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Superior Court of Massachusetts, Worcester County.STEELCRAFT, INC.v.MOBI MEDICAL, LLC, et al.
FN1.James Hensel.
No. 081934.
Nov. 13, 2008.
MEMORANDUM OF DECISION AND OR- DER ON THE PLAINTIFF'S MOTION FOR A TEMPORARY RESTRAINING ORDEROR
PRELIMINARY
INJUNCTION
RICHARD T. TUCKER, Justice.On September 3, 2008, Steelcraft, Inc.(Steelcraft) filed a three-count complaintand request for a temporary restraining order or
preliminary
injunction
against MobiMedical, LLC (Mobi) and James Hensel(Hensel). Steelcraft's complaint alleges that:(1) Hensel misappropriated trade secrets andconfidential business information; (2) Mobiand Hensel engaged in unfair and deceptiveacts and practices in violation of G.L.c. 93A, §§ 2 and11; and (3) Mobi and Hensel inten-
tionally interfered with Steelcraft's businessrelations. Steelcraft requests a restraining or-der or
preliminary
injunction
restraining or enjoining Hensel from performing any work for any corporation, business employer, or any other person relating to the design, man-ufacture, or sale of custom products, includ-ing: roller carts, rolling stands, intravenous pole-based systems, and adjustable arms andadditional mounts enhancing the utility of said products and devices that relate to theinformation Hensel acquired while workingfor Steelcraft.
For the following reasons,Steelcraft's motion for a temporary restrain-ing order or
preliminary
injunction
is
DENIED.
FN2.At oral hearing, counsel for the plaintiff stated that this was the only prayer for preliminary relief that the plaintiff was pursuing.
BACKGROUND
Steelcraft manufactures medical products.Hensel began working for Steelcraft inSeptember of 2002. While in Steelcraft'semploy, Hensel did not execute a writtencovenant not to compete and the parties dis- pute the existence of an oral covenant not tocompete. Hensel left Steelcraft's employ inearly 2007 At that time, Hensel incorporatedMobi, a business that manufactures productssimilar to those manufactured by Steelcraft.Hensel incurred $100,000 in debt to startMobi.
DISCUSSION
To prevail on a motion for a
preliminary
in- junction
, “a plaintiff must show (1) a likeli-hood of success on the merits; (2) that irre- parable harm will result from denial of theinjunction; and (3) that, in light of the plaintiff's likelihood of success on the mer-its, the risk of irreparable harm to the plaintiff outweighs the potential harm to thedefendant in granting the injunction.”
, citing
I. Likelihood of Success on the Merits A. Misappropriation of trade secrets and confidential business information
Massachusetts courts will not enforce a cov-enant not to compete unless it is valid andreasonable in light of the circumstances.
Mass. 280, 287 (1974). A covenant not tocompete is valid only if it: (1) protects anemployer's legitimate business interest; (2)is supported by consideration; (3) is reason-able in time and space; and (4) is consonantwith the public interest.
(1961). With regard to the first element,there are three types of legitimate businessinterests: (1) trade secrets; (2) confidential business information: and (3 good will.
287.Here, there was no written covenant not tocompete and the parties dispute the exist-ence of an oral covenant not to compete.However, even if Steelcraft can show thatthere was in fact an oral covenant not tocompete, that the covenant protected a legit-imate business interest, and that it was sup- ported by adequate consideration, Steelcraftwill nonetheless be unable to prove that thecovenant is enforceable under Massachusettslaw. First, with regard to time, Steelcraft hasnot alleged that the covenant contains a timelimit. Therefore, the covenant is not for areasonable amount of time. Second, with re-gard to space, Steelcraft has not alleged thatthe covenant limits its scope to a particular geographic area. Therefore, the covenant isnot reasonable in space. Lastly, the allegedcovenant is not consonant with the public in-terest because “the public and the individualhave an interest in every person carrying onhis trade or occupation freely,”
(1939), and the alleged covenant not to com- pete could conceivably stop Hensel from participating in his trade anywhere in theworld ever again. Therefore, Steelcraft hasnot shown a likelihood of success on themerits with regard to its claim alleging mis-appropriation of trade secrets and confiden-tial information.
