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Uni-World Capital, L.P. v. Preferred Fragrance, Inc.

United States District Court, S.D. New York

July 10, 2014

UNI-WORLD CAPITAL L.P., UNI-WORLD CAPITAL AIV, L.P, FRAGRANCE HOLDINGS, LLC and FRAGRANCE ACQUISITIONS, LLC, Plaintiffs,
v.
PREFERRED FRAGRANCE, INC., HARRY POLATSEK, EZRIEL POLATSEK, SARAH POLATSEK, SOLOMON TYRNAUER, BENT PHILIPSON, BENJAMIN LANDA, and JOSEPH RUBINSTEIN, Defendants

Page 210

For Uni-World Capital, L.P., Uni-World Capital AIV, L.P., Fragrance Holdings LLC, Fragrance Acquisitions, LLC, Plaintiffs: Jonathan Lee Hochman, Karen Marie Steel, Schindler Cohen & Hochman, New York, NY.

For Preferred Fragrance, Inc., Harry Polatsek, Ezriel Polatsek, Sarah Polatsek, Defendants: Christopher Edward Buckey, Emily Perks Quinlan, Whiteman Osterman & Hanna L.L.P., Albany, NY; James Sottile, IV, Noah David Solowiejczyk, Zuckerman Spaeder LLP, New York, NY; Paul Lewis Shechtman, Zuckerman, Spaeder LLP(NYC), New York, NY.

For Bent Philipson, Benjamin Landa, Joseph Rubenstein, Defendants: Brett D. Dockwell, Yehuda David Scharf, Morrison Cohen, LLP(909 Third Ave.), New York, NY.

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OPINION & ORDER

Paul A. Engelmayer, United States District Judge

This litigation, presently in mid-discovery, involves claims arising out of plaintiffs' acquisition of an imitation-fragrance business. Plaintiffs claim, inter alia, that they purchased that business based on misrepresentations from defendants. Pending before the Court now is a motion by plaintiffs for a preliminary injunction to prevent defendant Ezriel Polatsek from competing with the business they acquired from him. The Court finds that Polatsek, in violation of two binding non-compete agreements, has competed with plaintiffs' business and that, absent an injunction, he is likely to continue to do so. Accordingly, and for the reasons that follow, that motion is granted.

I. Background to the Present Motion

Ezriel Polatsek (hereinafter, " Ezriel" )[1] was the founder and CEO of Preferred Fragrance, Inc. (" Preferred Fragrance" ), which sells imitation perfumes. In October 2011, Ezriel and his fellow stockholders sold Preferred Fragrance to plaintiffs. As part of that transaction, Ezriel became president and chief operating officer of the new company, Fragrance Acquisitions, LLC (" Fragrance Acquisitions" ), and he signed a pair of non-compete agreements. In October 2013, Fragrance Acquisitions fired Ezriel. Plaintiffs then brought this action. They alleged, inter alia, fraud in connection with the sale of the company. Relevant here, they also alleged that Ezriel had violated his non-compete agreements by engaging in the fragrance business in connection with two entities, Exceed LLC (" Exceed" ) and Ouleaf, that competed with plaintiffs' business.

On March 3, 2014, plaintiffs applied for a temporary restraining order and preliminary injunction to prevent Ezriel from violating the non-compete agreements. See Dkt. 52. They did so based on limited documentary evidence, including an email chain errantly sent to Ezriel at Fragrance Acquisitions that seemed to indicate that he was aiding a competitor. The email chain concerned a fragrance-related project that Ezriel and Exceed had evidently entered into with a modeling company, Wilhelmina; plaintiffs also adduced evidence that Ezriel later attended a Wilhelmina meeting on February 28, 2014.

