Lanier Professional v. Ricci ( 1999 )

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit











No. 99-1534



               LANIER PROFESSIONAL SERVICES, INC.,



                      Plaintiff, Appellant,



                                v.



      EILEEN M. RICCI AND BOMONT GRAPHICS TECHNOLOGY, INC.,



                      Defendants, Appellees.







           APPEAL FROM THE UNITED STATES DISTRICT COURT



                FOR THE DISTRICT OF MASSACHUSETTS



           [Hon. Joseph L. Tauro, U.S. District Judge]







                              Before



            Selya, Boudin, and Lipez, Circuit Judges.









     Daniel M. Shea, with whom Smith, Currie & Hancock, LLP, Harry

T. Daniels, and Hale & Dorr, LLP, were on brief, for appellant.

     Barry Ravech for Eileen M. Ricci.

     Cheryl Pinarchick, with whom James W. Stoll, and Brown,

Rudnick, Freed & Gesmer were on brief, for Bomont Graphics

Technology, Inc.









September 15, 1999













  LIPEZ, Circuit Judge.  Plaintiff-appellant Lanier

Professional Services, Inc. ("Lanier"), brought this action against

its former employee Eileen M. Ricci and her new employer, Bomont

Graphics Technology, Inc. ("Bomont").  Lanier requested, inter

alia, a preliminary injunction barring Ricci from working for

Bomont in violation of a noncompetition provision in Ricci's

employment agreement with Lanier.  That provision requires that

Ricci not sell "Facilities Mgmt [Management] Services" for one year

after her employment with Lanier, which ended in November 1998.

Lanier also sought to enjoin both defendants from using

confidential information and trade secrets that Ricci had allegedly

misappropriated from Lanier.  The district court denied the motion

for a preliminary injunction, concluding that Lanier had not shown

a likelihood of success on the merits.  We affirm.

                                I.

  Ricci was employed by Copytech Printing, Inc.

("Copytech"), from 1991 to 1996.  She sold printing and copying

services to various clients including members of MASCO, a

consortium of colleges and hospitals located in Boston's Longwood

Medical Area.  She also supervised a printing and copying center

operated by Copytech at a facility in Boston leased from MASCO.  In

February 1996, Lanier purchased Copytech.  As a condition of

continued employment with Lanier, Ricci was required to sign a

standard-form Lanier Employment Agreement that included the

following provision: "During the term of employment with the

Company and for a period of one (1) year after termination of

employment hereunder . . . Employee will not, directly or

indirectly, on Employee's own behalf or for others, demonstrate,

service, or sell products or perform services in the Territory[]

that are competitive with the Products . . . ."  The "Products"

were defined by checking the appropriate items from a list; on

Ricci's agreement, only "Facilities Mgmt Services" was checked.

  Ricci performed the same type of work for Lanier that she

had for Copytech, selling off-site printing and copying services

and overseeing the copy center. Ricci resigned from Lanier on

November 30, 1998, and began working for Bomont in December 1998 as

its sole outside salesperson.  A small printing shop specializing

in large-format, full-color printing, Bomont to some degree

competes with Lanier (and many others) in the Boston printing

market.  In her new job Ricci has won at least two former Lanier

accounts for Bomont.

  Lanier filed suit against Ricci and Bomont in the United

States District Court for the District of Massachusetts in February

1999, seeking damages and a preliminary and permanent injunction.

After reviewing the affidavits submitted by the parties and hearing

argument, the court denied the motion for a preliminary injunction.

This appeal followed.

                               II.

  We review the denial of a request for a preliminary

injunction for abuse of discretion, see Hiller Cranberry Products,

Inc. v. Koplovsky, 165 F.3d 1, 4 (1st Cir. 1999), but "rulings on

abstract legal issues remain reviewable de novo, and findings of

fact are assessed for clear error," Ocean Spray Cranberries, Inc.

v. PepsiCo, Inc., 160 F.3d 58, 61 n.1 (1st Cir. 1998). "The

appealing party bears the considerable burden of demonstrating that

the District Court flouted the four-part test for preliminary

injunctive relief."  Used Tire Int'l, Inc. v. Diaz-Saldana, 155

F.3d 1, 4 (1st Cir. 1998) (internal quotation marks omitted).  That

familiar four-part test requires the plaintiff to show: "(1) it is

substantially likely to succeed on the merits of its claim; (2)

absent the injunction there is a significant risk of irreparable

harm; (3) the balance of hardships weighs in its favor; and (4) the

injunction will not harm the public interest."  I.P. Lund Trading

ApS v. Kohler Co., 163 F.3d 27, 33 (1st Cir. 1998) (internal

quotation marks omitted).  We apply the federal preliminary

injunction standard in a diversity case, at least where the parties

have not suggested that state law supplies meaningfully different

criteria.  See Ocean Spray, 160 F.3d at 61.  We have also noted

that "Massachusetts standards for a preliminary injunction do not

seem markedly different" than ours.  Id. (citing Packaging Indus.

Group, Inc. v. Cheney, 405 N.E.2d 106, 111-12 (Mass. 1980)).

                               III.

  The primary issue in this appeal involves the

interpretation of the term "facilities management services," which

the noncompetition agreement bars Ricci from selling until

November 30, 1999.  The district court found that term ambiguous,

construed the agreement against the drafter, Lanier, and concluded

that Lanier had not demonstrated a substantial likelihood of

success in proving that Ricci had violated the agreement.

