United States Court of Appeals
For the First Circuit
No. 10-2423
OFFICEMAX, INC.,
Plaintiff, Appellee,
v.
DAVID A. LEVESQUE, and DANA RATTRAY,
Defendants, Appellants,
COUNTY QWIK PRINT, INC., d/b/a/ CQP Office Solutions,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. John A. Woodcock, Jr., U.S. District Judge]
Before
Torruella, Thompson, Circuit Judges,
and Saris,* District Judge.
Edward W. Gould with whom Joseph M. Bethony was on brief for
appellants.
Kindra L. Hansen with whom John Byron Flood, Russell B.
Pierce, Jr., and Danielle Yvonne Vanderzanden were on brief for
appellee.
September 12, 2011
*
Of the District of Massachusetts, sitting by designation.
SARIS, District Judge. Appellants David A. Levesque and
Dana Rattray challenge the district court's issuance of a
preliminary injunction sought by their former employer OfficeMax,
Inc. ("OfficeMax") to enforce noncompetition agreements barring
them from working in office supply sales in or around Aroostook
County, Maine. See OfficeMax Inc. v. County Qwick Print, Inc., 751
F. Supp. 2d 221, 252 (D. Me. 2010). The appellants argue that,
under the plain language of the agreements, the one-year
noncompetition period was triggered in 1996, when OfficeMax's
predecessor in interest purchased all of the shares of the
appellants' employer. We agree. The preliminary injunction is
VACATED, and the case is REMANDED to the district court.1
I. Background
The following background facts are derived from the
district court's orders2 and are largely uncontested for the
purposes of this appeal.
In the early 1980s, the appellants were employed by a
small company called Fitzgerald Office Supplies. In 1994,
1
We have jurisdiction over this interlocutory appeal under
28 U.S.C. § 1292(a)(1). There is diversity jurisdiction pursuant
to 28 U.S.C. § 1332(a), and the parties do not dispute that Maine
law applies.
2
The district court issued two relevant orders. See
OfficeMax Inc. v. County Qwick Print, Inc., 751 F. Supp.2d 221 (D.
Me. 2010) (allowing preliminary injunction); OfficeMax Inc. v.
County Qwick Print, Inc., 709 F. Supp. 2d 100 (D. Me. 2010)
(denying motion for a temporary restraining order).
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Fitzgerald became Loring, Short, and Harmon ("LS&H"). In February
1996, Boise Cascade Office Products Corporation ("BCOP") purchased
all of LS&H’s shares. In anticipation of the purchase, BCOP asked
LS&H to solicit Confidential Information and Noncompetition
Agreements (the "agreements") from the appellants.3 Among other
things, the agreements bound the appellants to refrain from
disclosing confidential information or trade secrets acquired
during employment at LS&H. Most important for the purpose of this
dispute, Paragraph 4 of the agreements states in relevant part:
For a period of 12 months after termination of my
employment with LS&H (or for a period of 12 months after
a final judgment or injunction enforcing this covenant),
I will not, either for my own purposes or as an employee
of or for the benefit of any other entity or person in
a capacity that directly or indirectly includes
responsibility for developing and maintaining customer
relationships, engage in the sale or distribution of
office supplies, office furniture, or related office
products or services, engage in the sale of janitorial
supplies, or otherwise engage in the type of work that I
presently perform for LS&H within sixty (60) miles of any
county in which I performed services for LS&H in the 12
months prior to my termination of employment. In
agreeing to this restriction, I specifically acknowledge
the substantial value to LS&H of my customer contacts and
agree that such contacts constitute goodwill and a
protectible interest of LS&H.
(emphasis added). Also relevant, Paragraph 6 provides:
I agree that this Agreement shall be freely assignable by
LS&H to BCOP in the event of and upon the closing of the
sale of stock of LS&H to BCOP. I further agree that if
requested by BCOP, and for the consideration stated
above, I will sign a noncompetition agreement in
3
According to Section 8.9 of the Stock Purchase Agreement,
the agreements were "in a form. . . provided by BCOP."
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substantially the same form as this Agreement and which
names BCOP as the employer.
