UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
THE HUNTER GROUP, INCORPORATED,
Plaintiff-Appellant,
v.
SUSAN M. SMITH; MARTIN W.
REIMER; RENEE YATES-CREECH;
CATHERINE COOPER; GALE E. MANN; No. 00-1505
DELOITTE & TOUCHE, LLP,
Defendants-Appellees.
and
JULIA M. SALTER,
Defendant.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Andre M. Davis, District Judge.
(CA-97-1871-AMD)
Argued: February 26, 2001
Decided: May 24, 2001
Before WILLIAMS and MICHAEL, Circuit Judges, and
Cynthia H. HALL, Senior Circuit Judge of the
United States Court of Appeals for the Ninth Circuit,
sitting by designation.
Affirmed by unpublished per curiam opinion.
2 THE HUNTER GROUP v. SMITH
COUNSEL
ARGUED: Stacie Eileen Tobin, PIPER, MARBURY, RUDNICK &
WOLFE, L.L.P., Baltimore, Maryland, for Appellant. Stephen M.
Sacks, ARNOLD & PORTER, Washington, D.C., for Appellees. ON
BRIEF: James D. Mathias, PIPER, MARBURY, RUDNICK &
WOLFE, L.L.P., Baltimore, Maryland, for Appellant. Ronald A.
Schechter, Jonathan R. Streeter, ARNOLD & PORTER, Washington,
D.C.; Daniel F. Goldstein, BROWN, GOLDSTEIN & LEVY, Balti-
more, Maryland, for Appellees.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Hunter Group, Inc. (Hunter), filed suit against Susan Smith, Martin
Reimer, Renee Yates, Catherine Cooper, Julia Salter,1 and Gail Mann
(collectively, the employees) in the United States District Court for
the District of Maryland, alleging that they breached the nonsolicita-
tion and noncompete clauses in their employment agreements by join-
ing, and enticing each other to join, Deloitte & Touche, L.L.P.
(Deloitte). Hunter also sued Deloitte, alleging tortious interference
with contract, unfair competition, and civil conspiracy.2 After a bench
trial, the district court ruled in favor of the employees and Deloitte.
Hunter argues on appeal that the district court erred in finding that
there was no solicitation of its employees; that the district court incor-
rectly applied Georgia law, rather than Maryland law, to determine
that the noncompete provisions are unenforceable; and that the district
court erred in concluding that even if the noncompete provisions were
1
Hunter dismissed its claims against Salter prior to trial.
2
Hunter brought its unfair competition and civil conspiracy claims
against both Deloitte and the employees.
THE HUNTER GROUP v. SMITH 3
enforceable, Hunter was not entitled to recover any damages for the
employees’ breaches of those provisions. Finding no reversible error,
we affirm.
I.
Hunter, which is a Maryland corporation with offices throughout
the country, is engaged in the sale of various services and products
relating to financial accounting and human resources administration.
Smith, Reimer, Yates, Cooper, and Mann are former employees of
Hunter who are now employed at Deloitte. Deloitte, which is an inter-
national consulting firm, is a competitor of Hunter.
The employees worked in Hunter’s Education Services Department
in Atlanta, Georgia (the Department). Smith was a supervisor in the
Department. Each of the employees was a party to a signed employ-
ment agreement with Hunter, and each employment agreement con-
tained a nonsolicitation clause prohibiting the employees from
soliciting the employment of any other Hunter employee for twelve
months after leaving Hunter. All of the employment agreements,
except Salter’s, also included a noncompete provision which, among
other things, prohibited the employees from working for a competitor
for a six month period following the termination of their employment
at Hunter.
The relevant nonsolicitation provision, as found in Smith’s
employment agreement, provided,
During the period of employment, and for a twelve (12)
month period thereafter, EMPLOYEE agrees that he/she
will not employ or solicit the employment of any HUNTER
employee or any of HUNTER’s consultants, subcontractors
or independent contractors. Nothing herein shall be con-
strued to prohibit EMPLOYEE from soliciting or employing
any HUNTER employee, consultant, subcontractor or inde-
pendent contractor who was terminated by HUNTER for
economic or budgetary reduction purposes.
(J.A. at 33-34.)3 The relevant noncompete provision provided,
3
The contract does not define "solicit" or "solicitation."
4 THE HUNTER GROUP v. SMITH
(a) During the term of his/her employment, and for a six
(6) month period thereafter, EMPLOYEE agrees that he/she
will not render, directly or indirectly, any services of an
advisory or consulting nature similar in character to those
offered by HUNTER, whether as an employee or otherwise,
and whether paid or unpaid, to any business which is a com-
petitor of HUNTER.
...
(c) For the purposes of this paragraph 11., the term "com-
petitor" is defined as those persons, firms or corporations
which provide consulting, systems implementation, systems
integration, or advisory services in the areas of Human
Resource Administration or Financial Accounting systems.
