United States District Court, District of Columbia
LEGAL TECHNOLOGY GROUP, INC., d/b/a ESENTIO TECHNOLOGIES, Plaintiff,
v.
RAJIV MUKERJI and HBR CONSULTING LLC, Defendants. RAJIV MUKERJI, Counter-Plaintiff,
v.
LEGAL TECHNOLOGY GROUP, INC., d/b/a ESENTIO TECHNOLOGIES, Counter-Defendant.
MEMORANDUM OPINION
REGGIE
B. WALTON UNITED STATES DISTRICT JUDGE
The
plaintiff, Legal Technology Group, Inc., doing business as
eSentio Technologies (“eSentio”), filed this
civil action against its former employee, Rajiv Mukerji, and
Mukerji's current employer, HBR Consulting LLC
(“HBR”), alleging breach of contract against
Mukerji (Count I), tortious interference with contract
against HBR (Count II), and tortious interference with
prospective economic advantage against both defendants (Count
III). See generally Complaint
(“Compl.”). Currently pending before the Court
are the parties' cross-motions for summary judgment.
See Plaintiff Legal Technology Group, Inc.'s
Motion for Summary Judgment as to Liability and as to
Defendant Rajiv Mukerji's Counterclaim
(“eSentio's Mot.”); Defendant HBR Consulting
LLC's Motion for Summary Judgment (“HBR's
Mot.”); Defendant Rajiv Mukerji's Motion for
Summary Judgment on Counts I and III of Plaintiff Legal
Technology Group[, ] [Inc.]'s Complaint
(“Mukerji's Mot.”). Upon careful
consideration of the parties' submissions, [1] the Court
concludes that it must grant in part and deny in part the
plaintiff's motion and deny the defendants' motions.
I.
BACKGROUND
“eSentio
. . . provides business and technology consulting and
implementing services to the world's largest law firms
and corporate legal departments, ” eSentio's Facts
¶ 1; see HBR's Reply to eSentio's Facts
¶ 1, and “eSentio and HBR are competitors in the
document[] management space, ” HBR's Reply to
eSentio's Facts ¶ 20; see eSentio's
Facts ¶ 20 (“eSentio and HBR are
competitors”). Mukerji is a former employee of eSentio
and a current employee of HBR. See eSentio's
Facts ¶ 17; HBR's Reply to eSentio's Facts
¶ 17; Mukerji's Reply to eSentio's Facts ¶
17.
“Mukerji
began his employment with eSentio on or about August 15,
2011.” eSentio's Facts ¶ 12; see
HBR's Reply to eSentio's Facts ¶ 12;
Mukerji's Reply to eSentio's Facts ¶ 12. At
eSentio, Mukerji “served as the Director of
eSentio's Document Management System (‘DMS')
practice, ” eSentio's Facts ¶ 13; see
HBR's Reply to eSentio's Facts ¶ 13;
Mukerji's Reply to eSentio's Facts ¶ 13, and he
became “one of [eSentio's] leading NetDocuments
consultants for large firms, ” eSentio's Facts
¶ 16; see HBR's Reply to eSentio's
Facts ¶ 16; Mukerji's Reply to eSentio's Facts
¶ 16.[2] “In connection with [h]is hiring by
eSentio in 2011, Mukerji executed an offer letter dated July
18, 2011 (the ‘Offer Letter').” eSentio's
Facts ¶ 88; see Mukerji's Reply to
eSentio's Facts ¶ 88. Among other provisions, the
Offer Letter contains a provision regarding Mukerji's
compensation, which provides, inter alia, that
Mukerji would “be eligible for an annual performance
bonus based on the pre-defined performance objectives in the
amount of [$]20, 000.00 prorated from [his] start date”
(the “Bonus Provision”). eSentio's Mot.,
Exhibit (“Ex.”) 14 (Offer Letter) at LTG - 1.
“[A]s
a condition of his employment, [eSentio required Mukerji] to
execute eSentio's Employment Agreement on Ideas,
Inventions[, ] and Confidential Information (the
‘[Employment] Agreement')[, ]” which Mukerji
“signed . . . on July 20, 2011.” eSentio's
Facts ¶ 21; see HBR's Reply to
eSentio's Facts ¶ 21; Mukerji's Reply to
eSentio's Facts ¶ 21. Relevant here, the Agreement
includes a “Non-Competition” provision (the
“restrictive covenant”), which provides:
I hereby covenant and agree that at no time during my
employment with [eSentio] and for a period of one year
immediately following the termination of my employment . . .
with [eSentio], will I act in any way, directly or
indirectly, to solicit, divert or takeaway any client of
[eSentio] or prospect that I have been involved in pursuing
business with during the six months prior to the termination
of my employment with the company. I understand that this
“non-compete” is intended to include accepting
employment with a client of [eSentio] for the period and
involvement stated above. An eSentio client is defined as a
firm that eSentio has sold product [to] or performed services
for in the previous two years from date of termination of
employment.
eSentio's Mot., Ex. 14 (Employment Agreement) § 3.8;
see eSentio's Facts ¶ 23; HBR's Reply
to eSentio's Facts ¶ 23; Mukerji's Reply to
eSentio's Facts ¶ 23.
On June
20, 2016, “Mukerji accepted [an] offer [of employment]
with HBR . . . and gave notice to eSentio the same
day.” eSentio's Facts ¶ 17; see
HBR's Reply to eSentio's Facts ¶ 17;
Mukerji's Reply to eSentio's Facts ¶ 17.
“Mukerji's final day of active employment with
eSentio was July 15, 2016.” eSentio's Facts ¶
17; see HBR's Reply to eSentio's Facts
¶ 17; Mukerji's Reply to eSentio's Facts ¶
17.
A.
The Akin Gump LLP (“Akin”) Projects
“Beginning
in late 2015, the [Chief Information Officer] of Akin, Mike
Lucas, and [eSentio's President, Yvonne] Dornic[, ] began
discussing the possibility of Akin moving to the NetDocuments
platform.” eSentio's Facts ¶ 27; see
HBR's Reply to eSentio's Facts ¶ 27;
Mukerji's Reply to eSentio's Facts ¶ 27.
