Opinion
No. CV07-4028031
June 20, 2008
MEMORANDUM OF DECISION ON REQUEST FOR INJUNCTIVE RELIEF AND RESTRAINING ORDER
This case involves a request for equitable relief by Prudential against the defendant Colburn, a former "office leader" or manager of its Guilford office where she worked in that position for about two years. Upon commencement of employment Ms. Colburn signed an employment agreement which provided generally that she should would not solicit Prudential employees and interfere with their relationship with Prudential or seek to have them terminate such relationship. She also signed an agreement concerning nondisclosure of confidential information acquired while working at Prudential during and after her employment. She also acknowledged various types of documents were the property of the plaintiff. Ms. Colburn left the employ of Prudential in August 2007 to work for Raveis Realty. Prudential and Raveis are competitors in the sale of residential and commercial property in the shoreline area of Guilford and Madison.
For reasons which will be discussed in more detail, Prudential now seeks an order for injunctive relief and a restraining order. It wishes to have the court order Colburn not to solicit its agents or employees in accordance with the agreement she signed, requests the court to order her to return certain documents which she procured from Prudential's computer system upon her leaving that company's employment and "not abuse confidential information" as argued by counsel during the hearing on this matter. The court will now discuss in more detail the relief requested by Prudential then it will try to discuss the legal basis of Prudential's claim and finally the facts presented at the hearing on this matter.
I
In this case the plaintiff Prudential seeks a temporary restraining order and temporary injunction against the defendant Colburn in three respects and for the following purposes:
(1) enjoining and restraining Colburn from misusing, disclosing, and/or providing to others any of Prudential's confidential information or inducing others to misuse or disclose such information and directing Colburn to return to Prudential "all of its confidential information, in any medium and all copies thereof in the possess of Colburn or her agents or employees."
(2) restraining and prohibiting Colburn pursuant to her employment agreement "from directly or indirectly soliciting, approaching or seeking to interfere with any person or entity who is a customer or client of" Prudential.
(3) restraining and prohibiting Colburn, pursuant to her employment agreement from directly or indirectly soliciting, approaching or seeking to influence any individual who is an employee, independent contract, agent or representative of (Prudential) to terminate his or her employment with (Prudential).
In a brief filed by Prudential it claims that "absent the requested relief, (Prudential) will continue to suffer grievous harm by virtue of Colburn's material breaches of non-solicitation and confidentiality agreements she entered into with (Prudential)." Prudential "must move for injunctive relief to protect the confidential information, goodwill and staff, it has painstakingly developed, recruited and grown over the years and to prevent Colburn's continuing and material breaches of her agreement."
In seeking this relief Prudential relies on what it categorizes as three bodies of law (A) rights accruing to it as a result of the Employment Agreement and Confidentiality Agreement (B) the common law duty of loyalty owed by an employee or a former employee to an employer (3) any rights that might be relied upon by Prudential flowing from the Connecticut Unfair Trade Practices Act, (§ 42-110(a)(3)) in particular.
The dispute between the parties, including any claim Prudential might have for monetary damages, is to be resolved by arbitration. Prudential's position is that Colburn has already taken confidential information from Prudential and "upon information and belief, unlawfully solicited at least one member of (Prudential's) staff to join Raveis Realty" (Colburn's present employer). In other words this relief, pending arbitration, is sought to prevent "irreparable harm" to Prudential that will befall that company if no court order regarding the relief requested is granted.
II
The court will first discuss the legal grounds which Prudential relies upon in making its claim for relief and the general principles the court believes it should rely upon.
A.
Upon commencement of employment with Prudential Ms. Colburn signed an Employment and Compensation Agreement and another document entitled Confidential Report letter, Conflicts of Interest. Prudential, in part, bases its claim for relief on the rights given it under these documents. The Employment agreement contained sections having to do with non-solicitation of staff. Sections XIII and XIV read as follows:
XIII. NON-SOLICITATION COVENANT
It is recognized and understood by all the parties hereto that The Employee, during his or her employment with The Company (and/or its affiliates), acquired a considerable amount of knowledge and goodwill with respect to the business of The Company that is extremely valuable to The Company and that would be extremely detrimental if used by The Employee after his or her termination. It is, therefore understood and agreed by the parties hereto that, because of the nature of the business of The Company, it is necessary to afford fair protection to The Company from such detriment. Consequently, as a material inducement and prerequisite for The Company to enter into this Agreement, The Employee covenants and agrees to the following:
1. Except as otherwise pre-approved in writing by The Company, The Employee agrees that during the term of The Employee's employment with The Company and for a period of one (1) year after the date of voluntary or involuntary termination of The Employee's employment, The Employee will not, directly or indirectly:
(a) request, solicit, entice, or approach or otherwise interfere with or seek to interfere with the relationship between The Company and any person or entity who is a customer or client of The Company.