(J.A. at 34.)
Smith spent more than a year at Hunter developing training course-
ware to assist its clients in the use of PeopleSoft software, which is
a computer software package that provides financial and human
resources applications.4 On January 20, 1997, Hunter fired Smith
because she had "irreconcilable differences" with Mary Weaver, a
Hunter senior vice-president. Smith secured counsel in order to deter-
mine the scope of her contractual obligations to Hunter. Smith also
contacted a headhunter and began interviewing for jobs with other
firms. During her job search, Smith discovered that the market for
consultants with PeopleSoft experience was "hot" and that Hunter had
been substantially underpaying her. Although Smith’s last salary at
Hunter had been $75,000, other firms offered her salaries ranging
between $90,000 and $120,000.
On February 10, 1997, Smith accepted Deloitte’s offer of employ-
ment, and on March 10, 1997, Smith began work for Deloitte. In her
new position, Smith supervised individuals hired to provide People-
Soft training to Deloitte employees and developed PeopleSoft training
4
PeopleSoft software is owned by PeopleSoft, Inc. PeopleSoft has
licensed over forty companies, including Hunter, to use its software and
to provide training to end-users of its products.
THE HUNTER GROUP v. SMITH 5
courseware. That same month, Weaver wrote to Deloitte acknowledg-
ing that Smith had been hired and cautioning Deloitte against using
any Hunter trade secrets. Weaver’s letter did not suggest that Deloitte
was acting inappropriately in employing Smith. Weaver later testified
at the preliminary injunction hearing that she "did not want to prevent
Ms. Smith from getting employment." (J.A. at 583, 1213-14.)
Over the course of the next few months, the other employees in the
Department became increasingly dissatisfied with the situation at
Hunter. Among other things, the employees were concerned about
staffing levels, the lack of leadership, the delay in hiring a replace-
ment for Smith, and the qualities of the person who appeared to be
positioned to replace Smith. Several of the employees, both indepen-
dently and jointly, therefore initiated contact with Smith at various
times to ask her about her job search, to request information about
firms with which she interviewed, to find out about headhunters or
other contacts, and to ask for her help in getting their resumes to
Deloitte recruiters. For example, in April 1997, Salter contacted
Smith to arrange dinner with her. Without telling Smith, Salter
allowed Reimer, Yates, and Julia Howley, another co-worker at
Hunter, to join them at dinner. At the dinner, Salter, Yates, and How-
ley informed Smith that they were interested in positions at Deloitte,
and they asked her various questions about opportunities at Deloitte.
At the request of Yates and Howley, Smith wrote down "ballpark"
salary figures that she had seen during her job search. Yates asked
Smith if Smith could forward her resume to an appropriate person at
Deloitte, and Smith agreed. The district court explicitly found that
Smith did not initiate contact with the employees and that the employ-
ees each independently decided to explore the possibility of leaving
Hunter before contacting Smith. Eventually, Cooper, Yates, Mann,
Reimer, and Salter each left Hunter to go to Deloitte.5
On June 10, 1997, Hunter filed suit against Smith, Cooper, Yates,
Mann, and Reimer alleging breach of their employment agreements.
Hunter also alleged unfair competition and civil conspiracy against
the employees and Deloitte and tortious interference with contract
5
Howley ultimately decided not to leave Hunter, although she was
given an offer at Deloitte.
6 THE HUNTER GROUP v. SMITH
6
against Deloitte. Hunter sought a TRO, preliminary and permanent
injunctive relief, and damages. The district court denied injunctive
relief and we affirmed. The Hunter Group, Inc. v. Smith, No. 97-2218,
1998 WL 682154 (4th Cir. Sept. 23, 1998) (unpublished). On July 19
and 20, 1999, the district court held a two-day bench trial.
The district court found in favor of the employees. With respect to
whether Smith breached her nonsolicitation provision, the district
court stated that "whatever may be the outer limits of a reasonable
interpretation of ‘solicit,’ those limits are not reached in the case at
bar because it is clear that the term does not encompass mere contact
between an ex-employee and her former colleagues, and it does not
encompass responding to questions and requests regarding her new
employer initiated by her former colleagues." (J.A. at 1229.) The dis-
trict court explicitly credited the accounts of the employees, who tes-
tified that they were uncomfortable with the direction that their
Department was taking after it fired Smith, that they considered leav-
ing Hunter before they spoke to Smith, and that Smith did not initiate
contact with them, but rather that Smith only supplied information to
them in response to their questions. The district court also found that
the employees, at most, shared information about their own employ-
ment plans amongst each other and did not solicit each other.
