Aerotek, Inc. v. Obercian

Citation: 377 F. Supp. 3d 539Docket: Civil Action No. GLR-17-926

Court: District Court, D. Maryland; March 27, 2019; Federal District Court

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George L. Russell, III, United States District Judge, is addressing Defendant Christine M. Obercian's Motion for Partial Summary Judgment and Plaintiff Aerotek, Inc.'s Cross-Motion for Summary Judgment in an employment dispute following Obercian's departure from Aerotek on December 1, 2016, to work for Beacon Hill Staffing Group, LLC. The court finds the motions ready for decision without a hearing.

Obercian was employed by Aerotek beginning January 13, 2014, as Operations Manager of Clinical Solutions for Aerotek Scientific, LLC, focusing on life sciences. Upon hiring, she signed an Employment Contract containing three key provisions central to the dispute: a Noncompete Provision, a Nonsolicitation Provision, and an Early Resolution Conference (ERC) Provision. The Noncompete Provision restricts Obercian from engaging in any business competitive with Aerotek for eighteen months post-termination within a 50-mile radius of her workplace, concerning any area where she had provided services or accessed Confidential Information within the two years preceding her departure. The Nonsolicitation Provision bars her from contacting Aerotek's customers, with whom she had dealings or gained Confidential Information, to establish competitive business relationships or to reduce Aerotek’s business with those clients. Lastly, the ERC Provision mandates that Obercian must provide Aerotek with written notice at least 14 days before violating the Noncompete or Nonsolicitation Provisions and participate in mediation if requested by Aerotek. Failure to comply with this provision waives her right to contest the enforceability of the Noncompete or Nonsolicitation clauses. The court's ruling grants in part and denies in part Obercian's Motion while denying Aerotek's Cross-Motion.

In September 2014, Obercian became the Practice Lead at Aerotek, acting as a liaison among departments to meet customer needs. She resigned on December 1, 2016, and shortly after began working as a Division Director at Beacon Hill Pharma, where she was responsible for recruiting and placing candidates. Her new office was approximately ten miles from her previous Aerotek location. On April 6, 2017, Aerotek filed a lawsuit against Obercian, subsequently amending the complaint on June 5, 2018, alleging breach of contract and seeking injunctive relief and monetary damages. Obercian responded with an Answer and a Counterclaim under the Maryland Wage Payment and Collection Law, seeking monetary damages. She filed a Motion for Summary Judgment on July 13, 2018, which Aerotek opposed while filing a Cross-Motion for Summary Judgment. The motions were followed by replies from both parties in August and September 2018. The document outlines the standards for reviewing summary judgment motions, emphasizing the burden on the nonmovant to show genuine disputes of material fact and the necessity for evidence to be admissible in court.

A fact is deemed "material" based on substantive law, with only disputes that could influence the suit's outcome preventing summary judgment. A "genuine" dispute exists when evidence is sufficient for a reasonable jury to favor the nonmoving party. If the nonmovant fails to show sufficient proof on an essential element of their case, no genuine dispute arises, rendering other facts immaterial. In cases of cross-motions for summary judgment, the court evaluates each motion separately, resolving factual disputes in favor of the opposing party while ensuring unsupported claims do not proceed to trial. Evidence that is merely colorable or not significantly probative warrants summary judgment.

In Obercian's motion for summary judgment against Aerotek’s breach of contract claim, she contends that the Noncompete, Nonsolicitation, and ERC Provisions are unenforceable. For a breach of contract claim, a plaintiff must demonstrate a contractual obligation and its breach. If the provisions are unenforceable, Aerotek's claims fail by law. However, the court notes a genuine dispute exists regarding the Noncompete and Nonsolicitation Provisions, leading to the denial of Obercian's motion concerning these provisions. Under Maryland law, the enforceability of a restrictive covenant hinges on its specific language and case facts, requiring that the employer has a protected interest, the covenant is reasonably scoped, it does not impose undue hardship on the employee, and it does not violate public policy.