On March 14, 2014, after briefing, the Court issued an opinion from the bench,

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denying the motion without prejudice, on the grounds that plaintiffs' evidence, although suggesting that Ezriel might be violating the non-compete agreements, was not strong enough to prove that so as to show a likelihood of success on the merits. Dkt. 101. The Court, accordingly, set a schedule for expedited discovery with regard to the issue of whether Ezriel had violated the non-compete agreements, and granted plaintiffs leave to renew their motion for a preliminary injunction if such discovery strengthened their claims. Id.; see also Dkt. 68 (order incorporating by reference Court's opinion from the bench).

On May 1, 2014, after expedited discovery had been taken, plaintiffs renewed their motion for a preliminary injunction. Dkt. 113. On May 22, 2014, after briefing, the Court heard argument. Dkt. 137. Although plaintiffs' documentary evidence was substantially stronger than earlier, the Court stated that, in the interest of reliably resolving the motion, it would benefit substantially from hearing live testimony by Ezriel and his brother, Abraham Polatsek (hereinafter, " Abraham" ). Id. Plaintiffs allege that Ezriel assisted Abraham, a former Preferred Fragrance employee, in competing fragrance ventures at Exceed and Ouleaf.

The Court heard live testimony from Ezriel (on June 11, June 26, and June 30, 2014), and live testimony from Abraham (on June 30, 2014). The Court also received substantial documentary evidence at these hearings.[2]

II. The Court's Findings of Fact

The following are the Court's findings of fact. The Court's conclusions of law follow. As noted, the evidence, documentary and testimonial, is compelling that Ezriel has violated his non-compete agreements, on a number of occasions and in connection with multiple competing or potentially competing entities. As noted infra, the Court finds that the testimony of both Ezriel and Abraham was, on various points, not credible. In so finding, the Court has been mindful that English is the brothers' second language,[3] and that latitude is properly given them to reflect the alien nature of formal interrogation in a second language by an adversary in a deposition or in court. But even giving a wide berth for innocent error, enough of the brothers' testimony was so substantially impeached--including by documentary proof or other testimony, and at points by its inherent illogic--that the Court is constrained to conclude that Ezriel and Abraham at points gave knowingly untruthful testimony to the Court. These adverse credibility findings contributed to the Court's determination that Ezriel has violated the non-compete agreement and that there is a substantial likelihood that he will continue to do so absent a preliminary injunction.

A. Preferred Fragrance

In or around 2000, Ezriel and his wife started the perfume business that became Preferred Fragrance. Tr. 7, 9; Dkt. 55 (" Palmer Aff." ) ¶ 4. Initially, the business was small and was based in the Polatseks'

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home. Tr. 7, 9. Ezriel later came across technology that would allow him to reverse-engineer the chemical composition of perfumes; Preferred Fragrance began creating and selling " designer-inspired," or imitation, perfumes, i.e., perfumes with smells akin to, and names reminiscent of, designer perfumes. Tr. 7-8.

Preferred Fragrance began to grow rapidly, at a rate of 30 to 40 percent per year. Tr. 12. The number of employees increased every year such that, in 2011, when Ezriel sold the business, it employed 20 people in the office and in sales, and 40-70 people in the warehouse. Tr. 10. The employees included Ezriel's father, Harry, who was chief financial officer; his brother Abraham, who managed the warehouse; his brother-in-law, who worked in the warehouse; and two cousins, who worked in customs clearance and in purchasing, respectively. Tr. 11; Palmer Aff. ¶ 4. The perfume bottles were filled by JP Filling, a company owned by Ezriel's brother Joel; Ezriel put Joel in business. Tr. 10-11.

As Preferred Fragrance grew, it became too large and complicated for Ezriel and his wife to manage. Tr. 12. Ezriel reached out to a broker to find a buyer. Tr. 12. In early 2010, plaintiffs expressed interest. Tr. 13-14.

