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Veramark Technologies Inc. v. Bouk

United States District Court, W.D. New York

April 2, 2014

VERAMARK TECHNOLOGIES, INC., CALERO SOFTWARE, LLC, Plaintiffs,
v.
JOSHUA B. BOUK, CASS INFORMATION SYSTEMS, INC., Defendants

Page 396

For Veramark Technologies, Inc., Calero Software, LLC, Plaintiffs: Jennifer M. Bogue, LEAD ATTORNEY, PRO HAC VICE, Cooley LLP, San Diego, CA; Seth Alan Rafkin, LEAD ATTORNEY, Cooley LLP, New York, NY.

For Joshua B. Bouk, Defendant: Steven E. Cole, LEAD ATTORNEY, Leclair Korona Giordano Cole LLP, Rochester, NY.

For Cass Information Systems, Inc., Defendant: Aaron Warshaw, LEAD ATTORNEY, Ogletree Deakins Nash Smoak & Stewart, PC, New York, NY; William M. Lawson, LEAD ATTORNEY, PRO HAC VICE, McMahon, Berger, Hanna, Linihan, Cody & McCarthy, St. Louis, MO.

Page 397

DECISION AND ORDER

ELIZABETH A. WOLFORD, United States District Judge.

INTRODUCTION

Plaintiffs Veramark Technologies, Inc. (" Veramark" ) and Calero Software, LLC (" Calero" ) have sued a former employee, defendant Joshua Bouk, and his new employer, defendant Cass Information Systems, Inc. (" Cass" ), alleging breach of an employment agreement signed by Mr. Bouk and tortious interference with that agreement by Cass. (Dkt. 1-1). Plaintiffs seek a preliminary injunction to prevent Mr. Bouk from " accepting or commencing employment with, or otherwise providing services to, Cass" and they similarly seek to preliminarily enjoin Cass from employing Mr. Bouk. (Dkt. 4 at 1). Because Plaintiffs have not met the standard for granting a preliminary injunction, the Court denies the requested relief.

Page 398

FACTUAL BACKGROUND

Mr. Bouk began his employment with Veramark on March 3, 2008, as Vice President of Customer Services. (Dkt. 13-1 at ¶ 3). Veramark is a provider of Telecom Expense Management software and services, which means that it " helps businesses manage the lifecycle of communications expenses across diverse business units, geographies, etc." (Dkt. 4-2 at ¶ 2). Veramark subsequently became a wholly owned subsidiary of plaintiff Calero, which was formed in 2013. (Dkt. 1-1 at ¶ 2; Dkt. 4-2 at ¶ 1).

Mr. Bouk ultimately held the position of Veramark's Vice President of Sales. (Dkt. 4-2 at ¶ 5).[1] According to Plaintiffs, Mr. Bouk was Veramark's highest ranking sales executive, serving as Veramark's " senior-most executive point of contact with key customers and channel partners. . . ." ( Id. at ¶ 5). Mr. Bouk's base salary exceeded $157,000 and he also received " substantial commission and bonus compensation, Restricted Stock Awards, stock options and other employee benefits." ( Id. at ¶ 8).

Shortly before commencing his employment, Mr. Bouk entered into an Employment Agreement with Veramark dated January 25, 2008 (" the Agreement" ). ( Id. at ¶ 3; Dkt. 4-3 at 6-15). The Agreement, which is governed by New York law ( id. at ¶ 6(c)), contains various provisions with respect to post-employment conduct by Mr. Bouk. Specifically, Mr. Bouk agreed not to use or disclose information defined as " Confidential" under the terms of the Agreement, and to return all such information upon termination of his employment. (Dkt. 4-3 at ¶ ¶ 7(a) & (b)). Mr. Bouk also agreed that for 12 months following the termination of his employment, he would not compete with Veramark ( id. at ¶ 7(c)), he would not solicit Veramark employees ( id. at ¶ 7(d)), and he would not solicit Veramark customers. ( Id. at ¶ 7(e)). Specifically, the Agreement has the following restrictive covenants:[2]

Paragraph 7(c) -- The " Non-Compete" Provision
[Mr. Bouk] shall not engage . . . in competition with, or directly or indirectly, perform services . . . for . . . any enterprise that engages in competition with the business conducted by [Veramark] or by any of its affiliates, anywhere in the world.

(Dkt. 4-3 at ¶ 7(c)).

Paragraph 7(d) -- The " Non-Solicitation of Employees" Provision
[Mr. Bouk] shall not, directly or indirectly, solicit for employment, offer employment to, or employ . . . any employee or consultant of [Veramark] or any of its affiliates. . . .

(Dkt. 4-3 at ¶ 7(d)).

Paragraph 7(e) -- The " Non-Solicitation of Customers" Provision
[Mr. Bouk] shall not, directly or indirectly, solicit, raid, entice or otherwise induce any customer and/or supplier of

Page 399

[Veramark] or any of its affiliates to cease doing business with [Veramark] or any of its affiliates or to do business with a competitor with respect to products and/or services that are competitive with the products and/or services of [Veramark] or any of its affiliates.

(Dkt. 4-3 at ¶ 7(e)).

On or about January 17, 2014, Mr. Bouk notified Plaintiffs of his intention to resign his employment, providing 30 days' notice pursuant to the terms of the Agreement. (Dkt. 4-4). In his resignation letter, Mr. Bouk advised that he had accepted a position with Cass, but he would " honor" his " commitment to Veramark to not solicit or approach any Veramark customers or employees during the coming year." ( Id. ). Plaintiffs allege that prior to receiving this notice, they offered to increase Mr. Bouk's annual compensation to in excess of $290,000, and that after receiving his resignation, they offered a further increase to more than $350,000 annually. (Dkt. 4-2 at ¶ 8). Mr. Bouk disputes Plaintiffs' claims, instead contending that his position with Veramark was insecure after the change in ownership involving Calero, and that it was only after he announced his resignation that Plaintiffs orally offered to increase his salary. (Dkt. 13-1 at ¶ ¶ 9, 15).

Mr. Bouk contends that he was told that his last day of employment with Veramark would be January 31, 2014, and therefore Mr. Bouk began his employment with Cass on February 3, 2014. (Dkt. 13-1 at ¶ ¶ 27, 28). According to Plaintiffs, Mr. Bouk was paid through the 30-day notice period (i.e. until February 16, 2014), although he was not required to be at the office during that entire time period. (Dkt. 17 at ¶ 2). Plaintiffs explain that it was not until Defendants submitted their papers in opposition ...


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