“Dornic provided [ ] Lucas information and advice about
NetDocuments[] and informally consulted with him throughout
the spring and summer of 2016, explaining eSentio's
expertise and educating [ ] Lucas on various aspects of the
platform.” eSentio's Facts ¶ 27; see
HBR's Reply to eSentio's Facts ¶ 27;
Mukerji's Reply to eSentio's Facts ¶ 27.
“Dornic expected Akin would likely be transitioning to
NetDocuments relatively soon and that eSentio would almost
certainly be selected to provide assistance in the
conversion.” eSentio's Facts ¶ 27;
see HBR's Reply to eSentio's Facts ¶
27; Mukerji's Reply to eSentio's Facts ¶ 27.
“In
the fall of 2016, Akin [ ] committed to transitioning to
NetDocuments, and it sought proposals from vendors to assist
in a NetDocuments Conversion Project, as well as a related
Information Governance Project” (collectively, the
“Akin Project”). eSentio's Facts ¶ 28;
see HBR's Reply to eSentio's Facts ¶
28; Mukerji's Reply to eSentio's Facts ¶ 28. The
NetDocuments Conversion Project “would [involve] a
large-scale, firm-wide migration of Akin's document
management system from iManage to NetDocuments.”
eSentio's Facts ¶ 29; see HBR's Reply
to eSentio's Facts ¶ 29; Mukerji's Reply to
eSentio's Facts ¶ 29. “Akin['s] project
team was made up of [TJ] Whelan, Brian Cooke, . . . and
Juanita Bright[.]” HBR's Facts ¶ 26;
see eSentio's Reply to HBR's Facts ¶
26.
“On
November 1, 2016, [ ] Whelan reached out to Senthil
Rajakrishnan, a Senior Director at HBR, to inquire about
HBR's information governance capabilities.”
HBR's Facts ¶ 43; see eSentio's Reply
to HBR's Facts ¶ 43. “In response to [ ]
Whelan's inquiry, on November 23, 2016, [ ] Rajakrishnan,
Ray Fashola, . . . and [ ] Mukerji participated in a phone
call with the Akin [ ] [P]roject team to discuss information
governance.” HBR's Facts ¶ 44 (internal
citation omitted); see eSentio's Reply to
HBR's Facts ¶ 44.
As to
the NetDocuments Conversion Project, “Akin [ ]
initially identified Fireman & Company, eSentio, and
Kraft and Kennedy as potential partners for the [ ]
[P]roject.” HBR's Facts ¶ 27; see
eSentio's Reply to HBR's Facts ¶ 27. However,
“[a]t some point prior to [Whelan's] November 23,
2016 conference call with [HBR] . . ., [ ] Whelan learned
that [ ] Mukerji had NetDocuments conversion experience and .
. . had left eSentio, ” HBR's Facts ¶ 46;
see eSentio's Reply to HBR's Facts ¶
46, and “that [ ] Mukerji was one of the most
experienced people with [ ] NetDoc[uments] conversions,
” HBR's Facts ¶ 47; see eSentio's
Reply to HBR's Facts ¶ 47. “Upon learning that
[ ] Mukerji was [ ] with HBR, [ ] Whelan initiated
discussions with HBR about Akin['s] NetDocuments
[C]onversion [P]roject.” HBR's Facts ¶ 48;
see eSentio's Reply to HBR's Facts ¶
48. Specifically, “[o]n approximately December 1, 2016,
[ ] Whelan called [ ] Mukerji to discuss the information [ ]
Whelan had heard about [ ] Mukerji's experience with
NetDocuments conversions, ” HBR's Facts ¶ 49;
see eSentio's Reply to HBR's Facts ¶
49, and “requested that HBR submit a proposal . . .
[for] the NetDocuments [C]onversion [Project], ”
HBR's Facts ¶ 53; see eSentio's Reply
to HBR's Facts ¶ 53.
On
December 5, 2016, Mukerji submitted HBR's final proposal
for the Information Governance Project. See
eSentio's Facts ¶ 47; see also HBR's
Reply to eSentio's Facts ¶ 47; Mukerji's Reply
to eSentio's Facts ¶ 47; eSentio's Mot., Ex. 41)
at [XXXXX] at HBR_00000001 (attaching
HBR's “Information Governance Assessment”).
Then, “[o]n December 28, 2016, HBR submitted its
statement of work for . . . [the] NetDocuments [Conversion]
[P]roject, ” HBR's Facts ¶ 56; see
eSentio's Reply to HBR's Facts ¶ 56, which
“estimated fees at $161, 920, ” HBR's Facts
¶ 57; see eSentio's Reply to HBR's
Facts ¶ 57. eSentio also submitted “a proposal for
$1, 514, 250.00 for [the] NetDocuments [C]onversion
[Project]” on December 13, 2016. HBR's Facts ¶
35; see eSentio's Reply to HBR's Facts
¶ 35. Two other firms-Fireman & Company and Kraft
and Kennedy-also “provided proposals [for the
NetDocuments Conversion Project] that were very similar in
scope and . . . cost to HBR's” proposal. HBR's
Facts ¶ 61 (internal quotation marks omitted);
see eSentio's Reply to HBR's Facts ¶
61. “On or about January 20, 2017, Akin awarded . . .
[both] [p]roject[s] to HBR.” eSentio's Facts ¶
64; see HBR's Reply to eSentio's Facts
¶ 64; Mukerji's Reply to eSentio's Facts ¶
64.
B.
The King & Spalding LLP (“King &
Spalding”) Project
“In December 2016, King & Spalding engaged
NetDocuments to perform conversion services from iManage to
NetDocuments.” HBR's Facts ¶ 66; see
eSentio's Reply to HBR's Facts ¶ 66. Like Akin,
“King & Spalding was interested in engaging a
consultancy to supplement NetDocuments' services.”
HBR's Facts ¶ 67; see eSentio's Reply
to HBR's Facts ¶ 67. Thus, “[o]n January 10,
2017, King & Spalding issued a Request for Proposal
(‘RFP') for NetDocuments conversion consulting
services [(the ‘King & Spalding Project')],
soliciting responses from HBR, eSentio, Adaptive, Fireman
& Company, and InOutsource.” HBR's Facts ¶
72; see eSentio's Reply to HBR's Facts
¶ 72.
