Opinion
21-P-179
12-23-2021
INBOX INSIGHT, INC. v. KEITH SMITH & others.[1]
Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass.App.Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass.App.Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
Demand Dogs, LLC (Demand Dogs), and two of its employees, Keith Smith and Tracey Koehler (defendants), appeal from two civil contempt findings entered against them for violating a preliminary injunction. On appeal, the defendants argue that the judge erred in issuing the first contempt judgment because the language of the preliminary injunction was ambiguous. They challenge the second contempt judgment based on the same ambiguity and an error in one of the judge's factual findings. We affirm.
Background. Demand Dogs and Inbox Insight, Inc. (Inbox Insight), the former employer of Smith and Koehler, are competitors that both provide business-to-business lead generation services through audience profiling and targeting and content development and distribution. Smith cofounded Demand Dogs in 2018, when he was still employed by Inbox Insight. Koehler left Inbox Insight to join Demand Dogs a few months later.
In January 2019, Inbox Insight sued the defendants and several other parties for unfair competition and Smith and Koehler for breach of the noncompetition provisions in their employment agreements with Inbox Insight. A Superior Court judge (injunction judge) granted Inbox Insight a preliminary injunction prohibiting the defendants "from contacting any customer that either the . . . defendants or any other Demand Dogs employee, agent, or representative had contact with while that person was employed by Inbox until the end of 2019" (emphasis added) .
Inbox Insight subsequently filed a contempt complaint against the defendants for violating the terms of the injunction based on their contact with Overdrive Interactive (Overdrive) and Kingpin Communications (Kingpin). The defendants admitted that Demand Dogs employees had contacted "agency customers" Overdrive and Kingpin during their current employment with Demand Dogs and their previous tenure with Inbox Insight, but argued that "agencies" such as Overdrive and Kingpin were not clearly and unequivocally included in the term "customer" as used in the injunction. A second Superior Court judge (contempt judge) disagreed, concluding that the term "customer" unambiguously included Overdrive and Kingpin. The judge allowed Inbox Insight's motion for judgment on the pleadings and issued an effective judgment of contempt against the defendants.
The judge found the defendants to be in contempt in a decision and order dated November 7, 2019 (entered on November 12, 2019), but the judgment was held in abeyance pending further proceedings, including submissions with respect to an award of attorney's fees and costs to Inbox Insight. In his subsequent findings and order dated January 17, 2020 (entered on January 27, 2020), the judge ordered the entry of the judgment, the payment of attorney's fees and costs, and other relief, but the judgment was not "set forth on a separate document." Mass. R. Civ. P. 58 (a), as amended, 371 Mass. 908 (1977). The defendants filed a notice of appeal from the order entered against them on January 31, 2020.
Inbox Insight later filed a second contempt action against the defendants alleging that they had contacted other companies covered by the injunction (after the injunction had issued, but prior to the first contempt proceedings). The defendants stipulated to nearly all of Inbox Insight's factual allegations.The only triable factual issue was whether William Smibert, an agency account director at Demand Dogs, had contacted Leadscale when he worked at Inbox Insight. Following an evidentiary hearing, the contempt judge concluded that he had. Accordingly, the judge adjudicated Demand Dogs in contempt for violations of the injunction with respect to Leadscale and the four other companies covered by the defendants' stipulations.
Specifically, the defendants stipulated to having contacted five companies named in Inbox Insight's second contempt complaint, including Leadscale, and to the amount of profits Demand Dogs had generated from those contacts. They also stipulated that employees of Demand Dogs had previously contacted those companies, except for Leadscale, when they worked at Inbox Insight.
The judge issued findings of fact, rulings of law, and directed the entry of judgment in a decision dated September 10, 2020, which was entered on September 15, 2020. The order provided for further motion practice on the award of attorney's fees and costs, and the fee order, dated October 20, 2020, entered on October 28, 2020. Again, no contempt judgment was entered. On November 25, 2020, Demand Dogs filed a notice of appeal, purporting to appeal from the September 15 contempt order "finalized" on October 28 through the grant of Inbox Insight's unopposed fee award. Although no final contempt judgment entered in either contempt proceeding as required by the judge's orders for judgment, "[w]e exercise our discretion to reach [the defendants'] appeal of the contempt findings[s], because[d]ismissal of the appeal would serve no purpose and might require the parties to return to reargue issues already briefed and argued" (quotation and citation omitted). Commercial Wharf E. Condominium Ass'n v. Boston Boat Basin, LLC, 93 Mass.App.Ct. 523, 532 n.20 (2018). See also GTE Prods. Corp. v. Stewart, 421 Mass. 22, n.3 (1995) (despite absence of entry of final judgment, where, as here, parties treated orders contained in judge's decision as final judgment, court reached merits).
