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Saturn Wireless Consulting, LLC. v. Aversa

United States District Court, D. New Jersey

April 18, 2017

SATURN WIRELESS CONSULTING, LLC, Plaintiff,
v.
FRANK AVERSA, Defendant.

          OPINION

          KEVIN MCNULTY United States District Judge

         This matter comes before the Court on the application by order to show cause (ECF no. 3) of the plaintiff, Saturn Wireless Consulting, LLC ("Saturn"), for a preliminary injunction. Saturn asks this Court to enjoin its ex-employee, defendant Frank Aversa, from soliciting, contacting, or otherwise interfering with Saturn's customer AT&T. The action is one for breach of a written contract containing a restrictive non-solicitation covenant.[1]

         On Friday, March 10, 2017, 1 denied Saturn's request for a temporary restraining order but ordered expedited discovery and set the matter down for a preliminary injunction hearing. On March 31st and April 3rd, 2017, 1 held an evidentiary hearing. The court heard live testimony from two witnesses: Manika Sood, who testified on behalf of Saturn, and Frank Aversa, who testified on his own behalf. By the parties' stipulation, I accepted affidavits from witnesses in lieu of direct testimony. Sood and Aversa were cross-examined and also gave re-direct testimony. The parties submitted documentary exhibits, as well as deposition designations.

         For the reasons set forth below, the Court is persuaded that Saturn has met its burden of showing that injunctive relief is warranted, although not to the extent requested. Subject to the Court's "blue pencil" modifications to the non-solicitation provision, Saturn's motion for a preliminary injunction enforcing that provision will be GRANTED.

         I. FINDINGS OF FACT [2]

         A. Saturn's Business

         1. Saturn is a New Jersey-headquartered Limited Liability Company in the business of providing wireless communications support and training, and selling accessories to complement wireless devices. (Sood Cert. ¶¶ 1-2)

         2. Since 2001, Saturn has been a Solutions Provider for AT&T (an "AT&T SP").

         3. The AT&T Alliance Program Agreement between AT&T and Saturn (the "Alliance Agreement"), signed in December 2013 and effective as of January 1, 2014, sets forth the terms and conditions of AT&T's relationship with Saturn. (See Alliance Agreement.)

         4. The Alliance Agreement defines a "Customer" as a _________________________________________ (See Alliance Agreement §1)

         5. The Alliance Agreement defines Saturn, for purposes of the Alliance program, as____________________________ ( Id. §4.1)

         6. Additionally, the Alliance Agreement includes a non-exclusivity provision, which provides that_______________(Id § 4.3)

         7. Under the Alliance Program and Agreement, AT&T refers businesses that subscribe to AT&T's wireless network ("AT&T end-users") to Saturn for support services. Saturn then provides products and services to those referred AT&T end-users in exchange for compensation paid by AT&T. (Sood Cert. ¶ 2)

         8. For example, Saturn receives a commission from AT&T when it helps an AT&T end-user activate a new line of service from AT&T. [Id. ¶ 14)

         9. AT&T and Saturn consider this relationship, pursuant to AT&T's Alliance Program, to be a business "partnership."

         10. Because AT&T compensates Saturn for the services it provides to AT&T end-users, Saturn also considers AT&T a customer or client of Saturn. And, because Saturn provides services and products directly to the AT&T end-users, it considers those businesses to be customers or clients of Saturn as well. (Id. ¶ 15)

         11. Saturn derives 95% of its business from the referrals it gets from AT&T. Saturn's relationship with AT&T is therefore critical to its continued viability. (Id. ¶¶ 5, 14, 39)

         12. Saturn's relationship with AT&T is also critical because Saturn must compete for AT&T's referrals against hundreds of other AT&T SPs throughout the country. [Id. ¶ 16; Aversa Decl. ¶ 12)

         13. Saturn builds and maintains its relationship with AT&T by fostering individual relationships and goodwill between Saturn's Regional Account Managers ("RAMs") and AT&T sales representatives. (Sood Cert. ¶ 2)

         14. AT&T employs a hierarchy of sales representatives, e.g., officers, general managers, sales executives, and sales consultants. (Aversa Decl. ¶ 18) The AT&T employees who serve as the primary liaisons between AT&T and its SPs are called Channel Managers. (Id. ¶ 16)

         15. As Saturn's CEO, Manika Sood testified credibly that "Saturn's relationships with AT&T sales representatives have been cultivated through more than 15 years of relationship building, travel, entertainment, in-person meetings, the provision of prompt and accurate service and the preparation of marketing materials to promote the unique services that Saturn provides to its customers." (Id. ¶ 16)

         16. Sood also represented that "Saturn is . . . one of the only [AT&T SPs] that provides full end-to-end solutions for corporate customers looking for wireless services including, by way of example and without limitation, orders processing, buyback of used equipment, non-stocked devices that AT&T does not carry, professional services and mobility consulting." (Id.)

