Mechanical Plant Ser v. Dresser-Rand Company ( 1997 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
MECHANICAL PLANT SERVICES,
INCORPORATED, a North Carolina
corporation with offices in New
Hanover County, NC,
Plaintiff-Appellant,
v.
No. 96-1896
DRESSER-RAND COMPANY, a New
York partnership owned by
Ingersoll Rand, a New Jersey
corporation, and Dresser Industries,
a Delaware corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of North Carolina, at Wilmington.
James C. Fox, Chief District Judge.
(CA-95-156-7-F)
Argued: June 4, 1997
Decided: June 27, 1997
Before WILKINSON, Chief Judge, and WILKINS and
HAMILTON, Circuit Judges.
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Affirmed by unpublished per curiam opinion. Judge Hamilton wrote
a dissenting opinion.
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COUNSEL
ARGUED: Robert White Johnson, John Gregory Tillery, III, JOHN-
SON & LAMBETH, Wilmington, North Carolina, for Appellant.
Bradley Andrew Coxe, ANDERSON, DANIEL & COXE, Wrights-
ville Beach, North Carolina, for Appellee. ON BRIEF: Henry L.
Anderson, Jr., ANDERSON, DANIEL & COXE, Wrightsville Beach,
North Carolina, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
Mechanical Plant Services ("MPS") sued Dresser-Rand Company,
alleging that Dresser-Rand had violated a non-solicitation agreement
which prohibited Dresser-Rand from hiring former MPS employees.
The district court granted summary judgment in favor of Dresser-
Rand, finding that Dresser-Rand had never assented to such an agree-
ment. MPS appeals, arguing that Dresser-Rand's course of conduct
constituted an acceptance of MPS's contractual terms despite the fact
that there was no signed agreement. We disagree. The facts reveal
that MPS's course of conduct constituted an acceptance of Dresser-
Rand's offer to form a contract which did not include the non-
solicitation agreement. Accordingly, we affirm the judgment of the
district court.
I.
MPS is a labor broker which provides the services of precision
millwrights. Those millwrights specialize in the construction and
repair of metal surfaces, including rebuilding rotating equipment such
as steam turbines, gas turbines, pumps, and compressors.
In 1990, Dresser-Rand Company contacted MPS requesting that
MPS provide a labor quotation. On March 7, 1990, MPS sent Dresser-
Rand a quotation on a form contract, which included the following
non-solicitation clause.
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[Dresser-Rand] agrees not to employ any [MPS] employees,
who have been terminated, released or who voluntarily quit
for a period of one year from date of contract.[Dresser-
Rand] also agrees not to use MPS's employees through
other labor brokers, contractors, or any other vendor that
provides goods or services to [Dresser-Rand] for a period of
one year from date of contract. If [Dresser-Rand] deviates
from the above clause, [Dresser-Rand] agrees to pay MPS
a total of 2,000 manhours, per employee used at the straight
time invoice rate.
On March 19, Dresser-Rand sent MPS a purchase order taking
exception to this clause. The next day, MPS replied, refusing to
acknowledge the exception. On March 26, R. M. Jennings, Dresser-
Rand's Manager of Field Service Operations, responded by letter
which stated: "Although it is not our intention to employ any of
MPS's active employees, we do have a problem with signing your
contract with regard to Paragraph VI. I think we should discuss this
issue and try to resolve it to our mutual advantage." This letter was
followed by a flurry of telephone negotiations between the two com-
panies. Ultimately, Wayne Henry, MPS's vice-president, told Jen-
nings that MPS would not send any employees to Dresser-Rand
unless the non-solicitation clause was included in the contract.
Shortly thereafter, despite Henry's protestations, MPS began to
provide Dresser-Rand with millwrights even though Dresser-Rand
remained steadfast in its refusal to sign any document incorporating
the clause. Indeed, throughout the five-year relationship between the
two companies, MPS sent Dresser-Rand a form contract which
included the objectionable clause every time Dresser-Rand ordered
labor. Dresser-Rand never signed any of these contracts. Even so,
MPS continued providing millwrights, and Dresser-Rand paid for the
services rendered.
MPS brought this diversity action alleging that Dresser-Rand had
employed a number of MPS employees in violation of the non-
solicitation clause. MPS sought liquidated damages of $901,280.
Dresser-Rand moved for summary judgment, which the district court
granted on the grounds that MPS's course of conduct had constituted
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an acceptance of Dresser-Rand's offer to enter into a contract which
did not incorporate the non-solicitation clause. MPS appeals.
II.
It is undisputed that Dresser-Rand never signed any agreement
with MPS. This fact, however, is not dispositive on the issue of
whether there was a contract between the parties which embodied the
non-solicitation clause. In North Carolina, "the parties' failure to exe-
cute a written contract does not preclude the creation of an enforce-
able agreement." Walker v. Goodson Farms, Inc., 369 S.E.2d 122,
127 (N.C. App. 1988). Acceptance of an offer by a course of conduct
is valid and effective even in the absence of a signed agreement.
Snyder v. Freeman, 266 S.E.2d 593, 602 (N.C. 1980).
