ADP, LLC v. Eric Manchir ( 2017 )

11/08/2017
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
September 6, 2017 Session
ADP, LLC v. ERIC MANCHIR
Appeal from the Chancery Court for Davidson County
No. 14-1043-III Ellen H. Lyle, Chancellor
No. M2016-02541-COA-R3-CV
This appeal concerns an employment-related restrictive covenant. Eric Manchir
(“Manchir”) worked as a sales manager for ADP, LLC (“ADP”), a company that deals in
human resources and business outsourcing matters. As a prerequisite to obtaining
restricted stock options from ADP, Manchir consented to a restrictive covenant
agreement (“the Agreement”). The Agreement contained, among other things, a non-
competition clause extending to twelve months after Manchir left ADP. New Jersey law
governs the Agreement. Manchir later resigned from ADP and went to work for an ADP
competitor, Paycor, Inc. (“Paycor”). ADP sued Manchir in the Chancery Court for
Davidson County (“the Trial Court”) for breach of contract and sought specific
enforcement of the Agreement. ADP filed a motion for summary judgment, which the
Trial Court granted. The Trial Court also awarded ADP, pursuant to a provision in the
Agreement, attorney’s fees and costs. Manchir appeals. We hold, inter alia, that the
Agreement is reasonable and enforceable under New Jersey law, that Manchir breached
the Agreement, and that specific performance is an appropriate remedy. We affirm the
judgment of the Trial Court.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed;
Case Remanded
D. MICHAEL SWINEY, C.J., delivered the opinion of the court, in which FRANK G.
CLEMENT, JR., P.J., M.S., and RICHARD H. DINKINS, J., joined.
Mekesha H. Montgomery and Jessica E. Hill, Nashville, Tennessee, and Matthew C.
Blickensderfer, Cincinnati, Ohio, for the appellant, Eric Manchir.
William S. Rutchow, Nashville, Tennessee, for the appellee, ADP, LLC.
OPINION
Background
ADP hired Manchir as an entry level sales representative in July 2006. Manchir
initially worked for ADP in Atlanta. ADP later promoted Manchir to sales manager and
assigned him to Nashville. Manchir’s territory included southern Nashville metropolitan
area, Knoxville, Chattanooga and Birmingham. Manchir managed a team of sales
representatives that focused on businesses with fewer than 50 employees.
In 2011, 2012, and 2013, ADP presented Manchir with a choice regarding
restricted stock options. Manchir could obtain the stock options if he would consent to
the Agreement containing, among other things, non-competition and non-solicitation
clauses. Manchir consented electronically to the Agreement. We quote, as relevant,
from the Agreement:
d. “Competing Business” means any individual (including me),
corporation, limited liability company, partnership, joint venture,
association, or other entity, regardless of form, that is engaged in any
business or enterprise that is the same as, or substantially the same as, the
Business of ADP for that part of the business in which I have worked or to
which I have been exposed during my employment with ADP (regardless
of whether I worked only for a particular segment of that part of the
business in which I worked—for example, business segments based on the
number of employees a Client has or a particular class of business using an
ADP product or service).
***
3. Non-Competition. I agree that during my employment and for a period
of twelve (12) months from the voluntary or involuntary termination of my
employment for any reason and with or without cause, I will not, directly or
indirectly, own, manage, operate, join, control, be employed by or with, or
participate in any manner with a Competing Business anywhere in the
Territory where doing so will require me to (i) provide the same or
substantially similar services to a Competing Business as those which I
provided to ADP while employed, or (ii) use or disclose ADP’s trade
secrets. However, after my voluntary or involuntary termination of my
employment for any reason and with or without cause, nothing shall
prevent me from owning, as an inactive investor, securities of any
competitor of ADP which is listed on a national securities exchange.