In the preamble, the agreements explain that they were signed in
anticipation of the purchase of LS&H:
I understand that [BCOP] plans to purchase [LS&H]. I
execute this Agreement in contemplation of that
transaction, knowing that LS&H is tendering the
consideration on behalf of BCOP and intending that my
obligations, duties, and promises in this Agreement are
for the benefit of BCOP and in the expectation that I
will be offered, and if offered I will accept, employment
with BCOP after the closing of the transaction. In
consideration of the sum of $2,500, which has been paid
to me by LS&H, I agree to the following[.]
As consideration for signing the agreements, LS&H paid each of the
appellants $2,500 two days prior to the execution of the share
purchase agreement between BCOP and LS&H's shareholders. Soon
after execution of the agreements, LS&H physically delivered the
agreements to BCOP, and BCOP reimbursed LS&H for the consideration
paid to the appellants.4
Upon completion of BCOP's purchase of LS&H, the
appellants accepted employment with BCOP. Soon after, the
appellants assert that BCOP offered them separate noncompetition
agreements, which the appellants refused to sign. They both
continued to work at BCOP until its subsequent merger with
4
The district court found that this conduct, along with
the Stock Purchase Agreement, constituted assignment of the
agreements from LS&H to BCOP. OfficeMax Inc., 751 F. Supp. 2d at
240-41. The appellants challenge this finding, but because we find
that even if the agreements were assigned, the stock purchase
triggered the one-year noncompetition period, we need not address
this issue.
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OfficeMax.5 After the merger, OfficeMax offered the appellants
positions on the OfficeMax sales team. Appellants say that
OfficeMax similarly asked them to sign noncompetition agreements
with OfficeMax but that they again refused.
In 2009, OfficeMax terminated Levesque due to corporate
reorganization. In early 2010, Rattray resigned from his position.
After leaving their employment with OfficeMax, the appellants began
working together for County Qwick Print. At first they focused
mainly on printing services, but soon they began doing much of the
same office supply sales work as they had done at their previous
employments, servicing many of the same customers, and working in
the same region in which they worked for OfficeMax.
OfficeMax moved for a preliminary injunction preventing
the appellants from engaging in the sale of office supplies. The
district court found that OfficeMax had established a likelihood of
success on the merits, that the noncompetition clauses in the
agreements still covered the employees, that these agreements were
validly assigned by LS&H to BCOP, and that OfficeMax acquired the
agreements as successor by merger to BCOP. The district court also
found that OfficeMax had demonstrated that it would suffer
irreparable harm if the appellants continued competing in the sale
5
BCOP changed its name to OfficeMax Contract, Inc. in
October 2004. OfficeMax Inc., 751 F. Supp. 2d at 242. OfficeMax
Contract, Inc. subsequently merged into OfficeMax, Inc. in December
2006. Id.
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of office supplies and that the balance of equities supported the
issuance of a preliminary injunction. See OfficeMax, Inc., 751 F.
Supp. 2d. at 248-49.
II. Analysis
A district court's decision to grant a preliminary
injunction is reviewed for abuse of discretion. See Waldron v.
George Weston Bakeries Inc., 570 F.3d 5, 8 (1st Cir. 2009). Within
this ambit, findings of fact are reviewed for clear error and
issues of law are reviewed de novo. See Braintree Labs., Inc. v.
Citigroup Global Markets Inc., 622 F.3d 36, 41 (1st Cir. 2010).
"While the decision to grant or deny a preliminary injunction is
reversible only for an abuse of discretion, an incorrect finding of
law in determining the likelihood of success on the merits is not
within the district court's discretion." Paris v. Dep't of Housing
& Urban Dev., 843 F.2d 561, 574 (1st Cir. 1988). Contract
interpretation, when based on contractual language without resort
to extrinsic evidence, is a "question of law" that is reviewed de
novo. See Principal Mut. Life Ins. Co. v. Racal-Datacom, Inc., 233
F.3d 1, 3 (1st Cir. 2000).
The key issue here is whether the appellants' termination
of employment at OfficeMax triggers the running of the one-year
noncompetition period, or whether the period was triggered by
BCOP’s purchase of LS&H. Appellants contend that the language
"termination of my employment with LS&H" in Paragraph 4 of the
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agreements should be interpreted to mean that the appellants'
completion of employment with LS&H, which occurred at the stock
sale, initiated the running of the one-year noncompetition period.