(b) hire, contract with, induce or attempt to influence any individual who is an employee, independent contractor, agent or representative (collectively, "Affiliated Person") of The Company (or any affiliate of The Company) to terminate such Affiliated Person's employment, affiliation or association with The Company.
The Company's agreement to employ The Employee and his or her access to Confidential information all constitute sufficient and valuable consideration for The Employee's obligations under Section XIII of this Agreement.
XIV. LIQUIDATED DAMAGE CLAUSE
Because it is very difficult to place a monetary value on the loss of an Affiliated Person, if The Employee entices one or more Affiliated Persons away from The Company, The Employee agrees to pay fifteen percent (15%) of all Affiliated Persons' prior years' earnings or wages to The Company. This is in addition to any other remedies available to The Company.
The Confidential Reports letter reads as follows:
I agree, during my term of employment and afterwards, not to disclose at any time, or make use of, confidential information relating to the business of the Company, its products, research (including projects or business ideas in which I was a party), customer lists, or similar information which is not generally known or available to the public, without the prior written consent of the Company.
In the event of a potential conflict of interest or a doubt regarding any activity in which I am engaged or in which I plan to engage in the future, I will submit the problem through my Supervisor to the Committee for review.
In addition, upon leaving the employ of the Company, I agree that all records, reports, notes, compilations or other recorded or documented matter, and any copies thereof, shall be the property of the Company, exclusively.
B.
The plaintiff also relies generally on the concept in the employment area of the so-called duty of loyalty. The broad principle involved is set forth in 3 Am.Jur.2d at § 210 which says:
An agent is a fiduciary with respect to the matters within the scope of his (her) agency. The very relationship implies that the principle has reposed some trust or confidence in the agent and the agent or employee is bound to the exercise of the utmost good faith loyalty and honesty toward his (her) principal or employee.
(i)
First the court will discuss the duty of loyalty or perhaps better put the fiduciary obligations of an employee or former employee as regards confidential information concerning the employee's business. In this area applications of duty of loyalty principles can be applied to protect the employer or give it a basis for legal or equitable relief in several employment and post-employment situations even where the employer has no written contractual agreement protecting it, cf. Numed, Inc. v. McNutt, 724 S.W.2d 432, 434 (Tex.App. 1987), 27 Am.Jur.2d "Employment Relationship" § 177, page 677.
While the employee is in the employ of the principal the duty is set forth as follows in Restatement (2d) Agency
§ 395. Using or Disclosing Confidential Information
CT Page 10482
Unless otherwise agreed, an agent is subject to a duty to the principal not to use or to communicate information confidentially given him by the principal or acquired by him during the course of or on account of his agency or in violation of his duties as agent, in competition with or to the injury of the principal, on his own account or on behalf of another, although such information does not relate to the transaction in which he is then employed, unless the information is a matter of general knowledge.
The court has underlined the limitation on the duty set forth in § 395. An article in 3 Am.Jur.2d "Agency" as § 228, page 611 says referring to the Restatement that "This rule applies not only to those communications which are stated to be confidential but also to information which the agent should know the principal would not care to have revealed to others or used in competition such as the employer's unique business methods trade secrets, lists of names and other matters which are peculiarly known in the employer's business," see also comment (b) to § 395 of Restatement.
But even after employment has ceased, "the employee remains subject to a duty not to use trade secrets or other confidential information which (the employee) has acquired in the course of his (or her) employment for (the employee's) own benefit or that of a competitor to the detriment of (the employee's) former employer," Allen Mfg. Co. v. Loika, 145 Conn. 509, 514 (1958); Elm City Cheese Co. v. Federico, 251 Conn. 59, 69 (1999); also see subsection (b) of Section 396 of the Restatement (2d) Agency.