“On
January 27, 2017, HBR submitted its response to King &
Spalding's RFP.” HBR's Facts ¶ 111;
see eSentio's Reply to HBR's Facts ¶
111. King & Spalding also “received responses . . .
[from] Adaptive, eSentio, [ ] and InOutsource.”
HBR's Facts ¶ 75; see eSentio's Reply
to HBR's Facts ¶ 75. “On or about March 22,
2017, King & Spalding awarded the [King & Spalding]
Project to HBR.” eSentio's Facts ¶ 65;
see HBR's Reply to eSentio's Facts ¶
65; Mukerji's Reply to eSentio's Facts ¶ 65.
eSentio
filed its Complaint against HBR and Mukerji on April 10,
2017, see Compl. at 1, and fact discovery concluded
on June 28, 2018, see Order at 2 (May 1, 2018), ECF
No. 44. Shortly thereafter, on July 19, 2018, the parties
filed their cross-motions for summary judgment. See
eSentio's Mot. at 1; HBR's Mot. at 1; Mukerji's
Mot. at 1.
II.
STANDARD OF REVIEW
Courts
will grant a motion for summary judgment under Federal Rule
of Civil Procedure 56(a) “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). When ruling on a Rule 56(a) motion, the
Court must view the evidence in the light most favorable to
the non-moving party. See Holcomb v. Powell, 433
F.3d 889, 895 (D.C. Cir. 2006) (citing Reeves v.
Sanderson Plumbing Prods., 530 U.S. 133, 150 (2000)).
The Court must therefore draw “all justifiable
inferences” in the non-moving party's favor and
accept the non-moving party's evidence as true.
Anderson v. Liberty Lobby, 477 U.S. 242, 255 (1986).
In
responding to a motion for summary judgment, the non-moving
party “must do more than simply show that there is some
metaphysical doubt as to the material facts.”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986). Accordingly, the non-moving party
must not rely on “mere allegations or denials . . . but
. . . must set forth specific facts showing that there [are]
[ ] genuine issue[s] for trial.” Anderson, 477
U.S. at 248 (second omission in original) (citation and
internal quotation marks omitted). Thus, “[t]he mere
existence of a scintilla of evidence in support of the
[non-moving party's] position [is] insufficient” to
withstand a motion for summary judgment, as “there must
be [some] evidence on which the jury could reasonably find
for the [non-movant].” Id. at 252.
III.
ANALYSIS
eSentio
seeks “summary judgment in its favor as to [the
d]efendants' liability on Counts I, II[, ] and III . . .
[of its] Complaint, ” which allege “causes of
action [(1)] against [ ] Mukerji for breach of contract
arising out of Mukerji's violation of . . . [his]
restrictive covenant [ ] (Count I); [(2)] against . . . HBR .
. . for tortiously interfering with, and inducing the breach
of, Mukerji's [restrictive covenant] (Count II); and
[(3)] against both [d]efendants for tortiously interfering
with eSentio's prospective contracts with . . . [Akin and
King & Spalding] (Count III).” eSentio's Mot.
at 1. Additionally, eSentio seeks summary judgment in its
favor on Mukerji's Counterclaim, see
eSentio's Mot. at 2, which alleges breach of contract
against eSentio arising out of eSentio's alleged failure
to comply with the Bonus Provision of Mukerji's Offer
Letter, see Answer and Counterclaim of Defendant
Rajiv Mukerji (Jury Demand Endorsed) (“Mukerji's
Answer”) at 11, ¶¶ 7-9. HBR and Mukerji both
seek summary judgment in their favor on all claims against
them and on eSentio's claim for punitive damages.
See HBR's Mot. at 1; Mukerji's Mot. at 1.
The Court will address each of eSentio's claims and
Mukerji's Counterclaim in turn.
As an
initial matter, the Court notes that because “federal
jurisdiction in this case is based on diversity of
citizenship, . . . state law provides the substantive rules
of law with regard to all claims.” Base One Techs.,
Inc. v. Ali, 78 F.Supp.3d 186, 192 (D.D.C. 2015);
see Compl. ¶ 5 (“This Court has subject
matter jurisdiction of this dispute pursuant to 28 U.S.C.
§ 1332 (Diversity).”).[3] Because Mukerji's
Employment Agreement and Offer Letter provide that their
“terms will be governed by the laws of the District of
Columbia, ” eSentio's Mot., Ex. 14 (Employment
Agreement) § 13; see id., Ex. 14 (Offer Letter)
at LTG - 2 (“[T]his letter . . . shall be governed by
and construed in accordance with the substantive laws of the
District of Columbia.”), the Court concludes that it
must apply District of Columbia law to eSentio's and
Mukerji's breach of contract claims, which arise out of
the Employment Agreement and the Offer Letter, respectively,
see Compl. ¶¶ 40-41; Mukerji's Answer
at 11, ¶¶ 3, 7-9. Additionally, “[a]lthough a
contractual choice-of-law provision does not bind parties
with respect to non-contractual causes of action, ”
Base One Techs., Inc., 78 F.Supp.3d at 192, the
Court also finds it appropriate to apply District of Columbia
law to eSentio's remaining tortious interference claims
given that “[t]he parties have not raised any choice of
law issues and[] . . . have relied [almost entirely] on
District of Columbia law, ” Piedmont Resolution,
LLC v. Johnston, Rivlin & Foley, 999 F.Supp. 34, 39
(D.D.C.1998); see Base One Techs., Inc., 78
F.Supp.3d at 192 (relying on New York law for non-contractual
causes of action where a “choice-of-law
provision” required application of New York law for the
parties' contractual claims and “the parties . . .
rel[ied] solely on New York law with respect to all of the
counts”).