MPS argues that Dresser-Rand's course of conduct demonstrated
its agreement to the non-solicitation clause. We disagree. While it is
true that MPS had indicated during the initial negotiations that it was
unwilling to provide labor unless Dresser-Rand agreed to the clause,
the simple fact remains that Dresser-Rand never accepted that ultima-
tum. At the very outset, Dresser-Rand wrote to MPS expressing its
rejection of the non-solicitation agreement, stating, "Although it is not
our intention to employ any of MPS's active employees, we do have
a problem with signing your contract with regard to[the non-
solicitation clause]." This same resistance continued throughout the
parties' business relationship. Dresser-Rand never varied from its
refusal to acquiesce to MPS's terms, and never during its five-year
relationship with MPS did Dresser-Rand sign any of the contracts
including the clause. Under such circumstances, Dresser-Rand's
course of conduct cannot be interpreted to demonstrate the sort of
"meeting of the minds" sufficient to support a contract. See
Richardson v. Greensboro Warehouse & Storage Co., 26 S.E.2d 897,
898 (N.C. 1943).
To the contrary, the facts reveal that Dresser-Rand unequivocally
rejected the non-solicitation clause. Indeed, as the district court
observed, MPS signified through its course of conduct that it was
willing to supply labor to Dresser-Rand despite Dresser-Rand's con-
sistent rejection of any non-solicitation agreement. In effect, MPS
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accepted Dresser-Rand's counteroffer, which plainly eliminated the
non-solicitation clause.
Our conclusion is consistent with North Carolina's general suspi-
cion of direct contractual restraints on employee mobility. State law,
for example, requires employment contracts embodying non-
competition clauses to be in writing. N.C.G.S. § 75-4. Furthermore,
North Carolina case law sets forth strict requirements on contracts
which restrain the business activities of former employees. United
Laboratories, Inc. v. Kuykendall, 361 S.E.2d 292, 297 (N.C. App.
1987). While the non-solicitation clause in this case would not have
directly restricted employee mobility, it certainly would have had that
secondary effect. Indeed, MPS's avowed purpose in demanding the
clause was to prevent MPS millwrights from leaving the company in
order to work for MPS customers. In light of North Carolina's tight
restrictions on contracts which directly limit employee mobility, we
should be reluctant to find an agreement which accomplishes the
same effect indirectly. Such caution is particularly appropriate
because the employees are not even parties to the contract which
restricts their employment options.
III.
For the foregoing reasons, we affirm the judgment of the district
court.
AFFIRMED
HAMILTON, Circuit Judge, dissenting:
Because there is a genuine issue of material fact regarding whether
the agreement between the parties embodied the non-solicitation
clause, I respectfully dissent.
On the question of whether the parties' agreement embodied the
non-solicitation clause, the evidence in the record yields two equally
plausible conclusions. The first is that espoused by the majority
opinion--that Dresser-Rand never assented to the non-solicitation
clause and/or MPS accepted Dresser-Rand's counter-offer to exclude
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the non-solicitation clause from the agreement. The second is that
Dresser-Rand accepted MPS's offer which included the non-
solicitation clause.
The majority opinion adequately summarizes the evidence in sup-
port of the former conclusion. However, the majority opinion ignores
the equally compelling evidence that supports the latter conclusion.
Following Dresser-Rand's March 26 letter, MPS unequivocally told
Dresser-Rand that it would not send any employees to Dresser-Rand
unless Dresser-Rand agreed to include the non-solicitation clause in
the agreement. Thereafter, Dresser-Rand accepted the services of
MPS employees pursuant to MPS's written terms when those terms
unquestionably included the non-solicitation clause. From this evi-
dence, a reasonable jury could quite properly conclude that the
MPS/Dresser-Rand agreement contained the non-solicitation clause
by way of Dresser-Rand's acceptance of MPS's offer.
Our job here is not to pick between these equally plausible conclu-
sions in determining the question of mutual assent. Put another way,
it is not up to us to determine which party actually"fired the last shot"
and consequently, which party "accepted" the other party's offer. That
is why we have juries, and the question of mutual assent on these
facts should not be resolved on summary judgment. See Snyder v.
Freeman, 266 S.E.2d 593, 602 (N.C. 1980) ("Whether mutual assent
is established and whether a contract was intended between the parties
are questions for the trier of fact.").
In sum, there is a genuine issue of fact in this case which makes
summary judgment at this juncture inappropriate.* Accordingly, I
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*Additionally, I do not quarrel with the proposition that North Caro-
lina has a "general suspicion of direct contractual restraints on employee
mobility." See ante at 7. However, such contractual restraints on the
labor market (such as the non-solicitation clause here) are impermissible
only when the restraints imposed are "unreasonable." See Kadis v. Britt,
29 S.E.2d 543, 545 (N.C. 1944). In North Carolina, the party seeking
enforcement of this type of contract clause has the burden of proving
that, among other things, the restriction is reasonable as to both time and
territory. See Hartman v. W.H. Odell & Assoc., Inc., 450 S.E.2d 912, 916
(N.C. Ct. App. 1994), review denied, 454 S.E.2d 251 (N.C. 1995).
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would vacate the district court's grant of summary judgment to
Dresser-Rand and remand for further proceedings, including the con-
sideration of Dresser-Rand's other arguments in favor of summary
judgment.
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Because the district court never evaluated whether MPS's non-
solicitation clause was reasonable as to both time and territory, I believe
it is inappropriate to conclude at this juncture that we are "reluctant to
find an agreement which" "directly limit[s] employee mobility." See ante
at 7.
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