In **Deutsche Post Global Mail, Ltd. v. Conrad**, the court addressed the enforceability of a Noncompete Provision in the employment agreement involving Obercian and Aerotek. Obercian argued that the provision was overbroad, restricting her from working with any Aerotek competitors regardless of her role. The court acknowledged this overbreadth but stated that the problematic parts could be removed, allowing for the provision's enforceability. 

The court emphasized that employers have a legally protected interest in preventing former employees from exploiting established relationships with customers. Obercian did not dispute her involvement with Aerotek's customers during her employment, affirming Aerotek's interest in protecting its goodwill. 

The scope of the Noncompete Provision should be limited to what is reasonably necessary to protect this interest. Obercian did not challenge the duration or geographic scope of the provision; thus, the court evaluated the breadth of its restrictions. The Noncompete Provision had two main prohibitions: 1) Obercian could not engage in activities related to Aerotek's business that she worked on or had confidential information about during her last two years; and 2) she could not be employed by any competitor engaged in similar business activities. 

The second prohibition was deemed overly broad because it restricted Obercian from any role within a competing business without considering her specific responsibilities, failing to adequately protect Aerotek's goodwill. This ruling aligns with previous case law indicating that noncompete clauses must be tailored to the specific work an employee performed to be enforceable.

Aerotek contends that previous cases, specifically Allegis Group, Inc. v. Jordan, TEKsystems, Inc. v. Lajiness, and Aerotek, Inc. v. Thompson, support the enforceability of its Noncompete Provision. However, the Court disagrees with Aerotek's interpretation. In Allegis, a similar noncompete was upheld for an employee who started a competing business, but the court did not address the enforceability regarding employees moving to competitors. The Court finds Thompson and Lajiness unpersuasive, noting that Thompson merely follows Allegis without considering factual differences, as the Allegis employee founded a company while the Thompson employee joined an existing one. Moreover, both cases fail to adhere to the principle that contracts should not be interpreted to nullify their express terms, as doing so would render the first proscription redundant.

Consequently, the Court deems the second proscription of Aerotek's Noncompete Provision overbroad and unenforceable. Nonetheless, the Court can apply "blue pencil" excision to remove offending language in accordance with Maryland law, provided the provisions are "neatly severable." In this case, the Noncompete Provision contains two distinct and divisible promises: one prohibiting engagement in similar work, and the other prohibiting employment with a competitor regardless of the employee's role. The use of "or" indicates these are separate promises, allowing the Court to excise the second proscription while maintaining the first.

The Court has determined that the second proscription within the Noncompete Provision is to be removed, leaving the provision intact as it prohibits Obercian from engaging in AEROTEK's business within 18 months of her employment termination. This restriction applies to areas where she worked or gained confidential information during her last two years at AEROTEK, extending 50 miles from her last office. Obercian contends there’s no material factual dispute regarding her compliance with this provision; however, the Court found that a genuine dispute exists regarding the nature of her responsibilities at AEROTEK and the overlap with her role at Beacon Hill. AEROTEK argues she was involved in candidate resume reviews and mentoring recruiters, contradicting her claims of focusing solely on staffing solutions. Therefore, the Court cannot rule that Obercian did not violate the Noncompete Provision and will deny her motion related to it.

Regarding the Nonsolicitation Provision, Obercian asserts it is overly broad and thus unenforceable. The Court disagrees, stating that contract interpretation is a legal question. It emphasizes that Maryland law adheres to an objective standard for contract construction, indicating that the Nonsolicitation Provision's enforceability will be evaluated based on this principle.