A.
eSentio's Breach of Contract Claim (Count I)
eSentio
and Mukerji both seek summary judgment on Count I of the
Complaint, which alleges that “Mukerji [ ] breached
[his Employment] Agreement by[] . . . acting to solicit,
divert or take away eSentio clients and prospects, . . .
including but not limited to . . . Akin and King &
Spalding.” Compl. ¶ 45. “To prevail on a
claim of breach of contract [under District of Columbia law],
a party must establish (1) a valid contract between the
parties; (2) an obligation or duty arising out of the
contract; (3) a breach of that duty; and (4) damages caused
by [the] breach.” Francis v. Rehman, 110 A.3d
615, 620 (D.C. 2015) (emphasis omitted) (quoting
Tsintolas Realty Co. v. Mendez, 984 A.2d 181, 187
(D.C. 2009)).
eSentio
argues that it “is entitled to summary judgment as to
liability on Count I” of its Complaint, eSentio's
Mem. at 8, because (1) “it cannot be disputed that . .
. [the restrictive covenant] satisfies all the requirements
for validity and enforceability under [District of Columbia]
law, ” id. at 9; (2) Akin and King &
Spalding were both “clients” or
“prospects” under the restrictive covenant,
see id. at 11-14, 17; (3) Mukerji breached the
restrictive covenant by “t[aking] steps to
‘solicit, divert, or take away'” the Akin and
King & Spalding Projects, id. at 14, 17; and (4)
Mukerji's breach resulted in damages to eSentio, see
id. at 22-25. Despite seeking summary judgment in his
favor as to eSentio's breach of contract claim,
see Mukerji's Mot. at 1, Mukerji responds that
“genuine issues preclude summary judgment in favor of
eSentio, ” Mukerji's Opp'n at 14. Specifically,
he argues that genuine factual issues exist as to: whether
“Akin . . . [is] a restricted client, ” such that
he had a contractual duty as to Akin, id. at 15;
whether he “did anything to solicit, divert, or take
away” Akin and King & Spalding, id. at
14-15; and whether his conduct caused eSentio damages,
see Mukerji's Reply at 17. Additionally, he
argues that a genuine factual issue exists as to whether any
“breach [by him] was excused by eSentio's breach of
its [a]greement to pay . . . [him] an [a]nnual [p]erformance
[b]onus.” Mukerji's Opp'n at 15. The Court will
address each of the elements of eSentio's breach of
contract claim in turn.
1.
The Existence of a Valid Contract
“In order to be valid, covenants not to compete must
protect some legitimate interest of the employer and must be
reasonable in their scope.” Mercer Mgmt.
Consulting, Inc. v. Wilde, 920 F.Supp. 219, 237 (D.D.C.
1996). “Restrictions are unreasonable if ‘the
restraint is greater than is needed to protect the
promisee's legitimate interest, or . . . the
promisee's need is outweighed by the hardship to the
promisor and the likely injury to the public.'”
Id. (quoting Ellis v. Hurson Assocs., Inc.,
565 A.2d 615, 618 (D.C. 1989)). “Significantly, a
‘restraint is easier to justify . . . if the restraint
is limited to the taking of [a] former employer's
customers as contrasted with competition in
general.'” Id. (quoting Ellis, 56
A.2d at 618).
eSentio
argues that the restrictive “covenant . . . protect[s]
eSentio's legitimate business interests[] . . . [because]
it prevents Mukerji from taking advantage of his critical
leadership role at eSentio[] and his relationship with
eSentio clients and prospective clients[] to compete unfairly
with eSentio.” eSentio's Mem. at 9. eSentio further
argues that “[b]ecause the covenant . . . only
[prohibits Mukerji] from engaging in specified competitive
activities with regard to a precisely defined group of
‘clients' and ‘prospects,' the covenant
is plainly reasonable in scope and, accordingly, fully
enforceable.” Id. at 10-11. Mukerji does not
dispute the validity of the restrictive covenant. See
generally Mukerji's Mem.; Mukerji's Opp'n;
Mukerji's Reply.
Taking
into consideration eSentio's undisputed arguments as to
the validity of the restrictive covenant, the Court concludes
that eSentio has demonstrated that the covenant is valid. The
interests that eSentio asserts are protected by the
restrictive covenant, see eSentio's Mem. at 9,
constitute “legitimate interests” under District
of Columbia law, see Mercer Mgmt. Consulting, Inc.,
920 F.Supp. at 237 (recognizing as “legitimate
interests” an employer's desire “to protect
the investment made in its employees, preserve the
confidentiality of information gleaned in the course of
employment . . ., and protect itself from its employees
leaving and capitalizing on [its] client base”).
Additionally, the Court finds that the restrictive
covenant's one-year length is reasonable given that
District of Columbia courts have found similar and even
significantly longer time periods reasonable. See
id. (upholding a one-year restrictive covenant); see
also Ellis, 565 A.2d at 621 (concluding that a
“three[-]year time duration . . . was sufficiently
reasonable” and observing that “agreements
limiting competition for a period well in excess of three
years have been sustained in this jurisdiction”).
Moreover, the Court agrees with eSentio that a prohibition
against soliciting, diverting, or taking away eSentio's
clients or prospects is reasonable in scope given that it
“is limited to the taking of [eSentio's] customers
as contrasted with competition in general, ”
Ellis, 565 A.2d at 619, and also given Mukerji's
“active[] engage[ment] with eSentio clients and
prospective clients, ” eSentio's Facts ¶ 14;
see Mukerji's Reply to eSentio's Facts
¶ 14; Mercer Mgmt. Consulting, Inc., 920
F.Supp. at 237 (concluding that an employer's one-year
restriction on “rendering of services to [its]
clients” was “reasonable and enforceable”
given “the vital importance of its client base to its
business[] and the close contacts established between its
consultants and its client base”). Accordingly, the
Court concludes that eSentio has satisfied the first element
of its breach of contract claim against Mukerji.
2.
The Existence of an Obligation or Duty Arising Out of the
Contract
eSentio argues that the restrictive covenant creates an
obligation as to Akin and King & Spalding because Akin
was both a “client” and “prospect, ”
see eSentio's Mem. at 11-14, and King &
Spalding was a “prospect, ” id. at 17.