B. Violation of G.L.c. 93A, §§ 2and 11
General Laws c. 93A, § 2(a), provides that“[u]nfair methods of competition and unfair or deceptive acts or practices in the conductof any trade or commerce are hereby de-clared unlawful.”For conduct to be con-sidered unfair or deceptive pursuant toG.L.c. 93A, § 2(a), “(1) it must fall within atleast the penumbra of some common-law,statutory, or other established concept of un-fairness, (2) it must be unethical or unscru- pulous, and (3) it must cause substantial in- jury to a consumer or another businessman.”
(1986).At the outset, Steelcraft has not accusedMobi or Hensel of conduct that falls withinsome “common-law, statutory, or other es-tablished concept of unfairness.”See
id.
-Mindful that no written covenant not tocompete was executed by the parties, it isunlikely that Steelcraft will be able to showthat Mobi and Hensel acted in an unethicalor unscrupulous manner. Such a showingwould require Steelcraft to prove that Mobiand Hensel engaged in conduct that “attainsa level of rascality that would raise an eye- brow of someone inured to the rough andtumble of the world of commerce.”
Id.,
Here, Steelcraft alleges that Hensel left itsemploy with trade secrets and confidential business information and that he used the in-formation for the wrongful purpose of ad-vancing his own business, Mobi, to the det-riment of Steelcraft. However, Steelcraft hasnot established that the information was infact trade secrets or confidential business in-formation. Notably, Steelcraft has not shownthat it took any precautions to protect the in-formation. See
(hold-ing that the extent of measures taken toguard the secrecy of information is relevantto determining whether such informationconstitutes a trade secret or confidential business information). If trade secrets andconfidential business information were trulyat stake here, Steelcraft would have to estab-lish that it had taken measures to safeguardthe information. Of course, Steelcraft couldhave easily done so by asking Hensel to ex-ecute a confidentiality agreement or a writ-ten covenant not to compete.If the information was not in fact tradesecrets or confidential business information,Hensel merely departed with general know-ledge. Such use of general information ob-tained from a former employer in sub-sequent employment situations is not con-duct that “attains a level of rascality thatwould raise an eyebrow of someone inuredto the rough and tumble world of com-merce.”
679. Lastly, Steelcraft has failed to showthat it has been substantially harmed becauseit has failed to point to any specific businessit lost as a result of Hensel and Mobi's con-duct. Therefore, the plaintiff has not shown alikelihood of success on the merits with re-ward to its G.L.c. 93A claim.
C. Intentional Interference with Business Relations
In order to make out a prima facie case of intentional interference with business rela-tions, Steelcraft must prove “(1) the exist-ence of a ... business relationship which con-templated economic benefit; (2) the defend-ant's knowledge of the ... business relation-ship; (3) the defendant's intentional interfer-ence with the ... business relationship for animproper purpose or by an improper means;and (4) damages.”
. Here,Steelcraft has failed to point to any specificeconomically-beneficial business relation-ship that Hensel knew of and intentionallyinterfered with for an improper purpose or by an improper means that caused Steelcraftto suffer damages. Therefore, Steelcraft hasnot shown a likelihood of success on themerits with regard to its intentional interfer-ence with business relations claim.
II. Irreparable Harm
Even if Steelcraft could show a likelihood of success on the merits, it cannot show that itwill suffer irreparable harm without a re-straining order or
preliminary
injunction
.Steelcraft alleges that, due to Hensel'swrongful use of the information he acquiredwhile working for Steelcraft, it will lose business Loss of business can easily be com- pensated with a monetary award for theamount of business lost. As such, the loss al-leged by Steelcraft is essentially monetaryloss, which is not enough to establish irre- parable harm.
p.Ct. 37, 42 (2007). However, “monetaryloss may constitute irreparable harm wherethe loss threatens the very existence of the
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