In Gen. Motors Acceptance Corp. v. Daniels, the court emphasized that the language of a Nonsolicitation Provision is to be interpreted as written when it is clear and unambiguous. A contract is deemed unambiguous if a reasonable person can ascertain its meaning without confusion. Courts have previously invalidated overly broad restrictive covenants that prevent solicitation of prospective customers, as these customers have not yet engaged in business with the employer, and the employee has not built goodwill. In this case, the Nonsolicitation Provision restricts Obercian from communicating with any Aerotek customer under specific conditions. The term "customers" remains undefined in the Agreement, leading to differing interpretations: Obercian argues it includes prospective customers, while Aerotek refers to the dictionary definition, suggesting it applies only to those with whom they have conducted business. The court concludes that a reasonable interpretation of "customer" would be someone who has engaged in business with Aerotek, thus excluding prospective customers. As the provision's language is clear and Aerotek does not assert its applicability to prospective customers, the court finds the Nonsolicitation Provision enforceable. 

Regarding Obercian's alleged breach, the court notes that while the provision bars communications with certain customers based on confidential information obtained during her employment, it does not prohibit all communications. It specifically restricts communications aimed at establishing a competitive business relationship or diminishing Aerotek's business with those customers. Obercian's meeting with Alcobra Pharma, a former Aerotek customer, is at issue; although she acknowledges prior work with Alcobra, she contends the meeting did not violate the Nonsolicitation Provision as it was not for competitive purposes or to harm Aerotek's business.

Aerotek asserts that Obercian breached the Nonsolicitation Provision by meeting with Alcobra, a prospective client identified by her, while still employed at Beacon Hill. Aerotek claims this creates a genuine dispute regarding whether Obercian solicited business from Alcobra. Additionally, there is contention over whether Obercian violated the same provision by engaging in business with Immunocore, an Aerotek customer, after allegedly acquiring confidential information during her tenure at Aerotek.

Obercian disputes the admissibility of evidence presented by Aerotek, specifically the Spieller Declaration, arguing it was submitted after the discovery deadline, thus limiting her ability to respond effectively. She points out that Aerotek designated Kevin McKenna as its corporate representative for relevant testimony, but claims he was unprepared and lacked specific details about her work with Immunocore. To bolster its position, Aerotek introduced the Spieller Declaration post-discovery, in which Spieller claims to have provided Obercian with information about Immunocore. 

The Court, finding no justification for Aerotek's late submission and noting that Obercian did not have an opportunity to contest the evidence during the discovery phase, decided not to consider the Spieller Declaration or the related documents. Under Federal Rule of Civil Procedure 37(c)(1), a party is barred from using evidence not disclosed in accordance with the rules unless justified or harmless. Obercian maintains that the evidence does not prove she accessed confidential information about Immunocore, while Aerotek counters that she had access to proprietary databases containing such information.

McKenna indicated he was unaware of the specific information Obercian accessed, although he noted that "everyone" at Aerotek should access RWS at some point. An email chain submitted by Aerotek showed Obercian offered to discuss Immunocore during a business development call; however, it did not clarify whether she accessed confidential information about Immunocore or was simply knowledgeable about its market performance. Thus, there is no genuine dispute of material fact regarding Obercian's access to confidential information related to Immunocore, leading the Court to conclude that she did not violate the Nonsolicitation Provision in her dealings with Immunocore. A genuine dispute does exist concerning her contact with Alcobra, resulting in the denial of Obercian's Motion regarding the Nonsolicitation Provision.

Regarding the Early Resolution Conference (ERC) Provision, Obercian contends it is procedurally and substantively unconscionable, making it unenforceable, while Aerotek argues it functions like an enforceable arbitration clause. The Court agrees with Obercian, referencing Maryland law that voids unconscionable contracts. To establish unconscionability, both procedural (lack of meaningful choice) and substantive (terms favoring one party) aspects must be demonstrated. Adhesion contracts presented on a "take-it-or-leave-it" basis can be procedurally unconscionable, but are only invalid if also substantively unconscionable. The Court assessed the ERC Provision, noting that while it requires mediation rather than arbitration, both forms of dispute resolution often necessitate waiving the right to sue in court. Maryland courts require arbitration provisions to be supported by consideration, which consists of binding obligations. An illusory promise does not qualify as consideration. Only the language of the arbitration provision itself is reviewed to determine the presence of consideration, with prior contract considerations not rectifying an arbitration agreement's lack of enforceability.