On October 11, 2011, plaintiffs purchased the assets and business of Preferred Fragrance for $24.5 million, of which $16.837 million was paid in cash and the remainder in membership interests in the new holding company, Fragrance Holding, LLC. Dkt. 115 (" Steel Decl." ) Ex. B (" Asset Purchase Agreement" or " APA" ) § 2.2; Palmer Aff. ¶ 5; PX 30 (also filed as Dkt. 63) (" Ezriel Decl. I" ) ¶ 7. Ezriel received the membership interests, which amounted to 18.16% of the outstanding voting equity of Fragrance Holdings, LLC, and cash; the other stockholders of Preferred Fragrance received only cash. APA § 2.2; Palmer Aff. ¶ 5.

As part of the transaction, Glenn Palmer became CEO of the new company, Fragrance Acquisitions, which continues to do business as Preferred Fragrance; Ezriel became president and chief operating officer.[4] Palmer Aff. ¶ ¶ 1, 3; Steel Decl. Ex. C. (" Employment Agreement" ) ¶ 1. Ezriel also understood himself to be director of sales. PX 58 (also filed as Dkt. 120) (" Ezriel Decl. II" ) ¶ 4; see also Tr. 16 (" My goal [in the transaction] is to be busy with sales; my wife, product development. And execution, all this, this should be the part of Uni-World. . . . I should be able to do my job, sales, what I love to do." ); Tr. 27 (" [M]y understanding is that sales is my department." ).

Also as part of the transaction, Ezriel entered into two nearly identical non-compete agreements. In the APA, Ezriel agreed that, for five years after the closing date of October 12, 2011, he would not

directly or indirectly . . . own, manage, operate, join, control, participate in, invest in or otherwise be connected or associated with, in any manner . . . any business or venture which, directly or indirectly, competes with the Business within the territories in which the products of the Business are sold (which includes the United States of America, its territories and possessions, and any country outside of the United States of America to which products of the Business are sold).

APA § 6.1(a); see also id. § 1.1 (" 'Business' means the production, marketing and distribution of designer-inspired fragrances, private label fragrances, proprietary fragrances, and licensed celebrity fragrances

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as conducted by or on behalf of the Companies." ). In the Employment Agreement, Ezriel agreed to a non-compete agreement identical in substance to the APA's non-compete agreement, except that it is operative " during the time of his employment with [Fragrance Acquisitions] and for a period of three (3) years after the termination of his employment." Employment Agreement § 7(D).[5]

At the time he sold Preferred Fragrance, Ezriel was aware of the non-compete agreement and understood its gist, although, as developed below, the parties dispute whether he understood its geographic reach. Tr. 16 (" Q. As part of the sale to Uni-World, were you aware there was a non-compete? A. Yes." ); Tr. 17-18 (" THE COURT: . . . Tell me what your understanding was of the non-compete provision. THE WITNESS: For five years after I'm going away from the company, I'm not allowed to sell perfumes, to help someone selling perfumes, to be involved in a company from perfumes, anything that have to do with fragrance." ); Tr. 19 (" THE COURT: And did you understand that there was a non-compete that applied to you while you remained a partner in the company? THE WITNESS: Sure." ).

B. Fragrance Acquisitions

Ezriel testified, and the Court credits for the purpose of this motion, that, after plaintiffs acquired Preferred Fragrance, there was much tension and conflict between Palmer, the CEO of the new company, Fragrance Acquisitions, and the sales staff.[6] Palmer ultimately " fired a lot of [Ezriel's] salespeople," Tr. 23, such that the original sales staff of six or seven people was reduced to two, Tr. 26. Ezriel appears to have been distressed by these events.[7]

Ezriel was also upset that the new management did not allow him to run the sales department as he saw fit. Tr. 27. He explained:

