J-A19042-20
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MJ TEST PREP, LLC AND MATTHEW : IN THE SUPERIOR COURT OF
W. JOSEPH, PH.D., : PENNSYLVANIA
:
:
v. :
:
:
DAVID LYNCH AND VELTIO, LLC :
: No. 3531 EDA 2019
Appellants :
Appeal from the Order Entered November 27, 2019
In the Court of Common Pleas of Delaware County Civil Division at
No(s): No. CV-2019-004426
BEFORE: PANELLA, P.J., McLAUGHLIN, J., and McCAFFERY, J.
MEMORANDUM BY McCAFFERY, J.: Filed: January 21, 2021
David Lynch and Veltio, LLC (collectively, Appellants) appeal from the
order entered in the Delaware County Court of Common Pleas, granting a
preliminary injunction in favor of MJ Test Prep, LLC and Matthew W. Joseph,
Ph.D. (collectively, Appellees), based upon a non-compete agreement. On
appeal, Appellants contend the trial court erred or abused its discretion in: (1)
enforcing the non-compete agreement where only Joseph and Lynch
individually were signatories; (2) ignoring evidence that the test prep
materials created by Lynch were not subject to the Copyright Act; (3)
concluding that Appellees established their worksheets and materials
constituted trade secrets; (4) concluding Appellees established the
prerequisites for a preliminary injunction; and (5) determining that a three-
year temporal restriction was reasonable. Based on the following, we affirm.
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The facts underlying this appeal are detailed in the trial court’s opinion
as follows:
FACTUAL FINDINGS:
1. [Appellee] Joseph is a founder and principal of [Appellee] MJ
Test Prep. MJ Test Prep was formed on May 11, 2006. It is a
Pennsylvania limited liability company with a place of business at
756 [E]ast Haverford Road, Bryn Mawr, PA, 19010. MJ Test, Prep,
provides college admissions and professional tutoring services in
the Philadelphia metropolitan area. [ ] Joseph is a fifty (50%)
percent owner of MJ Test Prep along with his wife Renata Joseph
(“Renata”), who owns the remainder of MJ Test Prep.
2. [Appellant] David Lynch is an individual with a residence [in]
Wynnewood, PA . . . . [Appellant] Veltio, LLC is a Pennsylvania
limited liability company with [the same] address . . . . Lynch is
the sole owning [m]ember of Veltio. Veltio owns and operates
StudyLark Test Prep (“StudyLark”), through which Lynch provides
college admissions and professional tutoring services in the
Philadelphia metropolitan area including an office located at 230
Sugartown Road, Wayne PA, 19087. Lynch formed Veltio on April
27, 2018. The Parties have stipulated to the fact that Lynch is the
100% owner of Veltio.
3. After becoming aware of a test prep company, MJ Test Prep,
operating near his residence, Lynch reached out to inquire about
potential employment opportunities. Joseph responded and set
up a meeting with Lynch, in which they talked about Lynch doing
a few small projects with Joseph.
4. [ ] Lynch started to work for MJ Test Prep as an independent
contractor around September 2009.
5. On August 31, 2009, Joseph and Lynch entered into a Non-
Compete Agreement. [ ] MJ Test Prep and [ ] Veltio LLC are not
parties to the purported Non–Compete Agreement (“Agreement”).
The Parties to this Agreement are Matthew Joseph Ph.D. and
David Lynch[, in their individual capacities].
6. The terms of the Agreement state that Lynch would not
disclose confidential information or proprietary information,
compete with Joseph, and solicit clients of Joseph for a period of
three (3) years after the Agreement ends for any reason, and
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within a fifty (50) mile geographic radius from Joseph’s place of
business.
7. Joseph testified the Agreement was given to Lynch by Joseph.
In the Agreement, Lynch is considered an independent contractor.
Lynch testified [t]he Agreement acknowledged that Lynch had an
existing employment relationship with Examkrackers Inc., [which]
provides admissions and professional tutoring services to prepare
clients for graduate school entrance tests. The Agreement states
that Lynch may continue and carry on an ongoing employment
relationship with Examkrackers Inc., whether on a contract,
salaried, or unpaid basis. Lynch testified that [h]e wrote the
portion of the agreement regarding his ability to work for
Examkrackers Inc.
8. Joseph has operated his test prep business with teaching
techniques he developed during his Ph.D. work and has enhanced
in the years since earning his Ph.D. The core to his technique is
the worksheets he has developed and revises continuously. The
worksheets rely on a particular sequence of practice questions
taken from tests provided by the entrance exam taking
companies. Joseph does not create the questions. His teaching
method is a combination of the sequence of the questions and the
method of solving the questions, which involves techniques other
than teaching mathematics or grammar.
9. The Parties stipulated that all of the questions that are in the
worksheets used by MJ Test prep came from standardized tests
authored by others.
10. In addition to tutoring students for the LSAT, GMAT, GRE,
subject tests, SAT and the ACT, Lynch performed administrative
work for MJ Test Prep, including developing and formatting the
worksheets and the binders used by MJ Test Prep. Lynch put test
problems in the sequence that Joseph instructed. The worksheets
and binders contain problem-solving instructions. In some
instances, the problem-solving instructions were conceived of and
inserted into the worksheets by Lynch without the direction from
Joseph. In other instances, the problem-solving instructions were
conceived of by Joseph and inserted into the worksheets by Lynch
per instructions from Joseph.
11. The worksheets and binders developed by Lynch contain the
copyright insignia identifying MJ Test Prep as the copyright holder.
Versions of worksheets and binders from before Lynch started
with MJ Test Prep also contained the MJ Test Prep copyright
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insignia. As part of Lynch’s work in developing and formatting
worksheets, Lynch physically put a copyright insignia on
documents and never requested that it have a Lynch copyright
insignia alone or jointly with MJ Test Prep.
12. Lynch was paid by MJ Test Prep for his independent contractor
services throughout the course of his relationship with Joseph and
MJ Test Prep. The Parties stipulated that all payments made to
Lynch and Veltio were made by MJ Test Prep.
13. After an IRS audit in 2013, Renata gave Lynch a non-compete
agreement between Lynch and MJ Test Prep. Lynch declined to
sign this non-compete agreement. Despite being presented with
and declining to sign a new non-compete agreement, Lynch
continued to provide independent contractor services to MJ Test
Prep at its Bryn Mawr office.
14. MJ Test Prep opened a second location in Chestnut Hill in
2014, located at 14 W[.] Evergreen Ave, Philadelphia, PA 19118.
Lynch never worked in the Chestnut Hill location of MJ Test Prep.
15. The Bryn Mawr and Chestnut Hill offices of MJ Test Prep are
approximately twelve (12) miles apart.