  There appears to be no dispute that facilities management

services refers primarily to support services that the client

wishes to "out-source" to an outside provider who works on-site at

a client's place of business.  Facilities management services are

an important and growing part of Lanier's business in Boston.  The

dispute in this case relates to off-site printing services, not

performed at the client's place of business, which Ricci sold for

Copytech and Lanier, and now sells for Bomont.  Ricci and Bomont

contend that such off-site services are not facilities management

services as that term is used in the printing and copying industry,

and as it was used at Lanier while Ricci worked there.  Lanier, on

the other hand, asserts that facilities management services include

off-site printing.

  Under Massachusetts law, a contract term is ambiguous

when its language is "reasonably prone to different

interpretations" or "susceptible to differing, but nonetheless

plausible, constructions."  Alison H. v. Byard, 163 F.3d 2, 6 (1st

Cir. 1998); see also Bercume v. Bercume, 704 N.E.2d 177, 182 (Mass.

1999).  Whether a term is ambiguous is a question of law.  See

Alison H., 163 F.3d at 6.

  We agree with the district court that the term

"facilities management services," undefined in the agreement, is

inescapably ambiguous as a matter of law.  When contractual

language is ambiguous, its meaning is a question of fact.  See Den

norske Bank AS v. First National Bank, 75 F.3d 49, 52 (1st Cir.

1996). The resolution of the ambiguity turns on the parties'

intent, as "discerned by the factfinder from the circumstances

surrounding the ambiguity and from such reasonable inferences as

may be available."  Colasanto v. Life Ins. Co. of N. Am., 100 F.3d

203, 211 (1st Cir. 1996).  Extrinsic evidence is admissible to

assist the factfinder in resolving the ambiguity, including

evidence of, in descending order of importance: (1) the parties'

negotiations concerning the contract at issue; (2) their course of

performance; and (3) trade usage in the relevant industry.  See

Den norske, 75 F.3d at 52-53; see also Keating v. Stadium

Management Corp., 508 N.E.2d 121, 123 (Mass. App. Ct. 1987).  In

support of their competing definitions of facilities management

services, the parties offered evidence in each of those three

categories, the defendants focusing on the first and third and

Lanier on the second.

  There were no negotiations.  Ricci was presented with a

standard-form employment agreement and told she had to sign it to

retain her position.  Ricci, however, stated in her affidavit that

at the time she signed the agreement, she did not believe that her

work could be characterized as facilities management services, and

that she shared that view at the time with a fellow employee, Todd

Nugent.  Nugent's affidavit corroborates Ricci's.  Ricci also

stated that she thought that she might be asked to sell such

facilities management services in the future, thus explaining the

seeming oddity of Lanier requiring her to sign a noncompetition

agreement covering a product that she had never sold.

  Ricci and Bomont also offered significant evidence

concerning the usage of the term facilities management services in

the trade.  See Atlantic Track & Turnout Co. v. Perini Corp., 989

F.2d 541, 543 (1st Cir. 1993) (trade usage may be used to help

discern meaning of ambiguous contract term).  That evidence

included affidavits from Ricci, five other former Lanier employees,

an employee of another copying and facilities management company,

and an owner of Bomont.  They all agreed that off-site printing,

which Ricci sold for Lanier and now sells for Bomont, is not

considered facilities management in the printing and copying trade

or was not so considered at Lanier when Ricci worked there.

  Lanier focused primarily on the undisputed fact that

Ricci worked for Lanier for almost three years and that her

employment agreement prohibited her from competing when she left

the company in providing facilities management services.  See Lembo

v. Waters, 294 N.E.2d 566, 569 (Mass. App. Ct. 1973) (court may

resort to conduct of parties to determine meaning they put on

ambiguous contract term).  That fact, according to Lanier, shows

Ricci's acquiescence in its definition of the term.  There is an

intuitive appeal to the notion that Ricci should have understood

that when the employment agreement barred her from selling

facilities management services for a year after leaving Lanier, the

intent was to cover the sort of services that she in fact sold for

Lanier.  This evidence certainly has some probative value.

However, it did not compel a finding by the court that Ricci

acquiesced in Lanier's understanding by performing under the

agreement.

  Unable to resolve the ambiguity in the contract language,

the court properly resorted to the familiar principle that an

ambiguous "post-employment restraint imposed by the employer's

standardized form contract" will be construed against the drafter.

Sentry Ins. v. Firnstein, 442 N.E.2d 46, 46-47 (Mass. App. Ct.

1982) (citing Restatement (Second) of Contracts § 188 cmt. g

(1981)).  The court's conclusion that Lanier had not demonstrated

a substantial likelihood of success on the merits reflected

factual findings that are not clearly erroneous and a correct

understanding of the law.  The court's denial of a preliminary

injunction, therefore, was not an abuse of discretion.

                              IV.

  Lanier also argues that the district court abused its

discretion by refusing to enter an injunction barring Ricci from

disclosing, and Bomont from making use of, confidential information

misappropriated from Lanier.  That argument requires little

discussion.  Lanier's scant evidence that Ricci had appropriated

information consisted primarily of the affidavit of Ricci's

successor, who stated that he had "received information which led

[him] to believe Ricci may have removed documents from Lanier's

files prior to her resignation."  As the district court found, that

affidavit was so devoid of content as to be "practically

worthless."

  Even assuming that Lanier had shown that Ricci had

misappropriated documents, it offered no evidence that those

documents contained confidential information or trade secrets.

Although Ricci's employment agreement contained a nondisclosure

clause, "[s]uch an agreement cannot make secret that which is not

secret . . . ."  Dynamics Research Corp. v. Analytic Sciences

Corp., 400 N.E.2d 1274, 1288 (Mass. App. Ct. 1980).  The district

court did not abuse its discretion in denying the motion for a

preliminary injunction.

  Affirmed.