Uni-World start[ed] focusing very much [on] what I'm doing on sales, instead of putting a whole effort into infrastructure, what I need, coming to meetings and give me rules how to sell, what to sell, whom to speak, what to speak. And to put a lot of them in sales sometimes have a very, very bad reaction.
. . .
Our company is -- we don't have a brand name to dictate. So everything is based on relationships. . . . [F]or example, I have a customer, Rainbow. . . . And this was a good customer. It's a 3-, 4-million-dollar account for me. . . . [I]t's not an easy account. They have -- they give a lot of business, take a lot of advantage. . . . [J]ust one example, it came to a point that they ask me, we're not making enough money. We need to have our price increase. Instead of $1.45, we have to have $1.50. So I

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explain for them Avery Tuchman [the CFO of Fragrance Acquisitions], the buyer, is tough. Let's go to the buyer and let's talk to them. So they make a decision to go to more - to the people who owns the chain . . . . [W]hen I went to the buyer, the buyer found out that I went to the boss. And she was really, really pissed to me and the company.
. . .
Things like this happen every day in my business. And I went and I complain and cry to Uni-World . . . with my father, and explain constantly that they're doing a good job on one side in infrastructure, but to pushing the sales and the way they're behaving is trying to be like - come to buyers and say, no, this is the rule. It's not going to work. And they told me constantly, yes, they're going to fix it. They will see and they understand me. They're going to talk. But this was the part where I see the company start going down and competition comes in.

Tr. 20-22.

In late 2011 or early 2012, Ezriel's brother Abraham, who managed the warehouse, was fired. Tr. 283.

In early 2013, Abraham (who was not subject to a non-compete restriction) participated in the creation of Ouleaf, a competitor of Fragrance Acquisitions. Tr. 274-76. As discussed in greater detail infra, the parties dispute the extent and nature of Ezriel's involvement in Ouleaf.

On April 8, 2013, Fragrance Acquisitions sent most of the defendants here--Preferred Fragrance, Ezriel, and the Preferred Fragrance stockholders who signed the APA--a letter stating that it would seek indemnification for more than $5.5 million in lost profits. Dkt. 39 (" Dockwell Decl." ) Ex. D. Plaintiffs claimed they had been misled to believe the company was more valuable than it in fact was, and thereby overpaid for the company, as a result of various misrepresentations and omissions by defendants in connection with the company's sale. Id.

On June 12, 2013, a new company, Exceed, was formed. PX 34. As discussed in greater detail infra, the parties dispute the nature and extent of Ezriel's involvement in Exceed (both its creation and its business).

Between June and early September 2013, the parties attempted, via negotiations, to resolve plaintiffs' claim for indemnification and related issues. Dkt. 44 Ex. 3 (" Fuller Aff." ) ¶ ¶ 4-5. These discussions reached an impasse. On or around September 10, 2013, plaintiffs' counsel told defendants' counsel that plaintiffs would be moving toward litigation. Dkt. 44 Ex. 1 (" Koval Decl." ) ¶ 7. On September 13, 2013, however, before such litigation was filed, Preferred Fragrance and Ezriel filed an action in New York Supreme Court in Kings County, seeking declaratory judgments: that (1) Preferred Fragrance and Ezriel had not breached the APA and thus were not obliged to indemnify the Fragrance Entities for lost profits, and (2) Ezriel's non-compete agreements were void and unenforceable. Preferred Fragrance, Inc., et al. v. Fragrance Acquisitions, LLC, et al., Index No. 505426/2013 (N.Y. S.Ct. filed Sept. 13, 2013) (the " Brooklyn Action" ).

On October 10, 2013, Fragrance Acquisitions fired Ezriel. Ezriel Decl. I ¶ 13. At the hearing, Ezriel explained his firing, and the events that preceded it, as follows:

It came to a point that I complaining and complaining to the board that the company goes down, and I warned them, and they told me I agree 100 percent. They told me they're going to send in a coach, I don't know what it is, to teach Glenn to behave with the people. And they're going to put Avery - they're going to talk to him. I see things not

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getting better, and I'm start complaining, and people left the company.
Chris Fuller called me and hand me over a letter why I'm terminate[d] from the company. And a day before Glenn told me that it's going to be, and he feels bad for me, and he knows most of the things what in the letter says is not true. But you have to understand, I'm an employer and I have to do what I have to do. And don't take it personal. Things will work out. And a day later they gave me a letter that I'm fired from the company.