         17. Saturn's success has led AT&T to honor Saturn as a "platinum champion" partner for several years running, most recently in 2017. (Id. ¶ 16 & Ex. C)

         18. In recent years, Saturn has employed between five and six RAMs to build and maintain relationships with and sell Saturn's services to AT&T sales representatives, with each RAM having responsibility for several neighboring states in the United States. (Id. ¶¶ 3, 16)

         B. Aversa's Employment By Saturn And Restrictive Agreement with Saturn

         19. Saturn hired Aversa as a RAM on August 16, 2013, giving him responsibility for sales in Alabama, Florida, Georgia, Louisiana, North Carolina, South Carolina and Tennessee (the "Greater Southeast") through December 2014. Beginning in January of 2015, however, his territory was reduced to Florida, Louisiana and Alabama (the "Southeast") (Sood Cert. ¶ 3)

         20. Before accepting his position with Saturn, Aversa worked for Verizon Wireless from 2001 to 2006, and then for Chase Bank. (Aversa Decl. ¶¶ 5-6) He had general sales and wireless experience before coming to Saturn, but no experience with the AT&T Alliance program or relationships with AT&T sales representatives.

         21. As a condition of employment, on August 1, 2013, Aversa entered into a Confidentiality, Non-Solicitation, and Non-Compete Agreement with Saturn (the "Restrictive Agreement"), which contains a New Jersey choice of law provision. (See Restrictive Agreement ¶ 12)

         22. Aversa signed the Restrictive Agreement. Before signing, he was given the opportunity to, and did, read the Restrictive Agreement. He was also given the opportunity to have an attorney review the Restrictive Agreement.

         23. The Restrictive Agreement prohibits Aversa from disclosing any of Saturn's confidential information to any third party, "except for the benefit of [Saturn] and in the course of Employee's employment with [Saturn]." It also prohibits Aversa from retaining or disclosing any "written or other tangible material" containing confidential information in the event his employment with Saturn ceases for any reason. (Id. ¶ l(b)&(c))

         24. The Restrictive Agreement defines Saturn's confidential information as follows:

Confidential Information generally includes any and all information concerning products and pricing; pricing methods; existing customer and prospective customer lists, budgets, needs, and preferences; information relating to services used and preferred by [Saturn's] clients and prospective clients; historical sales information; supplier and vendor agreements; market research; policies and other terms of business; marketing practices; advertising strategies; unpublished financial data; methods of operation; pending proposals; business plans; processes; computer software used or to be used by [Saturn]; computer data information; information concerning [Saturn]'s employees; proprietary training materials; and any trade secrets or intellectual property. Employee specifically acknowledges that [Saturn]'s customer relationships were developed over many years, at great expense and effort by [Saturn], and as a result of [Saturn]'s relationships with its vendors, customers, agents and their respective employees, and that such relationships are deemed to be protected Confidential Information.

(Restrictive Agreement ¶1(a) (emphases added))

         25. The Restrictive Agreement also contains a non-solicitation provision, which provides, in relevant part:

As a specific condition of Employee's employment with [Saturn] and in consideration of the salary and other compensation paid by [Saturn] to Employee, Employee agrees that, from the date hereof and during Employee's employment with [Saturn], and for one (1) year immediately after Employee's employment with [Saturn] ceases, regardless of whether the termination of Employee's employment is initiated by [Saturn] or by Employee, is for cause or without cause, Employee will not directly or indirectly: . . . (iii) knowingly contact or solicit, either directly or indirectly, any person, firm or entity connected with [Saturn], including its customers, clients, vendors, or suppliers for the purpose of diverting work or business from [Saturn].

[Id. ¶2 (emphasis added))

         26. Additionally, the Restrictive Agreement contains a covenant not to compete, which provides, in relevant part:

As a specific condition of Employee's employment with [Saturn] and in consideration of the salary and other compensation paid by [Saturn] to Employee, Employee agrees that, from the date hereof and during Employee's employment with [Saturn], and for one (1) year immediately after Employee's employment with [Saturn] ceases, regardless of whether the termination of Employee's employment with [Saturn] is initiated by [Saturn] or by Employee, is for cause or without cause, Employee shall not, directly or indirectly: a) provide any services to (whether as an employee, agent, consultant, contractor, proprietor, partner, manager, officer, director, stockholder, investor, advisor, or otherwise), b) have any ownership interest in, or c) participate in, either directly or indirectly, the financing, operation, management, or control of: any person, sole proprietorship, firm, corporation, trust, joint venture, or other business or entity that engages in a "Restricted Business" in a "Restricted Territory, '” as such terms are defined below.
The term "Restricted Business" shall mean any business . . . providing services that are similar or related to the services provided by [Saturn]. Specifically, this term encompasses any and all businesses . . . whose business objective, in whole or in part, is to provide integrated wireless solutions, services, products, support, and/or products to business customers through coordination and partnering with telecommunications companies, software applications providers and hardware providers.
The term "Restricted Territory" shall mean the territory within a 50-mile radius of [Saturn]'s Jersey City headquarters, or the territory within a 50-mile radius of any location at which [Saturn] may hereafter maintain its headquarters.