Section 177 in 27 Am.Jur.2d "Employment Relationship" summarizes the foregoing concepts as well as the limitation on their ambit:
Confidential information received during the course of the employer-employee relationship cannot be used or disclosed to the detriment of the employer. During employment and after termination of the employment, an employee is obligated not to divulge the employer's confidential information or trade secrets. However, an employee can use to his or her own advantage all the skills and knowledge commonly used in the trade that the employee acquired during his or her tenure of employment.
Id., page 677.
(ii)
The duty of loyalty by an employee as it applies to solicitation of fellow employees to work for a business that employee plans to set up or for a competitor he or she plans to join are not a model of clarity, see comment (e) to § 393 of the Restatement (2d) Agency. There is the separate question of whether the duty of non-solicitation continues to operate once the employee has left the employment.
The case of Bancroft-Whitney Co. v. Glenn, 411 P.2d 921 (Cal. 1961), in the court's opinion sets forth the better view of the law, citing comment (e) of the Restatement (2d) Agency the court said the following at page 395:
There are only a few cases cited by the parties which involve the specific question whether an officer may offer employees of his (sic) corporation jobs with a competing enterprise he (sic) is preparing to join. These cases are not consistent in their results and appear to rest on general principles relating to the obligation of a fiduciary . . . The mere, fact that the office makes preparations to compete before he (sic) resigns his office is not sufficient to constitute a breach of duty. It is the nature of his (sic) preparation which is significant. No ironclad rules as to the type of conduct which is permissible can be stated, since the spectrum of activities in this regard is as broad as the ingenuity of man itself.
But the Bancroft v. Whitney court did go on to find a breach of fiduciary duty. One of the factors it considered was the following at p. 936:
The undisputed evidence shows a consistent course of conduct by him (the defendant Glen) designed to obtain for a competitor those of the plaintiff's employees whom the competitor could afford to employ and would find useful. If Glen, while still president of the plaintiff, had performed these acts on behalf of Bender Co. (the competitor) without also obligating himself to join the company, there could be no doubt that he would have violated his duties to the plaintiff. Surely, his position in this regard cannot be improved by the fact that he was also to be employed by Bender Co. and was to share in the profits of the new western division.
Connecticut seems to adopt this view, and appears to take the position that the fiduciary obligation regarding solicitation terminates once the employee accused of improper solicitation leaves the employment to work, for example, for a competitor. Thus, in Electronic Associates, Inc. v. Automatic Equip. Development Corp., supra, no breach of fiduciary duty was found where a former employee of the plaintiff induced one of the plaintiff's employees to work with him at a competitor. The court said that: "In the absence of fraud, misrepresentation, intimidation, obstruction, molestation or malicious acts, courts generally recognize no liability for inducing an employee not bound by an employment contract to move to a competitor." The court went on to say that this "rule rests on the policies of encouraging full fair and free economic competition." 185 Conn. at p. 34. But, even though the defendant was not a director or officer of the corporation at page 36, the court significantly went on to say, "Merritt (the defendant) testified that he directly contacted Lund (the employee induced to work for the competitor). The plaintiff, however, concedes that this solicitation occurred after Merritt had left its employ. Once Merritt left the plaintiff's employment, no fiduciary duty restrained him from using ordinary methods to encourage his former coworkers or subordinates to follow him to its competitor." In Republic Systems Programs, Inc. v. Computer Assist, Inc., 322 F.Sup. 619 (D.Conn., 1971), at page 626, the court said: "The evidence indicates that defendants (who were officers or had management positions) were aware that solicitation of other employees might be inconsistent with the fiduciary obligation they had while they remained as employees . . . and were careful to terminate their employment before embarking on any such solicitation." In that case, the defendants left the plaintiffs employ and set up their own competing corporation immediately thereafter, id. at p. 624, also see Dames Moore v. Baxter Woodman, Inc., 21 F.Sup.2d 817, 822, 823, 826 (N.D.Ill., 1998), cf. Standard Brands, Inc. v. U.S. Partition Packaging, 199 F.Sup. 161, 165, 173 (E.D.Wis., 1961); Frederick Chusid Co. v. Marshall Leeman Co., 326 F.Sup. 1043, 1059, 1060 (S.D.N.Y., 1971).