-2-
4. Non-Solicitation of and Non-Interference with Clients, Business
Partners, and Vendors.
a. Clients: I agree that during my employment and for a period of
twelve (12) months following the voluntary or involuntary termination of
my employment for any reason and with or without cause, I will not, either
on my own behalf or for any Competing Business, directly or indirectly,
solicit, divert, appropriate, or accept any business from, or attempt to
solicit, divert, appropriate, or accept any business from any Client for the
purposes of providing products or services that are the same as or
substantially similar to those provided in the Business of ADP, for any
Client: (i) whom ADP provides products or services in connection with the
Business of ADP; (ii) whom ADP has provided products or services in
connection with the Business of ADP and with whom ADP reasonably
expects business within the two (2) year period following my termination
of employment from ADP; (iii) whom ADP has actively solicited in
connection with the Business of ADP within the two (2) year period prior
to my termination of employment from ADP; or (iv) about whom I have
any trade secret information. I also agree that I will not wrongfully induce
or encourage or attempt to wrongfully induce or encourage any Clients to
cease doing business with ADP or materially alter their business
relationship with ADP.
b. Business Partners: I agree that during my employment and for a
period of twelve (12) months following the voluntary or involuntary
termination of my employment for any reason and with or without cause, I
will not, either on my own behalf or for any Competing Business, directly
or indirectly engage, contract with, solicit, divert, appropriate or accept any
business from, or attempt to engage, contract with, solicit, divert,
appropriate or accept any business from any Business Partner to provide to
me or any Competing Business any product or service that is (a) the same
as or substantially similar to the product or service provided to ADP and
which ADP uses for, uses for obtaining, or distributes to, its Clients or (b)
specialized, customized or designed by the Business Partner for ADP. This
provision applies only to any Business Partner: (i) whom ADP currently
has a commercial or business relationship with ADP in connection with the
Business of ADP; (ii) whom ADP has had a commercial or business
relationship in connection with the Business of ADP and with whom ADP
reasonably expects business within the two (2) year period following my
termination of employment from ADP; (iii) whom ADP has actively
solicited for a commercial or business relationship in connection with the
-3-
Business of ADP within the two (2) year period prior to my termination of
employment from ADP; or (iv) about whom I have any trade secret
information. I also agree that I will not wrongfully induce or encourage or
attempt to wrongfully induce or encourage any Business Partner to cease
doing business with ADP or materially alter their business relationship with
ADP.
***
12. Tolling. The restricted time periods in paragraphs three (3) through six
(6) above shall be tolled during any time period that I am in violation of
such covenants, as determined by a court of competent jurisdiction, so that
ADP may realize the full benefit of its bargain. This tolling shall include
any time period during which litigation is pending, but during which I have
continued to violate such protective covenants and a court has declined to
enjoin such conduct or I have failed to comply with any such injunction.
In 2014, Manchir resigned from ADP and went to work for Paycor, an ADP
competitor. Manchir serves as a Regional Sales Director for Paycor. Manchir manages a
team of sales representatives focusing on mid-market and major markets, involving
businesses with 10-75 or over 75 employees, respectively. Manchir receives a
commission on all sales his team makes. Manchir’s Paycor territory includes Tennessee,
Bowling Green and Hopkinsville, Kentucky, and Huntsville, Alabama. These territories
overlapped somewhat with Manchir’s previous territories at ADP. Whether Manchir
breached the Agreement by competing with ADP or soliciting ADP clients, even
indirectly through his sales team, is the crux of the dispute on appeal.
In July 2014, ADP filed suit against Manchir in the Trial Court alleging breach of
contract. ADP requested that the Trial Court order specific performance. Discovery
ensued in the matter. Both parties filed motions for summary judgment. The record
contains the deposition testimony of, among others, Christopher Stratton, Manchir’s boss
when he worked at ADP. Stratton testified, in part, as follows:
Q. Of the information that you told me was what you would consider
confidential, proprietary, trade secret information to ADP, was there any of
that that Eric did not have access to?
