacturers' exclusive “sales and service agent” in specific geographic regions. Id. In New England, NEC holds this relationship with the manufacturer Emerson. D. 16 ¶ 8. In December 2017, TriNova established an exclusive relationship with the manufacturer Endress & Hauser (“E&H”), replacing E&H's prior designated representative. D. 16 ¶ 9. Emerson and E&H are competitors “and have been for over 25 years.” D. 16 ¶ 8. Although manufacturers and designated representatives maintain exclusive relationships with each other, customers do not maintain exclusive relationships with either. D. 16 ¶ 10. Typically, a “customer solicits a proposal on a solution to solve a problem” from manufacturers, who contract directly with customers and pay commissions to representative companies like NEC/POND and TriNova. D. 16 ¶¶ 11, 7.

         When Pilsbury began working for POND in 2003, he was an account manager who worked “with specific identified customers” in Maine and New Hampshire selling Emerson products. D. 16 ¶ 13. In 2013, he was promoted to Field Sales Manager and in 2014 his title changed to “Measure and Analyze Business Development Manager.” D. 16 ¶¶ 15-16; see D. 10-1 ¶ 8. In this role, Pilsbury “had technical and commercial leadership responsibility for all of POND's measure and analyze products and services.” D. 10-1 ¶ 8. Pilsbury continued covering his designated accounts and traveled with and coached other account managers. D. 16 ¶ 17.

         According to Ramundo, Pilsbury's tenure at POND exposed him to such confidential NEC/POND information as “the [c]ompanies' compilation of information about customers, including those accounts [Pilsbury] did not personally represent, through the SalesLogix customer relations management database, ” including customers' contact information, product and service needs, purchasing protocols and procedures, transactional and negotiation history and pricing information, as well as NEC/POND's “unique sales and marketing techniques and strategies.” D. 10-1 ¶ 10. Pilsbury contends, however, that “NEC has no confidential pricing and marketing strategy information” because “[p]ricing is set by each manufacturer, not by the retailer, ” and pricing information is given to all new POND employees when they start and is available on the internet. D. 16 ¶¶ 30-31, 42(c); D. 26-1. He states that the “client identities of various competitors in the industry are well known to each other” and often voluntarily disclosed. D. 16 ¶¶ 33, 42(a). According to Pilsbury, the SalesLogix platform was not used to track account plans or pricing strategy, which were instead maintained by account managers on their own computers. D. 16 ¶ 34. Pilsbury's use of the database involved “review[ing] a weekly printed spreadsheet downloaded from SalesLogix by POND's receptionist which contained new opportunities, ” to which Pilsbury added information he had about those opportunities and returned it to the receptionist, who added his contributions to the database. D. 16 ¶ 37. Pilsbury used other software applications to store customer information, and when he resigned, he was not asked to turn over his login information for these accounts. D. 16 ¶¶ 41, 42(b). He also states that many NEC/POND employees with access to the SalesLogix database do not have non-solicitation agreements. D. 16 ¶ 36.

         On December 19, 2017, approximately two months after E&H announced that TriNova would be its new designated representative, Pilsbury notified Ramundo that he “wanted to explore opportunities with TriNova.” D. 16 ¶¶ 20, 22. Ramundo asked Pilsbury if he “was going to attempt to sell TriNova's products to POND/NEC's customers, ” and Pilsbury responded that he “did not see how such overlap was avoidable.” D. 16 ¶ 22. Pilsbury also expressed his intentions to his direct supervisor, Robert Osnoe, who warned of legal action based upon Pilsbury's non-solicitation agreement with NEC. D. 16 ¶ 23. Two days later, Ramundo contacted Pilsbury to warn that he would “enforce the non-solicitation agreement.” D. 16 ¶ 24.

         On January 11, 2018, Pilsbury accepted an offer from TriNova as an account manager for key accounts and the general territory of eastern New England and tendered his resignation to Osnoe. D. 16 ¶ 25. One week later, Pilsbury returned the “company property in [his] possession, ” including his laptop, tablet, smartphone and other office supplies. D. 16 ¶¶ 26, 28. NEC alleges that these devices had been “wiped” when he returned them. Compl. ¶ 29.[1]

         Pilsbury has held his position at TriNova since January 15, 2018. D. 16 ¶ 48. He contends that “[t]he majority of customers that TriNova works with today, and with whom [he is] working, were existing E&H customers prior to [his] joining TriNova.” D. 16 ¶ 9. Pilsbury states that his compensation at TriNova is partially dependent upon commission. D. 16 ¶ 45. He anticipates that an injunction would require him to “move to the Southern territory of TriNova for the remainder of the injunction period, ” which would also require relocation of his wife, two children and his wife's parents for whom he provides care. D. 16 ¶¶ 45-46.

         A. The Nondisclosure and Non-Solicitation Agreements and Alleged Breaches

         After NEC acquired POND, Pilsbury entered into two agreements relevant here. First, on November 22, 2010, in consideration of continued employment, Pilsbury signed the “Employee Agreement concerning Non-Disclosure & Intellectual Property” (the “Nondisclosure Agreement”). D. 10-1 ¶ 16, at 16-20. In the agreement, expressly governed by Massachusetts law, Pilsbury agreed that upon termination of employment, he would “not at any time directly or indirectly, use (for [him]self or another), disclose or make accessible to anyone any Confidential Information, except as expressly permitted by NEC or as required by law.” D. 10-1 at 18. The agreement defines “Confidential Information” to include, inter alia, “the names and contact information of actual and potential customers of the NEC, ” “marketing techniques or plans” and “pricing policies.” D. 10-1 at 17. The agreement does not contain terms limiting the duration of the agreement's applicability. See D. 10-1 at 17-20.

         Second, between 2013 and 2016, Pilsbury was awarded twenty shares of NEC Phantom Stock conditioned upon Pilsbury's signing the Invention, Non-Disclosure and Non-Solicitation Agreement (“the Non-Solicitation Agreement”). D. 10-1 ¶ 14, at 13-15. This agreement, ...

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