One further general observation should be made. The cases in this area often make note of and therefore seem to attach some importance to whether or not the former employee accused of improper solicitation and a violation of fiduciary obligations was in an executive or managerial position, see Electronic Associates, Inc. v. Automatic Equipment Development, supra, 185 Conn. at page 33, cf. Chelsea Industries Inc. v. Gaffney, 449 N.E.2d 320, 362 (Mass. 1983); National Rejectors v. Trieman, et al., 409 S.W.2d, 1, 37 (Mu, 1977).
An employee officer, who provides encouragement or solicits an employee to work for a competitor learns about the particular skills of such subordinates while working for his employer and if this individual engages in such activities while he or she is still employed by his or her principal, the ability to influence the subordinates who are approached or with whom there is contact on the subject of leaving the employment might be considerably greater. Also it might be added that as an officer he or she learns of the special skills of certain prime employees on what can be called "company time."
(iii)
The foregoing discussion indicates the broad rights an employer has in enforcing its right to protect confidential information and to protect its employee base from solicitation by competitors through the assistance of employees and perhaps former employees. But there are limitations on these rights felt to be necessitated by the requirements of maintaining competitive markets and the rights of a former employee against whom equitable relief is sought to earn a living.
These limitations are stated in general language and whether they are operative depends on a fact-based analysis. They are operative whether the employer seeks to enforce non-solicitation and confidentiality agreements signed by the employee or whether in its request for equitable relief the employer relies on fiduciary obligations of the employee not to reveal confidential material to competitors and/or not to solicit employees from the former employee.
First let it be said that the rights the plaintiff seeks to enforce here can be said to have an anti-competitive effect. The business in which Ms. Colburn is employed and in which Prudential and Raveis operate is extremely competitive. They compete in the same market area for the same business and they employ agents whose individual skills determine the profitability of the companies for which they work. They apparently are characterized as "producers" or "non-producers" and seem to go with some frequency from the employ one competitor to another depending on the training and financial advantages presented to them. Of course it would be an advantage to a competitor to have certain confidential information delivered to it by the former employee of a competitor and of course it would be of great competitive advantage to take the best employees of a competitor for ones own use by relying on former employees of that competitor and attract them to ones own business.
In order to prevent such competitive markets from self destructing by the creation of monopolistic practices and preventing the realistic possibility of new competitive forms from entering these markets the law in effect has permitted the enforcement of certain contractual agreements limiting for example solicitation of its employees or divulging confidential information and has created the concept of the duty of loyalty even where such contracts are not entered into.
But contractual provisions restraining the activities of employees and former employees cannot go so far as to unduly hamper the operation of competitive markets like this one. Thus it has been said that: "Under the common law, the well settled rule is that an anti-competitive covenant ancillary to a lawful contract is enforceable if the restraint upon trade is reasonable," Elida, Inc. v. Harmon Realty Corporation, 177 Conn. 218, 225 (1979). In Scott v. General Iron Welding Co, 171 Conn. 132, 137 (1976), the court developed a five-part test to evaluate the reasonability of so-called restrictive covenants some of whose considerations are applicable to all types of these restrictions, under contract, on the questioned activity of former employees.
Similar considerations are used to restrain a too rigid application of duty of loyalty and fiduciary obligation principles. Thus as noted § 395 of Restatement (2d) Agency does not apply confidentiality protection to items which are "a matter of general knowledge." Also as noted in the 27 Am.Jur.2d article on the "Employment Relationship" despite the strictures on the divulging of confidential information by an employee or former employee . . . "an employee can use to his or her own advantage all the skills and knowledge commonly used in the trade that the employee acquired during his or her tenure of employment," id., § 177, page 677.
(iv)
There is another procedural topic that must be discussed before the court turns to the facts of this case and decides whether the injunctive relief requested is appropriate. Injunctive relief is the mechanism available in the court system to enforce the rights the plaintiff seeks to protect. Certain basic principles must be set forth that the court will rely upon in deciding whether the relief requested should be granted.