A. Again, similar to the descriptions I have just given to the past few
questions, at a certain level, his access would have been restricted as far as
the scope of what he had access to. But everything that we have just
discussed, he definitely had access to, you know, the clients and the referral
-4-
sources and the revenue generated, et cetera, for his given geography and
team.
Q. Do you have any evidence that Eric has used any of that information to
harm ADP in any way?
***
THE WITNESS: I don’t believe we have any specific instances where Eric
has targeted an ADP client based on information that he may have had
knowledge of prior, you know, to going over to Paycor. We do, as I
mentioned earlier, after reviewing some data that was provided by Paycor, I
did notice where there was quite a number of clients that Eric and his team
converted to Paycor’s services from ADP.
***
Q. Do you have any evidence that that conversion to Paycor had anything
to do directly with anything that Eric did?
A. I don’t. I mean, the list that I was provided, it sort of determined which
clients Eric had involvement with the sales process, where they came from
prior to, you know, going to Paycor, et cetera. And I don’t remember
exactly what the tie-in was there. I do remember the figure. It was roughly
185- to $190,000 of ADP revenue that had been converted to Paycor’s
services. Again, since that time, whatever timeframe that list represented,
that was essentially the sum of those former ADP clients.
Q. But you don’t know if Eric had any direct involvement in converting
those clients?
A. I personally do not, but his team did. And he was compensated for those
conversions based on the data that I was looking at.
Manchir also was deposed. Manchir testified that he never personally competed
with ADP or solicited ADP clients. He instead directed his sales team, and he did not
believe he had breached the Agreement. Manchir testified, in part, as follows:
Q. All right. At Paycor you said that you get a commission on the sales that
your team makes, correct?
A. That is correct.
Q. And is that the same for both major market and mid market?
A. That is correct.
Q. Okay. Do you get that commission whether you are involved in the sale
or not?
-5-
A. That is correct.
Q. Do you get a bigger commission if you actually get involved in the sale?
A. No.
Q. Okay. Are you aware of any commissions that you have received on
Paycor customers who were previously ADP customers?
A. Yes.
Q. Okay. Any from your mid-market people?
A. Yes.
Q. Do you know the names of those customers?
A. I wouldn’t be able to tell you right this second.
Q. Is there a record of those anywhere?
A. Yeah, I’m sure. Yeah. We can get that.
Q. Okay.
A. I get a percentage of the overall team, what they sell, and my percentage
is cut off the overall.
***
Q. -- since you left? Have you had any ADP customers contact you about
coming over to Paycor?
A. No. Changed my phone number.
Q. Okay. Earlier you said that you had not taken any private or confidential
ADP information with you when you left. Did you have access to private
or confidential ADP information when you worked there?
A. We could get access. You know, sales reps, sales managers, you would
have certain -- we used a CRM tool, so you can get prospect data, client
data, things like that.
Q. What is a CRM tool?
A. A sales tool.
Q. Is that on some kind of computer software or something?
A. Yeah, just sales organizations use to track their prospects.
Q. And you could access, I think you said, prospect information and client
information through that tool?
A. You’d have to request client information.
Q. Did you ever do that?
A. When I worked at ADP –
Q. Yeah.
A. -- for my ADP employees.
Q. That’s what I mean. While you were working at ADP, would that be
something you would do, is to request information from them?
-6-
A. We did different campaigns. We sold additional business to clients. So
we would have a client campaign, so I would pass out everyone’s client list.
So, yes, I used that data as a manager at ADP.
Q. Any other confidential data that you would have used as a manager at
ADP?
A. I mean, outside of client lists, I mean, that’s, I mean, really the only
confidential data that you would have.
Q. Were you provided information about, for example, marketing plans or
campaigns?
A. I mean, I would know when they rolled out to the sales -- you know, the
same time they rolled out to the sales team. But future plans, no.
Q. What about financial information regarding your team, how they were
performing, that kind of thing?
