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LEGAL SEA FOODS v. STEPHEN CAUSE AND B R GUEST

August 19, 2003

LEGAL SEA FOODS, INC., PLAINTIFF,
v.
STEPHEN CAUSE AND B R GUEST, INC., DEFENDANTS



The opinion of the court was delivered by: Harold Baer, Jr., District Judge

OPINION & ORDER

Plaintiff Legal Sea Foods, Inc. ("LSF") moves by order to show cause for a preliminary injunction to enforce a non-compete agreement which defendant Stephen Calise ("Calise") signed and to enjoin him from working at one of defendant B R Guest's restaurant. LSF's lawsuit raises four causes of action: 1) breach of contract against Cause, 2) misappropriation of trade secrets against Calise and B R Guest, 3) unfair competition against Calise and B R Guest, and 4) tortious or intentional interference with contractual relations by B R Guest. Plaintiffs misappropriation-of-trade-secrets claim seeks preliminary and permanent injunctive relief; the other three claims seek preliminary and permanent injunctive relief or, alternatively, damages to be determined at trial. The parties submitted pre — and post-trial hearing briefs and the matter is ripe for resolution on the merits and if appropriate the issuance of a permanent injunction. For the following reasons, Legal Sea Foods motion is denied and judgment is entered in favor of the defendants.

I. BACKGROUND

LSF is a family-owned corporation that operates twenty-eight restaurants, including four restaurants within fifty miles of New York City. See Cartwright Aff. ¶ 4. On April 15, 1998, LSF offered the defendant Calise a position as kitchen-manager-in-training in its restaurant in Burlington, Massachusetts.*fn1 See Cartwright Aff. ¶¶ 19. At the end of his training which lasted [ Page 2]

several weeks, Calise was promoted to kitchen manager. See Cartwright Aff. ¶¶ 23-24; Calise Dep. 79-85. Calise eventually was promoted to chef and in October 2000 was transferred to the LSF restaurant in Paramus, New Jersey, where he remained until May 31, 2003. LSF's restaurant in Paramus is LSF's closest to New York City and is approximately seventeen miles from Blue Water Grill, the B R Guest restaurant at the center of this dispute.*fn2 See Cartwright Aff. ¶ 37. In addition to his responsibilities as the chef at Paramus, Calise frequently did demonstrations at stores such as Bloomingdale's and Chef Central and also appeared on several television programs. See Calise Dep. 191. Cause's base salary at LSF was $63,200 and in 2002 he earned bonuses of approximately $12,000. See Calise Dep. 193, 195.

LSF contends that its success in the highly competitive seafood-restaurant business is a result of the quality and consistency of its seafood, which in turn depends in its carefully developed recipes and techniques for safe-food handling. See Cartwright Aff. ¶¶ 5-13; Martinello Aff. ¶ 6; Tr. 136. LSF notes that its restaurants are frequently honored; for example, several of its restaurants, including the one in Paramus, have received Wine Spectator magazine's Award of Excellence. See Tr. 50-52; PI. Ex. 1. LSF operates a commissary where its seafood is sent to be "butchered" before it is transported by truck or by airplane to its restaurants. See Tr. 161-62. Because the interval between when LSF acquires its seafood to when it is consumed by its customers is approximately four to six days, LSF developed and maintains something called "Hazard Analysis and Critical Control Point" ("HACCP"), which is a plan for food services and seafood-processing, to safeguard the quality of its product. See Tr. 131; Martinello Aff. ¶ 6. This HAACP plan features "proprietary food processing and operations systems; advanced safety and quality control techniques; processes for handling and preparing seafood `from boat to plate;' state-of-the-art safety and sanitation processes, techniques and equipment developed by LSF at great effort and expense; and specialized machinery to prevent contamination of seafood and ensure the safety and consistency of food." See Martinello Aff. ¶ 6. LSF claims that its HACCP goes beyond what is required by the U.S. Food and Drug Administration and the U.S. Division of Marine Fisheries or the New York City health code.*fn3 See Martinello Aff. ¶ 7; Tr. 139-40. [ Page 3]