It is of course true that injunctive relief can be granted "to prevent or prohibit a threat of harm that has not yet occurred," Leatherbury v. Peters, 24 Md.App. 410, 412, aff'd. 276 Md. 367 (1975); El Bey v. Moorish Science Temple, 747 A.2d 241, 249 (Md., 2000). But Nicholson v. Connecticut Half-Way House, Inc., 153 Conn. 507, 511 (1966), in part quoting from other cases said:
It is clear that the power of equity to grant injunctive relief may be exercised only under demanding circumstances. No court of equity should ever grant an injunction merely because of the fears or apprehensions of the party applying for it. Those fears or apprehensions may exist without any substantial reason. Indeed they may be absolutely groundless. Restraining the action of an individual or a corporation by injunction is an extraordinary power, always to be exercised with caution, never without the most satisfactory reasons. The fears and apprehensions of the plaintiffs in the present case, based as they are on speculation, cannot justify the granting of injunctive relief, see also Anderson v. Latimer Point, 208 Conn. 256, 262 (1988).
To similar effect is the language in O'Toole v. Superior Court, 44 Cal.Rptr.3d 531 (Cal.App., 2006), where the court said: "The purpose of injunctive relief is to prevent future or threatened harm . . . A plaintiff is not entitled to declaratory relief where the defendant has in good faith discontinued the challenged conduct. To authorize the issuance of an injunction, it must appear with reasonable certainty that the wrongful acts will be continued or repeated," id. p. 551. Also see the language in Calamari Perillo on Contracts, Vol. 1 at § 2.9, page 225 to the effect that: "The preventive injunction, on the other hand, is not proper unless the defendant is threatening to commit a wrong in the future. The defendant's past trespass upon the plaintiff's land by dumping boulders on it is not by that act alone threatening to wrong the plaintiff in the future."
However, as to the apprehension of the divulgence of trade secrets and confidential information by a former employee Ohio has a rule regarding equitable relief which seems to this court at least, self-evident. In CT Page 10488 Proctor Gamble Co. v. Stoneham, 747 N.E.2d 268, 278-279 (Oh.App., 2000).
In actions to enforce covenants not to compete, Ohio courts have held that an actual threat of harm exists when an employee possesses knowledge of an employer's trade secrets and begins working in a position that causes him or her to compete directly with the former employer or the product line that the employee formerly supported. Although the courts do no refer to this evidentiary proposition as "inevitable use" or "inevitable disclosure" the concepts are the same. According to the inevitable-disclosure rule, a threat of harm warranting injunctive relief can be shown by facts establishing that an employee with detailed and comprehensive knowledge of an employer's trade secrets and confidential information has begun employment with a competitor of the former employer in a position that is substantially similar to the position held during the former employment."
See also Pepsico Inc. v. Redmond, 54 F.3d, 1262, 1269 (CA. 7, 1995); Dexxon Digital Storage, Inc. v. Haenszel, 161 Oh.App.3d 747, 755 (2005); Nelson v. Gray, 978, So.2d 198, 201 (Fla.App., 2008). The court will now try to apply the foregoing law to the facts and claims of this case.
III Confidential Materials
Prudential asks that the court order Ms. Colburn to return all of its confidential information in any medium and further requests the court to not disclose the information to others. The basis of this request apparently rests on the rights accruing to Colburn based on the confidentiality agreement she signed and also on fiduciary obligations under a duty of loyalty theory apart from any of Colburn's contractual commitments or ancillary agreements to her 2005 employment contract. There are three categories of material at issue (1) e-mail communications from a Prudential employee, Barry Rosa regarding a development in Guilford (2) a variety of documents Colburn sent from the main Prudential computer system to her home on August 20, 2007 (3) Part of the material Colburn sent to home computer on August 20th includes a power point presentation which should be discussed separately.
(i)
The Rosa material represented by exhibit 15 containing two e-mails should be immediately returned to Prudential by Ms. Colburn if she has it on hard copy and it should be erased from her computer if it still is on it. Any attempt to categorize the Rosa material as not confidential in the sense of the agreement or at common law is belied by Ms. Colburn's own testimony. She said it was the type of material she would not give to the competition. Exhibit two is the confidentiality agreement and regarding this she was asked and responded as follows concerning the Rosa letter:
Q. But you certainly would not have given it to the competition cause it's precisely the sort of confidential information that's covered by exhibit two.