Tr. 24.

On October 11, 2013, the day after plaintiffs fired Ezriel, they brought this lawsuit, claiming securities fraud, common law fraud, and breach of contract, and seeking declaratory judgments that the termination of Ezriel's employment had been for cause and that the non-complete clause was valid and enforceable. Dkt. 1.[8]

C. Abraham Polatsek

Abraham is 10 years younger than Ezriel. Tr. 31. He attended yeshiva until age 21. Tr. 269. Abraham then looked for a job for about a year and a half. Tr. 299. He was then hired to manage the production line at Joel's company, JP Filling, which fills perfume bottles for Preferred Fragrance. Tr. 269-70, 299. Abraham worked at JP Filling for between one and three years. Compare Tr. 270 (" around two, three years" ) with Tr. 299 (one year).

Abraham left JP Filling to become warehouse manager at Preferred Fragrance. Tr. 270, 299. He was warehouse manager for six or seven years. Tr. 270, 299. Abraham recalled that, as such, he visited Preferred Fragrance's customers between 10 and 30 times, " [t]o make sure that I'm doing my job right, that I'm shipping the goods [ ] the way the buyer wants the goods." Tr. 271-72. During these visits, Abraham met with personnel from at least three retail chains. Tr. 271. Abraham also called buyers concerning, for example, special requests in the buyer's order. Tr. 272. Abraham spoke to most or all of Preferred Fragrance's major customers at some point in time. Tr. 272. He also spoke with Ezriel about the buyers.[9] Important here, Abraham did not engage in sales. Tr. 300.

In late 2011 or early 2012, Fragrance Acquisitions fired Abraham. Tr. 283. Abraham then worked for a friend of his brother-in-law at Fine Line Setting, which sells upscale disposable dishes. Tr. 273, 303-04. But Abraham's attempts to sell dishes for Fine Line did not go well; he made sales to only three chain stores, Variety, Lot Less, and National Wholesale Liquidators. Tr. 274, 304, 327. Each was a customer of Fragrance Acquisitions. Tr. 304. Ezriel tried to help Abraham with

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his sales for Fine Lines by bringing Abraham to a retail show, approaching buyers on Abraham's behalf, and flying with Abraham to meet with the tableware buyer of one potential customer, Variety. Tr. 304-06.

D. Ouleaf

1. Creation of Ouleaf and Ezriel's Knowledge

Ouleaf is a competitor of Fragrance Acquisitions. Tr. 226, 274. Abraham testified that he came up with the idea for Ouleaf in early 2013. Tr. 275. He brought the idea to a woman he knows as " Bella," who owns OnlyYou, a Chinese company that is Fragrance Acquisitions's main supplier.[10] Bella, he testified, was " really excited" about the idea and said she had had a similar idea. Tr. 275. According to Abraham, after a few more conversations, he and Bella opened the company, with Bella as the owner, and they began doing business. Tr. 275.

As to what Ezriel knew of Ouleaf's founding, and when he knew it, the Polatseks gave divergent testimony. Ezriel testified that, in the beginning, Abraham did not tell him that Ouleaf was in the business of selling imitation perfumes, because, he believed, Abraham was concerned about how Ezriel might react. Tr. 224-25. However, Ezriel testified, before he had been fired from Fragrance Acquisitions in October 2013, Abraham told him about his work with Ouleaf, what Ouleaf did, and that Ouleaf had been his idea. Tr. 224-25. Ezriel testified that he was not upset that Abraham had opened a competing business. Tr. 226, 228. Ezriel also testified that he was not involved in the creation of Ouleaf.[11] Tr. 56.

