United States Court of Appeals
For the First Circuit
No. 99-1534
LANIER PROFESSIONAL SERVICES, INC.,
Plaintiff, Appellant,
v.
EILEEN M. RICCI AND BOMONT GRAPHICS TECHNOLOGY, INC.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Joseph L. Tauro, U.S. District Judge]
Before
Selya, Boudin, and Lipez, Circuit Judges.
Daniel M. Shea, with whom Smith, Currie & Hancock, LLP, Harry
T. Daniels, and Hale & Dorr, LLP, were on brief, for appellant.
Barry Ravech for Eileen M. Ricci.
Cheryl Pinarchick, with whom James W. Stoll, and Brown,
Rudnick, Freed & Gesmer were on brief, for Bomont Graphics
Technology, Inc.
September 15, 1999
LIPEZ, Circuit Judge. Plaintiff-appellant Lanier
Professional Services, Inc. ("Lanier"), brought this action against
its former employee Eileen M. Ricci and her new employer, Bomont
Graphics Technology, Inc. ("Bomont"). Lanier requested, inter
alia, a preliminary injunction barring Ricci from working for
Bomont in violation of a noncompetition provision in Ricci's
employment agreement with Lanier. That provision requires that
Ricci not sell "Facilities Mgmt [Management] Services" for one year
after her employment with Lanier, which ended in November 1998.
Lanier also sought to enjoin both defendants from using
confidential information and trade secrets that Ricci had allegedly
misappropriated from Lanier. The district court denied the motion
for a preliminary injunction, concluding that Lanier had not shown
a likelihood of success on the merits. We affirm.
I.
Ricci was employed by Copytech Printing, Inc.
("Copytech"), from 1991 to 1996. She sold printing and copying
services to various clients including members of MASCO, a
consortium of colleges and hospitals located in Boston's Longwood
Medical Area. She also supervised a printing and copying center
operated by Copytech at a facility in Boston leased from MASCO. In
February 1996, Lanier purchased Copytech. As a condition of
continued employment with Lanier, Ricci was required to sign a
standard-form Lanier Employment Agreement that included the
following provision: "During the term of employment with the
Company and for a period of one (1) year after termination of
employment hereunder . . . Employee will not, directly or
indirectly, on Employee's own behalf or for others, demonstrate,
service, or sell products or perform services in the Territory[]
that are competitive with the Products . . . ." The "Products"
were defined by checking the appropriate items from a list; on
Ricci's agreement, only "Facilities Mgmt Services" was checked.
Ricci performed the same type of work for Lanier that she
had for Copytech, selling off-site printing and copying services
and overseeing the copy center. Ricci resigned from Lanier on
November 30, 1998, and began working for Bomont in December 1998 as
its sole outside salesperson. A small printing shop specializing
in large-format, full-color printing, Bomont to some degree
competes with Lanier (and many others) in the Boston printing
market. In her new job Ricci has won at least two former Lanier
accounts for Bomont.
Lanier filed suit against Ricci and Bomont in the United
States District Court for the District of Massachusetts in February
1999, seeking damages and a preliminary and permanent injunction.
After reviewing the affidavits submitted by the parties and hearing
argument, the court denied the motion for a preliminary injunction.
This appeal followed.
II.
We review the denial of a request for a preliminary
injunction for abuse of discretion, see Hiller Cranberry Products,
Inc. v. Koplovsky, 165 F.3d 1, 4 (1st Cir. 1999), but "rulings on
abstract legal issues remain reviewable de novo, and findings of
fact are assessed for clear error," Ocean Spray Cranberries, Inc.
v. PepsiCo, Inc., 160 F.3d 58, 61 n.1 (1st Cir. 1998). "The
appealing party bears the considerable burden of demonstrating that
the District Court flouted the four-part test for preliminary
injunctive relief." Used Tire Int'l, Inc. v. Diaz-Saldana, 155
F.3d 1, 4 (1st Cir. 1998) (internal quotation marks omitted). That
familiar four-part test requires the plaintiff to show: "(1) it is
substantially likely to succeed on the merits of its claim; (2)
absent the injunction there is a significant risk of irreparable
harm; (3) the balance of hardships weighs in its favor; and (4) the
injunction will not harm the public interest." I.P. Lund Trading
ApS v. Kohler Co., 163 F.3d 27, 33 (1st Cir. 1998) (internal
quotation marks omitted). We apply the federal preliminary
injunction standard in a diversity case, at least where the parties
have not suggested that state law supplies meaningfully different
criteria. See Ocean Spray, 160 F.3d at 61. We have also noted
that "Massachusetts standards for a preliminary injunction do not
seem markedly different" than ours. Id. (citing Packaging Indus.
Group, Inc. v. Cheney, 405 N.E.2d 106, 111-12 (Mass. 1980)).
III.
The primary issue in this appeal involves the
interpretation of the term "facilities management services," which
the noncompetition agreement bars Ricci from selling until
November 30, 1999. The district court found that term ambiguous,
construed the agreement against the drafter, Lanier, and concluded
that Lanier had not demonstrated a substantial likelihood of
success in proving that Ricci had violated the agreement.
There appears to be no dispute that facilities management
services refers primarily to support services that the client
wishes to "out-source" to an outside provider who works on-site at
a client's place of business. Facilities management services are
an important and growing part of Lanier's business in Boston. The
dispute in this case relates to off-site printing services, not
performed at the client's place of business, which Ricci sold for
Copytech and Lanier, and now sells for Bomont. Ricci and Bomont
contend that such off-site services are not facilities management
services as that term is used in the printing and copying industry,
and as it was used at Lanier while Ricci worked there. Lanier, on
the other hand, asserts that facilities management services include
off-site printing.