A. Of course I would not give it to the competition.
Upon redirect plaintiff's counsel characterizes the Rosa material as disclosing what Prudential's thinking about in terms of asking for a commission compensation correct? (as regards the development in question). She responded
A. Correct.
Q. And that's something you always regarded as confidential, right?
A. Correct.
Q. You had never told a competitor what it was that you were proposing to take by way of a commission, would you?
A. I would not.
There is and can be no claim that the Rosa material regarding compensation rates charged by Prudential is common knowledge or is something developed pursuant to Colburn's efforts or even as part of her job responsibilities.
She downloaded one of the e-mails regarding this development project the last day of her employment at Prudential and the other the first day of her employment at Raveis.
It is of no relevance that Ms. Colburn downloaded the e-mails and now claims not to have read them or shared the information contained therein with her new employer or that her employer has not been told by her of the contents of the Rosa communication. If it still exists in her possession she has no right to retain it and Prudential need not face the possibility or run the risk that in future the information as to compensation rates for this development or developments of this type might be shared with Raveis, its competitor — Colburn after all is an employee of the competitor.
There is nothing to indicate that return of this material will interfere with Colburn's job responsibilities or prospects. At Raveis as at Prudential her job as office leader involves recruiting and retaining agents and she is not involved with the commercial aspects of the business. Furthermore no competitor can fairly argue that an order to return this material would operate as an unreasonable restraint on competition — such an order preserves fair competitive markets.
(ii)
A subcategory of the numerous documents Ms. Colburn sent to her home computer from the Prudential Computer on August 20, 2007 while she was still employed at Prudential will be dealt with separately by the court. There was a power point presentation developed solely by Prudential staff and not by Ms. Colburn as was apparently true of some of the other material that will be discussed. One of her jobs at Prudential was to recruit new agents. The power point was developed to do just that for prospective agents who had never sold real estate in Connecticut before. Ms. Colburn described the power point as a "valuable tool" to recruit new agents which she would not share with competitors.
At Raveis Ms. Colburn apparently has the same job she had at Prudential. She manages the Raveis Madison office. She does not sell property or take listings. She manages the office and recruits and retains agents: she testified that at Raveis she had similar duties to those she had at Prudential. At Prudential she did not do the regular training for the agents but did some training for new agents.
Clearly this power point presentation developed as it was by Prudential should be returned. It is difficult to see how such a presentation could be presented as something as not "confidential" under the signed agreement. This is a highly competitive industry that necessarily demands recruiting the most efficient and generally promising agents to sell real estate and take listings. A presentation developed by a company to foster such recruiting efforts is certainly something a company like Prudential would want to be kept confidential, i.e., not available to competitors which defines the ambit of confidential.
Prudential's claim to this material also finds support in the common law duty of loyalty. The power point presentation is confidential under this concept for the reasons just discussed. Its contents are not claimed to be in the industries common knowledge and it does not represent something created or, to the court's knowledge, in any way developed in part by Ms. Colburn.
Ordering the return of the power point material would not constitute a restraint of any acceptable definition of fair competition and Colburn can hardly claim to be unfairly disadvantaged in her profession if she is barred from using material developed by a former employer to advance the competitive activities of a present employer who directly competes with that former employer. Ms. Colburn is also ordered not to disclose or turn over to Raveis this particular training material,
(iii)
Ms. Colburn on August 20th also downloaded on to her home computer from the Prudential computer numerous other documents. They were used in her training of new agents and she said she wanted to revise and update them. On that date she was certainly leaning toward taking the Raveis position. She said she definitely decided to take the job when she was on vacation in California which began August 22, 2007. She began at the Madison office of Raveis on August 28th. Her responsibilities at Raveis were to be similar to those she had at Prudential. Given the foregoing it is difficult to posit that at the time she was downloading these materials or revising or reviewing them that she only did so in contemplation of deciding, after all, to turn down the Raveis offer and continuing to work at Prudential. That is why Prudential wants the materials returned.
The defense pointed out, however, that many if not most of the documents are readily available to people in the real estate industry and they are thus not material that is confidential to Prudential. They are in a sense in the common knowledge of this industry. Merely because an employee signs a contract saying all records, reports, other documented matter are the property of Prudential and must be considered as such does not mean that employee upon securing a new job, even with a competitor, must return all materials used by her in performing her duties in Prudential which are part of the Prudential information bank. The agreement signed by Colburn limits the ambit of "confidential" to material "not generally known or available to the public." Any other result would violate the holding of Scott v. General Iron Welding, 171 Conn. at page 137.
