2006-224, ACAS ACQUISITION (PRECITECH) INC. v. STEPHEN C. HOBERT

The defendant, Stephen C. Hobert, appeals a decision of the

on the brief and orally), for the defendant. Sheehan Phinney Bass & Green, P.A., of Manchester (Edward A. Haffer

for the plaintiff. Orr & Reno, P.A., of Concord (Martha Van Oot on the brief and orally), to press. Errors may be reported by E-mail at the following address:

No. 2006-224 editorial errors in order that corrections may be made before the opinion goes Cheshire Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New ___________________________

THE SUPREME COURT OF NEW HAMPSHIRE

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as with those of Precitech. p. 2 operational, it could have produced products that would have been competitive ceased operations. Hurst and Brehm testified that, had Novus remained

May 30, 2002, to the office shared by Hurst and Brehm, which outlined Precitech.

defendant was aware. Additionally, Precitech had a written confidentiality policy of which the

agreement with Precitech. Sometime after the founding of Accura, Novus Capital Strategies, a potential buyer of Precitech and the parent to ACAS. 2002, the defendant presented the Memo and other information to American

Accura. Following this conversation, the defendant delivered a letter, dated and from soliciting Precitech employees to engage in activities competitive with defendant met with Hurst and Brehm to discuss marketing strategies for any interest in joining them, he should call Hurst. A short time later, the Brehm and Hurst were developing a company and that if the defendant had Precitech’s trade secrets and to refrain from competing with Precitech. In April or May 2002, the defendant met with Brehm and was told that

Accura more than one year prior to the expiration of his non-competition form Accura Technics, L.L.C. (Accura). Brehm was involved in the founding of investment bankers in connection with a possible sale of Precitech. In early precision tools and equipment. In June 2001, Hurst partnered with Brehm to plans, as well as important product and financial information to be used by identified Precitech’s key customers, marketing strategies and future business Precitech, prepared a Confidential Information Memorandum (the Memo) which During the summer and fall of 2001, the defendant, along with others at non-competition agreement prevented Brehm from competing with Precitech and was subject to a three-year, non-competition agreement thereafter. That agreement whereby he remained employed by Precitech until October 14, 1999, That agreement contained provisions requiring the defendant to maintain employment, the defendant executed an employment agreement with Precitech. of Sales and Marketing. In November 1999, as a condition of his re-

formed Novus Technologies, L.L.C. (Novus) to design and manufacture ultra- In 2001, Patrick Hurst, who at one time was an engineer with Precitech,

time, had acquired Pneumo. As part of this sale, Brehm executed an

machine systems. Filter Corporation. He returned to Precitech in late 1999 as the Vice-President In 1998, the defendant left Precitech to be the director of sales at Optical

In 1997, Brehm sold Precitech to Schroeder Ventures, which, by that

single-point and multi-axis diamond turning, grinding, grooving and milling Pneumo. Each of these companies manufactured and sold ultra-precision described in the forgoing clauses (i) and (ii). 3

p. 3 secrets or proprietary or confidential information of [ACAS] or of

Line, and I will not assist any person or entity in taking any action Supplier . . . to cease doing business with [ACAS] in a Competitive or entity engaged in a Competitive Line or (ii) any Customer or Customer . . . of [ACAS] to become a Customer of any other person my employment, reveal to any person or entity any of the trade (a) I will not at any time, whether during or after the termination of aiding Accura, violated his 1999 employment agreement with Precitech. were in such markets. Thus, the trial court found that the defendant, by 1. Nondisclosure and Use of Proprietary Information potential markets for Accura and that the customers he identified to Accura The non-disclosure agreement provides, in pertinent part:

. . ., I will not, directly or indirectly, solicit, entice or induce (i) any (24) months after termination of my employment for any reason (c) While I am employed by [ACAS] and for a period of twenty-four

aware of Precitech’s interest in expanding into markets that he identified as. . . .

period of my employment with [ACAS] . . . . entered into and was planned by [ACAS] at any time during the of [ACAS] or any line of business which, to my knowledge was to be line of business that represents at least 5% of the gross revenues other commercial enterprise, directly or indirectly, engage in any consultant, agent, employee or stockholder of any company or . . ., I will not, whether alone or as a partner, officer, director, (24) months after termination of my employment for any reason (a) While I am employed by [ACAS] and for a period of twenty-four

Precitech customers. Moreover, the trial court noted that the defendant was 3. Non-Competition; Non-Solicitation competitive with those made by Precitech and would market those machines to would be in the business of manufacturing ultra-precision grinding machines in relevant part: disclosure agreements with ACAS. The new non-competition agreement states, purchase, the defendant signed new employment, non-competition and non- In June 2002, ACAS purchased Precitech. In conjunction with that

clearly stated that the defendant intended to join Accura and that Accura potential marketing strategies for Accura. The trial court found that this letter p. 4 4

be negotiable. Thus, the defendant proposed that if he and Accura could reach

made available to any other officer or employee of Precitech.