A. Oh, yeah, so forecasting, you know, obviously, as a manager, I know
what they make, what their commissions were, things like that.
***
Q. So for Paycor, one of your job responsibilities is to manage sales reps
who sell to the same type of customers as you managed when you were at
ADP, correct?
A. That is correct.
Q. Okay. Would that not violate this provision?
A. No, because I’m not selling similar services.
Q. Okay. You are not selling payroll services?
A. I’m selling payroll services, which is a very small percentage of what I
sell.
Q. Does it say anywhere in here unless, of course, you are only doing it as a
small percentage of what you do?
A. No, but that leaves it vague in the paragraph.
In August 2016, the Trial Court entered its thorough and detailed order granting
ADP’s motion for summary judgment and denying Manchir’s. The Trial Court carved
out a portion of the Agreement that required Manchir to refrain from soliciting
prospective ADP customers but otherwise held the Agreement enforceable. The Trial
Court ordered specific performance. The Trial Court stated as follows, in part:
[T]he Defendant argues that the Agreement is overbroad and would impose
an undue hardship. In this regard the Defendant argues that he “would have
to uproot himself and his family and move to an area more than 100 miles
outside of his current home” if the Agreement is enforced. Defendant’s
-7-
Memorandum, filed June 1, 2016, at 6. Yet, the undisputed facts are that
the job at Paycor, the Defendant voluntarily accepted, as the Regional Sales
Director, has responsibility for all of Tennessee and Kentucky—these are
outside a 100 mile radius of Defendant’s home.
More significantly, as a matter of law, New Jersey upholds
geographic restrictions that are reflective of the territory in which an
employee actually worked. Trico Equip.,Inc. v. Manor, 2009 WL 1687391,
at *2 (D.N.J. 2009). The facts of record are that before joining the Plaintiff,
the Defendant had no prior experience in the payroll industry. Thus any
customer contacts the Defendant has built up were contacts he developed
for the Plaintiff, and, therefore, are a legitimate basis for protection under
New Jersey law. See e.g. A.T. Hudson & Co., Inc. v. Donovan, 216 N.J.
Super. 426, 434, 524 A.2d 412 (App. Div. 1987).
Lastly, as established above in the statement of undisputed facts of
record, both Paycor and the Plaintiff assign sales territories based upon zip
codes. The Plaintiff’s calculations establish that Paycor has assigned the
Defendant a total of 500 zip codes. Of these, 303 do not overlap with the
Defendant’s former ADP territories. Also, many of these Paycor-only zip
codes are within 100 miles of the Defendant’s Mt. Juliet home. The result
is that there are large areas of Tennessee, southern Kentucky, northern
Georgia and Alabama that Defendant Manchir is responsible for in his job
with Paycor that do not overlap with his former ADP area.
From the foregoing, as a matter of law and fact, the Court concludes
that the Agreement is not geographically overbroad and its enforcement
imposes no undue hardship on Defendant Manchir.
In addition to the claim of overbroad geographic scope just
dismissed, the Defendant asserts that the Agreement’s restriction on the
Defendant soliciting prospective clients of ADP is overbroad, citing
Platinum Mgmt., Inc. v. Dahms, 285 N.J. Super. 274, 298, 666 A.2d 1028,
1039 (Ch. Civ. 1995); ADP, LLC v. Jacobs, No. CIV.A. 2:15-3710 JLL,
2015 WL 4670805 (D.N.J. Aug. 5, 2015); ADP, LLC v. Lynch, No. 2:16-
01053 (WJM), 2016 WL 3574328, at *1 (D.N.J. June 30, 2016). Based
upon the rationale in these cases concerning the need for notice of violative
conduct, the Court concludes the Defendant is correct. Accordingly, the
Court modifies the Agreement to carve out and not enforce the restriction
contained in the second clause of paragraph 4(a)(ii), “and with whom ADP
reasonably expects business within the two (2) year period following my
termination from ADP.”