Mukerji responds that “Akin [ ] was not a [r]estricted
[c]lient or prospect” because [XXXXX]Mukerji's Opp'n at 20. However,
Mukerji does not dispute King & Spalding's status as
a “prospect.” See generally
Mukerji's Mem.; Mukerji's Opp'n; Mukerji's
Reply. The Court will address the restrictive covenant's
application to each firm separately.
a.
Whether Akin Was a “Client” or
“Prospect”
The
Court first addresses the parties' dispute with respect
to Akin, which turns on their differing interpretations of
the restrictive covenant's language. As already
explained, the restrictive covenant prohibits Mukerji from
“act[ing] in any way, directly or indirectly, to
solicit, divert or takeaway any client of [eSentio] or
prospect that [he] ha[d] been involved in pursuing business
with during the six months prior to the termination of [his]
employment with [eSentio].” eSentio's Mot., Ex. 14
(Employment Agreement) § 3.8. The restrictive covenant
further defines a “client” as “a firm that
eSentio has sold product [to] or performed services for in
the previous two years from date of termination of
employment.” Id., Ex. 14 (Employment
Agreement) § 3.8.
Mukerji
argues that “[t]he phrase . . . ‘that [he] ha[d]
been involved in pursuing business with during the six months
prior to the termination of [his] employment' [(the
‘six-month involvement limitation')], fairly read,
applies to both [a] ‘client of [eSentio]' as well
as [a] ‘prospect, '” and, because “he
was not involved in pursuing business with Akin [ ] in the
six months prior to the termination of his employment,
” Akin was neither a “client” nor a
“prospect.” Mukerji's Opp'n at 20.
Alternatively, Mukerji argues that if the restrictive
covenant “were susceptible of more than this one fair
reading, . . . such ambiguity would open the door to evidence
of the parties' bargaining history, ” and
“[t]he bargaining history in this case reveals the
parties' intent to apply involvement to both prospects
and clients.” Id. at 21. eSentio responds that
“any fair reading of the [restrictive covenant]
demonstrates that the six-month [involvement limitation]
applies only to ‘prospect' and not to
‘client, '” eSentio's Reply at 2, and
thus, whether Mukerji worked with Akin in the six months
prior to his termination has no bearing on whether Akin
qualifies as a “client” under the restrictive
covenant. It further argues that “Mukerji's reading
of the contract renders other terms meaningless . . .
[because] there would be no need to distinguish between
‘clients' and ‘prospects' at all, [as] in
both cases, the six-month [involvement limitation] would
define the full scope of the restriction, and the clause
would simply refer to ‘firms' or
‘entities' or some other all-encompassing
term.” Id. Additionally, it argues that
“Mukerji cannot create a genuine dispute of material
fact by arguing that he reads the contract a different [ ]
way, as contract construction is for the Court, ” and
thus, “Mukerji's effort to introduce the
parties' bargaining history and related parol evidence
should be rejected.” Id. at 3 (emphasis
omitted). Finally, eSentio argues that, in any event,
“the bargaining history . . . proves conclusively that
the plain and unambiguous language included in the final
version of the [Employment] Agreement expresses the
parties' intent.” Id.
As the
District of Columbia Court of Appeals has explained,
“when interpreting a contract, ‘the court should
look to the intent of the parties entering into the
agreement.'” Steele Founds., Inc. v. Clark
Constr. Grp., Inc., 937 A.2d 148, 154 (D.C. 2007)
(citation omitted). However, “[t]he question of intent
is resolved by an objective inquiry, and ‘[t]he first
step' is therefore to determine ‘what a reasonable
person in the position of the parties would have thought the
disputed language meant.'” Id. (second
alteration in original) (citation omitted). Accordingly,
“the written language embodying the terms of an
agreement will govern the rights and liabilities of the
parties [regardless] of the intent of the parties at the time
they entered into the contract, unless the written language
is not susceptible of a clear and definite undertaking, or
unless there is fraud, duress, or mutual mistake.”
Tillery v. D.C. Contract Appeals Bd., 912 A.2d 1169,
1176 (D.C. 2006) (citation omitted). Additionally,
“[c]ontractual provisions are interpreted taking into
account the contract as a whole, so as to give effect, if
possible, to all of the provisions in the contract.”
Steele Founds., Inc., 937 A.2d at 154.
Applying
these principles here, the Court must reject Mukerji's
position that the six-month involvement limitation applies to
a “client” subject to the restrictive covenant.
As eSentio correctly notes, see eSentio's Reply
at 2, Mukerji's interpretation would render meaningless
the distinction between a “client” and a
“prospect” in the context of the restrictive
covenant's prohibition against “solicit[ing],
divert[ing, ] or tak[ing away], ” eSentio's Mot.,
Ex. 14 (Employment Agreement) § 3.8. Specifically,
Mukerji's interpretation would mean that the restrictive
covenant covers any “client” or “prospect,
” i.e., any firm, so long as Mukerji was
“involved in pursuing business with [the firm] during
the six months prior to [his] termination.”
Id., Ex. 14 (Employment Agreement) § 3.8. Thus,
in the context of the prohibition against
“solicit[ing], divert[ing, ] or tak[ing away], ”
id., Ex. 14 (Employment Agreement) § 3.8, there
would be no need to distinguish between a
“client” and a “prospect, ” and the
restrictive covenant's definition of
“client”- “a firm that eSentio has sold
product or performed services for in the previous two years
from date of termination of employment, ” id.,
Ex. 14 (Employment Agreement) § 3.8-would be
unnecessary. Such an interpretation does not square with the
District of Columbia Court of Appeals' instruction that
the Court must “give effect, if possible, to all of the
provisions in the contract.” Steele Foundations,
Inc., 937 A.2d at 154.
Nonetheless,
Mukerji argues that, “[s]ince the parties used [ ]
Mukerji's involvement to define [c]lients from whom he
could not accept employment in the second sentence of §
3.8(a), [his involvement] also applies to those [c]lients
whom he could not solicit, divert or take away in the first
sentence.” Mukerji's Opp'n at 21. Mukerji's
argument refers to a part of the covenant which states:
“[T]his ‘non-compete' is intended to include
accepting employment with a client of [eSentio] for the
period and involvement stated above.” eSentio's
Mot., Ex. 14 (Employment Agreement) § 3.8. However, even
assuming that the phrase “period and involvement stated
above” incorporates the six-month involvement
limitation contained in the preceding sentence, it only
incorporates that limitation for purposes of a prohibition
against accepting employment with an eSentio client and does
not purport to apply it to the prohibition against
soliciting, diverting, or taking away clients. Thus, the
plain language of the restrictive covenant provides the Court
with no basis to adopt Mukerji's position that the
limitation on clients with which Mukerji could not accept
employment must comport with the limitations on clients that
Mukerji could not solicit, divert, or take away.
