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DATA COMMUN., INC. v. DIRMEYER

January 29, 1981

DATA COMMUNICATION, INC., Plaintiff,
v.
Robert P. DIRMEYER and McFann-Grey & Associates, Inc., Defendants



The opinion of the court was delivered by: COSTANTINO

MEMORANDUM OF DECISION AND ORDER

In the instant motion, the plaintiff Data Communication, Inc. ("Datacom") requests a preliminary injunction enjoining the continued retention of the defendant Robert P. Dirmeyer ("Dirmeyer") by the defendant McFann-Gray & Associates, Inc. ("MGA"), allegedly in violation of the restrictive covenant in Dirmeyer's employment agreement with Datacom. The two defendants have opposed the motion and the defendant MGA has cross-moved to dismiss for lack of personal jurisdiction. For reasons set forth below, Datacom's motion is denied and MGA's motion to dismiss for want of in personam jurisdiction is granted.

BACKGROUND

 Datacom is a New York corporation engaged in the fields of technical publications and technical training which obtains the majority of its contracts through public bidding. The defendant MGA, a California corporation, is a management consulting company dealing basically in the behavioral sciences. Its work focuses mainly on the individual and the organization in an attempt to increase the competence and the productivity of employees. MGA acquires much of its work through private contracts, and like Datacom, a portion is obtained from public bids.

 Since January 1, 1978, the defendant Dirmeyer has been employed by Datacom as a Vice-President in Charge of the Performance Systems Engineering Division; as such, he developed and produced training materials to complement the basic technical documentation already manufactured by Datacom. These training materials customarily involved the "formulation of lessons which, using the technical documentation and the actual equipment as principal resources, (were) designed to teach the individual on a step by step basis how to perform various tasks using the equipment." (Dirmeyer Aff. September 4, 1980 at p. 4.) On 20 July 1980, Dirmeyer voluntarily terminated his employment with Datacom, and within weeks, he was hired by MGA.

 Datacom's fundamental charge is that since MGA is a competitor, Dirmeyer's employment with MGA violates the restrictive covenant in the Dirmeyer-Datacom employment agreement which provides in pertinent part that:

 
For a period of six (6) months after the termination by Dirmeyer of this Agreement ..., Dirmeyer will not directly or indirectly own, manage, operate, control or be employed by, participate in, or be in any manner connected with the ownership management, operation and control of any business in competition with Datacom or any affiliated corporation at the time of such termination. (emphasis supplied)

 In addition, Datacom charges that Dirmeyer was induced to breach the restrictive covenant by MGA's tortious conduct. *fn1" Datacom argues that by virtue of this covenant and the facts in the instant matter, the issuance of an injunction is essential to prevent irreparable injury in that Dirmeyer is in possession of vital proprietary and confidential information which he will or has disclosed to MGA, Datacom's competitor. *fn2"

 The defendants counter by contending that the restrictive covenant is inapplicable in that MGA operates solely in the behavioral science sphere, does not produce training programs, texts, and manuals, and is therefore not in competition with Datacom. To demonstrate this lack of competition, the defendants assert that during Dirmeyer's tenure with Datacom, Datacom submitted approximately 26 proposals and MGA 64, but in only one project of a possible 90, DABT 60-80-R-0023, did the two submit competitive bids. *fn3" Moreover, Dirmeyer, as a former Army officer, was retained by MGA to work solely on a project obtained on a non-competitive basis from the Department of Defense. This project, designed to compare the vocational aptitude scores of military recruits with skill qualification tests taken after the soldiers are trained, does not involve any aspect of the technical publications field and thus, defendants conclude, Dirmeyer is not acting in a capacity which could enable him to injure Datacom. Finally, both defendants argue that the unlimited scope of the restrictive covenant renders it unenforceable; but if this court should rule otherwise, the defendants contend that the preliminary injunction motion should be denied on the merits since Dirmeyer's current employment with MGA is not causing and will not cause Datacom to suffer irreparable injury.

 CONCLUSIONS OF LAW

 Before addressing the merits of MGA's jurisdiction motion, the questions concerning the applicability of the restrictive covenant to the instant facts deserve discussion. As noted above, the defendants have maintained throughout that MGA and Datacom are not competitors and as a result Dirmeyer's employment with MGA falls outside the purview of the restrictive covenant. Although the parties do not appear to be in constant, daily competition, they nonetheless were in competition in at least one instance, the DABT 60-80-R-0023 contract. Even though MGA failed to obtain this contract, fact issues remain concerning the competitive nature of Datacom's and MGA's respective businesses, and whether the defendants' acts gave rise to an actionable wrong. While the circumstances as set forth might be insufficient to establish ultimate liability or might not even withstand scrutiny in a summary judgment motion, they are clearly sufficient to sustain jurisdiction as it appears that MGA and Datacom are competitors and that a tort has in fact been committed. See Sybron Corp. v. Wetzel, 46 N.Y.2d 197, 207, 413 N.Y.S.2d 127, 385 N.E.2d 1055 (1978); Longines-Wittnauer Co. v. Barnes & Reinecke, 15 N.Y.2d 443, 460, 261 N.Y.S.2d 8, 209 N.E.2d 68 (1965); Evans v. Planned Parenthood, 43 A.D.2d 996, 997, 352 N.Y.S.2d 257 (3d Dep't 1974).

 Nonetheless, the action against MGA must be dismissed because Datacom has failed to meet any statutory bases under New York law for obtaining personal jurisdiction over MGA, a California corporation, not authorized to do business in New York, and not maintaining offices, employees, or agents in New York. Under New York's "long-arm" statute, N.Y.C.P.L.R. 302, Datacom asserts two bases for sustaining jurisdiction over the person of MGA: (1) that MGA transacted business with Dirmeyer within New York, N.Y.C.P.L.R. 302(a)(1); and (2) that MGA's tortious act committed outside New York caused injury to Datacom within the State and that MGA, a company deriving substantial revenue from interstate commerce, expected or should have expected the act to have consequences in New York. N.Y.C.P.L.R. 302(a)(3)(ii).

 With regard to jurisdiction based on Section 302(a)(1) "transaction of business," Datacom asserts upon information and belief that MGA conducted "substantial negotiations" with Dirmeyer in New York prior to his employment. (Platt Aff. September 15, 1980 at p. 11.) One of MGA's interviewing officers maintains, however, that the discussions took place in California and Virginia, not New York. (Greenberg Aff. November 24, 1980). While this court might be inclined to sustain jurisdiction were Datacom able to demonstrate that the defendants discussed business in New York, see Rosenfeld, Inc. v. Himar Sales Corp., 460 F. Supp. 640 (S.D.N.Y.1978); Xedit Corp. v. Harvel Industries Corp., 456 F. Supp. 725 (S.D.N.Y.1978), Datacom's inability to place any of the negotiations in New York mandates a denial of jurisdiction on the basis of Section 302(a)(1).

 Datacom's second jurisdiction basis is N.Y.C.P.L.R. 302(a)(3)(ii) in that MGA allegedly committed a tortious act outside New York which caused injury to Datacom in New York. Assuming that a tort was committed, there still remains the question ...


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