16. Lynch’s wife Sophia started to work for MJ Test Prep around
April 2018 as a receptionist.
17. Originally, MJ Test Prep paid Lynch for his independent
contractor services directly to his person. Around April or May
2018, Lynch and Sophia asked MJ Test Prep to pay the two of
them by writing checks to Veltio, and MJ Test Prep complied with
that request. No written Agreement was made between Veltio and
MJ Test Prep.
18. Around September 2018, Lynch and Sophia proposed a
business endeavor to the Josephs in which Lynch and Sophia
would operate a test prep business through Veltio and MJ Test
Prep would license its test prep materials to Veltio . . . in exchange
for a revenue sharing arrangement for a rate to be determined.
The Josephs declined to license MJ Test Prep’s materials to Veltio,
Lynch, and Sophia.
19. In October 2018, Renata asked Sophia to sign a non-compete
agreement even though she had stopped working for MJ Test Prep
and again Lynch was asked to sign a non-compete agreement to
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ratify his promise not to compete with MJ Test Prep. Both Lynch
and Sophia declined to sign such agreement.
20. In late 2018/early 2019, MJ Test Prep stopped requesting
service of any kind from Lynch[.] Lynch resigned from his work
at MJ Test Prep in mid-March 2019.
21. In March 2019, Lynch first started providing tutoring services
through Veltio/Studylark, after his final tutoring session at MJ Test
Prep.
22. Around April 30, 2019, MJ Test Prep learned Lynch was and
had been operating a competing business, Studylark and offering
services in Wayne and Media[,] Pennsylvania. Lynch publishes
study guides and provides test prep services under the trade name
Studylark Test Prep through Veltio.
23. In May 2019, Lynch signed a lease on behalf of Studylark for
an office located at 230 Sugartown Road, Wayne PA, 19087.
Veltio also has an office at 24 Veterans Square, Media,
Pennsylvania.
24. By letter dated May 13, 2019, Lynch was advised he was in
violation of the Non–Compete Agreement dated August 31, 2009,
by, establishing a competing business, StudyLark, in the same
market as MJ Test Prep within the 50-mile geographical restriction
established by the Agreement. Lynch was also advised that MJ
Test Prep believed Lynch violated the Agreement by disclosing or
appropriating confidential, business and proprietary information
by soliciting clients of MJ Test Prep. The letter further instructed
Lynch to cease these activities.
Trial Ct. Op., 2/4/20, at 3-8 (footnote omitted).
When Lynch refused to cease all operations of Studylark, Appellees
initiated this action by writ of summons on May 21, 2019. Thereafter, on June
21st, Appellees filed a complaint raising claims of breach of contract, a
violation of Pennsylvania’s Uniform Trade Secrets Act,1 and misappropriation
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1 12 Pa.C.S. §§ 5301-5308.
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of confidential information. See Appellee’s Complaint, 6/21/19, at 11-15. In
addition, the complaint sought injunctive relief and an accounting. Id. at 15-
17. Appellants filed preliminary objections, which were still pending when, on
August 19, 2019, Appellees filed a motion for a preliminary injunction. The
hearing on the preliminary injunction spanned three days — September 18,
19, and 24, 2019 — at which time, the court took the matter under
advisement. On November 27, 2019, the trial court entered the underlying
order granting Appellees’ motion for a preliminary injunction, enjoining
Appellants, and “anyone acting on their behalf or with them, . . . from . . .
operating StudyLark Test Prep or engaging in any business that provides
college admission or graduate school admissions tutoring services” within a
10 mile radius of MJ Test Prep’s Bryn Mawr office, for a period of three years,
or from using StudyLark’s Wayne and Media locations for tutoring, teaching,
marketing, or soliciting of clients for a three year period. Order, 11/27/19, at
12. The order also prohibited Appellants from (1) “disclosing or using MJ Test
Prep’s business information, including the materials and all worksheets . . .
having . . . a copyright stamp[,]” and (2) “soliciting MJ Test [P]rep’s current
or former clients for a period of three (3) years[.]” Id. Lastly, the court
directed Appellants to “return all of MJ Test Prep’s business information . . .
within ten (10) days[.]” Id. This timely appeal follows.2
____________________________________________
2 An order granting an injunction is an interlocutory order appealable as of
right pursuant to Pa.R.A.P. 311(a)(4). We will discuss Appellants’ compliance
with Pennsylvania Rule of Appellate Procedure 1925 infra.
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Appellants raise five issues for our review:
1. Whether the trial court erred and abused its discretion in
entering a preliminary injunction based on its finding that the
agreement dated August 31, 2009 between [ ] Joseph and [ ]
Lynch, for which there was no consideration, and which was not
assigned or transferred to MJ Test Prep LLC, is enforceable by MJ
Test Prep LLC against [ ] Lynch and Veltio LLC?
2. Whether the trial court erred and abused its discretion by
initially ignoring the requirements of the Copyright Act, 17 U.S.C.
§ 101(2) in entering the preliminary injunction, and subsequently
ignoring the undisputed evidence that [ ] Lynch was an
independent contractor without any written agreement when he
provided services to MJ Test Prep LLC to support the relief
granted?
3. Whether the trial court erred and abused its discretion in
enjoining [ ] Lynch and Veltio LLC from disclosing or using MJ Test
Prep LLC’s confidential or proprietary business information, when
[Appellees] failed to establish that MJ Test Prep LLC has
confidential or proprietary information or trade secret information
as defined by the Pennsylvania Uniform Trade Secrets Act, 12
Pa.C.S. [§] 5301, et seq.?
4. Whether the trial court erred and abused its discretion in
entering a preliminary injunction when the evidence presented at
the injunction hearing established that [ ] Joseph and MJ Test
Prep, LLC, who had the burden of proof, failed to establish each
of the essential prerequisites to preliminary injunctive relief?
5. Whether the trial court erred and abused its discretion in
finding the 3-year temporal restriction in the (unenforceable)
August 31, 2009 agreement to be reasonable?
Appellants’ Brief at 4-5.
Before we address the substantive claims raised on appeal, we must
first consider the trial court’s determination that Appellants failed to comply
with Pennsylvania Rule of Appellate Procedure 1925(b). See Trial Ct. Op. at
12. Although Appellants filed a timely statement of errors complained of on
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appeal pursuant to the court’s directive, the “concise statement” was 12 pages
in length, and raised 27 separate claims. See Appellee’s Statement of Matter
Complained of on Appeal, 12/30/19. Thus, the trial court found that “the
voluminous number of issues identified by Appellant[s] . . . impede[d] the
ability of [the court] to undertake a meaningful review of the issues raised on
appeal.” Trial Ct. Op. at 12. Accordingly, the court suggests Appellants have
waived all claims on appeal. See id. at 9-12. Nevertheless, the court
proceeded to address the issues that it was able to “glean[ ] from Appellants’
[1925(b)] Statement.” Id. at 13.