Having
concluded that a “client” need not be a firm that
Mukerji was “involved in pursuing business with during
the six months prior to [his] termination, ”
eSentio's Mot., Ex. 14 (Employment Agreement) § 3.8,
the Court must conclude that Akin qualifies as a client
subject to the restrictive covenant. The restrictive covenant
defines a “client” as “a firm that eSentio
has sold product [to] or performed services for in the
previous two years from date of termination of
employment.” eSentio's Mot., Ex. 14 (Employment
Agreement) § 3.8.[XXXXX]
HBR's Reply to eSentio's Facts ¶ 38;
see Mukerji's Reply to eSentio's Facts
¶ 38 (incorporating HBR's response to ¶ 38 of
eSentio's Facts), [XXXXX]
see eSentio's Facts ¶ 17; HBR's Reply
to eSentio's Facts ¶ 17; Mukerji's Reply to
eSentio's Facts ¶ 17. Thus, Akin qualified as a
“client” subject to the restrictive covenant, and
consequently, Mukerji had a contractual duty not to solicit,
divert or take away Akin's business.[4]
b.
Whether King & Spalding Was a
“Prospect”
eSentio
argues that King & Spalding was a “prospect”
under the restrictive covenant because [XXXXX] eSentio's Mem. at 17; see
eSentio's Facts ¶ 52 (citing). Although Mukerji
“disputes whether any of the exhibits cited by eSentio
. . . evince his involvement in pursuing business from [King
& Spalding], . . . [he] does not dispute [XXXXX] Mukerji's Reply to eSentio's Facts
¶ 52. Based on this undisputed fact, the Court concludes
that eSentio has demonstrated that King & Spalding was a
“prospect that [Mukerji] ha[d] been involved in
pursuing business with during the six months prior to the
termination of [his] employment with [eSentio], ”
eSentio's Mot., Ex. 14 (Employment Agreement) § 3.8,
and thus, he had a contractual duty as to King & Spalding
under the restrictive covenant.
3.
Whether Mukerji Acted to, Directly or Indirectly, Solicit,
Divert, or Take Away Akin or King & Spalding
a.
Akin
Mukerji
argues that he “did not solicit, divert[, ] or take
away” Akin's business because he “never
initiated sales activity with respect to Akin, ”
Mukerji's Opp'n at 16, and only “responded to
Akin['s] unsolicited requests for proposals or helped
someone at HBR do so, ” id. at 20.
Specifically, he argues that “[c]ourts that found
solicitation . . . require some proactive step by the
employee, like initiating the customer contact, . . . meeting
with the customer after the proposal and before the award, .
. . or otherwise taking proactive steps that went beyond
responding to the proposal, ” Mukerji's Reply at
14, and because “no reasonable juror[] . . . could
conclude that [he] took proactive steps that went beyond
responding to an RFP, he is entitled to summary judgment in
his favor and against eSentio on [eSentio's] breach of
contract claims, ” id. at 15. eSentio responds
that “the undisputed evidence in the record
demonstrates that Mukerji took action to ‘solicit,
divert, or take away' [the Akin Project] from eSentio,
” eSentio's Mem. at 16, because the evidence shows
that “Mukerji played . . . the principal role[] in
HBR's efforts to secure the award, ” including by
“playing a substantive role not only in preparing
HBR's bid . . ., but also in writing the proposal and
interacting substantively and materially with the Akin
personnel responsible for reviewing the qualifications of the
competing firms and selecting the winner, ”
id. at 14-15. It further argues that “the fact
that Akin requested a bid” is “immaterial”
because “the steps Mukerji took after this
request constitute direct efforts, by him, to
solicit, divert or take away the Akin Project.”
eSentio's Opp'n to Mukerji's Mot. at 3.
To
resolve the parties' dispute, the Court must determine
the proper meaning of the term “solicit” in the
context of the restrictive covenant. See Steele Founds.,
Inc., 937 A.2d at 154 (“[W]hen interpreting a
contract, . . . ‘[t]he first step' is [ ] to
determine ‘what a reasonable person in the position of
the parties would have thought the disputed language
meant.'” (second alteration in original) (internal
citation omitted)). The parties have not cited, and the Court
has not been able to locate, any decisions interpreting the
meaning of “solicit” in this context by the
District of Columbia Court of Appeals or any other court
applying District of Columbia law. And, courts that have
addressed the issue under other states' laws have adopted
conflicting interpretations. For example, the Fourth Circuit
has held “that the plain meaning of ‘solicit'
requires the initiation of contact.” Mona Elec.
Grp. v. Truland Serv. Corp., 56 Fed.Appx. 108, 110 (4th
Cir. 2003) (applying Maryland law); see Gen. Assur. of
Am., Inc. v. Overby-Seawell Co., 893 F.Supp.2d 761 (E.D.
Va. 2012) (concluding that “for purposes of enforcement
of nonsolicitation clauses under Georgia law, . . .
‘solicitation' of business . . . turns on which
party initiated contact”). By contrast, several other
courts, including the First Circuit and another member of
this Court, have concluded that solicitation does not
necessarily require initiating contact with a customer.