things, super-precision grinding. machine. Accura’s website described the machine as capable of, among other

consulting with an attorney he believed the non-competition agreement might of leaving ACAS would violate his non-competition agreement, but after that the defendant understood that being employed by Accura within two years field.” Accura. According to the trial court, this letter, among other things, implied this litigation commencing, Accura intended to compete in the ultra-precision In December 2002, the defendant again wrote to Hurst about joining the closing. Neither this severance package nor the “cash out” benefit was ACAS machines, “all the documentary evidence establishes clearly that prior to the defendant was permitted to “cash out” the stock he owned in Precitech at would not develop machines capable of the degree of precision attainable by any right to severance pay. In addition to negotiating this severance package, been terminated for cause as defined in his employment agreement, he forfeited expired, and within two months Accura had nearly completed its 1210G severance package. On October 1 p. 4 4, 2002, Brehm’s non-competition agreement information about the enforceability of his non-competition agreement and his same month, the defendant met with two different attorneys to obtain In August 2002, Accura began production of its 1210G machine. That

employee of [ACAS].

Brehm testified that Accura would not compete with ACAS because Accura Accura would not compete with ACAS. The trial court found that although twelve months’ pay and a portion of his incentive bonus. If, however, he had develop high-precision grinding and turning machines and his belief that cause within the first year he would be entitled to severance payments equal to misled ACAS regarding his involvement in Novus and Accura, his intent to unique severance package, which provided that if he were terminated without trial court found that when responding to ACAS’ correspondence, Brehm his employment upon sixty days’ notice. Further, the defendant negotiated a concerned that Brehm might be violating his non-competition agreement. The In late 2002, ACAS and Brehm began corresponding because ACAS was

required in the ordinary course of performing my duties as an any of the dealings or affairs of [ACAS] . . ., except as may be matter within the scope of the business of [ACAS] or concerning

could terminate him at any time with or without cause, or he could terminate Additionally, under the terms of the defendant’s employment agreement, ACAS

confidential . . . or other materials of any nature relating to any any third party which [ACAS] is under an obligation to keep attempted to aid Accura in selling and distributing its competing machines. p. 5 defendant, through the use of knowledge and information gained from ACAS, with machines made by ACAS. Additionally, the trial court found that the 5 Accura manufactured and promoted a machine capable of directly competing

that the initial communications came from the defendant. he had received. According to the trial court, the evidence “clearly indicates”

Non-Competition Agreement to Precitech.” comparable to those of ACAS’ machines. In sum, the trial court found that fiduciary obligations and obligations under his Employment Agreement and litigation, Accura promoted its 1210G machine as having capabilities forfeited his right to severance benefits and had to return severance payments letter is a blatant indication that [the defendant] intended to violate his enable it to directly compete with ACAS’ machines. Further, prior to this Act, RSA chapter 350-B (1995); (4) was not liable for a civil conspiracy; (5) compete in the ultra-precision area.” Further, the trial court found that “[t]he customer could add components touted by Accura to the 1210G that would violated his fiduciary duties to ACAS; (3) violated the Uniform Trade Secrets (1) violated his non-competition and non-disclosure agreements with ACAS; (2) As a result of the above findings, the trial court ruled that the defendant:

testimony that the e-mails were sent in response to e-mails or telephone calls or potential customers of ACAS. The trial court did not credit the defendant’s all of the companies contacted had been identified in the Memo as customers that included technical information and a company profile of Accura. Nearly

defendant “intended to use his knowledge learned at Precitech to help Accura Accura’s basic 1210G machine did not compete with ACAS’ machines, a Accura’s products. The trial court found that this letter made it clear that the Regarding the companies’ machines, the trial court found that although 12, he wrote a letter to Hurst outlining various marketing strategies for terminated without cause. Two days later, he met with Hurst, and on January

During the ensuing week, the defendant sent e-mails to numerous companies On January 17, 2003, Accura hired the defendant as its director of sales.

compete with ACAS prior to the commencement of this suit. his attorney with numerous documents indicating that Accura intended to that the defendant was not forthcoming with his attorney and did not provide defendant for performance reasons. On January 7, 2003, the defendant was discuss his obligations under his agreements with ACAS. The trial court found On January 13, 2003, the defendant again met with an attorney to

Later in December 2002, officers of ACAS met to discuss terminating the

from his agreements with ACAS. an agreement on employment, he would attempt to negotiate being released p. 6 6

restriction is greater than necessary to protect the legitimate interests of the

contract is reasonable, we engage in a three-part inquiry: first, whether the he had with Accura did not violate his non-competition agreement. To determine whether a restrictive covenant ancillary to an employment

trial court’s factual findings, however, for clear error. Id. Orthopaedics Prof. Assoc. v. Forbes, 142 N.H. 440, 443 (1997). We review the reasonableness is a matter of law for this court to decide. Concord on trade. We address his arguments in turn. reasonable, given the particular circumstances of the case. Id. A covenant’s provision was neither contrary to public policy nor an unreasonable restraint Restrictive covenants are, however, valid and enforceable if the restraint is N.H. 192, 197 (2005). Such contracts are to be narrowly construed. Id. restraint of trade or competition. Merrimack Valley Wood Prods. v. Near, 152 We have stated that the law does not look with favor upon contracts in

violated it. Thus, we deem any arguments relative to this agreement waived. relative to it, nor does he challenge the trial court’s determination that he products and did not avail themselves of the same markets; thus, any dealings companies were not competitors because they did not make competing ACAS and Accura were competitors. According to the defendant, the two in ruling that he violated his non-competition agreement because it found that The defendant’s primary argument on appeal is that the trial court erred

provision of the non-competition agreement; and (7) the “prevailing party” I. Non-Competition Agreement ACAS was entitled to its attorney’s fees pursuant to the “prevailing party” entitled to terminate severance benefits for post-termination violations; ( p. 6 6) agreement, RSA chapter 275 (1999 & Supp. 2006) and the CPA; (5) ACAS was See Colla v. Town of Hanover, 153 N.H. 206, 210 (2006).

