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Speedmark Transportation, Inc v. Ray Mui

April 21, 2011

SPEEDMARK TRANSPORTATION, INC., PLAINTIFF,
v.
RAY MUI, JOE PHAN, TONY LIU & EVERGLORY LOGISTICS, INC., DEFENDANTS.



The opinion of the court was delivered by: Andrew J. Peck, United States Magistrate Judge:

OPINION AND ORDER

Plaintiff Speedmark Transportation, Inc. brings this action against defendants Ray Mui, Joe Phan, Tony Liu and Everglory Logistics, Inc., alleging that Mui, Phan and Liu breached their February 19, 2002 employment agreements by: (1) "taking and/or using Confidential Information from Speedmark for the benefit of themselves personally and/or Everglory"; (2) "soliciting or otherwise enticing employees and an independent contractor to resign or otherwise cease working for Speedmark" and work for Everglory; and (3) "soliciting or otherwise enticing Speedmark customers to discontinue their contractual relationships with Speedmark." (Dkt. No. 17: Am. Compl. ¶¶ 48, 54, 60.) Speedmark also asserts claims for (1) "Tortious Interference with Contracts" (Compl. ¶¶ 62-66); (2) "Breach of Covenant of Good Faith and Fair Dealing" (Compl. ¶¶ 67-70); (3) "Unfair Competition" (Compl. ¶¶ 71-77); and (4) "Breach of Fiduciary Duty" (Compl. ¶¶ 78-89).

Presently before the Court is defendants' motion to dismiss the amended complaint pursuant to Fed. R. Civ. P. 12(b)(6) or, in the alternative, for summary judgment pursuant to Fed. R. Civ. P. 56. (Dkt. No. 19: Defs. Notice of Motion.)*fn1 Defendants principal argument is that under New York's choice-of-law rules, the February 19, 2002 employment agreements are governed by Massachusetts substantive law which renders those agreements unenforceable. (See Dkt. No. 20: Defs. Br. at 7-12; Dkt. No. 35: Defs. Reply Br. at 6-8.) The parties have consented to decision of this case by a Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Dkt. No. 11.)

For the reasons set forth below, defendants' motion is DENIED.

FACTS

Speedmark is a "leading global provider of secure transportation services" with over "1,600 employees and operations throughout the United States, Europe, and Asia." (Dkt. No. 17: Am. Compl. ¶ 8.) Speedmark is incorporated in New York, its headquarters are in California and it has offices in New York City, Boston, Chicago, Seattle, Los Angeles and Dallas. (Am. Compl. ¶ 1.)

Defendants Mui, Phan and Liu each were longtime Speedmark employees. (Am. Compl. ¶¶ 2-4, 9-12, 21-22.) Mui, a Massachusetts resident, worked at Speedmark "for over fifteen years" and was the "Assistant General Manager of Speedmark's East Boston Office." (Am. Compl. ¶¶ 2, 10, 17, 21.) Mui was "directly involved with Speedmark's customers, contractors and agents," and "had access to all of Speedmark's pricing information." (Am. Compl. ¶ 17.) Phan, also a Massachusetts resident, worked for Speedmark for seventeen years and was the "General Manager of Speedmark's East Coast operations." (Am. Compl. ¶¶ 3, 11, 18.) Like Mui, Phan was "directly involved with Speedmark's customers," contractors and agents, and "had access to all of Speedmark's confidential pricing information." (Am. Compl. ¶ 18.) Although Phan was based at Speedmark's East Boston office, he "frequently worked in, and stayed in New York." (Am. Compl. ¶¶ 3, 18.)

Liu was the General Manager of Speedmark's Boston Office from March 1, 1988 until October 1, 1997. (Am. Compl. ¶ 12.) On October 1, 1997, Liu was promoted to "East Coast Regional Manager," oversaw the Boston and New York offices, and was based in Speedmark's Jamaica, New York office. (Am. Compl. ¶ 12.) On May 1, 2002, Liu "was transferred to Speedmark's Shanghai joint venture office." (Am. Compl. ¶ 12.) As the "most senior employee in Speedmark's joint venture office in Shanghai," Liu was "privy to Speedmark's Confidential Information regarding its customers, contractors and agents in Shanghai and throughout Asia, Europe and the United States, as well as Speedmark's confidential pricing information." (Am. Compl. ¶ 19.)

On February 19, 2002, Mui, Phan and Liu each signed employment agreements with Speedmark promising not to: (1) "disclose or use any Confidential Information for the profit of any other party than Speedmark" during or after the termination of employment;*fn2 (2) "take advantage of any business opportunity arising from the Confidential Information gained as a result of his employment by Speedmark" during or after the termination of employment; (3) "directly or indirectly solicit any Speedmark employee or service provider, including independent contractors, for twelve months after the termination of his employment"; or (4) "solicit, or attempt to solicit, directly or indirectly any Speedmark customer for twelve months after the termination of his employment." (Am. Compl. ¶¶ 13-15; see Employment Agreements § B(4)-(6).) The employment agreements contain a choice-of-law clause stating that the agreements "shall be governed by and construed in accordance with the laws of the State of New York." (Employment Agreements § B(11)(a).)

In August 2010, while still employed at Speedmark, "Mui and Phan, with participation and encouragement of Liu," created Everglory Logistics, an international freight forwarder that would compete directly with Speedmark. (Am. Compl. ¶¶ 24-27, 29.) Mui and Phan asked Jay Breda of Liteship International LLC, a Speedmark customer and agent, to help Everglory acquire the licenses necessary to begin operations. (Am. Compl. ¶ 28.) Mui and Phan told Breda "that they would withhold Speedmark's business from Liteship if Breda refused to assist them in setting up Everglory to compete against Speedmark." (Am. Compl. ¶ 28.) Breda acquiesced and Mui and Phan named him a director of Everglory. (Am. Compl. ¶ 28.) Everglory began doing business sometime before November 26, 2010. (Am. Compl. ¶ 28.)

On January 7, 2011, Liu resigned his position at Speedmark's Shanghai joint venture. (Am. Compl. ¶¶ 4, 22.) Shanghai General Manager Kevin Huang, Shanghai Ocean Freight Manager Ke-Lin Lai and Shanghai Customer Service Representatives Hai-Qin Wu and Wen-Jing Leng resigned the same day. (Am. Compl. ¶¶ 30-33.)*fn3 "Defendants solicited, induced, recruited, and/or encouraged [them] to resign." (Am. Compl. ¶¶ 30-33.)

On January 10, 2011, Mui and Phan resigned their positions at Speedmark's East Boston office. (Am. Compl. ¶¶ 2-3.) Shortly thereafter, several other Speedmark East Boston employees, including independent contractor Fred Juden (January 10), customer service representative Carrie Stahl (January 19) and Air Export Supervisor Eric Ru (January 24), also resigned. (Am. Compl. ¶¶ 35-37.) "Defendants solicited, induced, recruited and/or encouraged [them] to resign from Speedmark and to commence providing the same services to Everglory." (Am. Compl. ¶¶ 35-37.)

Following Mui and Phan's resignation from Speedmark, Phan and Mui solicited business from long-time Speedmark customers J.F. Moran Co. and F.A.F. (Am. Compl. ¶¶ 39-40.)

On February 1, 2011, Speedmark commenced this suit seeking, inter alia, temporary and permanent injunctive relief barring defendants' continued solicitation of Speedmark ...


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