[Id. ¶3 (emphases added))

         27. The Restrictive Agreement further provides:

Employee acknowledges that should Employee breach any of the provisions of Sections 1, 2, or 3, [Saturn] will suffer immediate and irreparable harm and that money damages will be inadequate relief. Therefore, Employee agrees that in the event that Employee breaches or threatens to breach any of the provisions of Sections 1, 2, or 3, [Saturn] shall be entitled to: (i) injunctive relief enjoining Employee from committing or continuing to commit any violation of this Agreement, and employee consents to the issuance by a court of competent jurisdiction of a temporary restraining order, preliminary or permanent injunction to enforce its rights under this Agreement; and (ii) recovery from Employee of all gross profit earned by the business entity on whose behalf Employee conducted such activity in violation of Sections 1, 2, or 3. [Saturn] shall also be entitled to seek any other damages or remedies available under law, in equity, or by statute.

[Id. ¶5 (emphasis added))

         28. Additionally, the Restrictive Agreement provided that, in the event of Aversa's termination, whether voluntary or not, he was to immediately and without request surrender to Saturn all Saturn equipment, documents, and data, including his cell phone and laptop computer. [See Id. ¶ 1(b))

         29. The Restrictive Agreement contains the following warning on the last page, just above where Aversa and Saturn signed: "CAUTION: THIS AGREEMENT RESTRICTS EMPLOYEE'S RIGHTS TO COMPETE WITH [SATURN] AND DISCLOSE OR USE [SATURN'S] CONFID[EN]TIAL INFORMATION DURING AND SUBSEQUENT TO EMPLOYEE'S EMPLOYMENT. EMPLOYEE HAS READ THIS AGREEMENT CAREFULLY AND UNDERSTANDS ITS TERMS" (Id. p.5)

         30. Early in Aversa's employment with Saturn, Saturn flew him from his Florida home to New Jersey for an orientation. By Aversa's account this consisted of little more than having him shadow another Saturn employee. Aversa says his real training occurred through online learning modules that AT&T provided for free to AT&T SPs and which taught him about AT&T systems, products, and services. (Id. 18)

         31. By Sood's account, Aversa's training was more extensive, and involved teaching Aversa everything he knows about the wireless business, wireless systems and services, Saturn's products and unique solutions, relationship building, and sales and marketing. (SoodCert. ¶¶ 17-21)

         32.1 accept factually that Aversa's job required him both to learn about AT&T's products and services, and to learn about Saturn's business methods.

         33. Throughout Aversa's employment with Saturn, Sood introduced Aversa to AT&T sales representatives, often making trips to Aversa's Southeast territory for that purpose. (Sood Cert. ¶¶ 17, 19-20)

         34. Aversa emphasizes the role of AT&T Channel Managers, who, at the request of AT&T SPs, would furnish names and contact information for AT&T sales representatives, which led to the building of relationships. (Aversa Decl. ¶ 18; see also Ex. D3)

         35. Again, I accept factually that Sood's introductions and preexisting relationships, as well as the AT&T SP's building of relationships, were important.

         36. For the part of 2013 that Saturn employed Aversa, Aversa earned $18, 478. In 2014, he earned $102, 251. In 2015, he earned $86, 874, and in 2016 (through November 15, when he left), he earned $66, 988. (Sood Cert. ¶ 23)

         C. Aversa's Resignation and Formation of CCG

         37. Aversa resigned from Saturn, giving two weeks' notice by letter to Sood, on November 15, 2016. (Sood Cert. ¶ 24 8s Ex. G; Aversa Decl. ¶29)[3]

         38. Aversa had used a cellphone for Saturn-related business. On that cellphone he had business-related contact information for, inter alia, AT&T sales representatives and AT&T end-users. (Aversa Decl. ¶ 33) The phone itself had not been issued to him by Saturn. When Aversa resigned, he "wiped" the cellphone clear (i.e., deleted all information Aversa had downloaded onto it and restored it to its default settings) and sold it. (Id.)

         39. Aversa testified that he believed Sood deactivated his cellphone's SIM card, which would have cleared the cellphone of Saturn-related data unless that data was also stored on the cellphone's hard drive.

         40. Aversa returned the laptop Saturn had provided to him. Before doing so, Aversa wiped the laptop of all files, programs, and materials he had downloaded or installed locally, and reinstalled the laptop's operating system. [Id. ¶ 34)

         41. Aversa explained that he wiped his laptop because he had used the laptop for personal matters, in addition to Saturn-related ...


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