the 1999 agreement he had with Precitech, he does not raise any arguments We note first, however, that while the defendant mentions, in passing,

chapter 358-A (1995 & Supp. 200 p. 6 6). The defendant appeals. severance payments, and violation of the Consumer Protection Act (CPA), RSA

entitled to severance pay and related attorney’s fees under the parties’ trade secrets and otherwise acted wrongfully toward ACAS; (4) he was not disclosure agreement; (3) he violated his fiduciary duties, misappropriated (1) he violated his non-competition agreement; (2) he violated his non- On appeal, the defendant argues that the trial court erred in ruling that:

ruled against the defendant on his counterclaims for breach of contract, he had received; and ( p. 6 6) was liable for ACAS’ attorney’s fees. The trial court only the institution of this suit prevented such competition.

defendant were attempting to compete in a market occupied by ACAS and that companies were in competition. based upon the evidence and testimony presented, that Accura and the Accura were customers or potential customers of ACAS. The trial court found, machine. Also, the trial court found that the potential customers solicited by

positive image. machine, as designed, competed with its machines and, therefore, the during the employment; and the employer’s development of goodwill and a cannot, compete with ACAS’ products. ACAS counters that Accura’s 1210G covered his activities with a company that made products that do not, and to litigation clearly indicate they intended to do” – that is, to create a competing that they were not intending to do what their letters and materials created prior however, after this case was filed, Accura and the defendant “tried to argue those of machines manufactured by ACAS. According to the trial court, potential customers that the 1210G had capabilities substantially similar to to its detriment. Accura, with the defendant’s help, distributed promotional material informing legitimate interests. The trial court found that prior to the commencement of this case,

customers, obtained during the course of employment; contacts developed a unique business method; an employee’s special influence over the employer’s agreement was broader than necessary to protect ACAS’ interests because it communicated by the employer to the employee, such as information regarding The defendant argues that the restriction in his non-competition of employment; confidential information other than trade secrets trade secrets that have been communicated to the employee during the course Merrimack Valley, 152 N.H. at 198. legitimate interest in preventing its employees from appropriating this goodwill directed to the employee rather than to the employer, and the employer has a determine whether the restraint was narrowly tailored to protect the employer’s contact, it is natural that some of the goodwill emanating from the client is 158, 160 (2000). Moreover, when an employee holds a position involving client

Nat’l Employment Serv. Corp. v. Olsten Staffing Serv., 145 N.H.

unenforceable.

interest.

of an employer that may be protected from competition include: the employer’s

The first step in determining the reasonableness of a given restraint is to

Aid Corp. v. Allen, 134 N.H. 1, 8 (1991). reasonable, we will look to the time when the contract was made. Technical

Id. In determining whether a restrictive covenant is

answered in the affirmative, the restriction in question is unreasonable and

Merrimack Valley, 152 N.H. at 19 p. 7 7. If any one of these questions is

the employee; and third, whether the restriction is injurious to the public employer; second, whether the restriction imposes an undue hardship upon was not pursuing the same markets as those occupied by ACAS. p. 8 Accura’s machines could not compete with ACAS’ machines and that Accura defendant offered his own testimony, as well as that of Hurst and Brehm, that

occupied and in which it sought to expand its market share. In response, the

those in the “conventional tool room” market, and a market which ACAS and optics market, a market which required machines of greater precision than room” market. Instead, Accura was soliciting customers in the glass grinding

take into account that ACAS sold less accurate machines with which the occupied or planned to occupy. We disagree. they compared ACAS’ most accurate machines with the 1210G and did not “conventional tool room” market, a market distinct from any that ACAS the defendant were soliciting customers who were not in the “conventional tool testified that the comparisons made by the defendant were misleading because machines and that its lower precision machines were geared to the least some of ACAS’ machines. Furthermore, Davis testified that Accura and testified similarly to Davis regarding Accura’s and ACAS’ machines. He that the 1210G machine was not capable of the levels of precision of ACAS’ Following this testimony, Michael Janish, the current president of ACAS,

room” market and indicated that the machine was intended to compete with at the weight of the evidence and thus clearly erroneous. Specifically, he argues machine were “unusual” for a machine intended for the “conventional tool advertised aspects of the 1210G posed no problem, other attributes of the precision attained by ACAS’ machines. According to Davis, while some materials distributed by Accura described a machine capable of the levels of Precitech and ACAS from 1998 until 2004. Davis testified that the promotional The trial court heard the testimony of David Davis, president and CEO of machine that is directly competitive with a Precitech machine. components touted by Accura, a customer can buy an Accura