Procedural unconscionability is established regarding the Agreement, as employees were not allowed to negotiate its terms, making it a contract of adhesion under Maryland law. The court will evaluate the ERC Provision for substantive unconscionability. This provision requires Obercian to provide fourteen days' written notice before violating the Noncompete or Nonsolicitation Provisions or challenging their enforceability. Aerotek has unilateral discretion to demand mediation, and if Obercian fails to comply, she waives her right to contest these provisions. The ERC Provision lacks mutuality, as it does not require Aerotek to mediate upon Obercian's request, rendering it unenforceable due to a lack of consideration. Consequently, both procedural and substantive unconscionability apply, leading the court to agree with Obercian's motion regarding this provision.

Regarding Aerotek's cross-motion for summary judgment, the court finds there is no genuine dispute over the enforceability of the ERC Provision but acknowledges a dispute exists about the scope of Obercian's duties and her interactions with Alcobra. Therefore, Aerotek's motion concerning the Noncompete, Nonsolicitation, and ERC Provisions is denied.

On Obercian's Maryland Wage Payment and Collection Law (MWPCL) counterclaim, Aerotek argues that Obercian's bonus is not classified as a "wage," that she did not meet conditions to earn it, and that a bona fide dispute exists over the owed bonus. Obercian contends there is a genuine dispute regarding her claim. The court agrees, noting that wages due upon termination under the MWPCL include bonuses, although not all bonuses qualify as wages per Maryland judicial interpretation.

Bonuses qualify as wages only when they are awarded in exchange for an employee's work. If bonuses are contingent upon factors other than the employee's performance, they do not meet the legal definition of wages. Aerotek asserts that its bonuses are discretionary and thus not classified as wages under the Maryland Wage Payment and Collection Law (MWPCL). The company's Employee Handbook states that performance bonuses are at the sole discretion of the company and require satisfactory performance throughout the evaluation period to be earned. Employees who leave before the evaluation period ends are ineligible for these bonuses.

In contrast, Obercian's 2016 Compensation Letter specifies a bonus potential of $30,000, detailing specific performance goals that must be met, which collectively account for the full bonus amount, indicating that the bonus is not discretionary. The absence of language suggesting Aerotek retains discretion over the bonus implies that it is earned upon achieving the outlined goals. This discrepancy creates a genuine dispute regarding whether Obercian's bonus is discretionary and thus not covered under the MWPCL.

As a result, the Court denies Aerotek's Motion regarding Obercian's Counterclaim and grants in part and denies in part Obercian's Motion for Summary Judgment concerning Count I. A separate order will follow.

The Court acknowledges uncontroverted facts not alleged in Aerotek's Amended Complaint, viewing them favorably for the non-moving party. It notes that the ERC Provision includes two irrelevant provisions and states that if a restrictive covenant is overly broad, a court can modify it to reasonable limits. Under Maryland law, both an eighteen-month duration and a fifty-mile radius of a Noncompete Provision are enforceable. Relevant case law supports the reasonableness of geographic scope concerning the employer's national business. The Noncompete Provision restricts Obercian from engaging in work related to her role at Aerotek for two years prior to her departure on December 1, 2016, focusing solely on her work from December 1, 2014, to December 1, 2016. Although there is testimony suggesting Obercian worked with Immunocore while at Aerotek, Aerotek claims she breached the Nonsolicitation Provision due to having learned confidential information about Immunocore at Aerotek and subsequently working with them at Beacon Hill. Discovery closed on May 31, 2018, and a declaration related to the case was produced by Aerotek in August 2018, which Aerotek does not dispute.

Spieller was not initially indicated as a knowledgeable individual regarding Aerotek's claims in their discovery responses. Following the submission of the Spieller Declaration, Aerotek produced related documents and emails mentioned by Spieller. Obercian contests the confidentiality of these documents, asserting she never received confidential information concerning Immunocore. The Court identifies a genuine dispute of material fact regarding the discretionary nature of Obercian's bonus and declines to address Aerotek's alternative arguments.