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UNISOURCE WORLDWIDE, INC. v. VALENTI

April 19, 2002

UNISOURCE WORLDWIDE, INC, PLAINTIFF,
V.
ANTHONY VALENTI, KATHLEEN VALENTI, JAY GREENGLASS, LINDA REMENSCHNEIDER, RENEE MARQUART, ANDRE GILLARD, JOHN BARROTTA AND MATRIX GROUP LTD., DEFENDANT. ANTHONY VALENTI, PLAINTIFF, V. UNISOURCE WORLDWIDE, INC., DEFENDANT.



The opinion of the court was delivered by: Wexler, District Judge.

  MEMORANDUM AND ORDER

These actions, filed under Docket Numbers CV01-6090 and CV 01-7157 arise out of the parties' business relationship in the sale and distribution of paper and protective packaging products. In November of 2001, Unisource moved, in action number 01-7157, for preliminary injunctive relief. That motion was referred to the Honorable William D. Wall, United States Magistrate Judge, for the purpose of conducting a hearing and issuing a report and recommendation.

The parties appeared before Magistrate Judge Wall and presented their respective positions on five separate hearing dates. Testimony was taken and documentary evidence was presented. Thereafter, the parties were given the opportunity to submit post-hearing memoranda.

Upon review of all of the evidence, Magistrate Judge Wall issued an extensive and detailed Report and Recommendation dated January 24, 2002 (the "R & R"). The R & R recommended that Unisource's motion for a preliminary injunction against Defendants Anthony Valenti, Kathleen Valenti and Matrix Group, Ltd be granted and that such injunctive relief be denied as to Jay Greengrass, Linda Remenschneider, Renee Marquart and John Barrotta.

The parties were given the opportunity to submit objections to the R & R and those objections are presently before the court.

The court has reviewed the R & R, the objections thereto and the submission seeking adoption of the R & R. Upon such review, the court adopts the R & R, which is published herewith, in its entirety.

The court is aware that there remain several claims for adjudication in this matter and is also aware that an appropriate scheduling order has been entered into with respect to those claims. As a final housekeeping matter, the court orders the Clerk of the Court to consolidate the cases filed under docket numbers CV 01-6190 and CV 01-7157 under the latter docket number.

SO ORDERED.

REPORT AND RECOMMENDATION

WALL, United States Magistrate Judge.

Before the court is the plaintiffs motion for a preliminary injunction referred to the undersigned by District Judge Leonard D. Wexler on November 11, 2001 for a report and recommendation. The parties appeared for a hearing on November 9, November 13, November 20, November 26 and November 27, 2001. At the close of the hearing the parties requested an opportunity to submit post-hearing memoranda. That request was granted and the parties were given until December 11, 2001 to submit post-hearing memoranda. The parties then requested additional time and that request was also granted.

Based on the plaintiffs memorandum of law in support of the motion, its reply memorandum, the affidavits of William E. Vita, plaintiffs counsel, John Keller, an Administrative Manager at Georgia-Pacific, Gary Melampy, the plaintiffs Director of Field Human Resources, Diane Nussbaum, the plaintiffs Director of Purchasing Supply Systems. Michael J. McKeever, a private investigator retained by the plaintiff, John Czarkowski, a Customer Service Manager at Georgia-Pacific, Jack Weilar, a former executive at the plaintiff corporation, Anthony and Kenneth Santare, private investigators retained by the plaintiff, Bryna Rugen, a paralegal employed by the plaintiffs counsel, and Nick Johannes, the plaintiff's Manager of Business Analysis, and the plaintiff's post-hearing memorandum, along with the defendants' memorandum of law in opposition, the affidavits of the defendants Kathleen Valenti, Jay Greengrass, John Barrotta, Andre Gillard*fn1, Renee Marquart, Linda Remenschneider, and Anthony Valenti, and the post-hearing memorandum in opposition of the defendants, Matrix Group, Ltd., Anthony Valenti and Kathleen Valenti (collectively referred to as the "Valenti defendants"), and the "Findings of Fact and Conclusions of Law" of the defendants, Jay Greengrass, Linda Remenscneider, Renee Marquart, Andre Gillard and John Barrotta (collectively referred to as the "employee defendants"), the testimony of all of the witnesses at the hearing, the oral arguments and the applicable law, the undersigned recommends that injunctive relief be granted against Anthony Valenti, Kathleen Valenti and Matrix Group, Ltd.

