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Rentex, Inc. v. Franco

Superior Court of Massachusetts, Suffolk

July 12, 2018

RENTEX, INC.
v.
Thomas FRANCO et al.

          File Date: July 16, 2018

          DECISION AND ORDER REGARDING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION (DOCKET ENTRY NO. 5.0)

          Brian A. Davis, Associate Justice of the Superior Court

          In this action, plaintiff Rentex, Inc. ("Rentex") alleges that its former employee, defendant Thomas Franco ("Mr. Franco"), has violated, or is about to violate, the provisions of a noncompetition agreement that Mr. Franco signed when he joined Rentex by accepting a sales position with defendant 4Wall Entertainment, Inc. ("4Wall"). Rentex seeks preliminary injunctive relief preventing any such violation.

         The Court finds the facts, based on the affidavits, supplemental affidavits, exhibits, and other materials submitted, to be as follows. Mr. Franco has had an approximately twenty-year career working for various companies in New England and elsewhere as a salesperson marketing audio-visual ("AV") equipment and solutions for live public and private events. Briefly and broadly described, the AV equipment and solutions traditionally marketed by Mr. Franco consist of large venue projectors, projection screens, computers, television monitors, video cameras, lenses, amplifiers, switching and terminal boxes, and other equipment used in the production and presentation of small to medium-sized corporate, government, and entertainment meetings and tradeshows. Mr. Franco also has some experience in designing and operating stage lighting products that frequently are used at such events.

         Rentex is a Massachusetts-based company that rents AV equipment and solutions to wholesale customers throughout much of the United States. A "wholesale" customer in this field typically is the company that creates and produces a live event for an "end-user," which typically is the public or private entity that is hosting the event. The vast majority of Rentex’s revenues comes from AV equipment rentals. Rentex also rents a limited range of lighting products that sometimes are used in conjunction with its AV equipment and solutions, but lighting rentals form a much smaller part of Rentex’s overall business. Some information concerning the identity of Rentex’s customers and pricing is publicly available, but certain additional customer information concerning type and volume of equipment historically rented, key customer contacts, and customer-specific pricing and discounts is maintained as confidential by Rentex.

         4Wall traditionally has been in the business of renting (and occasionally selling) lighting for theaters, tradeshows, and other live events, along with the associated labor and support necessary to operate the lighting at the event. 4Wall has operated its lighting business in selected major markets outside of New England, and it has focused primarily on large end-users that organize and produce their own multi-media events, as[1] opposed to wholesale customers. More recently, however, 4Wall has been expanding the nature and scope of its business through a round of acquisitions. In June 2017, 4Wall acquired Wagner Media, which directly competes with Rentex in the rental of AV equipment and solutions for use at live events. More recently, 4Wall acquired another Massachusetts-based company, Advanced Lighting & Production Services ("ALPS"), which provides event lighting equipment and services in the New England area. At present, 4Wall bills itself on its website (www.4wall.com) as providing "Nationwide Lighting & Video Rentals." It says,

[o]ur lighting and video equipment is backed by tremendous service and support that allows it to outshine the rest. From maintaining our automated fixtures and projectors with certified technicians, to cleaning and testing our lenses and each piece of cable after every show, we go the extra mile to ensure the equipment you rent from us is show ready each and every time.
Our nationwide inventory contains the newest items from top stage lighting, rigging, and video manufacturers, including moving lights, LEDs, lighting consoles, dimmers, truss, projectors, screens, cameras, and much more! In addition to carrying the best products, our staff is comprised of industry proven professionals who stand ready to help you create the perfect lighting and video experience for your event....

         In affidavits submitted to this Court, 4Wall seeks to downplay the "nationwide" reach of its lighting and video rentals business, but the limitations that it describes are, at best, temporary. The Court finds (and it appears to be undisputed) that 4Wall has every intention of competing directly with Rentex on all fronts in New England as soon as 4Wall is capable of doing so.

         Rentex hired Mr. Franco as a Sales Project Manager in May 2017. On the first day of his employment, Mr. Franco signed a Rentex "Nondisclosure, Developments and Noncompete Agreement" (the "Non-Compete Agreement"), which provides, in relevant part, that

[d]uring the period of my employment with the Company [i.e., Rentex], and for a period of six months following my termination of employment, I will not, without the Company’s prior written consent, directly or indirectly, alone or as a partner, joint venture, officer, director, employee, consultant, [2] agent, independent contractor or stockholder of any company or business, engage in any business activity which is directly or indirectly in competition, in the United States or in any foreign country in which the Company conducts business, with any of the products or services being developed, marketed, distributed, planned, sold or otherwise provided by the Company at such time.

         As Sales Project Manager, Mr. Franco was responsible for developing business relationships with Rentex’s current and prospective customers in Massachusetts and throughout the United States. His job responsibilities gave him access to Rentex’s confidential information, including non-public information concerning the rental history of Rentex’s customers, Rentex’s largest individual customers, Rentex’s annual sales revenues for its largest customers, and the key contact personnel at each customer. Sometime in March 2018, Mr. Franco’s job title at Rentex changed to "Business Development Manager, New England/Key Accounts" and his responsibilities became more focused on developing new customer relationships. The change in job title was not accompanied, however, by any change in salary and Mr. Franco continued to work in the same office, and continued to report to the same supervisors, in his new position.

         At or around the time Mr. Franco’s job title at Rentex changed, he learned that ALPS was looking for an outside sales representative. Being somewhat dissatisfied with his role at Rentex, Mr. Franco inquired about the position. He eventually had lunch with the Steve Way, the President of ALPS, and Wes Bailey, a Vice President of 4Wall, shortly after 4Wall’s acquisition of ALPS was publicly announced. 4Wall was interested in hiring Mr. Franco because ALPS had no outside salesperson working in New England. Mr. Bailey then reached out to Rentex’s management and attempted to persuade them to waive the non-compete provisions of Mr. Franco’s Non-Compete Agreement and permit him to go to work for 4Wall. In doing so, Mr. Bailey acknowledged that 4Wall wished to hire Mr. Franco because of his knowledge of the local AV equipment rentals market. Rentex, in response, refused to release Mr. Franco from his Non-Compete Agreement.

          Shortly after 4Wall and Rentex reached their impasse, Mr. Franco resigned his position at Rentex to take a position at 4Wall. 4Wall represents that Mr. Franco’s "responsibilities at 4Wall will be to support 4Wall Boston’s (formerly ALPS) existing customers with their lighting equipment needs and arrange for related labor." 4Wall Opposition to Plaintiff’s Motion for a Preliminary Injunction (Docket Entry No. 7.0) at 8. 4Wall further represents that Mr. Franco "will not be encouraged or incentivized to convince these existing 4Wall customers or prospective ...


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