United States District Court, E.D. Virginia, Alexandria Division
ELLIS, III UNITED STATES DISTRICT JUDGE.
action for breach of contract, plaintiff, Update, Inc.,
alleges that its former employee, defendant Lawrence Samilow,
breached the non-compete and non-solicitation clauses in his
employment agreement. Plaintiff seeks a preliminary
injunction pursuant to the non-solicitation and non-compete
clauses of its contract with defendant, enjoining defendant
from continuing to solicit its customers and to enforce the
terms of the non-compete clause.
a Delaware corporation with its principal place of business
in New York, provides eDiscovery and legal staffing services
throughout the United States.
a New Jersey citizen, began working at plaintiff in 1995, and
eventually, in 2016, was promoted to Chief Customer Officer,
the company's top sales executive position. In that role,
defendant was responsible for developing new sales
opportunities and managing client relationships. Defendant
was directly responsible for customer service for a number of
New York and New Jersey clients. Defendant was also
responsible for supervision of national sales, and therefore
had access to client information across the country.
a year after defendant was promoted to Chief Customer
Officer, plaintiff offered defendant a new compensation plan.
In connection with the plan, defendant entered into an
“Employee Nondisclosure and Assignment Agreement”
(the Agreement) dated July 12, 2017. The Agreement contains a
non-solicitation clause, which provides:
I acknowledge that information about [plaintiff's]
customers and customer prospects is confidential competitive
information and constitutes a valuable trade secret.
Accordingly, I agree that during the term of this agreement
and for a period of one (1) year after my employment ends, I
will not, either directly or indirectly, separately or in
association with others, solicit or encourage others to
solicit any of [plaintiff's] customers or customer
prospects located within fifty (50) miles of any office,
branch office, or production facility of the [plaintiff] or
with whom I had any contact during the term of my employment
for the purpose of diverting or taking away business from
at § 12(a).
addition to the non-solicitation clause, the Agreement also
contains a non-compete clause which states:
I agree that during the term of my employment with Company,
and for one (1) year after my employment ends for any reason,
I will not directly or indirectly compete with Company by
providing to another person or entity in competition with
Company (defined below) the same or similar services as those
that I provided to the Company during the term of my
employment with Company. For purposes of this agreement, a
person or entity is in competition with the Company if it
provides legal staffing, managed review, legal consulting,
information governance, electronic data discovery and
litigation support services within fifty (50) miles of any
office, branch office, or production facility of the Company,
with the exception of any person or entity listed below as a
This covenant not to compete is limited to the types of
activities and services included within my Job Description
described in my offer letter.
Agreement at § 13.
January 10, 2018, defendant resigned his employment at
plaintiff. At approximately the same time as his
resignation, Driven, Inc. had acquired Update, Inc., and
defendant proposed to Driven moving all legal staffing and
eDiscovery clients defendant had been servicing to
defendant's soon to be formed consulting practice. That
proposal was rejected.
January 11, 2018 defendant contacted a law firm, Lowenstein
Sandler LLP, a client with which defendant had worked during
his employment, to solicit business. In January, defendant
also formed Samilow Harvest Group LLC, a new company
headquartered in Roseland, New Jersey, within 50 miles of
plaintiff's New York headquarters. Samilow Harvest
Group's website states that it provides eDiscovery
services similar to those provided by plaintiff.
defendant is providing services similar to those provided at
plaintiff to two of plaintiff's clients: (i) Porzio,
Bromberg & Newman, P.C. (Porzio), and (ii) Teligent, Inc.
(Teligent). With respect to Porzio, defendant is providing
legal staffing services similar to those provided by
plaintiff in the past. And with respect to Teligent,
defendant is alleged to have diverted a large project from
plaintiff, and Teligent has informed plaintiff that it
transferred its engagement to another vendor.
April 20, 2018 plaintiff filed its verified complaint
alleging that defendant was in breach of his Agreement (i) by
soliciting plaintiff's customers Porzio, Teligent, and
Lowenstein Sandler, and (ii) by engaging in similar services
he provided to plaintiff within a 50-mile radius of
plaintiff's New York headquarters. Plaintiff moved for a
preliminary injunction the same day. An initial hearing on
the motion for a preliminary injunction was held on Friday,
May 11, 2018. Defendant filed a response brief before that
hearing, making a number of arguments in opposition to the
motion for a preliminary injunction, but at the May 11
hearing, his newly retained counsel made a number of new
arguments. Following an additional round of briefing and
argument, the matter is now ripe for disposition.
standard for the issuance of a preliminary injunction is too
well-settled to require extended discussion. A party seeking
a preliminary injunction must demonstrate “that [it] is
likely to succeed on the merits, that [it] is likely to
suffer irreparable harm in the absence of preliminary relief,
that the balance of equities tips in [its] favor, and that an
injunction is in the public interest.” Di Biase v.
SPX Corp., 872 F.3d 224, 230 (4th Cir. 2017) (quoting
Winter v. Natural Resource Defense Council, Inc.,
555 U.S. 7, 20 (2008)).
respect to likelihood of success on the merits, the Fourth
Circuit has made clear that although the movant need not show
a certainty of success, the movant must make a “clear
showing” of likelihood of success on the merits.
Pashby v. Delia, 709 F.3d 307, 320 (4th Cir. 2013).
Analysis of each of these factors discloses that plaintiff
has made the required showing for a preliminary injunction.
begin with, plaintiff has made the requisite clear showing of
likely success on the merits. The central issue with respect
to likelihood of success on the merits is whether the
non-solicitation and non-compete clauses of the Agreement are
enforceable or unenforceable under Virginia
In Virginia, non-compete clauses are disfavored restraints on
trade. See Simmons v. Miller, 544 S.E.2d 666, 678
(Va. 2001). Given this disfavored status, non-compete clauses
“have been upheld only when employees are prohibited
from competing directly with the former employer or through
employment with a direct competitor.” Omniplex
World Servs. Corp. v. U.S. Investigations Servs. Inc.,
618 S.E.2d 340, 342 (Va .2005).
with these principles, the Supreme Court of Virginia has
established a three-part test for determining the
enforceability of non-solicitation and non-compete clauses.
This test “requires that the employer show that the
clause (i) is narrowly drawn to protect the employer's
legitimate business interest; (ii) is not unduly burdensome
on the employee's ability to earn a living; and (iii) is
not against sound public policy.” Lanmark
Technology, Inc. v. Canales, 454 F.Supp.2d 524, 528
(E.D. Va. 2006) (citing Richardson v. Paxton Co.,
127 S.E.2d 113, 117 (Va. 1962)). Analysis of these factors
requires courts to consider “the restriction in terms
of function, geographic scope, and duration.”
Simmons, 544 S.E.2d at 678.
courts employing this three-part test must take the
non-compete as written; courts have no authority under
Virginia law to “‘blue pencil' or otherwise
rewrite the contract” to eliminate illegal overbreadth.
Pais v. Automation Products, 36 Va. Cir. 230, 239
(1995). Thus, where a non-compete clause is ambiguous,
susceptible to two or more differing interpretations, one of
which is overbroad and unenforceable, the entire clause fails
even though it may be reasonable as applied to the specific
circumstances. Id. at 57-58. Still, the Supreme
Court of Virginia has made clear that “restraints on
competition are neither enforceable nor unenforceable in a
factual vacuum” and as such “[a]n employer may
prove a seemingly overbroad restraint to be reasonable under
the particular circumstances of ...