Abraham testified, at his April 10, 2014 deposition, that Ezriel did not " find out about Ouleaf" until early 2014, well after Ezriel had been fired and after Ouleaf had begun selling to the customers of Fragrance Acquisitions:

Q. At the time this invoice was done [on September 30, 2013] had you told your brother Ezriel that you were selling products to Rainbow?
A. No.
Q. Were you afraid that he was going to find out that you were in a business selling similar products to Preferred's customers when he was still the head of sales at Preferred?
. . .
A. Yes.
. .
Q. When to the best of your knowledge did [Ezriel] find out about Ouleaf? [ ]
A. About, I'm not remember. Like a month ago, two months ago. I'm not remember exactly when he find out. He didn't find out from me. That's the reason I don't know exactly when he find out.

Tr. 345-46 (quoting from deposition testimony). At the hearing, however, Abraham

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testified, that he was not sure when he told Ezriel about his involvement with Ouleaf. Tr. 345 (" Q. Now, at the time of this invoice you still had not told Ezriel that you were in the business of selling similar products to Preferred's customers, have you? A. I'm not sure when I told him." ).

2. Ouleaf's Sales

Ouleaf sells perfumes to 10 retail chains, each of which is or previously was a customer of Fragrance Acquisitions. PX 47; Tr. 227-28, 343. The parties dispute whether Ezriel assisted Abraham in connection with Ouleaf's sales. Abraham testified that he alone was responsible for these sales and that he knew these companies from his time at Preferred Fragrance. Tr. 276-77. He testified that, in each case, he personally persuaded the retailer to buy Ouleaf's perfumes by calling the retailer's main phone line and asking to be put in touch with the perfume buyer. Tr. 344. Abraham testified that he never asked Ezriel to introduce him to potential customers of Ouleaf. Tr. 348. Ezriel similarly testified that he never made sales, helped Abraham make sales, or gave Abraham advice about making sales for Ouleaf. Tr. 56-57.

3. Ezriel's Pitch in Puerto Rico for Business on Behalf of Ouleaf

It is undisputed that Ezriel, on one occasion, pitched Ouleaf's fragrance business to a corporate customer of Preferred Fragrance. This evidence came to light as a result of an affidavit from the customer's CEO, which plaintiffs submitted in this lawsuit. Specifically, on January 14, 2014, Ezriel called Radames Tirado, the CEO of Chucherias, Inc. (" Chucherias" ), a perfume wholesaler in Puerto Rico, to introduce Tirado to Abraham and Ouleaf. Steel Decl. Ex. FF (" Tirado Aff." ) ¶ 3. In his affidavit, Tirado recounts the call as follows:

2. Chucherias is and has been a customer of the business I know as " Preferred Fragrance." In connection with the dealings between Preferred Fragrance and Chucherias, I am acquainted with Ezriel Polatsek (" Ezriel" ).
3. On January 14, 2014, I received a call from Ezriel Polatsek. He said that he wanted to introduce me to a new fragrance company and that he wanted Chucherias to do business with this new company.
4. He said that this was " confidential."
. . .
7. The next day, January 15, 2014, I received an e-mail from Abraham Polatsek (" Abraham" ), on behalf of Ouleaf, soliciting business from Chucherias. The subject line of Abraham's e-mail was " Ouleaf/Chucherias." Abraham's e-mail attached a .pdf copy of the Ouleaf catalogue of products.
8. The first line of Abraham's email referred to " the conversation you had yesterday in which my line was introduced to you . . . ." That was clearly a reference to the conversation I had had the previous day with Ezriel. I had not spoken (and never did speak) to anyone else on behalf of Ouleaf.
9. I was not interested in doing business with Ouleaf and did not respond to Abraham's e-mail. He called a few times after that, apparently to follow up, but I did not speak to him or return his calls.

Id. ¶ ¶ 2-9.