The defendant contends that the trial court’s findings were contrary to

competitive. The trial court found: directly compete with ACAS’ machines. retain ACAS’ customers, but also that Accura’s 1210G machine was, in fact, The trial court further found that the 1210G was capable of tasks that would

competitive with Precitech’s machines. Also, by simply adding intended to also sell the 1210G for uses and in market[s] directly defendant in June 2002], Accura and [the defendant] both Precitech machines, but . . . at the time Precitech hired [the [T]he basic 1210G has applications that do not compete with

machine capable of competing with ACAS’ machines and that it sought to Not only did the trial court determine that Accura intended to develop a its legitimate interests.

p. 9 the testimony of Davis and Janish that the machines were competitive. differences in precision between the machines of each company and credited contentions, however, the trial court specifically addressed the alleged absolutely contrary to uncontroverted evidence.” Contrary to the defendant’s

this information and influence to the detriment of ACAS was certainly within

brought suit, but had been changed to a lower level thereafter – a point that is

information, strategies and customers. Preventing the defendant from using production of the Memo, a document outlining much of ACAS’ company over customers and potential customers. Moreover, he had participated in the

product had a higher (and competitive) level of precision when Precitech qualification revealed that “the Court evidently believed that the Accura on that issue, but did so with a mistaken qualification. He argues that this

confidential company information, and substantial contacts with and influence roles, he had nearly unfettered access to all of ACAS’ trade secrets and President of Sales for ACAS and in a similar capacity for Precitech. In those special influence over, customers. Here, the defendant had served as the Vice-

not mention this “critical evidence,” it granted his related request for a finding contention.” Also, the defendant contends that even though the trial court did

and other confidential information and an employee’s contacts with, and legitimate interests of an employer that may be protected include trade secrets through its non-competition agreement with the defendant. As noted above, consider whether ACAS had legitimate interests that could be protected Having determined that ACAS and Accura were competitors, we next

competitors. testimony. the evidence and uphold the trial court’s finding that ACAS and Accura were Hobert and Accura’s Brehm and Hurst – it demolished Precitech’s core we reject the defendant’s contentions that the trial court did not properly weigh defendant, “Not only was this evidence fully consistent with the testimony of Thus, therefore served a different need in a different market. According to the machines were substantially more precise than Accura’s and that they

no reasonable person would have come to the same conclusion. defendant, Hurst and Brehm. After reviewing the record, we cannot say that

reasonable person could have come to the same conclusion after weighing the

machines. it say a single word about the most critical evidence in the case” – that ACAS’ According to the defendant, “Not once in the Court’s 50-page Decree did

chose to credit p. 9 the testimony of Davis and Janish and not that of the

State v. Livingston, 153 N.H. 399, 402 (2006). Here, the trial court

We defer to the trial court’s determinations of credibility unless no

by Accura and the defendant had no use for “conventional tool room” 1210G competed. Finally, Janish testified that some of the customers solicited the conclusion of the trial court:

p. 10 information in aiding another entity in violating the agreement. We agree with

better able than any other person to solicit customers and to use customer with and through ACAS. Lastly, because of his position, the defendant was outlined the status of Precitech and the lines of business it planned to pursue

about a year prior to the defendant beginning negotiations with Accura which

defendant’s participation in the creation of the Memo, a document created only enter and had planned to enter. This knowledge is demonstrated by the structure, [the defendant’s] use and disclosure of this information was in a position to know which markets and lines of business ACAS would

customer base, market trends and opportunities and pricing produced at least five percent of the gross revenues of ACAS. Additionally, he By reason of [the defendant’s] intimate knowledge of Precitech’s defendant was in a position to know the customers and lines of business that

violate the non-competition agreement. customers of a competitor and from aiding anyone else in actions that would

access to ACAS’ technical, financial and customer information. Therefore, the consumers of goods within the market. Also, the defendant had unfettered the defendant had contacts with many of the consumers and potential market: the ultra-precision machine tool market. In this world-wide market, that had or have, on a world-wide level, a large share of a relatively small was in charge of marketing and sales for Precitech and later ACAS – companies Here, unlike the situations discussed in Merrimack Valley, the defendant

customer contacts. Id. employee’s influence geographically, or beyond the scope of the employee’s agreement prevented the defendant from soliciting ACAS’ customers to become agreements as too broad because they extended beyond the sphere of the during his employment with ACAS. Also, section 3(c) of the non-competition Id. We also noted that we had previously invalidated other non-competition knowledge, was to be entered into and was planned by ACAS at any time employer’s customers, the defendant was in no better position than a stranger. percent of the gross revenues of ACAS or any line of business which, to his know and could not have known. Id. at 199. We noted that as to many of the prevented him from engaging in any line of business representing at least five interests because it covered numerous customers that the employee did not with his employer in the previous year was too broad to protect the employer’s employee from doing business with any client who had transacted business In Merrimack Valley, we held that a restrictive covenant preventing an

