Hunter Group, Inc v. Smith ( 1998 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
THE HUNTER GROUP, INCORPORATED,
Plaintiff-Appellant,
v.
SUSAN M. SMITH; MARTIN W.
REIMER; RENEE Y. CREECH;
CATHERINE COOPER; GAIL E. MANN; No. 97-2218
DELOITTE & TOUCHE, LLP,
Defendants-Appellees,
and
JULIA M. SALTER,
Defendant.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Andre M. Davis, District Judge.
(CA-97-1871-AMD)
Argued: June 5, 1998
Decided: September 23, 1998
Before MURNAGHAN and MICHAEL, Circuit Judges, and
BUTZNER, Senior Circuit Judge.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
ARGUED: Stacie Eileen Tobin, PIPER & MARBURY, L.L.P., Balti-
more, Maryland, for Appellant. Stephen M. Sacks, ARNOLD &
PORTER, Washington, D.C., for Appellees. ON BRIEF: James D.
Mathias, PIPER & MARBURY, L.L.P., Baltimore, Maryland, for
Appellant. Ronald A. Schechter, Susan E. Huhta, ARNOLD & POR-
TER, Washington, D.C.; Daniel P. Goldstein, BROWN, GOLD-
STEIN & LEVY, L.L.P., Baltimore, Maryland, for Appellees.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
The Hunter Group, Inc. ("Hunter") appeals an order of the district
court denying Hunter's motion for a preliminary injunction. Hunter
seeks to enjoin five of its former employees (the"individual defen-
dants") from competing with Hunter through their employment with
Deloitte & Touche Consulting Group ("Deloitte"), and to prevent the
disclosure and use of Hunter's trade secrets and confidential informa-
tion by those employees.
We review the denial of preliminary injunctive relief for abuse of
discretion, Direx Israel, Ltd. v. Breakthrough Med. Corp., 952 F.2d
802, 814 (4th Cir. 1991), in light of the familiar four-factor test first
announced in Blackwelder Furniture Co. v. Seilig Mfg. Co., 550 F.2d
189, 193 (4th Cir. 1977). We affirm.
I
PeopleSoft, Inc., owns and licenses software to companies for use
in financial management, human resources, and personnel functions.
As a "PeopleSoft Partner," Hunter contracts directly with purchasers
to install the software and to teach employees how to use the soft-
ware. Hunter's implementation consultants perform the installation,
often customizing the software to accommodate a client's particular
needs. Following implementation of the PeopleSoft product, training
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consultants in Hunter's Education Services Group instruct the client's
employees how to use the new software. In teaching clients how to
use the PeopleSoft product, Hunter relies on its own proprietary
"courseware," or written training materials, to explain the functions of
the software and to provide training exercises. The courseware is
written by training consultants in Hunter's Education Services Group.
New consultants hired by Hunter, who often have little or no expe-
rience with the PeopleSoft product, participate in a program Hunter
calls "Boot Camp." Hunter conceived of Boot Camp, a one month
internal training program designed and delivered by members of the
Education Services Group, as an alternative to the training classes
offered by PeopleSoft, which often took three to five months to com-
plete.
Hunter employed Martin Reimer, Renee Creech, Catherine Cooper,
and Gail Mann as training consultants in Hunter's Education Services
Group. Each of those individuals had come to Hunter with significant
consulting experience; Creech, Reimer, and Mann had previous expe-
rience with the PeopleSoft software. During their employment with
Hunter, the training consultants participated in the development of
courseware and delivered training to new consultants in Hunter's first
Boot Camp in April 1997. Susan Smith managed the Education Ser-
vices Group and was the direct supervisor of the training consultants.
As a condition of employment with Hunter, each of the individual
defendants executed an Employment Agreement ("Agreement").
Other than the date of execution, the Agreements are identical. Each
Agreement contains several noncompetition provisions, including
covenants: (1) not to perform consulting services for a competitor of
Hunter's for a period of six months following termination, (2) not to
disclose or use Hunter's confidential information or trade secrets at
any time, and (3) not to solicit the employment of any Hunter
employee for one year following termination.