Pennsylvania Rule of Appellate Procedure 1925 requires an appellant to
file a statement of errors complained of on appeal when ordered to do so by
the trial court. Pa.R.A.P. 1925(b). The Rule further provides that the
Statement “shall concisely identify each error that the appellant intends to
assert” on appeal, and “should not be redundant or provide lengthy
explanations as to any error.” Pa.R.A.P. 1925(b)(4)(ii), (iv) (emphasis
added). Moreover, the Rule explicitly states: “Issues not included in the
Statement and/or not raised in accordance with the provisions of this
paragraph (b)(4) are waived.” Pa.R.A.P. 1925(b)(4)(vii) (emphasis added).
This Court has held that when an appellant fails to set forth its appellate
issues “in a concise manner,” it may impede the trial court’s ability to prepare
an opinion, and thereby frustrate this court’s “ability to engage in a meaningful
and effective appellate review process.” Kantor v. Epstein, 866 A.2d 394,
401 (Pa. Super. 2004) (concluding that the appellants “effectively precluded
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appellate review” when they, collectively, raised 104 issues, with multiple sub-
issues, and “deliberately circumvented the meaning and purpose of Rule
1925(b)”).3 Nevertheless, we have also declined to find waiver when a
“voluminous 1925(b) statement was not the result of bad faith or an attempt
to impede the appellate process.” Boehm v. Riversource Life Ins. Co., 117
A.3d 308, 319 n.3. (Pa. Super. 2015) (1925(b) statement raised 36 claims of
error).
While the Rule 1925(b) statement filed by Appellants in the present case
included numerous repetitive claims, we decline to find waiver here absent
any allegation of bad faith.4 Moreover, the trial court was able to address in
its opinion the issues Appellants raise on appeal. Thus, we proceed to a review
of Appellants’ substantive claims.
In their first issue, Appellants challenge the enforceability of the non-
compete agreement. Appellants’ Brief at 24. Specifically, they assert that the
agreement, entered into only by Joseph and Lynch individually, is not
enforceable by MJ Test Prep nor against Veltio. Id. Appellants maintain that
Joseph and Renata’s conduct — requesting Lynch sign a new non-compete
agreement years later — “illustrates their awareness that . . . MJ Test Prep
could not enforce any restrictive covenants because it had no agreement with
____________________________________________
3 We note Rule 1925 has been amended several times since the Kantor
decision in 2004. See Pa.R.A.P. 1925, Credits.
4 We caution Appellants’ counsel, however, that this Court will view repeated
violations of Rule 1925(b) as evidence of bad faith.
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Lynch.” Id. at 37. Appellants insist that, “without an assignment, a restrictive
covenant can be enforced only by a party to the covenant against a party to
the covenant.” Id. at 24. Furthermore, by permitting MJ Test Prep to enforce
the agreement, they contend the trial court “disregarded the corporate entities
and treated them as if they were the same as the individual parties.” Id. at
31. Lastly, Appellants assert there was no consideration for the non-compete
agreement since Lynch never performed work for Joseph, and, therefore, the
agreement never went into effect. Id. at. 35. We will address these claims
seriatim.
Our review of an order granting a preliminary injunction is well-settled:
[T]his Court must “conduct a searching inquiry of the record.
Accordingly, . . . the scope of review in preliminary injunction
matters is plenary.” Our standard of review is “highly deferential.”
Under this standard, “[we do] not inquire into the merits of the
controversy, but rather examine[ ] only the record to ascertain
whether any apparently reasonable grounds existed for the
action of the court below. We may reverse if the trial court’s
ruling amounted to an abuse of discretion or a misapplication of
law.”
AmQuip Crane Rental, LLC v. Crane & Rig Servs., LLC, 199 A.3d 904, 913
(Pa. Super. 2018) (citations omitted and emphasis added).
In the present case, Appellees’ request for relief was based upon a
restrictive covenant, specifically a non-compete agreement.
To establish a clear right to relief on a claim for breach of
restrictive covenants of an employment contract, a party must,
inter alia, demonstrate the following:
In Pennsylvania, restrictive covenants are enforceable if
they are incident to an employment relationship between
the parties; the restrictions imposed by the covenant are
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reasonably necessary for the protection of the employer;
and the restrictions imposed are reasonably limited in
duration and geographic extent. Our law permits equitable
enforcement of employee covenants not to compete only so
far as reasonably necessary for the protection of the
employer. However, restrictive covenants are not favored
in Pennsylvania and have been historically viewed as a trade
restraint that prevents a former employee from earning a
living.
Pennsylvania cases have recognized that trade secrets of an
employer, customer goodwill and specialized training and skills
acquired from the employer are all legitimate interests protectable
through a general restrictive covenant. In essence, the court
must examine and balance the employer’s legitimate business
interest, the individual's right to work, the public’s right to
unrestrained competition, and the right to contract in determining
whether to enforce a restrictive covenant.
In construing a restrictive covenant, courts do not assume that a
contract’s language was chosen carelessly, nor do they assume
that the parties were ignorant of the meaning of the language they
employed. When a writing is clear and unequivocal, its meaning
must be determined by its contents alone. It is not the function
of this Court to re-write it, or to give it a construction in conflict
with the accepted and plain meaning of the language used.
WMI Grp., Inc. v. Fox, 109 A.3d 740, 748–49 (Pa. Super. 2015) (citation
omitted).
Appellants’ primary argument is that “the trial court enforced a non-
existent agreement,” because the only signatories to the agreement were
Joseph, as an individual (identified as the employer), and Lynch, as an
individual (identified as the independent contractor). Appellants’ Brief at 24.
Appellants emphasize that Joseph drafted the agreement, and chose not to
name his company, MJ Test Prep, as the employer. Id. at 24-25. Because
“Joseph ultimately chose not to employ Lynch in his personal capacity and
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requested no work from Lynch,” Appellants insist the non-compete agreement
was rendered a “nullity.” Id. at 25. Moreover, Appellants emphasize that
non-compete agreements “are personal and not assignable without the
express consent of the employee.” Appellant’s Brief at 26, quoting All-Pak,
Inc. v. Johnston, 694 A.2d 347, 351 (Pa. Super. 1997). Similarly, Appellants
maintain there was no consideration for the agreement because “no work was
ever performed under the agreement” by Lynch for Joseph, in his individual
capacity. Id. at 36.
