United States District Court, D. New Jersey
WILLIAM J. MARTINI, U.S.D.J.
ADP, LLC (“Plaintiff” or “ADP”)
brings this action against its former employees Jordan Lynch
and John Halpin (collectively “Defendants”),
alleging violations of restrictive covenants contained in
their employment agreements. This matter comes before the
Court upon four motions for summary judgment. ECF Nos. ,
, , &  (“the Summary Judgment
Motions”). Also before the Court is Plaintiff ADP's
letter filed February 1, 2019 in “supplemental
support” of its motion for summary judgment against
Defendant Halpin alleging a violation of the Court's
preliminary injunction order after Halpin communicated with
an ADP client on October 18, 2018. ECF No. . Defendant
Halpin in response acknowledges the communication but asks
the Court to “void the preliminary injunction.”
ECF No. .
reasons set forth below, the Court STAYS the
Summary Judgment Motions pending disposition of two
consolidated and related cases fully briefed and argued
before the Third Circuit. Defendants' request to lift the
preliminary injunction is DENIED WITHOUT
PREJUDICE and ADP's request to provide
supplemental briefing as to the preliminary injunction is
GRANTED IN PART. Accordingly, ADP shall
SHOW CAUSE why the preliminary injunction
should not be lifted as specified in the accompanying order.
THE MOTIONS FOR SUMMARY JUDGMENT
Court assumes the parties' familiarity with the facts and
will summarize below only those facts relevant to the instant
motions. Halpin and Lynch are former sales employees of
Plaintiff who voluntarily resigned from their positions on
December 23, 2015, and January 4, 2016, respectively. During
their employment Halpin and Lynch each entered into an
initial Sales Representative Agreement (“SRA”)
and several Restrictive Covenant Agreements
(“RCAs”). These agreements contained non-compete,
non-solicitation, non-use, and non-disclosure provisions. The
alleged breach of these agreements is the subject of these
parties have informed the Court, currently pending in federal
and state court in this state are at least thirteen cases in
various procedural postures challenging the enforceability of
the SRAs and RCAs. This includes six cases on appeal.
Particularly relevant to the pending motions are three
appeals before the Third Circuit: consolidated appeals in
ADP, LLC v. Rafferty (No. 18-1796) and ADP, LLC
v. Mork (No. 18-2603), and a third appeal in ADP,
LLC v. Trueira (No. 18-2803). The appeal in
Trueira is stayed pending the outcome of the
Rafferty/Mork appeal seeks review of, inter
alia, “[t]he enforceability of the restrictive
covenant agreements . . . .” See ADP, LLC v.
Rafferty (No. 18-1796, Concise Summary of the Case, Doc.
003112904133 at 2). On appeal, ADP formulated the issue
presented in Rafferty as follows:
[W]hether the district court erred in failing to find a
likelihood of success on the merits of ADP's claims under
is Restrictive Covenant Agreements and failing to enter a
preliminary injunction with respect to it, when (a) the same
district court in 2015 in ADP, LLC v. Jacobs found a
likelihood of success on the merits on similar claims under
ADP's same Restrictive Covenant Agreements and granted a
preliminary injunction in favor of ADP, and (b) where another
district court in 2016 in ADP, LLC v. Lynch and
ADP, LLC v. Halpin, relying in part on
Jacobs, also found a likelihood of success on the
merits on similar claims under ADP's same Restrictive
Covenant Agreements and also granted a preliminary injunction
in favor of ADP, which decision was affirmed by this Court in
See ADP, LLC v. Rafferty (No. 18-1796, Doc.
003112942253 at 12). On September 6, 2018, the parties
presented oral argument on the enforceability of the SRAs and
RCAs under New Jersey law, including whether the agreements
as written categorically violate New Jersey law or whether a
fact specific-inquiry with “blue-pencilling” is
required to determine the agreements' enforceability for
each ADP sales representative who signed RCAs.
parties now request the Court to decide nearly identical
questions in the Summary Judgment Motions. While the Court
notes the fact-specific nature of ADP's claims against
Halpin and Lynch and the procedural posture of the
Rafferty/Mork appeal, the legal questions under
consideration by the Third Circuit significantly overlap
those now ripe in the motions. It is well-established in this
Circuit that a district court maintains “broad power to
stay proceedings” before it. Bechtel Corp., v.
Local 215 Laborers' Int'l Union of N. Am., 544
F.2d 1207, 1215 (3d Cir. 1976). The Third Circuit has
explained that “[t]he power to stay proceedings is
incidental to the power inherent in every court to control
the disposition of the causes on its docket with economy of
time and effort for itself, for counsel, and for litigants.
How this can best be done calls for the exercise of judgment,
which must weigh competing interests and maintain an even
balance.” Id. (quoting Landis v. N. Am.
Co., 299 U.S. 248, 254-55 (1936)). “In the
exercise of its sound discretion, a court may hold one
lawsuit in abeyance to abide the outcome of another which may
substantially affect it or be dispositive of the
issues.” Bechtel, 544 F.2d at 1215.
the Court finds that a stay is warranted. The unique inquiry
at the preliminary injunction stage requires the district
court-and, subject to the standard of review, the Third
Circuit-to weigh the likelihood of success on the merits of
Plaintiff's claims. Because further guidance from the Third
Circuit may substantially affect the ultimate decision in
these cases, the Court finds that a brief stay of the Summary
Judgment Motions pending the outcome of the
Rafferty/Mork appeal is appropriate.
THE CONTINUING INJUNCTION
the Court has determined that a stay of the motions for
summary judgment is required here, this decision does not
alter the preliminary injunction entered by this Court on
June 30, 2016. While the Summary Judgment Motions were
pending, ADP informed the Court that it believed that
Defendant Halpin had again violated the preliminary
injunction. ECF Nos.  & . In response,
Defendant Halpin concedes that he communicated with an ADP
client, but asks the Court to lift the preliminary injunction
because over three years have passed since Halpin left ADP.
ECF No. . Halpin does not appear to argue that the
conduct identified by ADP did not violate the injunction.
Court has previously held, to determine whether a violation
occurred, “[t]he only relevant question is whether
Halpin solicited any of Plaintiff's clients after the
Court's issuance of the Injunction on June 30,
2016.” ECF No. . Here, ADP has supplied a copy of
a LinkedIn communication between Halpin and an ADP client,
United Methodist Retirement Communities, and counsel for
Defendant Halpin acknowledges Halpin sent the communication.
ECF No. . Halpin's continued disregard for this