Hunter terminated Smith's employment on January 20, 1997.
Shortly thereafter, Smith accepted the offer of a position at Deloitte
as a supervisor in Deloitte's National Education group. By June 1997,
each of the individual defendants had terminated their employment at
Hunter and joined Deloitte's consulting group. At Deloitte, they have
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been engaged in taking PeopleSoft classes, writing courseware to be
used in delivering PeopleSoft training to Deloitte's implementation
consultants, and developing an internal training program. Several of
the individual defendants are developing courseware on the same
PeopleSoft products for which they wrote courseware at Hunter. For
example, Creech, who developed Hunter's "General Ledger" course-
ware, is developing a "General Ledger" course at Deloitte. Cooper is
responsible at Deloitte, as she was at Hunter, for creating templates
for the courseware. The use of templates, files that structure the
appearance and layout of a document, ensures that the materials have
a consistent and attractive appearance.
On June 10, 1997, Hunter filed suit against Deloitte and the indi-
vidual defendants in the United States District Court for the District
of Maryland. The six-count complaint alleged violations of the non-
competition provisions of the Agreements and of the Maryland Uni-
form Trade Secrets Act, tortious interference with contractual
relations by Deloitte, unfair competition, and a civil conspiracy to
harm Hunter. Upon Hunter's motion, the district court entered a tem-
porary restraining order enjoining the individual defendants from fur-
ther violating the noncompetition provisions of the Agreements, and
enjoining Deloitte from contacting Hunter employees or using Hunt-
er's confidential information or trade secrets. The defendants later
consented to the entry of a preliminary injunction pendente lite with
respect to the alleged solicitation of Hunter employees.
On July 30 and 31, 1997, the district court conducted a hearing on
Hunter's motion for a preliminary injunction. By order dated August
29, 1997, the district court denied Hunter's request that the defendants
be enjoined from competing against Hunter in their employment at
Deloitte, and from retaining, revealing, or otherwise using Hunter
trade secrets or confidential information. Hunter filed a timely appeal.
II
It is axiomatic that a "clear showing of irreparable harm" is a pre-
requisite to the issuance of a preliminary injunction. Direx Israel, 952
F.2d at 812; see Rum Creek Coal Sales, Inc. v. Caperton, 926 F.2d
353, 360 (4th Cir. 1991) ("To succeed, the [plaintiff] must show that
it will sustain irreparable harm without a preliminary injunction.");
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Faulkner v. Jones, 10 F.3d 226, 237 (4th Cir. 1993) (Hamilton, J., dis-
senting) (stating that the "inability to establish irreparable harm `is by
itself a sufficient ground upon which to deny a preliminary injunc-
tion'") (quoting Gelco Corp. v. Coniston Partners, 811 F.2d 414, 418
(8th Cir. 1987)). To satisfy its burden of proving irreparable injury,
the plaintiff must demonstrate a causal connection between the
alleged harm and the actions to be enjoined; a preliminary injunction
will not issue unless it will remedy the alleged injuries. See Faulkner,
10 F.3d at 235-36 ("[A]ny inquiry into the irreparable harm resulting
from the denial of interim relief must necessarily begin with an analy-
sis of the degree to which that particular relief remedies the alleged
injuries.").
Hunter claims that it is threatened with the loss of clients and good-
will as a result of the defendants' violation of the covenants not to
compete contained in their Employment Agreements. In support,
Hunter relies on the testimony given by Mary Weaver, Hunter's
Senior Vice President in charge of the Education Services Group.
Weaver testified that since the individual defendants left, Hunter has
lost one contract because of its inability to produce expert PeopleSoft
consultants. In the absence of sufficient training consultants, Hunter
has been required to staff three existing contracts with implementa-
tion consultants. According to Weaver, Hunter no longer expects to
achieve its goals with respect to the number of training consultants to
be hired, the number of new consultants trained, and overall revenue.