See Corp. Techs., Inc. v. Harnett, 731 F.3d 6, 10-12
(1st Cir. 2013) (applying Massachusetts law and concluding
that “the identity of the party making initial contact
is just one factor among many that the trial court should
consider in . . . [defining] solicitation . . . in a given
case”); see also Wells Fargo Ins. Servs. USA, Inc.
v. McQuate, 276 F.Supp.3d 1089, 1111 (D. Colo. 2016)
(“find[ing] that, under Colorado law, conduct may fall
within the definition of ‘solicit' and
‘solicitation' even in the absence of [the]
[d]efendants making the initial contact with [the
plaintiff's] client or customer”); Wachovia
Ins. Servs., Inc. v. Hinds, Civ. Action No. WDQ-07-2114,
2007 WL 6624661, at *6 (D. Md. Aug. 30, 2007) (applying
Maryland law and concluding that “[e]ven if [the
employee] did not initiate contact with [her former
employer's client], she may have actively solicited
them”); FCE Benefit Adm'rs, Inc. v. George
Wash. Univ., 209 F.Supp.2d 232, 234 (D.D.C. 2002) (not
identifying the state law being applied and concluding that
an employee violated a prohibition against soliciting her
client's customers because, “[e]ven though she was
initially contacted by [a customer] . . ., she assumed an
active role in [the customer's] decision-making
process”).[5]
The
Court concludes that the plain meaning of
“solicit” does not necessarily require the
soliciting party to initiate contact. Common dictionary
definitions of “solicit” support this
interpretation, as they explicitly include conduct that does
not require an actor to initiate contact or even make a
request, but only require “seeking to obtain
something” or making “[a]n attempt or effort to
gain business.” Black's Law Dictionary
1607-08 (10th ed. 2014); see also Solicit,
Merriam-Webster Dictionary Online,
https://www.merriam-webster.com/dictionary/solicit (last
visited Mar. 19, 2019) (defining “solicit” to
include “to urge (something, such as one's cause)
strongly”). Notably, Mukerji appears to concede that
the plain meaning of “solicit” is not limited to
circumstances in which an employee initiated contact with a
potential customer. See Mukerji's Reply at 14
(arguing that “[c]ourts that found solicitation . . .
uniformly require . . . initiating the customer contact,
disclosing confidential former employer information,
misrepresenting or omitting competitive information, meeting
with the customer after the proposal and before the award,
socializing with the customer[, ] or otherwise
taking proactive steps that went beyond responding to the
proposal” (emphasis added)).
Adopting
the ordinary meaning of “solicit, ” the Court
concludes that a reasonable jury must conclude that Mukerji
solicited Akin to obtain the Akin Project. Mukerji does not
dispute that he communicated directly with Whelan regarding
HBR's bids for the Information Governance and
NetDocuments Conversion Projects. Specifically, Mukerji does
not dispute that from November 27, 2016, through December 1,
2016, he exchanged e-mails with Whelan regarding
“information [HBR] needed for the [Information
Governance] proposal, ” and that, on December 1, 2016,
he “sp[o]k[e] with [Whelan] about the [Information
Governance] proposal.” Mukerji's Reply to
eSentio's Facts ¶ 45, at 20. Additionally, Mukerji
does not dispute that, on his December 1, 2016 phone call
with Whelan, he also spoke with Whelan about the NetDocuments
Conversion Project and Whelan “asked him ‘to
consider and come up with what aspects [HBR] would want to
take on for the [NetDocuments Conversion]
[P]roject.'” Id. (quoting HBR's Mot.,
Ex. 21 ([XXXXX]) at HBR 000226). As
another member of this Court has observed, direct contacts
with a restricted client for the purpose of obtaining
business from that client “plainly violate” a
nonsolicitation provision. Robert Half Int'l Inc. v.
Billingham, 315 F.Supp.3d 419, 432 (D.D.C. 2018)
(concluding that an employee “violated [his]
non[]solicitation provision . . . by communicating with
[prohibited] customers for the purpose of creating business
opportunities for his new employer[]”). Moreover,
Mukerji does not dispute that he prepared the NetDocuments
Conversion Project proposal and participated in the
preparation of the Information Governance Project proposal.
See Mukerji's Mem. at 28 (asserting that
“Schmidt . . . asked [ ] Mukerji to prepare [the
NetDocuments Conversion Project proposal], which [Mukerji]
did”); see also Mukerji's Reply to
eSentio's Facts ¶ 45, at 20 (admitting that the
record evidence demonstrates that “Mukerji revised and
circulated internally a draft of the [Information Governance]
proposal requested by Akin” and also “blocked out
time on his calendar to plan the proposal that Akin requested
for its Net[]Documents [Conversion] [P]roject”).
Mukerji also submitted final or pre-final versions of
HBR's proposals for both projects directly to Whelan.
See eSentio's Facts ¶ 47; see also
Mukerji's Reply to eSentio's Facts ¶ 47 (not
disputing that Mukerji submitted the final version of
“the proposal Akin requested for Information Governance
services”); id. ¶ 45 (admitting that the
evidence shows “Mukerji sent a preliminary draft of the
[NetDocuments Conversion Project] proposal to . . . Whelan to
discuss”); eSentio's Mot., Ex. 41 (E-mail from
Rajiv Mukerji to TJ Whelan (Dec. 5, 2016)) at HBR00000001
(attaching “HBR proposal for Akin [Information
Governance] Assessment” and stating: “We'd
like to go through the proposal with you at your convenience
this week so we can adjust as needed to make sure we've
captured all your requirements.”); eSentio's Mot.,
Ex. 28 (E-mail from Rajiv Mukerji to TJ Whelan (Dec. 22,
2016)) at HBR00001049 (attaching “Akin discussion
proposal” for NetDocuments Conversion Project). These
collective actions clearly constitute “attempt[s] or
effort[s] to gain business” from Akin, Black's
Law Dictionary 1608 (10th ed. 2014), or actions
“to urge [HBR's cause] strongly, ”
Solicit, Merriam-Webster Dictionary Online,
https://www.merriam-webster.com/dictionary/solicit (last
visited Mar. 19, 2019).
Mukerji's
counterarguments are unpersuasive. He cites a number of cases
for the proposition that “[c]ourts that f[i]nd
solicitation . . . uniformly require . . . initiating
customer contact, disclosing confidential former employer
information, misrepresenting or omitting competitive
information, meeting with the customer after the proposal and
before the award, socializing with the customer[, ] or
otherwise taking proactive steps that went beyond responding
to [a] proposal.” Mukerji's Reply at 14. However,
for the reasons already explained, the Court cannot agree
that initiation of customer contact is required for
solicitation, and thus, it rejects as unpersuasive
courts' conclusions relying on this proposition. The
Court also cannot agree that an employee must take
“proactive steps . . . beyond responding to [a]
proposal” to violate a nonsolicitation provision, as
efforts to prepare and submit a proposal for a client's
business fall squarely within the plain meaning of solicit.
