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U.S. Security Associates, Inc. v. Parretti

United States District Court, D. Massachusetts

September 26, 2019

U.S. SECURITY ASSOCIATES, INC., & UNIVERSAL PROTECTION SERVICES, LLC, dba ALLIED UNIVERSAL SECURITY SERVICES, Plaintiffs,
v.
JOHN PARRETTI, AURY MALDONADO, & CENTRAL PUBLIC SAFETY, LLC, Defendants.

          ORDER AND MEMORANDUM ON DEFENDANT’S MOTION FOR PRELIMINARY INJUNCTION AGAINST ENFORCEMENT OF RESTRICTIVE COVENANTS (DOCKET NO. 13)

          TIMOTHY S. HILLMAN DISTRICT JUDGE

         U.S. Security Associates, Inc. (“USSA”) and Universal Protection Services, LLC (“Allied”) (collectively, “Plaintiffs”) filed an action against John Parretti (“Defendant”), Aury Maldonado, and Central Public Safety, LLC (“CPS”) for, inter alia, breach of contract, trade secret appropriation, unfair competition, and intentional interference with contractual and advantageous business relations. Defendant moves to enjoin Plaintiffs from enforcing a noncompetition covenant Defendant signed with USSA while the parties litigate Plaintiffs’ claims. (Docket No. 13). Because Defendant has not shown likelihood of success on the merits, the Court denies his motion for a preliminary injunction without prejudice.

         Background

         On June 13, 1994, USSA hired Defendant as a Branch Manager in its Somerville office. (Docket Nos. 1 at 10, 11 at 3). In this capacity, Defendant serviced accounts in and around Boston. (Docket Nos. 1 at 10–11, 11 at 3). He also serviced certain other accounts that fell within other branches, including the Worcester office. (Docket Nos. 1 at 11, 11 at 3).

         During his tenure at USSA, Defendant signed two employment agreements. (Docket Nos. 1 at 11–12, 11 at 3). The first, dated April 19, 2012, restricted Defendant from soliciting co-employees and/or current or prospective clients for two years after termination (the “2012 Agreement”). (Docket No. 1-1 at 4–5). It also provided that, “[s]hould the Employer at any time be merged into or consolidated with another corporation . . . the provisions of this contract shall be binding upon and inure to the benefit of the corporation resulting from such merger or consolidation or to which substantially all of the assets of the Employer shall be transferred.” (Docket No. 1-1 at 3). The second, an employment agreement dated April 23, 2014, modified the non-solicitation covenant of the 2012 Agreement by reducing the restriction from two years to eighteen months (the “2014 Agreement”). (Docket Nos. 1-2 at 2–4, 13 at 2). It also prohibited Defendant from “perform[ing] job activities of the type [he] conducted or provided for Employer within the two years prior to [his] termination” for eighteen months after his termination. (Docket No. 1-2 at 3).

         In August 2018, USSA announced a planned acquisition by Allied. (Docket No. 1 at 2). In October 2018, Allied purchased all USSA’s stock, and USSA became a wholly owned subsidiary pending merger of the companies in 2019. (Docket Nos. 1 at 4, 11 at 2). USSA informed its employees that their status at the merged company would be confirmed no later than mid-November. (Docket No. 20-1 at 9–10). The Chief Human Resources Officer later emailed Defendant Parretti to identify him as a “Key Associate” in the merger. (Docket No. 20-1 at 14). To incentivize Defendant to remain with the company, the Chief Human Resources Officer conveyed an offer to pay Defendant $23, 522.58 if he stayed and his role ended up being eliminated. (Docket No. 20-1 at 14). Defendant resigned on October 25, 2018, citing the “elimination of my job title and the fact that I have not received an employment offer from Allied.” (Docket No. 20-1 at 16).

         Before he left, Defendant forwarded several emails allegedly containing confidential information to his personal email address. (Docket No. 20-1). Plaintiffs subsequently learned that Defendant’s wife owned a 50% share in CPS, one of their competitors. (Docket No. 1 at 19). Plaintiffs lost at least four customers to CPS in the wake of Defendant’s resignation. (Docket No. 1 at 20).

         On July 26, 2019, Plaintiffs filed this action to, among other things, enforce the noncompetition covenant in the 2014 Agreement. (Docket No. 1). Defendant moved for a preliminary injunction on September 9, 2019. (Docket No. 19).

         Legal Standard

         When considering a motion for a preliminary injunction, this Court weighs four factors: “(1) the plaintiff’s likelihood of success on the merits; (2) the potential for irreparable harm in the absence of an injunction; (3) whether issuing an injunction will burden the [non-moving party] less than denying an injunction would burden the [moving party]; and (4) the effect, if any, on the public interest.” Jean v. Massachusetts State Police, 492 F.3d 24, 26-27 (1st Cir. 2007) (citation omitted). Likelihood of success on the merits is “the most important part of the preliminary injunction assessment.” Id. at 27. If a movant cannot show that he is likely to succeed on the merits, “the remaining factors become matters of idle curiosity.” New Comm Wireless Servs., Inc. v. SprintCom, Inc., 287 F.3d 1, 9 (1st Cir. 2002).

         Discussion

         Defendant can only succeed in his motion for a preliminary injunction if he can prove the unenforceability of the non-competition covenant. Under Massachusetts law, a non-competition covenant is enforceable if it is “necessary to protect a legitimate business interest, reasonably limited in time and space, and consonant with the public interest.” Boulanger v. Dunkin’ Donuts Inc., 442 Mass. 635, 639 (2004). Because Defendant has not shown that Plaintiffs lack a legitimate business interest in enforcing the non-competition covenant or that the covenant is unreasonably limited in time and space, Defendant has not proven likelihood of success on the merits. The Court therefore denies his motion for a preliminary injunction without addressing the other factors. See New Comm, 287 F.3d at 9.

         1. Legitimate Business Interest

         Defendant argues that Plaintiffs cannot enforce the non-competition covenant because neither USSA nor Allied has a legitimate business interest to protect. According to Defendant, USSA lost its business interests when it merged with Allied and ceased independent operations, and Allied has no business interest because it was never Defendant’s employer. (Docket No. 13 at 4). Defendant misinterprets Massachusetts law. Although the merger may have ended the “separate existence” of USSA “it did not end all obligations owed” to USSA. See Intertek Testing Servs. NA, Inc. v. Curtis-Strauss LLC, No. 98903F, 2000 WL 1473126, at *4 (Mass. Super. Aug. 8, 2000). Instead, “all of [USSA’s] property, rights, and privileges automatically became vested in the merged company.” Id.; see also M.G.L. c. 156B ยง 80. Thus, the property, right, and privilege to enforce the post-employment ...


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