***
-8-
[T]he Court finds that while there are some differences in the services the
Defendant performs at Paycor from those he performed at ADP, they are
not material. The undisputed facts provided above establish that at Paycor
the Defendant’s duties, client sector and types of products are the same or
substantially similar. There also is an overlap in some of the territories.
Moreover, the Defendant’s self-regulation of no personal involvement in
soliciting or selling to ADP customers is not a defense to breach because
the Agreement precludes not only direct but also indirect solicitation or
acceptance of business from ADP clients. The record establishes that the
Defendant trains his Paycor team to sell, the team sells to ADP clients, and
the Defendant shares in the team’s commissions on sales to ADP
customers. The record establishes breach.
***
T]he Court concludes that under New Jersey law once the breach of a
restrictive covenant is established, as found above, the inadequacy and the
intangible nature of the damages in such cases is recognized by the law, and
specific performance of the restrictive covenant is an appropriate remedy . .
..
The Trial Court’s order was not final, however, as the issue of attorney’s fees and
costs remained outstanding. In its December 2016 final order, the Trial Court awarded
ADP $94,307.75 in attorney’s fees and $2,583.25 in costs. The Trial Court ordered
Manchir to refrain from the following conduct:
A. Directly or indirectly own, manage, operate, join, control, be employed
by or with, or participate in any manner with a Competing Business (as that
term is defined in the parties’ Agreement), including Defendant’s current
employer, Paycor, in the following Restricted Territories where doing so
would require Defendant to (i) provide the same or substantially similar
services to a Competing Business as those he provided to Plaintiff while
employed with Plaintiff, or (ii) use or disclose ADP’s trade secrets. The
Restricted Territories are comprised of the zip code territories listed in
Exhibit A hereto, which are the territories Manchir supervised during his
last two years of employment with ADP. Competitive activities from which
Manchir is Page 717 prohibited include, but are not limited to, providing
services or supervising employees who are providing services for Paycor in
any of the zip codes listed in Exhibit A.
B. Directly or indirectly solicit or accept any business from any ADP
customer, any entity ADP had actively solicited in the two years prior to
-9-
Manchir’s resignation and/or any ADP customer about whom Manchir has
any trade secret information. This prohibition includes any “indirect”
solicitation or acceptance of business, such as Manchir supervising Paycor
employees who directly solicit ADP customers and/or Manchir accepting
commissions associated with sales to ADP customers.
C. Directly or indirectly engage, contract with, solicit, divert, appropriate or
accept any business from any business partner of ADP (such as CPA firms)
as set forth in Paragraph 4(b) of the parties’ Agreement.
D. Directly or indirectly, hire, solicit, recruit or encourage to leave ADP,
any current employees of ADP.
Manchir is also prohibited, at any time, from disclosing, using,
reproducing, distributing or otherwise disseminating ADP’s Confidential
Information (as defined in the parties’ Agreement) or trade secret
information.
Manchir filed a motion to stay enforcement of the judgment. In January 2017, the Trial
Court entered an order granting, upon posting of bond, Manchir’s motion to stay
enforcement of the judgment pending appeal. Manchir timely appealed to this Court.
Discussion
Although not stated exactly as such, Manchir raises the following issues on appeal.
1) whether the Trial Court erred in finding the Agreement enforceable under New Jersey
law; 2) whether the Trial Court erred in finding that Manchir breached the Agreement; 3)
whether the Trial Court erred in ordering specific performance of the Agreement; and, 4)
whether the Trial Court erred in awarding attorney’s fees and costs to ADP.
The material facts of this case are not in dispute. The parties agree substantially as
to what Manchir did, and the Agreement, obviously, says what it says. It is the legal
implication of the undisputed facts that is at issue. This case was disposed of by means
of summary judgment. As our Supreme Court has instructed regarding appellate review
of a trial court’s ruling on a motion for summary judgment:
Summary judgment is appropriate when “the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law.”