As to the noncompete provisions, the district court applied Georgia
law, rather than Maryland law,7 because it concluded that Georgia had
6
Hunter originally also alleged that Deloitte and the employees misap-
propriated Hunter’s trade secrets but, after additional discovery, it volun-
tarily dismissed that claim. It then amended its complaint to add a
negligent supervision claim against Deloitte.
7
The choice-of-law provision in the employment agreement provided
that Maryland law should govern. The district court properly looked to
Maryland law, which follows § 187 of the Restatement (Second) Conflict
of Laws, to determine whether to apply Maryland or Georgia law. See
Ciena Corp. v. Jarrard, 203 F.3d 312, 323 (4th Cir. 2000) ("For its
choice-of-law rules, Maryland subscribes to § 187 of the Restatement
(Second) of Conflict of Laws."). Under § 187, Maryland courts apply the
law of another jurisdiction notwithstanding a choice-of-law provision (1)
where Maryland has no substantial relationship to the parties or transac-
tion and there is no other reasonable basis for the parties’ choice; or (2)
THE HUNTER GROUP v. SMITH 7
a far greater relationship to the employment contracts and that the
noncompete agreements violated Georgia’s fundamental public poli-
cies. Specifically, the district court stated that "the Hunter noncom-
pete clause is so broad that it violates Georgia fundamental public
policy and Georgia courts would not enforce it. While the Hunter
noncompete is of limited duration, it covers an overly broad scope of
activity and it contains no geographical restriction." (J.A. at 1226.)
Because the district court found no underlying liability for the alleged
breaches of the noncompete and nonsolicit provisions, the district
court found it unnecessary to reach Hunter’s tortious interference,
negligent supervision, and civil conspiracy claims. Finally, the district
court noted that even if Hunter’s noncompete provision was enforce-
able, Hunter had failed to prove any damages from the employees’
alleged breaches of their agreements. The district court stated that
[e]ven if the noncompete provisions were enforceable, . . .
Hunter has failed to establish that it suffered any damages
as a result of the five individual defendants going to work
for a competitor rather than for some other employer when
they left Hunter. Hunter’s counsel acknowledged that
Hunter was not presenting any damages "based on identifi-
able or specific lost contracts" to Deloitte. Instead, Hunter’s
damages calculation is based entirely upon alleged lost reve-
nues caused when four of the individual defendants (not
including Smith) and one additional employee (Salter) left
Hunter. Based on the record here, Hunter’s damages calcu-
lation would have been the same had these employees
elected to withdraw from the labor market altogether. Thus,
Hunter has not proved by a preponderance of the evidence
that the alleged violation of the noncompete provision
caused it any damage . . . .
(J.A. at 1227 (internal footnote omitted).)
where the other jurisdiction has a materially greater interest in determin-
ing the issue, that jurisdiction has the most significant relationship to the
transaction absent the contractual choice, and applying Maryland law
would violate the fundamental policy of the other jurisdiction. See id. at
323-24 (citing Restatement (Second) of Conflict of Laws § 187(2)
(1971)).
8 THE HUNTER GROUP v. SMITH
Hunter raises several issues on appeal. First, Hunter argues that the
district court erred in finding that there was no solicitation of its
employees. Second, Hunter argues that the district court erred in
applying Georgia law rather than Maryland law in evaluating the
enforceability of Hunter’s noncompete provision and that under either
law, the noncompete provision is enforceable. Third, Hunter asserts
that the district court erred in failing to consider its tortious interfer-
ence with contract, negligent supervision, and civil conspiracy claims.
Finally, Hunter argues that the district court erred in concluding that
Hunter failed to establish any damages for the alleged breaches of its
noncompete provision.
II.
"On appeal from a bench trial, we may only set aside findings of
fact if they are clearly erroneous, and we must give due regard to the
opportunity of the district court to judge the credibility of the wit-
nesses." Scrimgeour v. Internal Revenue, 149 F.3d 318, 324 (4th Cir.
1998). A district court’s factual finding is clearly erroneous "when
although there is evidence to support it, the reviewing court on the
entire evidence is left with the definite and firm conviction that a mis-
take has been committed." Id. (internal quotation marks omitted).
"[W]here there are two permissible views of the evidence, the fact-
finder’s choice between them cannot be clearly erroneous." Id. (inter-
nal quotation marks omitted and alteration in original). We review the
district court’s legal conclusions de novo. See Williams v. Sandman,
187 F.3d 379, 381 (4th Cir. 1999).
We have reviewed the record, briefs, and pertinent case law on this
matter, and we have had the benefit of oral argument. Our careful
review persuades us that the rulings of the district court were correct.
See Hunter Group, Inc. v. Smith, No. AMD 97-1871 (D. Md. Mar. 17,
2000). Accordingly, we affirm the judgment in favor of the employ-
ees and Deloitte on the reasoning of the district court.
AFFIRMED