FACTS

The plaintiff, Unisource Worldwide, Inc., ("Unisource"), is a Delaware corporation that sells and distributes paper and protective packaging products. Vita Aff. at ¶ 8. In 1996, Unisource bought a company named Spero Wallach. Tr. 11/20 at 156. The defendant, Anthony Valenti was a shareholder and employee of Spero Wallach. Id. After the sale, Anthony Valenti remained employed by Unisource as an Executive Vice-President and salesman, until his suspension on October 26, 2001, pursuant to the terms of an Employment and Non-Competition Agreement ("the Employment Agreement"). Anthony Valenti Aff. at ¶¶ 1 and 8. The Agreement addressed, inter alia, the use by Anthony Valenti of confidential information, and included a restrictive covenant clause. It provided, in pertinent part:

E. Non-Competition Covenant. In consideration of Employee's employment hereunder and Unisources' obligations and other agreements contained herein, Employee hereby agrees that, during (i) the Employment Period under this Agreement (including any Renewal Period), (ii) during the initial Severance Period, if applicable, (iii) any continued employment after termination of this Agreement, and (iv) for a period equal to two (2) years after the latter of the date of termination of his employment with Unisource for any reason whatsoever or the expiration of any Initial Severance Period, Employee shall not, directly or indirectly, (either as principal, agent, employee, employer, investor for investments of no greater than 3% of the total outstanding shares in any publicly traded company in related businesses of Unisource's business), consultant, controlling stockholder, co-partner or in any other individual capacity whatsoever, (A) within New York City or within a 100 mile radius of New York City or within any other marketing area currently serviced by the Company, or within any other marketing areas which later come under Employee's supervision or responsibility as part of the SWC Division or Unisource, engage in or carry on in the business of selling and distributing industrial paper, packaging, food service, office service, and janitorial supplies that are similar to, competitive with, or currently sold by the Company or hereafter sold by the SWC Division or Unisource, or any related business, (B) solicit the business of any of the Company's or SWC Division's or Unisource's customers (including, but not limited to, present customers and any customers who become customers prior to the expiration of the restrictive covenant provisions set forth in this section) with respect to the products sold and services performed by the Company, the SWC Division, or Unisource, or (C) induce or encourage any employee in the above-described business to leave the SWC Division or Unisource.

Vita Aff. at Ex. G.

Anthony Valenti's employment is also governed by the terms of a Confidentiality and Patent Agreement ("the Confidentiality Agreement"), incorporated by reference into the Employment Agreement. It provided, in pertinent part:

2. Disclosure of Confidential Information. I shall not at any time during the term of my employment or thereafter, . . . use, publish, disclose or authorize anyone else to use, publish, or disclose any confidential information belonging to [Unisource, an Alco Standard Corporation company]. Confidential information includes, but is not limited to, models, drawings, memoranda and other materials, documents or records of a proprietary nature, information relating to research, finance, accounting, sales, personnel management and operations; and information particularly relating to customer lists, price lists, customer service requirements, costs of providing service and equipment, pricing, and equipment maintenance costs.

Id.

Meanwhile, in April 2001, Anthony Valenti's wife, the defendant Kathleen Valenti, met with the couple's accountant, Rochelle Nechin, and developed a business plan to set up a business identical to the business Anthony Valenti was engaged in on behalf of Unisource. Tr. 11/27, p. 14; Hearing Ex. DD. Following this meeting, the Valentis sought the advice of their lawyer, Mario Mikelinich, as to whether Mrs. Valenti's business would be in conflict with Mr. Valenti's obligations under his Employment Agreement. Tr. 11/27 at p. 112. Kathleen Valenti testified that "she was instructed at the meeting that as ...


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