Ezriel, at the hearing, admitted this conduct. He testified that he had called Tirado on behalf of Ouleaf at Abraham's request. Tr. 40-42, 247; see Tr. 247 (" Q. And you did that so that Abraham could sell Ouleaf products, correct? A. Yes. Q. And specifically your brother had a line of perfumes that you wanted to introduce to the perfume buyer in Puerto Rico? . . . A.

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Yes." ). Ezriel also admitted that he asked Tirado to keep the conversation confidential.[12] Tr. 251.

Abraham, by contrast, denied this. He testified that he had called Tirado himself, without any help from Ezriel, and that he had no recollection of asking Ezriel to call Tirado. Tr. 349-51. The Court does not credit Abraham's testimony on this point. It is inconsistent with Tirado's affidavit and Ezriel's ensuing testimony.

Ezriel admitted that his call to Tirado was a violation of his non-compete agreements. Tr. 40. In what the Court understood to be an attempt to explain why this violation was a singular event unlikely to recur, Ezriel testified that at the time he made the call, he believed that his non-compete agreement did not apply to Puerto Rico:

Q. Since the conversation that you had with [Tirado], have you learned that there's an issue under your non-compete with regards to Puerto Rico?
A. After the[n], no. Only when the affidavit comes up and I went to my lawyers and they read me - they told me actually that I cannot do in the entire world for five years, not compete. So I didn't know from this. Just explain a small thing for the judge, that when I have lawsuits before from copyright, like from Estee Lauder, like things looks too close and we have to make a deal to sell it outside of the country, was always Puerto Rico a place where I can sell it.
THE COURT: In other words, you were accused of copyright infringement before, and when you settled those cases, the settlement drew a geographic line between the continental United States on the one hand, where you were prohibited from doing what you were doing, and outside of it, where you were allowed to, is that right?
THE WITNESS: Right. So I'm just trying to bring out that I'm not so dumb, but I didn't - when I say that I didn't know that Puerto Rico was a part of the US, I know it's a part of US, but I didn't think that my non-compete wasn't good.

Tr. 44; see also Tr. 40-41 (" I was very careful not to violate my non-compete. It was one day, what I remember that my brother ask me maybe I can help him some at least overseas, because I was always on the understanding that my non-compete is only in the U.S. . . . [S]o I told him, I don't know too much people, and . . . he told me about Chucherias. . . . I make a phone call, and I told them that, I didn't speak to you for a long time. My brother have a line of perfumes, and he going to call you. You should know who it is. That's what I did." ). Ezriel testified that, at the time, he did not check whether his non-compete agreement applied to Puerto Rico; instead, he relied on his memory of it. Tr. 248-49.

4. Ezriel and Abraham's Visit to a Toronto Customer

On February 6, 2014, Ezriel and Abraham traveled to Toronto, together, so that they could each meet with personnel at

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YM, a chain store. Tr. 53-54, 62-64. They testified that they went for completely separate and independent purposes: Abraham went, on behalf of Ouleaf, to sell perfumes, whereas Ezriel went to meet with Mike Gold, a good friend and the owner of YM, to discuss lines of business that Ezriel might be able to pursue that were outside the scope of his non-compete prohibition. Tr. 53.

This episode was the source of extended testimony at the hearing. The parties disagree about Ezriel's purpose in going to Toronto and, in particular, whether his claim to have gone there independent of Abraham's prospecting trip for Ouleaf is credible. The Court first sets out Ezriel's and Abraham's initial flat denials about the joint trip to Toronto; then recounts their later testimony, which reflected a changed version of events; and then sets out its factual conclusions.

a. The Polatseks' Initial Denials

The Polatseks flew on the same plane to Toronto, shared a taxi from the airport to YM's office, and then shared a taxi back to the airport. Tr. 295, 297. Initially, however, the Polatseks entirely denied that they had traveled to Toronto together. At his deposition, strikingly, Ezriel testified that he had flown instead with Abe Katz, a ...


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