Superior Court of Massachusetts, Suffolk, Business Litigation Session
D. Douglas YOUNG
DECISION AND ORDER REGARDING PLAINTIFFâS REVISED
MOTION FOR PRELIMINARY INJUNCTION (DOCKET ENTRY NO. 9.0), AND
PLAINTIFFâS REVISED EMERGENCY MOTION FOR EXPEDITED DISCOVERY
(DOCKET ENTRY NO. 8.0)
A. Davis, Associate Justice of the Superior Court
Plaintiff Hyperactive, Inc. ("Plaintiff" or
"Hyperactive") is a business that creates
multimedia presentations for various commercial clients. In
this recently-commenced action, Hyperactive claims that
defendant D. Douglas Young ("Mr. Young"), a former
company executive and one of two Hyperactive shareholders,
conspired with an aspiring competitor, defendant AVFX, LLC
("AVFX"), to steal Hyperactiveâs confidential and
proprietary trade secrets, customer relationships, and key
employees for the joint benefit of Mr. Young and AVFX.
Hyperactive further claims that another former employee,
defendant Joseph Pannoni ("Mr. Pannoni"),
wrongfully copied and has retained the source code to
Hyperactiveâs proprietary "HyperFrame" software,
and wrongfully copied and has retained certain confidential
digital project files associated with Hyperactiveâs clients,
possibly at the request or direction of Mr. Young and/or
AVFX. Hyperactive seeks a preliminary injunction that would
require Mr. Young to immediately return any confidential and
proprietary trade secrets or information that he obtained
from Hyperactive and bar him from competing with Hyperactive
for a period of two years pursuant to the terms of a written
shareholder agreement that Mr. Young signed in December 2004
(the "Shareholder Agreement"). Hyperactive also
seeks a preliminary injunction requiring Mr. Pannoni to
return any source code, project files, or other confidential
and proprietary trade secrets or information that he took
from Hyperactive, and further requiring him to turn over his
computers and other electronic storage devices for forensic
examination by Hyperactiveâs computer expert. Lastly,
Hyperactive seeks expedited discovery of Mr. Young, Mr.
Pannoni, and certain third parties concerning Mr. Young and
Mr. Pannoniâs allegedly unlawful activities.
parties appeared before the Court on July 19, 2018, for a
hearing on Hyperactiveâs motions. Plaintiff and Mr. Young
appeared and argued through legal counsel. Mr. Pannoni
appeared pro se and argued on his own behalf. Counsel for
AVFX appeared, but did not argue.
considered the motion papers, affidavits, and other written
submissions of the parties, as well as the oral arguments and
other information provided at the motion hearing, the Court
ALLOWS Hyperactiveâs revised motion for preliminary
injunctive relief and ALLOWS, IN PART, Hyperactiveâs revised
motion for expedited discovery to the extent, and for the
reasons, discussed below.
Hyperactiveâs Claims Against Mr. Young
his prior history with Hyperactive, Mr. Young has a variety
of legal obligations that are implicated by Hyperactiveâs
claims in this action. First, Mr. Young was an employee of
Hyperactive for at least thirteen years prior to his
resignation on June 29, 2018. As an employee of Hyperactive,
Mr. Young owed the company a duty of loyalty. This duty, as
spelled out by the Massachusetts Supreme Judicial Court
("SJC") in Augat, Inc. v. Aegis, Inc., 409
Mass. 165 (1991) ("Augat "), permits an
employee to "go into competition with his employer and
... take active steps to do so while still employed,"
provided, however, that the employee "may not
appropriate his employerâs trade secrets," or
"solicit his employerâs customers while still working
for his employer ..." Id. at 172-73.
significant shareholder in Hyperactive, which is a
closely-held corporation, Mr. Young also owed (and continues
to owe) his fellow shareholders the same fiduciary duty as a
partner in a partnership, that is a duty of "utmost good
faith and loyalty." Merriam v. Demoulas Super Mkts.,
Inc., 464 Mass. 721, 726 (2013).
Mr. Young has contractual obligations to Hyperactive created
by the Shareholder Agreement that he signed in December 2004.
That Shareholder Agreement provides, in relevant part, that
[i]n the event of termination of Youngâs employment by the
corporation through voluntary resignation or through
discharged for cause, Young further covenants and agrees that
he will not during a period of 2 years thereafter nor within
a radius of 100 miles from the present principal office of
the Corporation in Braintree, MA engage, either individually
as a sole proprietor, as a partner, as a co-venturer, or as
an officer, a director, or a major stockholder of a
corporation or controlling fiduciary or beneficiary or
operator of a business trust or other non-corporate business
entity, directly or indirectly in a business that directly
competes for the business of any existing clients of the
Corporation, or work for any such business as a key employee.
Agreement, § 2(ix).
Court has reviewed the evidence concerning Mr. Youngâs recent
activities at Hyperactive, including his interactions with
AVFX and others about potentially entering into competition
with Hyperactive either in combination with AVFX or on his
own. It finds that there is a high likelihood that
Hyperactive will be able to demonstrate that, in planning and
acting on his plans to compete, Mr. Young breached his
fiduciary duty of loyalty to the company and to his fellow
shareholders by, at the very least, encouraging and assisting
other key employees of Hyperactive (including Aaron Root and
Jonathan Ugol) to jump ship to AVFX, and by attempting to woo
away current Hyperactive customers (including Philips
Healthcare). See Augat, 409 Mass. at 172-73.
foregoing activities by Mr. Young also constitute a breach of
the non-competition provision of his Shareholder Agreement
which, reasonably construed, bars him from competing,
directly or indirectly, with Hyperactive for a period of two
years within a 100-mile radius of Hyperactiveâs former
offices in Braintree, Massachusetts. See USM Corp. v.
Arthur D. Little Systems, Inc., 28 Mass.App.Ct. 108, 116
(1989) ("The object of the court is to construe [a]
contract as a whole, in a reasonable and practical way,
consistent with its language, background, and purpose").
Covenants not-to-compete generally are enforceable in
Massachusetts "to the extent that they are necessary to
protect the legitimate business interests of the
employer," Marine Contractors Co., Inc. v.
Hurley, 365 Mass. 280, 287 (1974), and to the further
extent that they are reasonable "in time, in space or in
any other respect," All Stainless, Inc. v.
Colby, 364 Mass. 773, 778 (1974). A court is empowered,
for enforcement purposes, to adjust the terms of an
unreasonable non-compete provision so as to render them
reasonable. Cheney v. Automatic Sprinkler Corp. of
America, 377 Mass. 141, 147 (1979) (Rather than
declining entirely to give effect to an unreasonable
non-competition clause, a court may modify its terms so as to
make it reasonable; i.e., "overbroad" terms may be
Court further finds that Mr. Youngâs improper competitive
activities pose a serious threat of irreparable harm to
Hyperactive, that the balance of the harms that the parties
may suffer through the issuance of preliminary injunctive
relief cuts in favor of Hyperactive, and that the public
interest is best served by granting such relief in these
circumstances. See Packaging Indus. Group, Inc. v.
Cheney,380 Mass. 609, 616-17 (1980). ...