Tenn. R. Civ. P. 56.04. We review a trial court’s ruling on a motion for
summary judgment de novo, without a presumption of correctness. Bain v.
Wells, 936 S.W.2d 618, 622 (Tenn. 1997); see also Abshure v. Methodist
Healthcare–Memphis Hosp., 325 S.W.3d 98, 103 (Tenn. 2010). In doing
-10-
so, we make a fresh determination of whether the requirements of Rule 56
of the Tennessee Rules of Civil Procedure have been satisfied. Estate of
Brown, 402 S.W.3d 193, 198 (Tenn. 2013) (citing Hughes v. New Life Dev.
Corp., 387 S.W.3d 453, 471 (Tenn. 2012)).
***
[I]n Tennessee, as in the federal system, when the moving party does not
bear the burden of proof at trial, the moving party may satisfy its burden of
production either (1) by affirmatively negating an essential element of the
nonmoving party’s claim or (2) by demonstrating that the nonmoving
party’s evidence at the summary judgment stage is insufficient to establish
the nonmoving party’s claim or defense. We reiterate that a moving party
seeking summary judgment by attacking the nonmoving party’s evidence
must do more than make a conclusory assertion that summary judgment is
appropriate on this basis. Rather, Tennessee Rule 56.03 requires the
moving party to support its motion with “a separate concise statement of
material facts as to which the moving party contends there is no genuine
issue for trial.” Tenn. R. Civ. P. 56.03. “Each fact is to be set forth in a
separate, numbered paragraph and supported by a specific citation to the
record.” Id. When such a motion is made, any party opposing summary
judgment must file a response to each fact set forth by the movant in the
manner provided in Tennessee Rule 56.03. “[W]hen a motion for summary
judgment is made [and] . . . supported as provided in [Tennessee Rule 56],”
to survive summary judgment, the nonmoving party “may not rest upon the
mere allegations or denials of [its] pleading,” but must respond, and by
affidavits or one of the other means provided in Tennessee Rule 56, “set
forth specific facts” at the summary judgment stage “showing that there is a
genuine issue for trial.” Tenn. R. Civ. P. 56.06. The nonmoving party
“must do more than simply show that there is some metaphysical doubt as
to the material facts.” Matsushita Elec. Indus. Co., 475 U.S. at 586, 106 S.
Ct. 1348. The nonmoving party must demonstrate the existence of specific
facts in the record which could lead a rational trier of fact to find in favor of
the nonmoving party. If a summary judgment motion is filed before
adequate time for discovery has been provided, the nonmoving party may
seek a continuance to engage in additional discovery as provided in
Tennessee Rule 56.07. However, after adequate time for discovery has
been provided, summary judgment should be granted if the nonmoving
party’s evidence at the summary judgment stage is insufficient to establish
the existence of a genuine issue of material fact for trial. Tenn. R. Civ. P.
56.04, 56.06. The focus is on the evidence the nonmoving party comes
-11-
forward with at the summary judgment stage, not on hypothetical evidence
that theoretically could be adduced, despite the passage of discovery
deadlines, at a future trial.
Rye v. Women’s Care Cntr. of Memphis, MPLLC, 477 S.W.3d 235, 250, 264-65 (Tenn.
2015).
We first address whether the Trial Court erred in finding the Agreement
enforceable under New Jersey law, which both parties agree governs the Agreement.
New Jersey law concerning restrictive covenants was discussed in a recent federal case as
follows:
Restrictive covenants, such as the non-compete and non-solicitation
provisions in the Restrictive Agreement here, may be enforced. They must
be scrutinized closely, however, because they stifle free competition and
the individual’s right to exploit his skills and labor. A non-solicitation
provision is not valid if its sole purpose is to restrict competition, but it may
be valid to the extent it furthers some other legitimate goal of the employer.