See Black's Law Dictionary 1608 (10th ed. 2014)
(defining “solicitation” to include “[a]n
attempt or effort to gain business”). The remaining
cases cited by Mukerji do not dictate otherwise, as they
simply conclude that “[m]erely accepting
business, ” without taking any other action to obtain
it, “does not . . . constitute solicitation.”
Akron Pest Control v. Radar Exterminating Co., 455
S.E.2d 601, 603 (Ga.Ct.App. 1995) (concluding that a
“nonsolicitation agreement could [not] be violated by
failing to turn away the business of former
customers”); see, e.g., J.K.R., Inc. v.
Triple Check Tax Serv., Inc., 736 So.2d 43, 44 (Fla.
Dist. Ct. App. 1999) (concluding that “[t]he words
‘call upon, solicit, divert or take away' . . . do
not disallow [employees] from accepting former clients who
actively seek their assistance, ” and thus,
“affirm[ing] . . . [a] temporary injunction prohibiting
[the employees] from contacting former clients, but
revers[ing] that portion forbidding them from ‘doing
business with' former clients”); Harry
Blackwood, Inc. v. Caputo, 434 A.2d 169, 170 (Pa. Super.
Ct. 1981) (concluding that a nonsolicitation provision did
not “preclude [an insurance agent] from any writing of
insurance for any of [his former employer's]
customers”). And, the decision by another member of
this Court in FCE Benefit Administrators, upon which
Mukerji relies, does not support the proposition that any or
all of the actions listed by Mukerji must be present to find
solicitation. In that case, the Court considered whether an
insurance agent breached an agreement with a health insurance
benefits company to not “call on, solicit, take away,
or attempt to call on, solicit, or take away any of [the
company's] customers, ” 209 F.Supp.2d at 234, and,
in concluding that the agent breached the agreement, it
observed that the actions taken by the agent to sell the
company's customer a competitor's health insurance
benefits plan-including “solicit[ing] alternative price
quotes, me[eting] repeatedly with [the customer]'s
benefits committee, and [ ] prepar[ing] numerous
spreadsheets” - “constituted far more
than merely ‘accepting . . . business, '”
id. at 240 (emphasis added). In any event,
Mukerji's direct communications with Whelan regarding the
Information Governance Project and NetDocuments Conversion
Project proposals would suffice to satisfy any
“proactive steps” requirement, as they
demonstrate that Mukerji “assumed an active role in
[Akin's] decision-making process” with respect to
those projects. Id. at 234.
Thus,
the Court concludes that the undisputed evidence demonstrates
that Mukerji solicited Akin with respect to the Akin Project.
Accordingly, the Court concludes that eSentio has
demonstrated that Mukerji breached his restrictive covenant
as to Akin.
b.
King & Spalding
Mukerji
argues that “[t]his Court must enter summary judgment
in [his] favor on eSentio's breach of contract claim with
respect to King & Spalding” because he “did
nothing to obtain the King & Spalding . . . [P]roject,
” as shown by the fact that he “asked to be
walled off from it, ” Mukerji's Mem. at 24, and
that others involved in the bid issued instructions that
Mukerji could not be involved, see id. He further
argues that “a covenant not to solicit, divert or take
away clients does not bar a non-breaching employee from
performing work he did not solicit.” Id.
eSentio responds that “[t]he supposed ‘wall'
was just a smokescreen to mask Mukerji's pivotal role, as
Mukerji was copied on e[-]mails, and in one e[-]mail provided
analysis of HBR's competition” for the King &
Spalding Project. eSentio's Reply at 18. Additionally, it
argues that the evidence demonstrates that Mukerji
“indirectly” solicited King & Spalding by
“us[ing] . . . HBR [ ] to place his credentials and
experience before the [King & Spalding]
decisionmakers.” eSentio's Mem. at 20; see
id. at 19 (arguing that HBR “solicit[ed] [King
& Spalding] on Mukerji's behalf” by
“actively pitch[ing] Mukerji as a key member of the
[proposed] project team, [and] inform[ing] [King &
Spalding] that Mukerji would actually lead the
project”).
The
Court finds that a genuine factual dispute exists with
respect to whether Mukerji solicited the King & Spalding
Project in violation of the restrictive covenant.
Specifically, the Court concludes that a genuine factual
issue exists with respect to whether Mukerji advised on and
otherwise participated in preparing HBR's bid for the
project. For example, as eSentio notes, see
eSentio's Reply at 18, evidence in the record
demonstrates that HBR employees involved in preparing the
King & Spalding bid included Mukerji on several e-mails
related to HBR's efforts to obtain the King &
Spalding Project. See eSentio's Opp'n to
HBR's Mot., Ex. 114 ([XXXXX]) at
HBR00001232-33 (informing Mukerji, Denner, and two others
that HBR was “about to get an RFP from King &
Spa[]lding on [NetDocuments] services” and identifying
firms they would “be competing against”);
id., Ex. 112 ([XXXXX]) at
HBR00001121 (circulating “updates to the King &
Spalding RFP” to Schmidt, copying Mukerji, Mark Denner,
and Jorge Arana); id., Ex. 113 ([XXXXX]) at HBR00001447-48 (informing Mukerji that
“Erik didn't do a good job leading the work
on” the RFP for the King & Spalding Project, to
which Mukerji responded, “[W]hen is it due? [C]an you
and Terry fix?”). And, [XXXXX]
provided his opinion regarding HBR's potential
competition for the King & Spalding Project. See
id., Ex. 114 (E-mail from Rajiv Mukerji to Erik Schmidt
and Mark Denner (Jan. 10, 2017)) at HBR00001232 (advising
that “Adaptive would be the main [competition], [as]
they are helping A&P and have a good DC presence”).
Additionally, [XXXXX] provided Denner
with information regarding eSentio's relationship with
...