Under this interpretation, even if BCOP and then OfficeMax acquired
the rights to the agreements, the noncompetition clauses lapsed
around February 1997. OfficeMax argues, and the district court
agreed, that the valid assignment of the agreements to BCOP not
only gave BCOP the rights to enforce the agreements but also set
termination of employment with BCOP, which later merged with
OfficeMax, as the triggering event for the one-year noncompetition
agreement.
Though neither side argues that the agreements are
ambiguous, under Maine law, we must address this question first.
See Halco v. Davey, 919 A.2d 626, 629 (Me. 2007) ("When
interpreting whether a contractual provision was breached, courts
must first determine as a matter of law whether the provision is
ambiguous."). "When a contract is reasonably subject to two or
more interpretations, or its meaning is unclear, it is ambiguous."
Waltman & Co. v. Leavitt, 722 A.2d 862, 864 (Me. 1999). "The fact
that parties have different views of what an agreement means does
not render it ambiguous." Champagne v. Victory Homes, Inc., 897
A.2d 803, 806 (Me. 2006). Although OfficeMax presses hard for an
interpretation that the noncompetition agreements were triggered by
the appellants' termination of employment at OfficeMax, the
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language of the agreements, read as a whole, unambiguously compels
the appellants' interpretation.
In most cases, where contractual language has a plain,
generally accepted meaning, it should be interpreted in accordance
with that meaning. See Reliance Nat. Indem. v. Knowles Indus.
Serv., Corp., 868 A.2d 220, 228 (Me. 2005) ("Interpretation of an
unambiguous provision. . .is given its plain, ordinary, and
generally accepted meaning." (internal quotation marks and citation
omitted)); see also Restatement (Second) of Contracts § 202(3)(a)
("[W]here language has a generally prevailing meaning, it is
interpreted in accordance with that meaning."). Paragraph 4 sets
"termination of employment with LS&H" as the triggering event for
the running of the noncompetition agreement. Both BCOP and LS&H
were aware of the imminence of the share sale, and yet Paragraph 4
refers solely to employment with LS&H, rather than termination of
employment with LS&H or any of its successors or assigns. The
plain language of this provision sets the completion of employment
with LS&H, and solely LS&H, as the triggering event for the running
of the noncompetition period.
This interpretation of Paragraph 4 is consistent with the
agreements read as a whole. See In re Estate of Barrows, 945 A.2d
1217, 1221 (Me. 2008). Paragraph 6 of the agreements indicates
that BCOP might solicit noncompetition agreements of "substantially
the same form" as the agreements at issue here and requires
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appellants to sign new agreements, "which name[] BCOP as the
employer," if requested by BCOP. The district court deemed this
sentence to be a "contingent clause" that did not "requir[e] a new
Agreement in order to maintain enforceability." OfficeMax Inc.,
709 F. Supp. 2d at 110. This interpretation is reasonable to the
extent that it recognizes that, after assignment, BCOP could
enforce the agreements for one year after the stock sale without
acquiring new agreements. However, if the appellants owed a duty
not to compete for one year after their termination from BCOP,
there would be no reason for BCOP to seek new noncompetition
agreements of "substantially the same form" as the agreements
between the employees and LS&H, as BCOP would have all of the same
benefits under the contract that LS&H had initially acquired. The
district court’s interpretation, therefore, reads this clause out
of the contract in contravention of the fundamental principle of
contract interpretation that "a contract should be construed to
give force and effect to all of its provisions and not in a way
that renders any of its provisions meaningless." Am. Protection
Ins. Co. v. Acadia Ins. Co., 814 A.2d 989, 993 (Me. 2003) (internal
quotation marks and citation omitted).
Still, OfficeMax argues for an alternative interpretation
based in part upon the considerable, undisputed evidence that all
of the parties, including the appellants, understood that these
agreements were signed for the benefit of BCOP. As the agreements
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themselves explain, the appellants were aware that BCOP planned to
purchase the shares of LS&H and that LS&H "intend[ed] that [the
employees'] obligations, duties, and promises in this Agreement are
for the benefit of BCOP and in the expectation that [the employees]
will be offered, and if offered . . . will accept, employment with
BCOP after the closing of the transaction." Further, Paragraph 6
expressly allows for such an assignment.