152 N.H. at 197. As quoted above, the defendant’s non-competition agreement was narrowly tailored to protect ACAS’ legitimate interests. Merrimack Valley, Next, we consider whether the defendant’s non-competition agreement position economically.”

giving a restrictive covenant, be able to place himself in a more advantageous benefit of the employer but to the employee as well, in that the latter may, by exchange for signing the covenant. Restrictive covenants “not only inure to the negotiated a substantial severance package, both in value and duration, in

defendant negotiated a substantial severance package in exchange for

covenant would force him to relocate. For this reason, the defendant tailored to protect ACAS’ legitimate interests. At the time the contract was made, the defendant understood that the reasonable in both scope and duration, we also conclude that it was narrowly because we conclude that the defendant’s non-competition agreement was he had acquired. We disagree. replacements to demonstrate their effectiveness, was reasonable. Therefore, and because it precluded him from exercising the skill and general knowledge or calling for which he was fitted and from which he may earn his livelihood, undue hardship because it unnecessarily interfered with his following a trade Realty Co. v. Enwright, 101 N.H. 195 (1957), that the restriction imposed an Merrimack Valley, 152 N.H. at 197. The defendant argues, citing Dunfey enforceable is whether its restrictions imposed an undue hardship upon him. The second factor in determining if the defendant’s restrictive covenant is

reasonable opportunity to demonstrate their effectiveness to customers.” should last no longer than necessary for the employees’ replacements to have a in the brief that the duration is unreasonable. “A covenant not to compete disassociate him from ACAS after his many years there, and for his competitive lines of business for two years. In this case, no argument is made Filter Corporation. We conclude that allowing two years for the public to ACAS in that position since 1994, except for the year he spent with Optical ultra-precision machine tools for many years and had served Precitech and employer’s business. Id. Here, the defendant had been involved in the sales of of the public the association between the identity of the employee with his duration, the court must consider the time necessary to obliterate in the minds Concord Orthopaedics right to protect under New Hampshire law., 142 N.H. at 444 (quotation omitted). When evaluating defendant] during his employment, an interest Precitech has the and the usurpation of corporate opportunities identified to [the

Secondly, the defendant’s agreement prevented him from engaging in

its scope. unlike the agreements discussed in Merrimack Valley, was not overly broad in Accordingly, we conclude that the defendant’s non-competition agreement,

cause Precitech irreparable injury through the loss of its good will to or for the benefit of Accura has caused, and will continue to covenant was reasonable and enforceable.

p. 12 contacts delivered to Accura by the defendant indicated that Accura was

public interest. Accordingly, we conclude that the defendant’s non-competition

by aiding Accura, regardless of whether Accura sold a single product. 12

there. As discussed above, however, Accura’s promotional materials and the business that was planned to be entered into by ACAS during his employment portion of the agreement requiring him to abstain from entering any line of defendant from engaging in competitive business lines in any way injured the

competition agreement with ACAS.

non-competition agreement. Thus, the defendant could violate the agreement prevented from assisting another entity to engage in activities forbidden by the products. Moreover, under section 3(c) of the agreement, the defendant was to stand idly by while Accura and the defendant worked to compete with its product, Accura did not compete with ACAS. ACAS was not, however, required because Accura had not, as of the institution of this litigation, sold a single

enter the “conventional tool room” market and, therefore, he did not violate the agree. Nothing in the record leads to the conclusion that preventing the Next, the defendant argues that Precitech and ACAS never planned to for a period of two years, unreasonably limits the public’s right to choose.” We lines or from usurping corporate opportunities identified to him by Precitech determination that by aiding Accura, the defendant violated his nondefendant’s agreement is valid and enforceable, we uphold the trial court’s markets are supported by the evidence, and because we have held that the

his non-competition agreement, which we address briefly. He contends that The defendant raises what he describes as “secondary points” regarding

argue that enjoining [the defendant] from competing in the limited competitive

Accura and ACAS made competing products and operated in competitive Because we have concluded that the trial court’s factual findings that

did not impose an undue hardship upon him. and knowledge he had obtained. Therefore, we conclude that the agreement interfered with his ability to follow a particular trade or from using the skills trial court found that “[n]either Accura nor [the defendant] can reasonably skill and general knowledge he obtained while with Precitech and ACAS. The Constitution, he had a right to work for Accura and to bring to that work the and fair competition is protected by Part I, Article 83 of the New Hampshire Merrimack Valley, 152 N.H. at 197. The defendant contends that because free we look to whether the restriction was injurious to the public interest. Finally, in determining whether the restrictive covenant was reasonable,

that he might need to relocate, we cannot say that the covenant unnecessarily decreasing the sting of the restrictive covenant and with the full understanding p. 13 13

from appropriating [its] good will to its detriment.” business. “The employer has a legitimate interest in preventing its employees aiding in the marketing and sales of competitive products for a competitive that ACAS had a legitimate interest in preventing its chief sales person from

provided to Accura was readily ascertainable from public sources. 9. discretion to credit this testimony. that test; (2) ACAS and Accura were not competitors; and (3) the information he Technical Aid, p. 13 134 N.H. at agreements also applies to non-disclosure agreements and this agreement fails

tailored to protect ACAS’ legitimate interests. As noted previously, we conclude The first step is to determine whether this agreement was narrowly

