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ADP, LLC v. Trueira

United States District Court, D. New Jersey

October 18, 2019

ADP, LLC, Plaintiff,
v.
DAVID TRUEIRA, Defendant.

          OPINION

          KEVIN MCNULTY. U.S.D.J. [1]

         Before the Court is a renewal of a motion for a temporary restraining order (DE 56) brought on by an order to show cause filed by the plaintiff, ADP, LLC ("ADP"). The defendant, David Trueira, left his employment at ADP and joined a rival firm, Ultimate Software Group, Inc. ("Ultimate"). While at ADP, Trueira entered into three agreements containing restrictive employment covenants. Based on those covenants, ADP asked this Court to enjoin Trueira, for a period of one year, from providing services for Ultimate in the same geographic territory he covered for ADP and from soliciting business from any client of ADP or encouraging any clients to cease doing business with ADP.

         In a prior decision, I granted the motion in part and denied it in part, finding that two of the employee agreements (the "SRA" and the "NDA") were enforceable, but that a third, more restrictive one (the "RCA") was not enforceable. (DE 45). Then, in a case involving another employee named Rafferty, the Third Circuit disagreed, holding that the RCA was enforceable. In a separate order, the Third Circuit vacated my prior order and remanded for further proceedings in light of the Rafferty decision. (DE 55).

         On remand, ADP has now renewed its motion for an injunction, citing the restrictions of the now-enforceable RCA. (DE 56) I heard additional oral argument from counsel, who did not seek to introduce any further testimony. APD's motion is GRANTED to the extent stated herein.

         I. BACKGROUND

         For ease of reference, I will here reprint from the prior Opinion my findings of fact, which have not changed.

         On March 16, 2018, I denied ADP's request for a temporary restraining order but ordered expedited discovery and scheduled the matter for a hearing on the preliminary injunction application. (DE5). On April 18, 2018, I held an evidentiary hearing. (DE 32). The Court heard live testimony from two witnesses: David Trueira, who testified on his own behalf, and Kate Whittier, the Vice President of Sales for Major Account Services for ADP and Trueira's former supervisor, who testified on behalf of ADP. I accepted certifications and declarations from witnesses in lieu of direct testimony. Trueira and Whittier were cross-examined and also gave redirect testimony. The parties submitted documentary exhibits, as well as deposition transcripts. After the hearing, the parties submitted proposed findings of fact and conclusions of law. (DE 38 86 39).

         In the course of the hearing, I had the opportunity to observe the demeanor of the witnesses and assess their credibility. In doing so, I considered such usual factors as the witnesses' apparent ability to recall; their general affect and demeanor; the apparent influence of bias or interest in shaping the narrative; the inherent plausibility of the accounts; and the extent to which their testimony fit with other evidence. I kept in mind that discovery, to date, has necessarily been limited. I have accepted the bulk of both sides' factual contentions. Whittier's testimony, to be sure, had a pro-plaintiff slant. I had more difficulty, however, with the credibility of Trueira, who sometimes was evasive (employing such qualifications as "vaguely") and sometimes selective in what he remembered reading.

         The following facts emerged from the evidentiary hearing and supporting documents:

         Trueira's Employment before working at ADP

         1. Prior to working at ADP, Trueira had been working as a salesperson in business marketing and advertising for about seven years. (Trueira Cert. ¶ 19); see also (Tr. 50:19-22). He had never before worked in the areas of payroll and human capital management. (Id. at 50:14-17).

         2. All of Trueira's knowledge, training, and experience in the area of payroll and human capital management began with ADP. (Id. at 50:25-51:2).

         ADP's Business

         3. ADP is a Delaware limited liability company with its principal place of business in Roseland. New Jersey. (Compl. (¶ 2).

         4. It is a provider of "business outsourcing and software services to clients, including human resources, payroll, tax, and benefits administration services." (Id. at 6).