The trial court, however, found the agreement “was intended to apply
between them and the companies through which they work, pay and are paid,
which from the beginning was MJ Test Prep and Lynch, and since March 2018
included Lynch’s company Veltio, LLC.” Trial Ct. Op. at 15. The court
emphasized the following facts:
[ ] Lynch sough employment from MJ Test Prep LLC after noticing
its business front located at 756 East Haverford Road, Bryn Mawr,
Pennsylvania[.] Lynch met with [ ] Joseph, principal and owner
of MJ Test Prep, LLC, at [the] Bryn Mawr location to enter into the
non-compete agreement at the center of this case. The non-
compete agreement entered into by Joseph and Lynch states
Joseph’s address as 756 East Haverford Road, Bryn Mawr,
Pennsylvania[ —] the same address as the MJ Test Prep location
that [ ] Lynch first noticed and the location which he was physically
present when he entered into the agreement. . . . MJ Test Prep
was not a stranger to this deal. MJ Test Prep’s Bryn Mawr location
was initially what caught Lynch’s attention and inspired him to
reach out to the business’ principal, [ ] Joseph. From the genesis
of the relationship, Lynch dealt with Joseph in his capacity as
principal of MJ Test Prep. Lynch even accepted all payment for
his employment efforts by MJ Test Prep over the near decade long
employment relationship. This Court is not persuaded by the
notion that MJ Test Prep LLC is a stranger, or unknown entity, to
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[ ] Lynch simply because [ ] Joseph was the signatory to the non-
compete agreement between the parties. At the time of signing,
[ ] Lynch clearly knew of MJ Test Prep. He knew [ ] Joseph was
the principal and owner of MJ Test Prep. [ ] Lynch even signed
the Agreement at MJ Test Prep’s actual place of business.
Id. at 14-15.
We agree. At the time the parties signed the non-compete agreement,
Lynch was well aware Joseph was hiring him to work for MJ Test Prep.
Indeed, the agreement stated, in pertinent part:
Independent Contractor [Lynch] is being hired to teach and tutor
individuals in preparation of standardized testing, including but
not limited to SATs, SSATs, GREs, Gmats, LSATs; and is willing to
provide services as a tutor/instructor for Employer.
Appellees’ Complaint, 6/21/19, Exhibit 1, Non-Compete Agreement, 8/31/09,
at 1 (unpaginated). There was no evidence or testimony presented that,
after the creation of his company in 2006, Joseph, individually, provided
tutoring services outside of MJ Test Prep.
We recognize that Lynch testified he was hired to “do some special
projects for” Joseph, and that he insisted on including the addendum
acknowledging his continued employment with Examkrackers “because [he]
wasn’t sure if these small projects with Mr. Joseph would actually lead
anywhere.” N.T., 9/24/19, at 33. Lynch further testified he “believed [he]
was going to be working for Mr. Joseph” because Joseph’s name was on the
non-compete agreement, and the first time he realized he would be working
for MJ Test Prep was when he received his first paycheck. Id. at 34.
Conversely, Joseph testified that the agreement was in his name
because “that’s who we are” and that he did not recognize any difference
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between “Matt Joseph and MJ Test Prep.” N.T., 9/18/19, at 135-36. Indeed,
from the inception of his employment, Lynch worked out of MJ Test Prep’s
office, used “documents that were copyrighted by MJ Test Prep,” and was paid
with checks written by MJ Test Prep; further, all his clients wrote a check for
his services payable to MJ Test Prep. Id. at 136-37. Therefore, the trial court,
as fact finder, was free to resolve this conflict in favor of Joseph. See Turner
Const. v. Plumbers Local 690, 130 A.3d 47, 62 (Pa. Super. 2015) (“It is
beyond peradventure that the trial court is empowered to weigh the evidence
and to resolve matters of credibility.”).
Moreover, the cases upon which Appellants rely are distinguishable.
Both Hess v. Gebhard & Co., 808 A.2d 912 (Pa. 2002), and All-Pak, Inc.,
concern the assignability of an employee’s non-compete agreement when a
business is later sold to a third party. See Hess, 808 A.2d at 922 (holding
“a restrictive covenant not to compete, contained in an employment
agreement, is not assignable to the purchasing business entity, in the absence
of a specific assignability provision, where the covenant is included in a sale
of assets”); All-Pak, Inc., 694 A.2d 351 (holding non-compete covenants
“should be construed narrowly[ ] and, absent an explicit assignability
provision, courts should be hesitant to read one into the contract[;] a
successor employer is free to negotiate new employment contracts with the
employees”). Further, in Hess, the Pennsylvania Supreme Court rejected the
argument that the original employer could still enforce the agreement since it
had “retain[ed] a financial interest” in the business for several years after the
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sale to the third party. Hess, 808 A.2d at 923. The Court explained that
“pure financial gain at the expense of restricted competition is insufficient to
constitute a protectable business interest.” Id.
Here, however, there was no sale of the business to a third party, or
assignment of the non-compete clause. Joseph was co-owner of MJ Test Prep
with his wife, Renata. Unlike in Hess and All-Pak, Joseph was the business.
Upon our review, we conclude the record contains reasonable grounds for the
trial court’s determination that that Lynch agreed to work for, and not compete
with, MJ Test Prep.5 See AmQuip Crane Rental, LLC, 199 A.3d at 913. See
also Daniel Adams Associates, Inc. v. Rimbach Pub., Inc., 519 A.2d 997,
1000-01 (Pa. Super. 1987) (“A corporation is a creature of legal fiction which
can ‘act’ only through its . . . agents[, and w]here a party contracts with a
corporation through a corporate agent who acts within the scope of his
____________________________________________
5 We note Appellants state in their brief — absent a citation to the record —
that “Lynch and Joseph both testified that the agreement was to reflect their
personal relationship” and that Joseph’s testimony “established Joseph
wanted to be Lynch’s employer,” which is why the agreement is signed by him
individually. Appellants’ Brief at 30 & n.17 (emphasis added). However, our
review of the record reveals no support for this assertion. Rather, as noted
above, Joseph testified he did not see a distinction between himself and MJ
Test Prep, and at all times, Lynch was paid with a business check, the sign on
the door of his office stated “MJ Test Prep,” and his clients paid for services to
“MJ Test Prep.” Id. at 136-37. Thus, we conclude Joseph’s testimony
established just the opposite — that is, he intended to hire Lynch as an
independent contractor for MJ Test Prep.