Discussion. 1. First contempt proceeding. The defendants contend that the contempt judge erred by finding them in contempt on a motion for judgment on the pleadings given their denial that Overdrive and Kingpin were "customers" and the ambiguity of the injunction's term "any customer." Although contempt judgments on the pleadings are uncommon, "a judge may properly rule on a complaint for contempt without an evidentiary hearing, or without receiving live testimony" in cases where "material facts are not in dispute." Mahoney v. Mahoney, 65 Mass.App.Ct. 537, 540 (2006). See also Clarke v. Metropolitan Dist. Comm'n, 11 Mass.App.Ct. 955, 955 (1981) (judgment on pleadings under Mass. R. Civ. P. 12 [c], 365 Mass. 754 [1974], appropriate "where there are no material facts in dispute on the face of the pleadings").
Rule 65.3 of the Massachusetts Rules of Civil Procedure is not to the contrary. Specifically, Mass. R. Civ. P. 65.3 (d), as appearing in 386 Mass. 1244 (1982), gives judges wide flexibility in determining how to resolve complaints for contempt.
The defendants' issue with the first contempt judgment concerns a legal dispute rather than a factual one. The defendants admitted to all the factual allegations necessary to sustain the judgment: they had contacted Overdrive and Kingpin to solicit business for Demand Dogs, and Demand Dogs employees had previously contacted those companies when they worked at Inbox Insight. The only remaining issues for the judge to decide were two related legal questions: (1) whether the injunction contained a "clear and unequivocal command," Demoulas v. Demoulas Super Mkts., Inc., 424 Mass. 501, 566-567 (1997) (reviewing "legal meaning" of "ordinary course of business" as used in preliminary injunction), and (2) if the injunction's command was unambiguous, whether the defendants' undisputed contact with Overdrive and Kingpin violated that command. See Coyne Indus. Laundry of Schenectady, Inc. v. Gould, 359 Mass. 269, 273-276 (1971) (interpreting legal meaning of consent decree, then applying undisputed facts to conclude that defendant violated decree).
The defendants agreed at oral argument that the disputed issues were legal questions.
In addressing these questions, the contempt judge concluded that the injunction's prohibition on contacting "any customer" with whom a Demand Dogs employee, agent, or representative had had contact while employed by Inbox Insight constituted a "clear and unequivocal command." The judge further concluded that Overdrive and Kingpin were "customers" and that the defendants, therefore, violated the injunction when Demand Dogs employees contacted them. We review those legal conclusions de novo. See Commercial Wharf E. Condominium Ass'n v. Boston Boat Basin, LLC, 93 Mass.App.Ct. 523, 532 (2018).
The term "customer" has an unambiguous, ordinary meaning: "a person who buys goods or services." Boston Professional Hockey Ass'n v. Commissioner of Revenue, 443 Mass. 276, 287 (2005), quoting American Heritage Dictionary 327 (1969). Its meaning is not susceptible to judicial discretion or multiple interpretations. See Demoulas, 424 Mass. at 566; Coyne Indus. Laundry of Schenectady, Inc., 359 Mass. at 273-275. "While vague or ambiguous language in a judicial decree cannot constitute a 'clear and unequivocal command,' a party's self-serving characterization of a provision as 'ambiguous' does not make it so" (citation omitted). Stabile v. Stabile, 55 Mass.App.Ct. 724, 726-727 (2002) .
Notwithstanding this universally recognized meaning, the defendants contend that the injunction's use of "any customer" refers to only some entities that buy services from Inbox Insight but not others. Specifically, they invite us to read one subset of customers -- so-called "agency customers" -- as outside the meaning of "any customer." In support of this strained reading, they make one argument based on the text of the injunction and another based on extrinsic evidence of the intent of the injunction.
First, they argue that "any customer" cannot include agencies because the term "agency" does not appear in the injunction. This argument lacks merit. Agencies fall under the umbrella of "any customer" because they pay Inbox Insight and Demand Dogs for services. Listing "agency customers" in the injunction in addition to "customers" would have been superfluous. See Balles v. Babcock Power Inc., 476 Mass. 565, 575 n.17 (2017) .