Similar limitations on the common-law duty of loyalty and the fiduciary obligation regarding materials claimed to be confidential also apply.
The problem the court has, however, in relying on the foregoing to deny injunctive relief is that the foregoing observations, at least in the court's opinion, do not necessarily fit the factual scenario operative in this case.
That is, the issue is not whether individual documents in this mass of documents are a matter of common knowledge or that individual documents were revised or even changed by Colburn's own input. As to the latter observation she made such changes or revisions while receiving a Prudential paycheck and did so in trying to address the particular needs of Prudential which should not be broadcast to the public or competitors of Prudential. More to the point the source of individual documents cannot be the basis to deny confidentiality protection on the basis of some "common knowledge" rubric.
The court would imagine that there are numerous materials concerning this industry in trade journals, training tests, etc., that could have been used by Prudential and someone like Colburn in training new agents. The point is that out of that universe of documents only these were picked by Colburn to perform her training functions and only these documents were put on the Prudential computer. It is that selection process as it applies to these documents that makes them, en masse, confidential.
Therefore the court orders them returned to Prudential. Based on this bare record, however, the court is hesitant, and believes it would be inappropriate, to order Colburn not to use any of these documents in any training role she has at Raveis or even order that she not use all of them especially if while at Raveis she has made substantial revisions of or additions to the material.
IV Non-Solicitation CT Page 10493
The most difficult aspect of the litigation for the court has been the request for injunctive relief regarding the non-solicitation by Colburn of Prudential employees pursuant to the non-solicitation agreement she signed when she began working for Prudential in 2005. She agreed during her employment and for a year thereafter, she must not "hire, contract with, induce or attempt to influence any individual who is an employee of (Prudential) to terminate (his or her) employment . . . with (Prudential).Although the plaintiff purports to rely upon the non-solicitation agreement and fiduciary obligations under the duty of loyalty, the complaint bases its non-solicitation request for injunctive relief squarely on the employment agreement.
The concerns of the court are exemplified by its earlier discussion of certain case law and authorities concerning the procedural requisites and peculiarities of injunctive relief.
As our court said in Nicholson v. Connecticut Half-Way House, Inc., supra, "no court of equity should ever grant an injunction merely because of the fears or apprehensions of the party applying for it," 153 Conn. at page 71. This is related to another principle discussed in O'Toole v. Superior Court, supra, for injunctive relief to be granted "it must appear with reasonable certainty that the wrongful acts will be continued or repeated," 44 Cal.Rptr.3d at page 551 and in Calamari Perillo On Contracts. There the authors note that where as here a preventive injunction is sought it must be shown the defendant "is threatening to commit a wrong in the future" — a past wrongdoing "is not by that act alone threatening to wrong the plaintiff in the future," § 2.9 at page 225.
There are several bases for the injunctive relief sought which apparently have been offered as predictive of possible future actions by Colburn regarding solicitation. First basic factors must be repeated which must guide the court's discussion. At Prudential's Guilford office Colburn was the office leader or manager whose job it was to recruit new agents and seek to retain agents already working for Prudential. Ms. Colburn worked for Prudential until August 27, 2007 and began working for Raveis at the Madison office on August 28th. She was the manager of that office and her job at Raveis was the same, recruit and retain new agents; her immediate supervisor was Carolyn Deal who was a Raveis vice president. Ms. Deal spoke to Colburn in early August 2007 and she wished to recruit Colburn to work for Raveis. Although the testimony is not a model of clarity it is fair to say that Colburn after her two meetings with Deal in the beginning of August had pretty much decided to go work for Raveis. This is underscored by the fact that on August 17th she sent an e-mail to Deal listing various categories of agents under three headings "Offers presented/offers pending presentation." Four names were listed of agents who worked neither for Prudential or Raveis. Under the heading "Strong relationship with the following" eleven agents were listed who also did not work for Prudential or Raveis. The last group listed nine Prudential agents. In the first category were three agents to which Prudential had made an offer or an offer was pending as indicated. One name was listed by mistake but the other three were experienced agents. She had tried to recruit them for Prudential. The next category included people who Colburn had a strong relationship with and this would be of interest to Raveis if it was intent on increasing its pool of prospective agents once Colburn started working for Raveis.
The last group of Prudential agents were people Colburn heard were unhappy with Prudential. One of the people listed was a "top producer."