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authority and reveals his principal, the corporate principal alone is liable for
breach of the contract.”) (citations omitted).6
Appellants also rely on WMI Group, Inc., for the proposition that a trial
court may not disregard the plain language of an employment agreement to
consider the parties’ intent. See Appellants’ Brief at 25-26 n.12. Again, the
facts in WMI are distinguishable from those presented herein. In that case,
the employee signed an employment agreement and non-compete clause with
WMI in 2004. WMI Group, 109 A.3d at 743. The agreement also contained
a clause that stated it would “automatically terminate if and when [the
e]mployee assumes a different position in the Company and signs a new
Agreement, or upon termination of employment.” Id. (citation omitted).
Several years later, the employee was promoted to a new position in a
separate, but related, business entity — WM Robots, LLC — owned by the
same individuals. Id. at 744 (citation omitted). The employee’s promotion
agreement did not contain a non-compete clause. Id. (citation omitted). The
employee was promoted again several years later before later resigning, and
opening his own competing business. Id. at 745-46.
The second employer — WM Robots, LLC — filed a complaint against the
employee and his new company alleging, inter alia, breach of contract, and
____________________________________________
6 For the same reasons, the record supports the trial court’s finding that
Lynch’s non-compete agreement bars Veltio from operating StudyLark.
Lynch is the sole owner of Veltio, an LLC he formed “on the advice of an
accountant” to “mitigate” some of his tax liability as an independent
contractor. N.T., 9/19/19, at 135; N.T., 9/24/19, at 66-67.
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seeking a preliminary injunction. WMI Group, 109 A.3d at 746 (citation
omitted). Following a hearing, the trial court denied the petition for
preliminary injunction and the employer appealed to this Court. Id. The
employer argued that the employee’s promotion agreements did not void his
original non-compete clause, and the parties’ “unstated intent” was “to
incorporate the original [ ] agreement . . . by implicit reference.” Id. at 747.
A panel of this Court rejected the employer’s claim, concluding the one year
non-compete clause became effective when the employee “terminated
employment with WMI and joined WM Robots, LLC[; the employee] did not
assume a different position within WMI.” Id. at 750 (emphasis added). We
also rejected the employers’ attempt to rely on parol evidence to “establish
the parties’ intent to incorporate by reference the 2004 agreement’s non-
compete clause.” Id. This Court stated: “[The employers] have not referred
this Court to any ambiguous language such that we may resort to extrinsic
and parol evidence.” Id.
Here, however, Appellees did not attempt to enforce a non-compete
agreement entered into by another party. Unlike in WMI, Joseph was not a
principal of two separate corporate entities. Rather, it was clear to both
parties that Joseph signed the non-compete agreement as principal of MJ Test
Prep, and Lynch signed the agreement intending to provide tutoring services
for MJ Test Prep. Therefore, the consideration for the agreement was
Appellants’ employment of Lynch. See Pulse Techs., Inc. v. Notaro, 67
A.3d 778, 781 (Pa. 2013) (“As long as the restrictive covenants are an
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auxiliary part of the taking of regular employment, and not an after-thought
to impose additional restrictions on the unsuspecting employee, a contract of
employment containing such covenants is supported by valid consideration,
and is therefore enforceable.”) (citation omitted).
We also reject Appellants’ assertion that “the conduct of Joseph and MJ
Test Prep established their awareness that they had no enforceable [non-
compete] agreement with Lynch.” See Appellants’ Brief at 37. Indeed,
Appellants emphasize that after an IRS audit in 2013 and again several years
later, Appellees asked Lynch to sign a new non-compete agreement with MJ
Test Prep, but he refused. Id. However, Renata testified that the later non-
compete agreements presented to Lynch were revised by “lawyers working in
our office as tutors,” and although the subsequent agreements listed MJ Test
Prep as the employer, she and Matthew Joseph were “not worried” because
Lynch had “signed an agreement with us.” N.T., 9/24/19, at 16, 18.
Accordingly, Renata’s testimony disputes Appellees’ contention that MJ Test
Prep asked Lynch to sign a second non-compete agreement because it knew
the original agreement was unenforceable. Accordingly, Appellants’ argument
fails.
Next, Appellants contend the trial court erred when it enjoined them
from keeping and using the worksheets and materials Lynch created when he
was employed by MJ Test Prep. Appellants’ Brief at 38. They argue that,
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pursuant to the Copyright Act,7 “a signed ‘Work for Hire’ agreement is required
for an employer to attain ownership and copyright privilege to any work
created by an independent contractor.” Id. Because there is no “work for
hire” agreement between the parties, Appellants insist that “Lynch, not MJ
Test Prep, owns the materials [Lynch] created while providing independent
contractor services for MJ Test Prep.” Id. at 41.
Section 201 of the Federal Copyright Act provides that the “[c]opyright
in a work protected under [the Act] vests initially in the author or authors of
the work.” 17 U.S.C. § 201(a). However, subsection (b) provides that, when
a work is “made for hire, the employer or other person for whom the work
was prepared is considered the author for purposes of this title[.]” 17 U.S.C.
§ 201(b) (emphasis added). Section 101 defines a “work made for hire” as
follows:
(1) a work prepared by an employee within the scope of his
or her employment; or
(2) a work specially ordered or commissioned for use as a
contribution to a collective work, . . . as a compilation, as an
instructional text, as a test, as answer material for a test, or as
an atlas, if the parties expressly agree in a written instrument
signed by them that the work shall be considered a work made
for hire. . . .
17 U.S.C. § 101(1)-(2) (emphases supplied).
Appellants argue that “Lynch, not MJ Test Prep, owns the material he
created while providing independent contractor services for MJ Test Prep.”
____________________________________________
7 17 U.S.C. §§ 101-1401.
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Appellants’ Brief at 41. Relying on the United States Supreme Court’s decision
in Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989),
Appellants maintain a “work for hire” can be attained by “‘two mutually
exclusive means’ . . . the first for employees, and the second for independent
contractors.” Appellant’s Brief at 40, citing Community for Creative Non-
Violence, 490 U.S. at 742-43. Because “it is undisputed that Lynch was an
independent contractor for MJ Test Prep,” Appellants contend the materials
Lynch created were not “a work prepared by an employee within the scope
of his or her employment” under Section 101 of the Copyright Act. See
Appellants’ Brief at 41; 17 U.S.C. § 101(1) (emphasis added). Moreover,
because Lynch did not sign a “work for hire” agreement with either MJ Test
Prep or Joseph,8 Appellants assert the materials Lynch created did not become
“a work made for hire” under the Act. See Appellant’s Brief at 41.
The trial court, however, found the flaw in Appellants’ argument was
that they “made the assumption that [ ] Lynch is considered an independent
contractor and not an employee for the purposes of applying” Section 101(2).
