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Business Merchant Solutions v. Arst (noncompete 2006)

Business Merchant Solutions v. Arst (noncompete 2006)

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Published by: gesmer on Mar 24, 2011
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Superior Court of Massachusetts.MERCHANT BUSINESS SOLUTIONS,LLC dba Merchants Bankcard Systemsv.Jonathan D. ARST.
No. 06067.
 Feb. 14, 2006.
This matter comes before the Court on amotion by the Plaintiff, Merchant BusinessSolutions, LLC (Merchant) seekingpreliminary injunctive relief against theDefendant Jonathan D. Arst.
 In October of 2004, the Plaintiff MerchantBusiness Solutions hired the DefendantJonathan Arst, promising that during thefirst year of employment he could earnupwards to $100,000. Within the year, theDefendant earned approximately $13,000and was dismissed by the Plaintiff who nowseeks an injunction prohibiting theDefendant from a career in sales by virtue of a non-compete agreement that was executedat the beginning of his employment.The Plaintiff in its Independent Sales AgentAgreement acknowledged that it currentlypossessed certain recruiting and salescontracts and registrations known as ISOAgreements with MasterCard International,VISA and First National Bank of Omaha, aswell as other financial transactionprocessors. The Plaintiff had authorizedDefendant and Defendant had accepted fullresponsibility of controlling all of Defendant's own business activities,including but not limited to all contracts of vendors, suppliers, et cetera. However, at notime should Defendant or any of Defendant'sagents be in contact either directly orindirectly with the banks and/or processorsunless otherwise directed by the Plaintiff. Aspart of the Independent Sales Agreement,there was contained under clause number 7,titled “Non-Competition” that Defendantacknowledged the importance of maintaining the absolute confidentiality orinformation relating to the Plaintiff'sbusiness and agrees not to disclose toanyone other than the Plaintiff the tradesecrets and confidential proprietaryinformation of the Plaintiff, included but notlimited to this agreement, all devices,processes, records, business relationships,lists or other data pertaining to customers,distributors or suppliers, formulas,improvements and any other suchinformation regarding the operation of thePlaintiff's business. Under 7.2 thatDefendant agrees that during the term of Defendant's relationship with Merchant thatDefendant shall not without the Plaintiff'sexpress prior written consent directly orindirectly engage in any activity which is ormay be competitive with or which mightplace Defendant in a competing position tothat of the Plaintiff in any activity where thePlaintiff does business. Under clause 7.4,Defendant agrees that in the eventDefendant voluntarily or involuntarilyviolates any of the provisions contained inthis non-competition agreement, as hereinstated, then the Plaintiff shall beimmediately entitled to injunctive relief against Defendant, whether damages, real or
actual, can be proved. Furthermore, thePlaintiff shall be entitled to any and allreasonable attorneys fees or court costsincurred as a result of any action againstDefendant for such action. Under clause 7.5,the provisions within this non-competeprovision are void if the Plaintiff violatesterms of this agreement and fails to remedysuch violation within 60 days after beingnotified per section 15 herein. This is theagreement that was signed by Jonathan Arstas the Independent Sales Agent. TheAgreement was not signed by the Plaintiff.
Shortly after his involuntary terminationfrom the Plaintiff, the Defendant involvedhimself in a competing business,establishing his own company, where hewas designed as president.
 In order to prevail on its request for apreliminary injunction, the Plaintiff bearsthe burden of showing its likelihood of success on the merits; that it will sufferirreparable harm if the injunctive relief sought is not granted; and that its harm,without the injunction, outweighs any harmto the Defendant from him being enjoined.
GTE Products Corp. v. Stewart,
414 Mass.721, 722-23 (1993);
Packaging IndustryGroup, Inc. v. Cheney,
380 Mass. 609, 616-17 (1980). Before assaying these issues, it isappropriate to canvas the relevant elementsof the Massachusetts law dealing with theenforcement of non-competition agreements.Employee covenants not to competegenerally are enforceable only to the extentthat they are necessary to protect thelegitimate business interests of theemployer.
Novelty Bias Binding Company v.Shevrin,
342 Mass. 714 (1961). Suchlegitimate business interests might includetrade secrets, other confidential informationor the good will of the employer that wasacquired through dealings with itscustomers. See
All Stainless, Inc. v. Colby,
 364 Mass. 773 (1974). Protection of theemployer from ordinary competition,however, is not a legitimate business interestand a covenant not to compete designedsolely for that purpose will not be enforced.
Richmond Brothers, Inc. v. WestinghouseBroadcasting Company, Inc.,
357 Mass.106, 111 (1970).A non-competition agreement to beenforceable also must be reasonable ingeological scope and length of time, in otherwords, must be reasonable in time andspace. See
Blackwell v. E.M. Helides, Jr.,Inc.,
368 Mass. 225, 228; 
Becker College of Business Administration and Secretarial Science v. Gross,
281 Mass. 355 (1933).Here, the protection for the Plaintiff was thatthe agent or the Defendant for a period of two years would not compete with thePlaintiff. However, the agreement itself hasno geological limits. An unlimited, country-wide area, or the area where the Plaintiff does business, is simply not acceptable. Thenet effect would be that the Defendantwould be enjoined from competing with thePlaintiff within the Continental UnitedStates and beyond.The Court must also consider and balancethe harm to the Plaintiff from failure to grantthe injunctive relief it seeks. Contracts likethe one before me here, “are scrutinized withparticular care because they are often theproduct of unequal bargaining power andbecause the employee is likely to give scantattention to the hardship he may suffer lateron through the loss of his livelihood.”
SentryInsurance v. Firnstin,
14 Mass.App.Ct. 706(1982). The burden is on the Plaintiff to

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