Under Massachusetts law, a contract term is ambiguous
when its language is "reasonably prone to different
interpretations" or "susceptible to differing, but nonetheless
plausible, constructions." Alison H. v. Byard, 163 F.3d 2, 6 (1st
Cir. 1998); see also Bercume v. Bercume, 704 N.E.2d 177, 182 (Mass.
1999). Whether a term is ambiguous is a question of law. See
Alison H., 163 F.3d at 6.
We agree with the district court that the term
"facilities management services," undefined in the agreement, is
inescapably ambiguous as a matter of law. When contractual
language is ambiguous, its meaning is a question of fact. See Den
norske Bank AS v. First National Bank, 75 F.3d 49, 52 (1st Cir.
1996). The resolution of the ambiguity turns on the parties'
intent, as "discerned by the factfinder from the circumstances
surrounding the ambiguity and from such reasonable inferences as
may be available." Colasanto v. Life Ins. Co. of N. Am., 100 F.3d
203, 211 (1st Cir. 1996). Extrinsic evidence is admissible to
assist the factfinder in resolving the ambiguity, including
evidence of, in descending order of importance: (1) the parties'
negotiations concerning the contract at issue; (2) their course of
performance; and (3) trade usage in the relevant industry. See
Den norske, 75 F.3d at 52-53; see also Keating v. Stadium
Management Corp., 508 N.E.2d 121, 123 (Mass. App. Ct. 1987). In
support of their competing definitions of facilities management
services, the parties offered evidence in each of those three
categories, the defendants focusing on the first and third and
Lanier on the second.
There were no negotiations. Ricci was presented with a
standard-form employment agreement and told she had to sign it to
retain her position. Ricci, however, stated in her affidavit that
at the time she signed the agreement, she did not believe that her
work could be characterized as facilities management services, and
that she shared that view at the time with a fellow employee, Todd
Nugent. Nugent's affidavit corroborates Ricci's. Ricci also
stated that she thought that she might be asked to sell such
facilities management services in the future, thus explaining the
seeming oddity of Lanier requiring her to sign a noncompetition
agreement covering a product that she had never sold.
Ricci and Bomont also offered significant evidence
concerning the usage of the term facilities management services in
the trade. See Atlantic Track & Turnout Co. v. Perini Corp., 989
F.2d 541, 543 (1st Cir. 1993) (trade usage may be used to help
discern meaning of ambiguous contract term). That evidence
included affidavits from Ricci, five other former Lanier employees,
an employee of another copying and facilities management company,
and an owner of Bomont. They all agreed that off-site printing,
which Ricci sold for Lanier and now sells for Bomont, is not
considered facilities management in the printing and copying trade
or was not so considered at Lanier when Ricci worked there.
Lanier focused primarily on the undisputed fact that
Ricci worked for Lanier for almost three years and that her
employment agreement prohibited her from competing when she left
the company in providing facilities management services. See Lembo
v. Waters, 294 N.E.2d 566, 569 (Mass. App. Ct. 1973) (court may
resort to conduct of parties to determine meaning they put on
ambiguous contract term). That fact, according to Lanier, shows
Ricci's acquiescence in its definition of the term. There is an
intuitive appeal to the notion that Ricci should have understood
that when the employment agreement barred her from selling
facilities management services for a year after leaving Lanier, the
intent was to cover the sort of services that she in fact sold for
Lanier. This evidence certainly has some probative value.
However, it did not compel a finding by the court that Ricci
acquiesced in Lanier's understanding by performing under the
agreement.
Unable to resolve the ambiguity in the contract language,
the court properly resorted to the familiar principle that an
ambiguous "post-employment restraint imposed by the employer's
standardized form contract" will be construed against the drafter.
Sentry Ins. v. Firnstein, 442 N.E.2d 46, 46-47 (Mass. App. Ct.
1982) (citing Restatement (Second) of Contracts 188 cmt. g
(1981)). The court's conclusion that Lanier had not demonstrated
a substantial likelihood of success on the merits reflected
factual findings that are not clearly erroneous and a correct
understanding of the law. The court's denial of a preliminary
injunction, therefore, was not an abuse of discretion.
IV.
Lanier also argues that the district court abused its
discretion by refusing to enter an injunction barring Ricci from
disclosing, and Bomont from making use of, confidential information
misappropriated from Lanier. That argument requires little
discussion. Lanier's scant evidence that Ricci had appropriated
information consisted primarily of the affidavit of Ricci's
successor, who stated that he had "received information which led
[him] to believe Ricci may have removed documents from Lanier's
files prior to her resignation." As the district court found, that
affidavit was so devoid of content as to be "practically
worthless."
Even assuming that Lanier had shown that Ricci had
misappropriated documents, it offered no evidence that those
documents contained confidential information or trade secrets.
Although Ricci's employment agreement contained a nondisclosure
clause, "[s]uch an agreement cannot make secret that which is not
secret . . . ." Dynamics Research Corp. v. Analytic Sciences
Corp., 400 N.E.2d 1274, 1288 (Mass. App. Ct. 1980). The district
court did not abuse its discretion in denying the motion for a
preliminary injunction.
Affirmed.