Weaver's testimony is persuasive evidence that Hunter has
incurred substantial losses as a result of the departure of five employ-
ees, comprising almost half of Hunter's twelve-member Education
Services Group. We conclude, however, that a preliminary injunction
will not remedy the injuries Hunter has identified. Hunter's injuries
are caused by a lack of training consultants with the necessary exper-
tise in PeopleSoft. Enjoining the individual defendants from perform-
ing consulting services at Deloitte will not address that harm.
Hunter argues, however, that its injuries are compounded by the
competitive advantage Deloitte enjoys as a result of its employment
of the individual defendants. According to Hunter, the defendants'
defection to Deloitte has permitted Deloitte rapidly to enter the mar-
ket for PeopleSoft consulting services, while simultaneously handi-
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capping Hunter's ability to compete effectively in the same market.
An injunction would allow Hunter time to restore its consulting group
to full capacity.
We agree with Hunter that enforcement of a covenant not to com-
pete may forestall the type of competitive imbalance Hunter
describes. We decline, however, to issue a preliminary injunction
under the circumstances presented by the instant case. It is undisputed
that the Agreements' six-month restraint on competition expired some
time between July 20, 1997, and December 9, 1997. Therefore, Hunt-
er's contractual right cannot be preserved through the issuance of a
preliminary injunction; the right has expired by its own terms. See,
e.g., Nationwide Mut. Ins. Co. v. Hart, 534 A.2d 999, 1002 (Md. Ct.
Spec. App. 1988) (holding that an employer's request for a prelimi-
nary injunction "ha[d] been rendered moot by the passage of time
since the one year period set out in the contract" had terminated). A
preliminary injunction cannot protect Hunter from the injury it claims,
because the injury Hunter sought to prevent by securing its employ-
ees' agreement not to compete for six months has already occurred.
We are not unsympathetic to the fact that Hunter has diligently sought
expedient resolution of its claims, or that its contractual right to relief
expired in the midst of the prolonged process of judicial resolution.
And we do not foreclose the possibility that an injunction may be an
appropriate remedy, should it prove impossible for Hunter to prove
damages with any degree of certainty after a full trial on the merits.
Because a preliminary injunction will not prevent Hunter's alleged
injuries, however, we affirm the district court's refusal to enjoin pre-
liminarily the defendants from working in Deloitte's PeopleSoft con-
sulting group.
III
Next, Hunter argues that the district court abused its discretion in
denying Hunter's request that the defendants be enjoined from using
or disclosing Hunter's trade secrets and confidential information. In
denying Hunter's request for preliminary relief, the district court
stated that it did not "find that any of the defendants intentionally or
negligently provided to Deloitte, or have used in their work at
Deloitte, any of the trade secrets that [Hunter] claims." To the extent
that similarities existed between the Hunter courseware that the train-
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ing materials being developed at Deloitte, the district court concluded
that the similarities were traceable to information and materials dis-
seminated by PeopleSoft, Inc., to both companies. After a careful
review of the record, we conclude that the district court's factual find-
ings are fully supported by the evidence, and discern no abuse of dis-
cretion in the district court's denial of the preliminary injunction.
IV
Finally, we find no merit to Hunter's contention that the district
court abused its discretion in excluding evidence relating to Smith's
alleged solicitation of the Hunter employees. See Martin v. Deiriggi,
985 F.2d 129, 137 (4th Cir. 1992) ("It is well-settled that decisions
regarding the admission and exclusion of evidence are peculiarly
within the province of the district court, not to be reversed on appeal
absent an abuse of discretion."). The defendants consented before the
hearing to the entry of a preliminary injunction on Hunter's claim of
solicitation. Therefore, the only issues before the district court were
whether the defendants should be preliminarily enjoined from work-
ing in Deloitte's consulting group, and from using or disclosing Hunt-
er's trade secrets. The district court found, and we agree, that
evidence of how the defendants came to work at Deloitte was not rel-
evant to those issues.
Therefore, the judgment of the district court is hereby
AFFIRMED.
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