[his] duties as an employee of [ACAS].” confidential, “except as may be required in the ordinary course of performing ACAS or of any third party to which ACAS has an obligation to keep reveal any of the trade secrets or proprietary or confidential information of The defendant’s non-disclosure agreement provides that he may not nearly fifteen percent of ACAS’ gross revenues. The trial court was within its preceding the institution of this suit, grinding systems had accounted for agreement because: (1) the three-part test applied to non-competition to the public interest. Merrimack Valley, 152 N.H. at 197. percent of ACAS’ gross revenues. Davis testified, however, that in the years an undue hardship upon the employee, and whether the restriction is injurious agreement not to engage in any line of business representing at least five protect the legitimate interests of the employer, whether the restriction imposes requires us to determine whether the restriction is greater than necessary to purposes of this opinion we will assume that it does. As stated above, this test to non-competition agreements applies to non-disclosure agreements, for While we have never expressly stated that the three-part test applicable

The defendant next contends that he did not violate his non-disclosure

produce five percent of its gross revenues, and, therefore, he did not violate his II. Non-Disclosure Agreement

agreement is valid and that the defendant violated its terms. Accordingly, we uphold the trial court’s rulings that the non-competition

Finally, the defendant contends that ACAS’ grinding system did not

therefore reject the defendant’s argument. entering a line of business that was directly competitive with ACAS. We sources. While the mere identity of customers for precision

used on Accura’s behalf was “readily ascertainable” from other

not violate the agreement. The trial court found:

promoted competing products and functioned in competing markets. Therefore, the agreement did not impose an undue hardship upon him. As we have already concluded, however, ACAS and Accura developed and not need to rely upon the confidential information of ACAS to earn a living.

agreement was reasonable, valid and enforceable. Some of the information [the defendant] disclosed to Accura and information that is required by a court or agency to be disclosed. of confidentiality obligations, information ACAS permits to be released, and any domain, information from third parties that can be disclosed without a breach Accura was information available from public sources and, therefore, he did Finally, the defendant argues that any information he disclosed to

and, therefore, ACAS suffered no detriment if any information was disclosed. individuals with interest in the products he was attempting to sell, and he did The defendant contends that ACAS and Accura were not competitors, industry, he was aware of the public sources of information on companies and obligations. Because the defendant had spent a great deal of time in this information from third parties that was not subject to confidentiality burden the public. Therefore, we conclude that the defendant’s non-disclosure information in the public domain, information ACAS had released and other Permitting ACAS to protect its proprietary information did not in any way use ACAS’ proprietary information to aid another company, but he could use information for his own gain or for the benefit of another person or entity. under the agreement, it expressly does not include information in the public defendant’s agreement merely prevented him from using ACAS’ proprietary Third, the agreement is not injurious to the public interest. The

defendant. Under the agreement, the defendant was not permitted to reveal or information.” While “proprietary information” has a comprehensive definition Second, the agreement did not impose an undue hardship upon the from revealing any information that ACAS had defined as “proprietary the defendant could not disclose. By its terms, the defendant was prevented tailored to protect ACAS’ legitimate interests. concerns the conduct of its business. Therefore, the agreement was narrowly that the agreement covered only information that belonged to ACAS and that The definition of “proprietary information” and its exemptions make clear

protect ACAS’ legitimate interests. It specifically defined the information that Moreover, we conclude that this agreement was narrowly tailored to p. 15 [his attorney], Brehm and Hurst. spreadsheet and the Business Overview [the defendant] provided to Confidential Information Memorandum and the SCH Contact.xls

products or markets. This information was set forth in the

claims also fail, for the reasons stated in Arguments I and II. otherwise acted wrongfully vis-à-vis Precitech. All of these latter he breached his fiduciary duty, misappropriated trade secrets, and

who might partner with Precitech in the development of future who had purchased or would likely purchase “special” machines or the trial court did not err. manufactured or developed; and the identification of customers trial court’s rulings is that he did not violate his covenants, we conclude that covenants and because the only basis upon which the defendant challenges the Because we agree with the trial court that the defendant violated his restrictive

court’s ruling that the defendant violated his non-disclosure agreement. disclosed ACAS’ confidential information to Accura. Thus, we uphold the trial his restrictive covenants are also the facts on which it claims that enforceable, that ACAS and Accura were competitors, and that the defendant The facts on which Precitech claims that [the defendant] violated

chapter 350-B, and other wrongful acts states, in its entirety: breach of fiduciary duties, misappropriation of trade secrets under RSA customers who were likely prospects for products Precitech The defendant’s argument as to the trial court’s rulings relative to his

III. Fiduciary Duties, Misappropriating Trade Secrets and Other Wrongful Acts

the above reasons, we conclude that the defendant’s agreement was divulged to Accura’s principals was not in the public domain. Accordingly, for with Hurst and Brehm was not. Therefore, at least some of the information he disclosed to Accura was publicly available, some of the information he shared markets and/or particular Precitech products; the identification of The trial court recognized that while certain information the defendant customers by volume; the identification of customers by particular defendant] had constant and ready access included the ranking of

sources, the compiled customer information to which [the machinery systems may be readily ascertainable from other though this evidence was not obtained until after his termination. We agree.