Because LSF considers certain recipes and some of the specific techniques and processes of its HACCP plan to be proprietary and confidential, it requires certain managerial employees to sign a document entitled "Information and Non-Competition Agreement Confidential/Proprietary" ("the Non-Compete Agreement"). See Cartwright Aff. ¶¶ 17, 22. On May 4, 1998, the day Calise started his training program with LSF, he signed the Non-Compete Agreement. Article IV of the Non-Compete Agreement provided that Calise agreed, inter alia, not to work in a restaurant in which seafood comprises at least fifty percent of the entrees or* main menu within a fifty-mile radius of any existing or planned LSF restaurant for one year after the termination of his employment with LSF. (Although a letter to Calise dated April 15, 1998 which confirmed LSF's offer of employment indicated that the Non-Compete Agreement was enclosed and advised him to review it, Calise testified that it was not and that he was not provided a copy in advance and was given only a brief opportunity to review the document. See Calise Dep. 110.) In April 2003, LSF circulated to its key managerial employees a new non-disclosure and non-compete agreement to replace the earlier version — i.e., the one that Calise signed in 1998. Calise did not sign the new agreement.

In February or March 2003, B R Guest, which owns and operates several well-known and highly-regarded restaurants in New York City, ran a classified ad in the New York Times for a chef position at a three-star Italian restaurant.*fn4 Calise responded to this ad. See Calise Dep. 103-105. Bret Reichler, B R Guest's executive corporate chef and its 30(b)(6) witness, stated that B R Guest probably would not have hired Calise if it had known he had signed the Non-Compete Agreement with LSF. See Reichler Dep. 61. On May 27, 2003, B R Guest formally offered Calise a position as a sous chef at a salary of $65,000 per year.*fn5 See Reichler Dep. 90.

Calise had on May 8, 2003 submitted his resignation to LSF. See Cartwright Aff. ¶ 32. LSF became aware of Calise's intent to leave when B R Guest sought a reference from LSF's human resources department, which in turn informed Cartwright. See Tr. 53. 87. Richard [ Page 4]

Vellante, LSF's executive chef, spoke with him about his obligations under the Non-Compete Agreement and that LSF intended to enforce its terms. See Tr. 54. According to Reichler, the decision to place Calise at Blue Water Grill was made in late June, because a sous chef at Blue Water Grill was needed to replace the executive chef at another restaurant who had given his notice. See Reichler Dep. 72-73. Calise's responsibilities as sous chef at Blue Water Grill include preparation of the menu items and sauces, management of the cooks and runners, and closing procedures. See Calise Dep. 212, 214, 239, 246.

On June 3, 2003, LSF's counsel wrote Calise a letter and sent a copy to B R Guest about Calise's obligations under the Non-Compete Agreement. Reichler and B R Guest's other executive corporate chef discussed among themselves and with counsel the possibility of moving Calise to a restaurant that did not predominantly serve seafood, but concluded that the restaurants were so different and the need so immediate that they went ahead with placement at the Blue Water Grill. On July 2, 2003, LSF commenced the instant action, which included a request for a temporary restraining order. On that same day, I denied LSF's TRO but authorized expedited discovery and set a date for a hearing on LSF's motion for a preliminary injunction. Defendant submitted its answering papers on July 11 and plaintiff its reply on July 17. In addition to the exchange of documents between the parties, LSF took the deposition of Calise and of Bret Reichler, one of B R Guest's corporate executive chefs. An evidentiary hearing was held on July 17 and continued on July 22. LSF called three witnesses. The parties then submitted post-hearing briefs. Based on the fullness of the record presented, it is appropriate that this matter, which started as an effort for preliminary relief be decided on the merits — i.e., whether a permanent injunction is merited. See Ticor Title Insurance Co. v. Cohen, 173 F.3d 63, 67-68 (2d Cir. 1999) (affirming district court's grant of a permanent injunction after it had granted expedited discovery and held an evidentiary hearing).

II. DISCUSSION

LSF seeks an injunction to prevent Calise from working in the Blue Water Grill or any other of B R Guest's seafood restaurants for one year, per the terms of the Non-Compete Agreement he signed on May 4, 1998. The Non-Competition Agreement provides that Massachusetts law applies, and the enforceability of this Non-Compete Agreement is determined accordingly. See Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd., 230 F.3d 549, 556 (2d Cir. 2000) ("New York law is clear in cases involving a ...


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