Trial Ct. Op. at 18. Rather, the trial court analyzed whether Lynch would be
considered an employee under the “common law agency doctrine,” as set forth
by the Supreme Court in Community for Creative Non-Violence:
In determining whether a hired party is an employee under the
general common law of agency, we consider the hiring party’s
right to control the manner and means by which the product is
accomplished. Among the other factors relevant to this inquiry
____________________________________________
8 See N.T., 9/24/19, at 35-36.
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are the skill required; the source of the instrumentalities and
tools; the location of the work; the duration of the relationship
between the parties; whether the hiring party has the right to
assign additional projects to the hired party; the extent of the
hired party’s discretion over when and how long to work; the
method of payment; the hired party’s role in hiring and paying
assistants; whether the work is part of the regular business of the
hiring party; whether the hiring party is in business; the provision
of employee benefits; and the tax treatment of the hired party.
No one of these factors is determinative.
See Community for Creative Non-Violence, 490 U.S. at 751-52 (footnotes
and citations omitted). See also Trial Ct. Op. at 19-20.
In its opinion, the trial court detailed the testimony presented during
the preliminary injunction hearing, which it found supported its determination
that Lynch was working as an “employee” of MJ Test Prep for purposes of the
Copyright Act. See Trial Ct. Op. at 20-22. These facts include: (1) all the
worksheets and binders Lynch created for MJ Test Prep contained the
company’s copyright insignia; (2) the employment relationship lasted for
nearly 10 years; (3) “Lynch was not paid upon the completion of a specific
job[, but rather,] was paid by the hour for his efforts like an employee;” (4)
Lynch “held the title of Senior Tutor and Director of Curriculum Development;”
and (5) Lynch’s work “was always subject to the control and approval of
Joseph and MJ Test Prep much like an employee’s work.” Id. Thus, the court
found that “Lynch is considered an employee for purposes of the Copyright
Act . . . [and] no Work for Hire agreement [was] necessary for MJ Test Prep
to attain ownership of the work created by Lynch during the course of his
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employment with Joseph and MJ Test Prep.” Id. at 22. We agree, and adopt
the trial court’s analysis of this issue.
We note that Appellants do not refute the court’s findings; rather, they
insist there was no need for the court to undertake the analysis in the first
place because “it is undisputed that Lynch was an independent contractor for
MJ Test Prep.” See Appellants’ Brief at 41. Furthermore, they insist the trial
court misinterpreted the Supreme Court’s discussion in Community for
Creative Non-Violence, where, “unlike here, the parties had not already
labeled the relationship.” Id. Appellants, however, provide no authority for
their assumption that the parties’ “labeling” of the relationship settles the
question of whether a person is an “employee” who created a work within the
scope of their employment for purposes of Section 101(1) of the Copyright
Act. Indeed, in Innovative Networks, Inc. v. Satellite Airlines Ticketing
Centers, Inc., 871 F.Supp. 709 (S.D.N.Y. 1995), a federal district court9
concluded that a worker was an employee for purposes of the Copyright Act
despite the fact the worker received compensation from an “affiliated entity”
rather than the employer itself, and the employer reported the worker as an
independent contractor to “federal and state taxing authorities.” Id. at 719.
The court explained: “While [the employee] may have held the title of
‘independent contractor,’ . . . ‘an independent contractor is an ‘employee’ for
____________________________________________
9 We acknowledge that “[d]ecisions of the federal district courts are not
binding authority for this Court;” nevertheless, we may rely upon them for
persuasive authority. Huber v. Etkin, 58 A.3d 772, 780 n.7 (Pa. Super.
2012) (en banc).
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the purposes of the Act if the contractor was not truly independent, but was
controlled and supervised in the creation of the particular work by the
employing party.’” Id. (citation omitted). The federal district court found that
under the particular facts of that case, the worker was an employee for
purposes of Section 101. Id. Accordingly, Appellants’ second claim fails.
In their third claim, Appellants argue the trial court erred when it found
MJ Test Prep’s worksheets and materials constituted protectable trade secrets
as defined by Pennsylvania’s Uniform Trade Secrets Act. See Appellants’ Brief
at 42. Specifically, Appellants assert the information contained on the
worksheets was copied “from previous standardized tests” and there was
“nothing unique about the explanations provided in the worksheets.” Id. at
44. Furthermore, Appellants emphasize the worksheets were stored on a
“‘wall of worksheets’ in open, unlocked cubbies in MJ Test Prep’s offices where
they are easily accessible” and were routinely given to students, “who [were]
not required to return them.” Id. at 45-46. Thus, Appellants contend
Appellees failed to establish that Lynch appropriated trade secrets.
Pennsylvania’s Uniform Trade Secrets Act permits an aggrieved party to
seek an injunction to prevent an “[a]ctual or threatened misappropriation” of
a trade secret. 12 Pa.C.S. § 5303(a). The Act defines a trade secret as
follows:
“Trade secret.” Information, including a formula, drawing,
pattern, compilation including a customer list, program, device,
method, technique or process that:
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(1) Derives independent economic value, actual or potential,
from not being generally known to, and not being
readily ascertainable by proper means by, other
persons who can obtain economic value from its disclosure
or use.
(2) Is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
12 Pa.C.S. § 5302(1)-(2) (some emphases added).
“The question of whether information is a trade secret is determined on
a case-by-case basis and can include confidential customer lists.” Shepherd
v. Pittsburgh Glass Works, LLC, 25 A.3d 1233, 1245 (Pa. Super. 2011).
This Court has compiled the following list of factors that a trial court should
consider in determining whether information constitutes a trade secret:
1) the extent to which the information is known outside of [the]
business; 2) the extent to which it is known by employees and
others involved in [the] business; 3) the extent of measures taken
by [the employer] to guard the secrecy of the information; 4) the
value of the information to [the employer] and to [its]
competitors; 5) the amount of effort or money expended by [the
employer] in developing the information; and 6) the ease or
difficulty with which the information could be properly acquired or
duplicated by others. “The crucial indicia for determining
whether certain information constitutes a trade secret are
‘substantial secrecy and competitive value to the owner.’”
Crum v. Bridgestone/Firestone N. Am. Tire, LLC, 907 A.2d 578, 585 (Pa.
Super. 2006) (citations omitted). Moreover, “if a competitor could obtain the
information by legitimate means, it will not be given injunctive protection as
a trade secret.” WellSpan Health v. Bayliss, 869 A.2d 990, 997 (Pa. Super.
2005).