p. 16 termination violations is a defense to its obligation to pay severance benefits,

cause. Essentially, ACAS argues that its evidence of the defendant’s predefendant’s termination without cause, it would have terminated him for agreements. ACAS contends that had it known of those violations prior to the

Hurst and Brehm, which violated his non-competition and non-disclosure

during any calendar year [the defendant] was employed by the defendant’s] Incentive Bonus, if any, for the applicable period agreements survive the defendant’s termination.

entitled to do so because it discovered the defendant’s dealings with Accura, suspended the defendant’s severance payments. ACAS argues that it was his severance benefits. Also, ACAS admits that on January 31, 2003, it

effect at the Company, and (ii) a pro rata portion of [the provisions governing severance and the non-competition and non-disclosure Period, payable in accordance with the usual payroll practices in [defendant] shall be entitled to (i) his Base Salary for the Severance [defendant] for Good Reason pursuant to Section 5(v), the

without cause and, because it terminated him without cause, it began paying ACAS acknowledges that on January 7, 2003, it dismissed the defendant

agreement, if any, with the Company.” Also, the agreement provides that its his or her Service or of a confidentiality, non-competition or other similar part, as “a material breach of the [defendant’s] obligations in connection with the Company without Cause pursuant to Section 5(iv), or (ii) by the if he is terminated for cause. “Cause” is defined in the parties’ agreement, in Under section 6(d) of the agreement, the defendant is not entitled to severance

turn.

Upon termination of the [defendant’s] employment hereunder (i) by

relevant part: Section 6(c) of the defendant’s employment agreement provides, in

A. The Parties’ Agreement

double or treble damages and attorney’s fees. We address each argument in because ACAS willfully refused to pay his severance benefits, he is entitled to agreement, RSA chapter 275 and RSA chapter 358-A. He also argues that court’s ruling, he is entitled to his full severance benefits under the parties’ address them together. The defendant contends that, contrary to the trial defendant’s entitlement to severance benefits and related attorney’s fees, we Because the next two issues deal with the trial court’s rulings on the

IV. Severance Pay and Related Attorney’s Fees p. 17 17 ‘extracation’ [

expiration of Brehm’s non-competition agreement and [the defendant’s] Precitech customers so that Accura would be poised to enter the market upon confidential information, advice regarding marketing and solicitation of affirmed. business through identification of corporate opportunities, disclosure of The defendant makes no separate challenge to that ruling, and it is, therefore, recover the $6,132.29 in severance payments it made before suspending them. violations. Finally, we note that the trial court ruled that ACAS was entitled to

contract. but that the defendant was not entitled to severance under the terms of the parties’ ‘without cause’ termination changed to a ‘for cause’ termination after the fact – Because there is evidence in the record to support these findings, we conclude

sic] from his own contractual and fiduciary obligations . . . .” Non-Competition Agreement

fired that employee had it known of the misconduct.” lost as a result of discharge if the employer can demonstrate that it would have calculated series of moves to help Brehm and Hurst set up a competitive The trial court found, however, that the defendant “engaged in a terminating the defendant’s severance payments for his pre-termination that under the terms of the parties’ agreements, ACAS was justified in contends that he did not work for Accura until after his termination by ACAS. only if he had violated his covenant pre -termination.” The defendant

have been terminated ‘for cause’ on that basis. Similarly, [he] could have had a

agreement when, in his brief, he states: “[I]f [the defendant] had violated his The defendant acknowledges this understanding of the parties’

misconduct is a defense to a breach of contract action for wages and benefits

not learn of the defendant’s violations until after his termination, we conclude cause, it would have terminated him for cause. Therefore, although ACAS did had ACAS known of the defendant’s violations prior to his termination without disclosure agreements. Here, ACAS contends, and the trial court found, that his right to severance payments if he violated his non-competition or nonomitted). Under the terms of the parties’ agreements, the defendant forfeited

“[I]n a breach of contract action after-acquired evidence of employee

McDill v. Environamics Corp., 144 N.H. 635, 640 (2000). completely bar liability is a question of law reviewable de novo by this court.” (2006). Also, “[w]hether after-acquired evidence may limit damages or novo.” Barclay Square Condo. Owners’ Assoc. v. Grenier, 153 N.H. 514, 5 p. 17 17 “The interpretation of a contract is a question of law, which we review de matter of practice or policy at ACAS. Therefore, we conclude that the

individually with those employees, granting severance benefits was not a the sale of Precitech and only then to a few employees on terms negotiated trial court that because severance benefits were offered only in connection with negotiated individually with each management employee.” We agree with the

pursuant to RSA 275:42, III, when due.” matter of employment practice or policy, or both, shall be considered wages 275: 42, III defines “wages” as: wages for each day . . . such failure continues . . . .” RSA 275:44, IV. RSA