See Solari Indus., Inc. v. Malady, 264 A.2d 53 (N.J. 1970); Whitmyer Bros.
v. Doyle, 274 A.2d 577 (N.J. 1971); see also A.T. Hudson & Co., Inc. v.
Donovan, 216 N.J. Super. 426, 432-34, 524 A.2d 412 (App. Div. 1987)
(analyzing a non-solicitation clause under Solari, and recognizing Solari as
“the seminal case”).
Under the approach of the Solari/Whitmyer line of cases, a non-
solicitation provision is enforceable to the extent it is reasonable under the
circumstances of the case. Karlin v. Weinberg, 390 A.2d 1161, 1166 (N.J.
1978). A non-compete will be found reasonable if it “(1) protects the
legitimate interests of the employer, (2) imposes no undue hardship on the
employee, and (3) is not injurious to the public.” Id. (numbering added;
internal quotations and citations omitted). See also The Community Hosp.
Grp., Inc. v. More, 869 A.2d 884, 897 (N.J. 2005) (citing Karlin).
Furthermore, New Jersey law authorizes the Court to modify, or “blue
pencil” a restrictive covenant to a reasonable “scope of activity” if it
crosses the line into unreasonableness. Kadi v. Massotto, No. A-2555-
O7T2, 2008 WL 4830951, at *8 (N.J. Super. Ct. App. Div. Nov. 10, 2008)
(internal quotation marks and citation omitted).
Saturn Wireless Consulting, LLC v. Aversa, Civ. No. 17-1637 (KM/JBC), 2017 WL
1538157, at *12 (D.N.J. April 26, 2017) (Footnote omitted).
-12-
Under the Solari test, our initial inquiry is whether the Agreement protects ADP’s
legitimate interests, which we answer in the affirmative. ADP had a legitimate interest in
protecting its relationships with customers. The lifeblood of ADP’s business, as well as
that of its competitor Paycor, is development and maintenance of customer relationships.
It is both legitimate and reasonable that ADP would wish to prevent, at least for a limited
time period, certain of its customers from being poached by an employee who just left for
a competitor.
We next consider whether the Agreement imposed an undue hardship on Manchir.
With respect to the non-compete and non-solicitation clauses, the Agreement is limited in
scope. Manchir is not prevented from engaging in his livelihood. Rather, he simply must
refrain from competing against ADP in a limited area or soliciting certain of its customers
for a year. As the Trial Court found, “there are large areas of Tennessee, southern
Kentucky, northern Georgia and Alabama that Defendant Manchir is responsible for in
his job with Paycor that do not overlap with his former ADP area.” The Trial Court
further reduced any hardship imposed by the Agreement by carving out the provision
requiring Manchir to refrain from soliciting prospective ADP customers. The
Agreement, so modified, poses no undue hardship to Manchir, who may continue to earn
his living in numerous other territories.
Finally, there is no evidence that the Agreement is injurious to the public. While
restrictive covenants are disfavored under New Jersey, they are not prohibited and will be
enforced if these required conditions are met. In the instant case, we believe the
Agreement is sufficiently tailored and narrow in scope to be enforceable, and is not
merely a restraint on general competition. We hold, as did the Trial Court, that the
Agreement is reasonable and enforceable under New Jersey law.
We next address whether the Trial Court erred in finding that Manchir breached
the Agreement. Manchir argues that he never solicited any ADP clients at Paycor and
that he never disclosed any ADP secrets. ADP argues that Manchir is competing against
it in contravention of the Agreement, even if indirectly, through his sales team. Manchir
directs and trains his sales team. Manchir is compensated for the work his sales team
performs. To adopt Manchir’s argument, he could direct, train, and supervise his team to
compete against ADP and solicit ADP customers, but so long as he is not in direct
contact with ADP customers, he is not in breach of the Agreement. We reject this
reasoning. The Agreement prohibits direct or indirect competition. Moreover, such an
interpretation as Manchir’s effectively would hollow out the Agreement, which he
entered into voluntarily in order to receive certain benefits provided him by the
Agreement, by insulating him from its terms while allowing his team to act on his behalf.