Two observations can be made regarding this August 17th communication with Deal. It persuades the court Colburn was much more sure that she was going to Raveis by August 17th than her testimony would otherwise indicate. Furthermore as to the first two listed categories it takes no lengthy recitation of case law to characterize this communication as a violation of fiduciary obligations even if Colburn had never gone to Raveis. As to the Prudential agents listed, Colburn said she knew these agents were unhappy at Prudential but Raveis did not necessarily know that — why list them then and what on earth does "Prudential agents I will be working with to make the transition to Raveis." that mean Colburn would try to transition them over to Raveis too? The point is at Raveis she would be trying to recruit new agents for Raveis. Putting the Prudential agents on a sublist to her new supervisor would seem to indicate that, as to these agents, that could very well be her intention. As to the listing of the Prudential agents this would be a violation of her fiduciary obligations and at or around the time this communication was sent, seeing she was going to Raveis, there was a real threat that the non-solicitation agreement would be violated at the very least as to these Prudential agents.
But Colburn testified she in fact has never approached these Prudential agents and no evidence was offered that she solicited them or encouraged them from August to the present date to leave Prudential. The same is true as to any other Prudential agent. This action was commenced September 20, 2007. Hearings were held on December 14 and 20, 2007. Argument was held February 22, 2008. No evidence has been offered to rebut this conclusion.
Other possible evidence of the threat of violation of the non-solicitation agreement center around a Prudential agent Ms. Bailey-Rice. She was a very productive agent and testified in this matter. She now works at the Raveis office in Madison where Colburn is the manager and started there on August 27, 2007, the day before Colburn. Bailey-Rice adamantly denied that Colburn solicited her in any way to make a move to Raveis or even told her she was going to Raveis. But the court will review the Colburn testimony in this regard.
Colburn started communicating with her on August 13th after her first meeting with Deal. When asked whether her first meeting with Bailey-Rice was to tell her that she, Colburn, was going to Raveis Colburn testified "that wasn't the initial purpose of the meeting." She then said she told Bailey-Rice at the meeting that after bringing her to Prudential she was leaving that company and apologized for this. She denied that Bailey-Rice told her she was going to Raveis or that she encouraged her to do so. Bailey-Rice called her while she was in California on vacation but Colburn could not recall what the conversation was about "it had to do with a move of some sort." Colburn guessed once she heard I was leaving Prudential "she wasn't very happy with the company. She was checking out her options and I guess she wanted to discuss with me her options. But Raveis never came up. Yet both started working at Raveis within a week after this California conversation and within a day of each other. And a listing for a development project of the family of Bailey-Rice was removed from Prudential shortly before Colburn left Prudential; she testified this was within her authority and was done per an agreement Bailey-Rice had with Prudential. Colburn also waived Prudential's right to recoup any company expenses made to promote the listing. She did all of this while she was on vacation in California the second to last week in August and lo and behold she starts working for Raveis August 28th, Bailey-Rice started on August 27th and the listing for the development was placed with Raveis August 30, 2007. This is all very coincidental and a reasonable fact finder could conclude that while she was employed by Prudential from all the foregoing circumstances Colburn solicited Bailey-Rice to join her. Colburn had an incentive also to do so, Bailey-Rice was a good producer and Colburn would receive compensation from her efforts.
But again the problem the court has in issuing injunctive relief under the agreement or on the basis of a finding of a violation of the duty of loyalty is that the events surrounding Bailey-Rice's move to Raveis occurred at the end of August 2007. There has been no evidence of any solicitation of Prudential agents by Colburn since that date. It is quite possible that Colburn wanted to increase her marketability to Raveis by the communication listing various agents to Deal and wanted to make sure she had an excellent agent with her when she first started a Raveis given the compensation arrangement she had. However, nothing presented indicates there is a present imminent threat of solicitation by Colburn because of actions she engaged in almost eleven months ago. The reason for this seems obvious to the court, first no evidence has been presented to this effect, as noted, and experienced lawyers have entered the picture facing the prospect of arbitration hearings.
The court will only order injunctive relief as to confidential material as set forth previously in the opinion and will not order injunctive relief or a retraining order regarding her duties of non-solicitation for the remainder of the one year ban to such activity after her departure from Prudential or make a further order regarding this subject under the duty of loyalty theory.