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Here, the trial court determined the worksheets and binders prepared
by MJ Test Prep — a “compilation of admission test style questions with
instructions on how to address the test problems successfully” — qualified as
trade secrets. Trial Ct. Op. at 27. Furthermore, the court found MJ Test Prep
took sufficient measures to “maintain confidentiality” of the information by
marking the worksheets “‘unauthorized reproduction prohibited’ and telling
tutors and students to maintain the confidentiality.” Id. at 28.
Conversely, Appellants emphasize that the test questions utilized on the
worksheets were derived from previous standardized tests, which are
“available in bookstores and online.” Appellants’ Brief at 44. Further, Lynch
testified that the method of grouping questions Joseph used in compiling his
worksheets was a “ubiquitous method used to prepare students for the SAT”
by other test prep companies, and by Lynch, himself, before he began working
for MJ Test Prep. Id. at 44-45. See N.T. 9/24/19, at 42, 52. Appellants also
maintain that Appellees did not take adequate measures to maintain the
secrecy of worksheets because they were stored in open cubbies “easily
accessible” to anyone, and were routinely handed out to students without
requiring them to sign any nondisclosure or confidentiality agreements. Id.
at 46-47. Indeed, Appellants insists “MJ Test Prep has no way of tracking,
and does not track, whether any MJ Test Prep student shares the worksheets
with other students.” Id. at 47.
Our review of the record reveals ample support for the trial court’s
determination that the worksheets and materials prepared by Lynch for MJ
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Test Prep constitute trade secrets pursuant to Section 5302. Although the
test questions were easily accessible by individuals outside of MJ Test Prep,
Joseph explained the unique method he used to compile the questions on MJ
Test Prep’s worksheets. See N.T., 9/18/19, at 60-67. He stated that he
started tutoring for SAT prep in 1988, but began developing his system of
teaching in 1996, when he changed the focus of his doctoral dissertation to
“coaching for the SAT’s.” Id. at 52-54. Joseph explained:
I initially developed [the system] when I was working on my PhD
because in order to write a dissertation, you have to basically
operationalize your approach. And so, what I did is I
deconstructed the SAT and broke it into components of the test,
discrete components that I could come up with solution strategies.
* * *
. . . So I could come up with solutions, so, I could come up with
types of problems that would definitely show up. I broke those
into categories. Then I broke that down into the simplest ways to
teach those problems. . . . And so, in creating that system and
seeing that operationalization, I also became more aware of what
students needed help on what types of problems. So, when kids
come to us, our system is adaptable in a sense that we can look
at someone’s needs and prescribe the right kind of materials.
Id. at 60-61. He testified that he looked for “broad categories” of question
types, and “ways in which seemingly different questions fell under the same
category.” Id. at 63. Joseph summarized: “[W]hat I tried to do is . . . look
categorically at the entire test, understand through my own deconstruction
what I saw as the nature of these problems, broken into categories and then
broke them into subcategories so they could easily be taught.” Id. He noted
that the sequence of the questions was “[e]xtremely” important to the
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learning process. Id. at 95. Indeed, Appellees’ witness, Matthew Tausch,
testified that, when he began working for MJ Test Prep in July of 2019, he was
“impressed” by the teaching system the company utilized, specifically the
“level of understanding of the test” that the worksheets reflected. Id. at 36.
He further stated that he was not aware of any other test prep company that
used similar SAT worksheets. Id. at 51.
Joseph testified that had limited computer skills, so he instructed Lynch
how to compile and group the questions for the worksheets, but would allow
Lynch, under his direction, to type an explanation for the students. N.T.,
9/18/19, at 93, 114, 127-28. While Lynch testified that he created a computer
database of questions, which included his own method of “sorting [the]
questions and determining . . . an appropriate order to present those
questions in[,]” he acknowledged that the “last stage in that process was to
show them to [Joseph] for his approval and occasionally he would suggest
small tweaks[.]” N.T., 9/24/19, at 46-47. Despite Lynch’s insistence that the
worksheets were “almost completely [his] own work[,]” Joseph testified that
he paid Lynch “a fee each week . . . simply to transcribe all the sort of ideas
or visions for our business.” N.T., 9/18/19, at 128; 9/24/19, at 47. The trial
court resolved this credibility determination in favor of Appellants. See
Turner Const., 130 A.3d at 62.
With regard to confidentiality, Lynch conceded that all of the worksheets
included a notice at the bottom, which stated “unauthorized reproduction
prohibited,” and that he, personally, added a copyright symbol to the
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worksheets he created.10 N.T., 9/24/19, at 55-56. Further, Joseph testified
that he requires all of his tutors to sign a non-compete/non-disclosure
agreement “so that people would not use the system . . . or divulge any of
this information in a professional capacity to any other professionals[.]” N.T.,
9/18/19, at 130-31. He also instructs MJ Test Prep tutors to emphasize to
students who leave to work with another company that MJ Test Prep’s
materials “are intellectual property . . . not to be used with anyone else[.]”
Id. at 133. While he acknowledged he has, ‘in very limited cases,” provided
his materials to nonprofits groups or relatives free of charge, he has done so
“with the provision that it’s only used with a select group of people and they
will not be reproduced or printed outside for anyone else to use.” Id. at 133.
Thus, the record supports the trial court’s determination that Appellees’
worksheets and other materials meet the “substantial secrecy and competitive
value” test to qualify as trade secrets pursuant to Section 5302. See Crum,
907 A.2d at 585. Accordingly, Appellants are entitled to no relief on this claim.
In their final two issues, Appellants insist Appellees failed to establish
the essential prerequisites for injunctive relief. See Appellants’ Brief at 49.
In particular, Appellants contend Appellees failed to demonstrate (1) they will
suffer “irreparable harm” that cannot be cured by monetary damages; and (2)
the three-year temporal restriction is reasonable. Id. at 49, 54-55.
____________________________________________
10 Lynch also testified, however, that he “knew that there was no validity in
that symbol[, t]hat it simply was the custom at MJ Test Prep when [he]
arrived.” N.T., 9/24/19, at 57.
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When reviewing a trial court’s order grant of a preliminary injunction,
we must bear in mind the following:
[O]ur review of a trial court’s order granting or denying
preliminary injunctive relief is “highly deferential”. This
“highly deferential” standard of review states that in
reviewing the grant or denial of a preliminary injunction,
an appellate court is directed to “examine the record to
determine if there were any apparently reasonable
grounds for the action of the court below.”
“An abuse of discretion is not merely an error of judgment, but if
in reaching a conclusion the law is overridden or misapplied, or
the judgment exercised is manifestly unreasonable, or the result
of partiality, prejudice, bias, or ill will, as shown by the evidence
or the record, discretion is abused.” “[W]e do not inquire into the
merits of the controversy. . . . Only if it is plain that no grounds
exist to support the decree or that the rule of law relied upon was
palpably erroneous or misapplied will we interfere with the
decision of the trial court.”
