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MCKAY v. COMMUNISPOND

October 28, 1983

RICHARD J. McKAY, Plaintiff, against COMMUNISPOND, INC., Defendant.


The opinion of the court was delivered by: CANNELLA

MEMORANDUM AND ORDER

CANNELLA, D.J.:

 Plaintiff's motion for a preliminary injunction is granted and his motion adjudging defendant in contempt is denied. Fed. R. Civ. P. 44, 65.

 Defendant's cross-motion for a preliminary injunction is granted in part and denied in part. Fed. R. Civ. P. 65.

 Both parties' requests for attorneys' fees are denied.

 BACKGROUND

 Plaintiff commenced this action premised on diversity jurisdiction, seeking to enjoin defendant Communispond, Inc. ["Communispond"] from interfering with his right to pursue his career as an instructor in the communications field. Shortly thereafter, plaintiff sought a temporary restraining order to prevent Communispond and its employees from further interfering with plaintiff's career. After some discussion, both parties agreed to the entry of a restraining order which in part provides that neither party discuss the existence or content of the Order. Order, 83 Civ. 2731 (JMC) (S.D.N.Y. Apr. 26, 1983) [hereinafter "April 26 Order"].

 Defendant cross-moves to enjoin plaintiff from violating a covenant not to compete; engaging in unfair trade practices; breaching a duty of confidentiality; and using or disclosing trade secrets. Defendant claims that its interference with plaintiff's career is warranted because he violated a covenant not to compete. Plaintiff, in response, contends that he neither signed an agreement with a covenant not to compete nor disclosed any trade secrets.

 Plaintiff also seeks an order adjudging Communispond in contempt because it allegedly disclosed the existence of this action to a prospective client of plaintiff. On July 15, 1983, the Court conducted a hearing on plaintiff's contempt motion. This Memorandum and Order sets forth the Court's findings of fact and conclusions of law with respect to the above-mentioned motions.

 FACTS

 Since 1969, Communispond has offered programs for business executives to enhance their presentation skills. Today, the basic program consists of three stages: "benchmark," "eye/brain control" and "energy release." Other integral parts of defendant's core program include the use of "ideographs" or pictures, modules and question-and-answer sessions. Although Communispond continually revises its more specific programs which are designed for the needs of particular clients, it has retained the core program which includes benchmark, eye/brain control and energy release. Kevin Daley, co-founder and president of Communispond, contends that Communispond's program "together with the special sequence of our modules and our techniques of teaching constitute our trade secrets." *fn1" The programs are taught throughout the world by sixty instructors trained by Communispond, one of whom was McKay.

 Because Communispond considers its program a trade secret, employees are apprised of this fact through seminars conducted by its general counsel. Furthermore, each employee is required to sign an employment contract which contains a covenant not to compete for three years after the employee leaves Communispond and which forbids disclosure of confidential information of trade secrets. *fn2"

 Plaintiff worked for defendant from April 1, 1978 through September 17, 1982 until he voluntarily left and started his own company which competes with defendant. Plaintiff alleges that he did not solicit Communispond's clients until after his termination when he sent announcements to 250 prospective clients, including some of defendant's. Plaintiff is the only full-time employee of his company. Three individuals, however, work on a part-time basis.

 Plaintiff began working for Communispond as an instructor and was a vice-president when he terminated his employment. Plaintiff acknowledges that Communispond regarded its sequential program and teaching methods as trade secrets. Plaintiff also admits he attended annual seminars which informed employees of their obligation to preserve any confidentialities of Communispond pursuant to their employment agreements. Plaintiff alleges that other competitors -- including former employees of defendant -- also offer similar programs to those of defendant.

 On December 20, 1982, Fiduciary Trust Company ["Fiduciary"], a client of defendant, expressed interest in having plaintiff conduct seminars for its employees. Fiduciary decided to use plaintiff's program because it was similar to but less expensive than defendant's. Through written and telephonic communications, plaintiff and Fiduciary agreed upon the dates and locations for seminars.

 On February 18, 1983, Edward Fuller, senior vice-president and part-owner of Communispond, advised Fiduciary that plaintiff was contractually obligated not to compete with defendant. On February 23, 1983, Barbara Marcin of Fiduciary allegedly informed plaintiff that Fiduciary was no longer interested in retaining his services based on communications with defendant. On February 24, 1983, a settlement of the instant dispute was discussed. Unfortunately, the parties were unable to ...


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