         5. ADP offers its services internationally and across the United States, including in New Jersey. (Id.).

         Trueira's Employment with ADP

         6. On August 6, 2012, Trueira began employment with ADP in its Salem, New Hampshire office. (Trueira Cert. ¶ 2). On February 9, 2018, he resigned from ADP and immediately began his employment with Ultimate. (Id. ¶¶ 42 & 45).

         c. Employment in ADP's Total Source Division

         7. At the beginning of his employment with ADP, Trueira sold ADP's Total Source products and services.[2] (Id. at 4).

         8. Total Source is a professional employer organization program through which ADP would provide human resource services, employee benefits administration, and payroll services to employers. (Id.). Through outsourcing, ADP would step into the role of co-employer of each client's personnel for the purposes of payroll, employee benefits, and other aspects of employee management. (Id.); see also (Tr. 28:13-17 & 57:20-25).

         9. When selling Total Source products and services, Trueira focused on employers of 25 to 75 employees. (Trueira Cert. ¶ 5).

         10. Trueira recalls that he "rarely proposed and never sold Total Source products and services to employers with 200 or more employees." (Id.).

         11. Approximately 70% of Trueira's business (solicitation and sales) was with existing ADP clients. (Id. ¶ 6). The remaining 30% of his business was with new ADP clients. (Id.).

         12. Trueira solicited clients in two counties in northern Massachusetts and certain areas of Boston. (Id. ¶ 7).

         13. During Trueira's time as a Total Source sales associate, ADP assigned him an electronic database. (Id.). Known as the "SalesForce database," the database contained client and prospective client information, including a client's name, contact information, number of employees, and telephone numbers. (Tr.32:16-33:6).

         14. The SalesForce database identified approximately two hundred prospective clients for Trueira. (Trueira Cert. ¶ 7). Trueira was also referred leads by sales associates in ADP's Small Business Division and Major Accounts Division. (Id.).

         15. In late June/early July 2015, about three years after Trueira began employment with ADP as a sales associate, he was promoted to a Sales Executive position in ADP's Total Source Division. (Id. ¶¶ 4 & 8; Whittier Decl. ¶ 3).

         16. For about two years, Trueira managed a team of approximately six sales associates who sold Total Source products and services to ADP clients and prospective clients in northern Massachusetts and New Hampshire. (Trueira Cert. ¶ 8).

         17. During this period, Trueira's team "rarely made a proposal and never sold Total Source products and services to any employer having 200 or more employees." (Id. ¶ 9).

         d. Employment in ADP's Comprehensive Services Division

         18. In late June/early July 2017, Trueira was transferred to a Sales position in ADPs Comprehensive Services Division.[3] (Id. ¶ 10). Trueira was in that position for approximately seven months before he left ADP. (Id.).

         19. Trueira's supervisor during his time in Comprehensive Services was Kate Whittier. (Tr. 29:17-19).

         20. As a Comprehensive Services Manager, Trueira was considered an "overlay" sales representative who worked with District Managers who sold Workforce Now. (Trueira Cert. ¶ 13; Tr. 29:13-16).

         21. ADPs Workforce Now is a technology platform for software that provides basic payroll and tax services. (Tr. 29:20-24). Individual modules can be added to that platform, including modules for applicant tracking, performance management, analytics, document storage, human resources, and time and attendance. (Id. at 29":5-3O:l8). Each module is an add-on to the basic Workforce Now product. (Id. at 74:12-14).

         22. Trueira never sold ADP's Workforce Now product and services. (Trueira Cert. ¶ 17; see also Tr. 62:11-12).[4]

         23. ADPs Comprehensive Services division sells such individual modules and services that function on the WorkForce Now platform.[5] (Id. at 30:23-31:10). Such services were sold individually, not as a bundled package. (Trueira Cert. ¶ 11).

         24. Comprehensive Services therefore required ADP's Workforce Now as a platoon. (Tr. at 30:19-22; 31:7-9; 59:8-11).

         25. Total Source, however, does not require Workforce Now as a platform. (Id. at 59:5-7).

         26. Comprehensive Services is similar to Total Source but lacks the professional employer organization feature. (Trueira Cert. ¶ 11; see also Tr. 58:18-24 (describing Comprehensive Services as "people support" without the professional employee organization structure)).

         27. Comprehensive Services is an outsourcing by the client/employer of payroll processing and other services. (Trueira Cert. ¶ 11; see alsoTr. 58:15-59:4; Whittier Decl. ¶ 3) (describing Comprehensive Services as "business process outsourcing services")). ADP would not, however, become a co-employer, as it did with Total Source. (Trueira Cert. ¶ 11).