We hold, again as did the Trial Court, that Manchir breached the Agreement.
-13-
We next address whether the Trial Court erred in ordering specific performance of
the Agreement. Whether and when specific performance may be ordered under New
Jersey law has been discussed as follows:
In general, to establish a right to the remedy of specific performance,
a plaintiff must demonstrate that the contract in question is valid and
enforceable at law, Jackson v. Manasquan Sav. Bank, 271 N.J. Super. 136,
144 n. 8, 638 A.2d 165 (Law Div. 1993); 25 Williston, Contracts (Lord ed.,
2002), § 67:2 at 186, that the terms of the contract are “expressed in such
fashion that the court can determine, with reasonable certainty, the duties of
each party and the conditions under which performance is due,” Salvatore
v. Trace, 109 N.J. Super. 83, 90, 262 A.2d 409 (App. Div. 1969), aff’d o.b.,
55 N.J. 362, 262 A.2d 385 (1970); accord Barry M. Dechtman, Inc. v.
Sidpaul Corp., 89 N.J. 547, 552, 446 A.2d 518 (1982), and that an order
compelling performance of the contract will not be “harsh or oppressive,”
Stehr v. Sawyer, 40 N.J. 352, 357, 192 A.2d 569 (1963); Ridge Chevrolet-
Oldsmobile, Inc. v. Scarano, 238 N.J. Super. 149, 155, 569 A.2d 296 (App.
Div. 1990).
Marioni v. 94 Broadway, Inc., 374 N.J. Super. 588, 598-99 (App. Div. 2005)(Footnotes
omitted).
In the present case, damages are difficult to quantify with specificity. ADP
acknowledges that it cannot pinpoint instances where Manchir personally solicited ADP
customers or wrongly utilized confidential ADP information he possessed. However, the
record does establish that Manchir’s sales team, which he trains and directs, competes
with ADP and that Manchir receives a commission from their sales. Under these
circumstances, requiring Manchir to adhere to the Agreement for its prescribed duration
as relevant is a reasonable remedy.
Manchir asserts that ADP’s failure to seek a preliminary injunction is a tacit
concession that ADP did not suffer any damages. Indeed, a number of cases involving
restrictive covenants governed by New Jersey law reveal that preliminary injunctions
sometimes are sought in these matters. However, Manchir fails to establish that ADP
somehow was obligated to seek a preliminary injunction. Parties generally may not
dictate the legal strategies of their adversaries. Although this litigation has been fairly
protracted, there is no hint that ADP “sat” on its claim or otherwise tried to game the
judicial process. ADP’s decision not to seek a preliminary injunction did not preclude
them from pressing this action on to its ultimate resolution by summary judgment.
-14-
Specific performance would not be harsh or oppressive because Manchir can
continue to practice his livelihood in numerous other territories. In time, the non-
competition and non-solicitation clauses will expire, and Manchir can compete freely
with ADP. Meanwhile, Manchir must adhere to the Agreement, which he entered into
voluntarily with ADP in order to obtain restricted stock options. We affirm the Trial
Court in its order of specific performance.
The final issue we address is whether the Trial Court erred in awarding attorney’s
fees and costs to ADP. Manchir argues that “the award of attorneys’ fees to ADP should
be reversed because the summary judgment in favor of ADP should be reversed.” Since
we affirm the Trial Court’s grant of summary judgment to ADP, Manchir’s argument
fails. We affirm the Trial Court as to its award of attorney’s fees and costs to ADP, and
on all other issues.
Conclusion
The judgment of the Trial Court is affirmed, and this cause is remanded to the
Trial Court for collection of the costs below. The costs on appeal are assessed against the
Appellant, Eric Manchir, and his surety, if any.
____________________________________
D. MICHAEL SWINEY, CHIEF JUDGE
-15-