Ironically, in order to have limited the injunction to only non-agency customers, the injunction would have needed to use the term "agency."
Second, the defendants argue that the term cannot include agencies because the scope of the injunction would be very broad if agencies were included, and the injunction judge expressed concern that "enter[ing] all of the relief requested . . . by Inbox" may result in "putting Demand Dogs out of business." The difficulty with this argument is that we may not consider the judge's comments for the purpose of creating ambiguity in an unambiguous injunction. See Commonwealth v. McHugh, 326 Mass. 249, 276 (1950) ("What that judge said before the terms of the injunction were finally settled and before the injunction was issued could not be used to interpret or qualify the language of the decree itself"). See also EventMonitor, Inc. v. Leness, 473 Mass. 540, 549 (2016) ("When the words of a contract are clear they alone determine the meaning of the contract. A reviewing court considers extrinsic evidence only when a term in a contract is ambiguous" [quotation and citations omitted]). In any event, it appears that the judge denied the relief Inbox Insight sought -- an order enjoining Demand Dogs from soliciting "any customer of Inbox's" -- and instead limited the scope of the injunction to the subset of customers that employees, agents, or representatives of Demand Dogs had actually contacted while employed at Inbox Insight until the end of 2019. If the injunction judge did not want to prohibit Demand Dogs from contacting agency customers, he would not have used the broad phrase "any customer."
Notably, the contempt judge also did not grant Inbox Insight's request for the individual defendants' forced resignation from Demand Dogs.
In sum, even if the wording of the injunction made its command quite broad, it did not make the command ambiguous. The injunction clearly put the defendants on notice that they were prohibited from contacting persons or entities, including agencies, who paid Inbox Insight for services. See Demoulas, 424 Mass. at 566. If the defendants believed otherwise, they should have "sought clarification from the court before [they] engaged in the questionable conduct." Coyne Indus. Laundry of Schenectady, Inc., 359 Mass. at 275-276. Because agencies like Overdrive and Kingpin are customers covered by the injunction and the defendants admitted to impermissible contact with them, the contempt judge properly granted Inbox Insight's motion for judgment on the pleadings.
2. Second contempt proceeding. Demand Dogs argues that the contempt judge erred in finding that Smibert contacted Leadscale when he worked for Inbox Insight. We review the finding "for clear error." Commercial Wharf E. Condominium Ass'n, 93 Mass.App.Ct. at 532. The finding is clearly erroneous if, "although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Demoulas, 424 Mass. at 509, quoting Building Inspector of Lancaster v. Sanderson, 372 Mass. 157, 160 (1977) . We defer to the contempt judge's assessment of the weight and credibility of the evidence. See Demoulas, supra at 509-510.
Our discussion of the first contempt judgment disposes of the defendants' challenge to the second contempt judgment on ambiguity grounds because, as with the first complaint for contempt, Demand Dogs stipulated to all of Inbox Insight's factual allegations, except for its contact with Leadscale, see note 3, supra, which we address here.
At the evidentiary hearing, Inbox Insight introduced three e-mails that suggested Smibert had contacted Leadscale when he worked at Inbox Insight. Most relevantly, in one e-mail to a Demand Dogs customer, Smibert wrote that he "used to work with" Leadscale when he was employed at Inbox Insight. In another e-mail, from Smibert's time at Inbox Insight, he requested information about "the Leadscale campaign" from a colleague. A third e-mail to a Leadscale employee right after Smibert started at Demand Dogs implied that he had an existing business relationship with the employee.
Despite this documentary evidence, Smibert testified that he "[a]bsolutely" did not have any contact with Leadscale during his tenure at Inbox Insight. He explained his apparent familiarity with the Leadscale employee and his e-mail assertion that he "used to work with them at my previous company" as mere sales tactics to build rapport with Leadscale contacts. After considering this conflicting evidence, the contempt judge determined that the e-mails were more credible than Smibert's testimony. Given the content of the e-mails, and the reasonable inferences drawn from them, and our deference to the contempt judge's assessment of credibility, Demand Dogs has not shown that the judge clearly erred in finding that Smibert contacted Leadscale when he worked at Inbox Insight, in violation of the injunction. See Demoulas, 424 Mass. at 509-510.
We deny Inbox Insight's requests for costs and appellate attorney's fees.
Orders entered November 12, 2019, January 27, 2020, September 15, 2020, and October 28, 2020, affirmed.
By the Court (Blake, Massing & Ditkoff, JJ. ),
The panelists are listed in order of seniority.