         28. A Comprehensive Services client would be assigned a "dedicated person" from ADP to assist it in a certain area or areas. (Tr. 29:8-11).

         29. After Trueira sold clients Comprehensive Services products, he did not remain responsible for managing clients. ADP would "routinely assign a Relationship Manager with whom the client would deal concerning the Comprehensive Services provided to it." (Trueira Cert. ¶ 12).

         30. Trueira would, however, interact with Comprehensives Services clients when they would request assistance with implementation issues. (Id.).

         31. From July 2017 to December 2017, Trueira worked with four District Managers, and from January 2018 to early February 2018, he worked with two District Managers. (Id. ¶ 13).

         32. Trueira would solicit business from the clients to which he was directed by the District Managers. (Id. ¶ 14; Tr. 32:4-8).

         33. Trueira was not directly assigned a specific geographic territory. (Trueira Cert. ¶ 16). Rather, his territory was the territory of the District Managers for whom he served as an overlay. (Id. ¶¶ 15 & 16).

         34. The four District Managers with whom Trueira initially worked sold Workforce Now in Northern Massachusetts, New Hampshire, Maine, and the greater Boston area. [Id. ¶ 16; see also Whittier Decl. ¶ 3).

         35. While working with those District Managers, Trueira sold Comprehensive Services to two existing ADP clients in New Hampshire. (Trueira Cert. ¶ 15 & 16).

         36. Trueira did not make any sales of Comprehensive Sources while working with the two District Managers in January and February 2018. (Id. ¶ 13).

         37. As a Comprehensive Services Manager, Trueira met with approximately fifty clients. (Id. ¶ 15). The ADP clients and prospective clients that Trueira solicited were in Northern Massachusetts, New Hampshire, Maine, and the greater Boston area. (Id.).

         38. More than 80% of the companies with whom he met were existing ADP clients. (Id.).

         39. During the sales process for Workforce Now or Comprehensive Services, District Managers provide demonstrations of the products and sometimes provide documents with product information. (Tr. 105:17-106: 1). However, ADP does not require the potential client to sign a confidentiality agreement regarding the documents, demonstration, or pricing information. (Id. at 106:2-17).

         40. After a company signs onto ADP and becomes a client, it is provided a sales order which incorporates a Master Service Agreement. (Id. at 120:15-17 & 123:6-10). That Master Service Agreement includes a section guarding ADP's confidential and proprietary information. (Id. at 118:18-119:17).

         Salesforce Database

         41. Trueira did not have a Salesforce database of prospective clients assigned directly to him. (Trueira Cert. ¶ 14).

         42. Trueira did have access to the Salesforce database (or client list) of each of the District Managers for whom he acted as an overlay. (Id. ¶ 38; see also Tr. 32:19, 39:9-10, 65:3-4 & 93:7-10.).

         43. Trueira would access these databases, generally to make a note about a meeting or discussion with a client. (Trueira Cert. ¶ 38).

         44. Trueira did not have access to any type of database identifying all of ADP's clients worldwide or all of ADP's clients nationwide in one document. (Tr. 93:15-21).

         45. Trueira did not have his own access to a database that identified all of ADPs clients in a specific state, but did have access to the state-specific information in his District Managers' databases. (Id. at 93:22-94:10).

         46. Trueira sat in on feedback and round table discussions that were open to all of Comprehensive Services' District Managers. (Id. at 111:10-17).

         Pipeline

         47. During his time at Comprehensive Services, Trueira created a "pipeline," an Excel spreadsheet that tracked and documented potential sales of Comprehensive Services. (Id. at 33:7-10 & 38:1-3; see also Whittier Suppl. Decl. Ex. 1).

         48. The pipeline "show[ed] what potential business may or may not be coming in." (Tr. at 33:17-18).

         49. The information in the pipeline was a combination of information from the District Managers and information from Trueira. (Id. at 34:22-35:1).

         50. Trueira provided the pipeline to his supervisor, Whittier, on a weekly or biweekly basis. (Id. at 33:10-11).

         51. The pipeline included the following information: company name, location, contact person, the title of the contact person, "roll call," employee count, product information, information on the stage of the sales process, who referred the company, and whether the company is a prospect or a client. (Id. at 35:2-14; 36:5-10 & 36:21-37:12).