These features of the agreements do not affect the
interpretation of Paragraph 4 read in the context of the agreements
as a whole. As a legal matter, assignment of the agreements could
not have altered the appellants' substantive duties under the
agreements' terms. See Goldberg Realty Group v. Weinstein, 669
A.2d 187, 191 (Me. 1996); Chadwick-BaRoss v. Martin Marietta Corp.,
483 A.2d 711, 715 (Me. 1984) ("A contractual right can be assigned
unless the substitution of a right of the assignee for the right of
the assignor would materially change the duty of the obligor, or
materially increase the burden or risk imposed on him by his
contract." (quoting Restatement (Second) of Contracts §
317(2)(a))). Though assignment of the agreements to BCOP may have
substituted the party that could enforce the agreements, it could
not have changed the triggering date of the noncompetition clause.
Further, it made sense for the parties to set termination
of employment with LS&H as the triggering event, even though this
was likely to occur soon after the agreements' execution. Although
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the agreements envision the "expectation" that the appellants would
be offered employment contracts with BCOP, continued employment was
not guaranteed. In this context, the agreements prevent
competition from these employees for a year after the purchase of
LS&H to allow BCOP time to secure its own sales representatives and
build up sufficient customer good will to withstand any future
competition from either of the appellants. See OfficeMax Inc. v.
W.B. Mason Co., Inc., No. 2:11-cv-21, 2011 WL 2173789, at *3 (D.
Vt. June 2, 2011) (interpreting nearly identical language and
finding that the fact that the agreement was signed for the benefit
of BCOP was consistent with an interpretation that "the contract’s
intended purpose may have been to provide temporary protection for
BCOP before and for a short time after the stock sale").
OfficeMax suggests that the plain language reading urged
by the appellants renders the contract nonsensical and absurd. See
Northern Ins. Co. of New York v. Point Judith Marina, LLC, 579 F.3d
61, 72-73 (1st Cir. 2009) (applying Rhode Island law); Restatement
(Second) of Contracts § 203(a) ("[A]n interpretation which gives a
reasonable, lawful, and effective meaning to all the terms is
preferred to an interpretation which leaves a part unreasonable,
unlawful, or of no effect."). It argues that if the termination
from LS&H were the triggering date, then the appellants would have
been contractually prohibited from performing their duties for BCOP
until a year after BCOP had purchased LS&H's shares, in clear
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conflict with BCOP's intent to rehire the employees immediately
after the purchase of LS&H. Along with Paragraph 4, Paragraphs 1
and 2 of the agreements are implicated by this argument. Paragraph
1 provides that the employee has a "duty to develop and maintain
good relationships between LS&H and its customers," and Paragraph
2 provides that confidential information acquired during employment
with LS&H shall "not [be] divulge[d] . . . to any person, firm, or
institution, except as such disclosure is a necessary part of a
bona fide merchandise sale negotiation with an actual or potential
LS&H customer." If the employees' substantive duties under the
contract ran only to the benefit of LS&H, then, OfficeMax argues,
the appellants would have been in violation of the terms of the
agreement the split second they began working for BCOP.
This argument ignores the fact that the parties intended
that BCOP would be assigned LS&H's rights to enforce these
agreements. Even if the appellants were in technical violation of
the terms of the noncompetition clause during the first year of
their employment with BCOP, BCOP was the only party that could have
enforced these prohibitions. With all parties understanding that
LS&H's contractual rights were going to be assigned to BCOP during
the share sale, it was not absurd for BCOP to have approved
contractual language setting the triggering date of the
noncompetition clause as the termination from LS&H.
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Because we conclude as a matter of law that the terms of
the agreements, when read as a whole, are not ambiguous and that
the triggering date for the noncompetition clause is the
termination of employment from LS&H, OfficeMax has not demonstrated
a likelihood of success on the merits. Therefore, there is no need
to consider the remaining factors of the preliminary injunction
analysis. See Pharm. Research & Mfrs. of Am. v. Concannon, 249
F.3d 66, 84-85 (1st Cir. 2001). The district court's award of a
preliminary injunction is vacated, and the case is remanded. Costs
are taxed against appellee OfficeMax, Inc. It is so ordered.
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