Synthes USA Sales, LLC v. Harrison, 83 A.3d 242, 248–49 (Pa. Super.
2013) (citations omitted and emphases added). See also AmQuip Crane
Rental, LLC, 199 A.3d at 913.
The party requesting preliminary injunctive relief has the burden of
establishing each of the following “essential prerequisites” in order to obtain
relief:
The party must show: 1) “that the injunction is necessary
to prevent immediate and irreparable harm that cannot be
adequately compensated by damages”; 2) “that greater injury
would result from refusing an injunction than from granting it,
and, concomitantly, that issuance of an injunction will not
substantially harm other interested parties in the proceedings”; 3)
“that a preliminary injunction will properly restore the parties to
their status as it existed immediately prior to the alleged wrongful
conduct”; 4) “that the activity it seeks to restrain is actionable,
that its right to relief is clear, and that the wrong is manifest, or,
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in other words, must show that it is likely to prevail on the merits”;
5) “that the injunction it seeks is reasonably suited to abate the
offending activity”; and, 6) “that a preliminary injunction will not
adversely affect the public interest.”
Warehime v. Warehime, 860 A.2d 41, 46–47 (Pa. 2004).
Much of Appellants’ argument is simply a rehash of claims that we have
previously rejected. See Appellants’ Brief at 49 (asserting there is no
“enforceable agreement that contains enforceable restrictive covenants”); 52
(arguing the status quo prior to the lawsuit was that “the 2009 agreement
was not in effect, MJ Test Prep was not a party to the agreement . . . , the
materials created by Lynch while he was an independent contractor for MJ
Test Prep belonged to him, [and] Appellees had no trade secrets or
confidential information”); 53 (stating “Appellees did not establish . . . the
existence of an enforceable agreement and protect[a]ble business
interests.”). Therefore, we need not address them again.
However, Appellants also assert that Appellees failed to demonstrate
“the injunction is necessary to prevent immediate and irreparable harm that
cannot be adequately compensated by damages” and “the injunction . . . is
reasonably suited to abate the offending activity.” Appellants’ Brief at 49, 54-
55; see Warehime, 860 A.2d at 46-47. Appellants emphasize Joseph’s
testimony that a “typical student at MJ Test Prep gets 15 sessions of tutoring
over a 15-week period of time,” for which the loss of income is an “easy
mathematical calculation.” Appellants’ Brief at 50 (emphasis removed).
Moreover, they maintain the trial court ignored this testimony, and speculated
“without any supporting evidence” that MJ Test Prep may suffer future harm
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because their SAT clients might seek additional test prep support in the future
for graduate school exams. Id. Appellants aver: “Where, as here, there is
an admission that customers use services for a finite period of time and that
the loss of revenue from competition is easily calculated, irreparable harm is
not established, and injunctive relief if no proper on that basis alone.” Id. at
51. Similarly, Appellants insist the three-year temporal restriction is
unreasonable because their “typical student . . . get 15 sessions of tutoring
over a 15-week period.” Id. at 54. Indeed, they maintain the three-year
restriction is “designed to unfairly reduce competition.” Id.
Our review of the record reveals “reasonable grounds” for the trial
court’s order granting Appellees’ request for a preliminary injunction. See
Synthes USA Sales, LLC, 83 A.3d at 249. Joseph testified that “most of [MJ
Test Prep’s] business is referral.” N.T., 9/19/19, at 30. See also N.T.,
9/18/19, at 57 (stating “[W]e’re so well established in terms of raising scores
and the system that we use [that b]asically, kids come to us because they
know the results”). Joseph stated that, when discussing his business with a
potential client,
one of the things that we can say with great confidence is that
we have a system of materials that no one else has that
comprehensively cover[s] every component of the test and that if
you come to us, you’re going to be getting a research[ed] and well
established system that is going to significantly raise scores.
N.T., 9/19/19, at 30-31. Moreover, he explained that he requires tutors to
sign a three-year non-compete agreement because:
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I believe that the system that we have is so powerful and so
effective, that for anyone to use it within the immediate vicinity
after working with us, would make them stronger than anybody
else in the area and it would diminish what we do that’s separate
and special.
Id. at 126. See also N.T., 9/18/19, at 57-58 (noting his business “really took
off” after the newspaper interviewed three students who received perfect SAT
scores, and reported they had worked with him).
With regard to the immeasurable harm and three-year temporal
restriction, the trial court opined:
This Court notes that MJ Test Prep has been providing
college admissions and professional tutoring services in the
Philadelphia metropolitan area continuously since May 11, 2006.
Over this period of time, customers have engaged MJ Test Prep
for tutoring services for college admissions tests, many of whom
received tutoring from [ ] Lynch directly through his work with MJ
Test Prep. It is apparent that many individuals who pursue higher
education often seek multiple degrees, each of which usually
require an entrance exam. [A] customer is likely to return to a
business that provided a satisfactory service in the past.
The nature of the test prep business has inherent delay in
when a repeat customer may solicit for additional services. . . .
The traditional undergraduate degree takes students four (4)
years to compete. If a student were to purchase SAT tutoring
from MJ Test Prep, they are not likely to return for other graduate
admissions test tutoring until they have completed all or a
substantial portion of their undergraduate degree program.
The goodwill that was developed by MJ Test Prep with its
customers through offering testing service is the legitimate
business interest they seek to protect. While the approximate
value of services a single customer may seek from MJ Test Prep
is reasonably predictable, it is unknown how many of MJ Test
Prep’s existing customers will require additional test prep tutoring
. . . if they . . . seek to forward their scholastic careers[.] This
makes the measure of potential lost revenue near impossible to
determine.
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Trial Ct. Op. at 25-26.
We agree. During cross-examination, Joseph acknowledged that if a
student was tutored by MJ Test Prep for the SAT’s before college, they would
not return for graduate school tutoring until four years later. N.T., 9/19/19,
at 125. Expanding on this testimony in a common-sense manner, the trial
court determined that a three-year temporal restriction was reasonable to
protect the goodwill of any repeat customers. Considering the bulk of
Appellants’ business is generated by word-of-mouth, we detect no abuse of
discretion in the court’s analysis.
Accordingly, bearing in mind our “highly deferential” standard of review,
we find “reasonable grounds” in the record supporting the trial court’s grant
of a preliminary injunction in favor of Appellees.
Order affirmed.
President Judge Panella joins the memorandum.
Judge McLaughlin files a concurring memorandum in which President
Judge Panella joins.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/21/21
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MJ Test Prep v. Lynch, D.
Combined Opinion