         52. The "Roll call" column referred to the potential revenue that Trueira expected to generate from that particular client. (Id. at 35:15-36:4).

         53. The pipeline distinguished between "a pure prospect of ADP Major Accounts or ... a client of ADP Major Accounts." (Id. at 36:12-14; see also Trueira Dep. 66:6-14 (explaining that the list includes ADP clients that Trueira considers to be a prospect for Comprehensive Services, and prospects that may be candidates for Comprehensive Services that are not existing ADP clients)).

         54. All of the companies identified as existing ADP clients on the last pipeline Trueira prepared were already on Workforce Now. (Tr. at 36:19-20, 61:10-20).

         55. Two companies listed in the pipeline were identified not as existing ADP clients but as "prospects." (Id. at 61:13-52:3). One prospect company was not an ADP client. The other was an ADP Total Source client, but not a Workforce Now client. (Id. at 62:4-10).

         56. The "product" column identified the particular product that Trueira and the District Manager thought they could sell to the client or prospect. (Id. ¶ 36:21-37:1).

         57. The "product" column listings did not include WorkForce Now. (Id. at 92:19-23).

         58. The "stages" column identified the stage of the sales process, and the "referred by" column identified the District Manager that Trueira was working with. (Id. at 37:2-7).

         59. The pipeline also included a "month" column which was an estimate of when the business would come in for ADP, assuming ADP "won the business." (Id. at 37:15-18).

         60. The final column of the pipeline, "notes," contained information on the next steps that were going to be taken and where Trueira and the District Manager "were in the process." (Id. at 37:19-25).

         61. The top portion of the pipeline identified companies that Trueira was actively soliciting. (Id. at 86:7-11).

         62. The bottom portion of the pipeline identified "leads," which were companies that Trueira and the District Manager considered to be potential clients. (Id. at 38:11-12).

         63. Companies would appear on the "leads" list either because a meeting had been held with that company or because someone at ADP had recommended going after that account. (Id. at 60:17-21).

         Trueira's Training While at ADP

         64. When Trueira began working in ADP's Total Source Division, he received formal and informal new-hire training in the Total Source product. (Tr. 58:2-11; see also Trueira Cert. ¶ 19). The formal training consisted of classes, while the informal training consisted of Trueira's shadowing other employees who were selling Total Source. (Tr. 58:2-11).

         65. In the Total Source Division, Trueira also had "several trainings," including a leadership development training in 2014 which was given by Total Source group. (Id. at 58:12-14 & 78:18-79:5).

         66. Through Blackboard Integration, a training site that ADP uses, Trueira attended thirteen or fourteen different courses while he was selling Total Source. (Id. at 79:9-18).

         67. Every time Trueira's role at ADP changed, he would receive training specific to the new products and services he was dealing with. (Trueira Cert. ¶ 19).

         68. When Trueira began to work in the Comprehensive Services Division, he did not receive any formal training. (Tr. 59:12-14). He recalled receiving informal training by watching videos and observing demonstrations. [Id. at 59:15-18).

         69. Whittier testified credibly that Trueira did have formal training "in certain aspects" of Comprehensive Services. [Id. at 82:11-13). She explained that she had instructed Trueira to participate in a series of trainings that the Vice President of Computer Services had set up. (Id. at 82:4-10).

         70. She also testified credibly that Trueira had formal training in executive conversations, "a training on gaining access at the C level and how a CFO thinks and how to be effective at basically getting them to meet with you and what was on top of their mind." (Id. at 82:18-20).

         71. As to WorkForce Now specifically, Trueira testified that he never received any formal training. (Id. at 59:19-20).

         72. Trueira also acknowledged, however, that when he first began to work in Comprehensive Services, he had asked Whittier if he could attend some demonstrations of WorkForce Now, a request which she granted. (Id. at 31:14-21). Trueira recalled watching videos and observing live demonstrations of the WorkForce Now product. (Id. at 31:11-21 & 59:22-25).

         73. Whittier agreed that Trueira had "on-the-job training like watching demonstrations" of WorkForce Now that were given to clients, and also observed demonstrations of WorkForce Now in the office, as per his request. (Id. at 82:22-83:8).

         74. Whittier did not direct Trueira to get training in Comprehensive Services or in Workforce Now through the ...


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