connection with its acquisition of Precitech, and the severance benefits were time, task, piece, commission, or other basis of calculation. management employees were offered employment contracts by ACAS in rendered by an employee, whether the amount is determined on a 275:42, III or RSA 275:43.” According to the trial court, “Only a few key practice or policy’ at Precitech, and are therefore not ‘wages’ as defined by RSA The trial court found that, “Severance benefits were not a ‘matter of

pay, sick pay and payment of employee expenses, when such benefits are a Under RSA 275:43, III, “Vacation pay, severance pay, personal days, holiday employee for liquidated damages in the amount of 10 percent of the unpaid employee’s wages . . . , such employer shall be additionally liable to the If, however, “an employer willfully and without good cause fails to pay an employee, the employer shall pay the employee’s wages in full within 72 hours.” employee and agreed to by his employer, for labor or services agreement, or other agreement adopted for the benefit of an agreement, pension fund trust agreement, collective bargaining fund contributions required pursuant to a health and welfare trust compensation, including hourly health and welfare, and pension

RSA 275:44, I, requires that “Whenever an employer discharges an

Director, N.H. Div. of Motor Vehicles, 151 N.H. 315, 3 p. 18 18 (2004). them, we review its application of the law to the facts de novo. Saviano v. court’s factual findings, provided there is evidence in the record to support Appeal of Tennis, 149 N.H. 91, 93 (2003). Also, while we defer to the trial Interpretation of a statute is a question of law, which we review de novo.

costs and attorney’s fees. willful and without good cause he is entitled to recover increased damages, statute. Also, the defendant contends that because ACAS’ refusal to pay is in RSA chapter 275 and that ACAS’ failure to pay them is a violation of the The defendant contends that his severance benefits are wages as defined

B. RSA chapter 275 p. 19 19 RSA chapter 275 in refusing to pay them.

employed the “rascality” test.

injury.

law. will be upheld unless they lack evidentiary support or constitute clear error of making our determination, the trial court’s findings of fact and rulings of law within the statute’s general prohibition on unfair and deceptive acts. In that the defendant’s severance benefits are not wages, ACAS did not violate severance benefits are not wages under RSA chapter 275. Because we hold See Barrows v. Boles, 141 N.H. 382, 390 ( p. 19 1996). Accordingly, we uphold the trial court’s conclusion that the defendant’s commercial actions, not specifically delineated, are covered by the act, we have not wages, they were not intended by the parties to be treated as wages. scope. State v. Moran, 151 N.H. 450, 452 (2004). In determining which to bring a private action for damages and to recover enhanced damages for that worded, and not all conduct in the course of trade or commerce falls within its Finally, RSA 358-A:10 permits any person injured by an unfair act or practice We have recognized that the general provision of the CPA is broadly 358-A:2 provides a non-exhaustive list of acts and practices that are unlawful. directly or indirectly affecting the people of this state.” RSA 358-A:1, II. RSA Milford Lumber Co. v. RCB Realty, 147 N.H. 15, 19 (2001).

provisions of the CPA. Therefore, we must determine whether ACAS’ actions fit The defendant does not argue that ACAS violated any of the enumerated

double or treble damages as well as costs and attorney’s fees. reinforce the conclusion that not only are the defendant’s severance benefits contends that because ACAS’ refusal was willful and knowing, he is entitled to finding, although not necessary to the determination of the issue, serves to Precitech if he was terminated without cause or voluntarily resigned.” Such a rendered,’ but rather, consideration for his agreement not to compete with services and any property . . ., and shall include any trade or commerce are defined as “the advertising, offering for sale, sale, or distribution of any of any trade or commerce within this state.” “Trade” and “commerce,” in turn, method of competition or any unfair or deceptive act or practice in the conduct RSA 358-A:2 states that it is “unlawful for any person to use any unfair

qualifies as an unfair act or practice under RSA 358-A:2. Also, the defendant The defendant contends that ACAS’ refusal to pay his severance benefits

were not wages because they “were not ‘compensation . . . for labor or services C. RSA chapter 358-A

Additionally, the trial court found that the defendant’s severance benefits

275:42, III and RSA 275:43, III. defendant’s severance benefits do not meet the definition of wages in RSA parties’ agreement, RSA chapter 275 or the CPA.

p. 20 defendant, the disparity in bargaining power between the employer and the unreasonable restraint on alternative employment.” According to the

this provision. We address each argument in turn. 20 contends that the trial court erred in awarding ACAS its attorney’s fees under conclude that the defendant was not entitled to severance benefits under the unreasonable restraint on alternative employment. Moreover, the defendant defendant is not entitled to recovery under the CPA. For the above reasons we of commerce. Accordingly, we uphold the trial court’s conclusion that the provision is contrary to New Hampshire public policy “as a chilling and

because it is an unreasonable restraint on alternative employment. public policy because it is a contract of adhesion and a chilling and that this provision is not enforceable because it is a contract of adhesion and addition to all other available remedies.” As noted, the defendant contends does not raise an eyebrow of one inured to the rough and tumble of the world Agreement shall be entitled to recover his or its attorneys’ fees and expenses in Regarding his second argument, the defendant contends that this

(2003). deemed waived. In the Matter of Jasper-O’Neil & O’Neil, 149 N.H. 87, 91 the issue in his notice of appeal, he failed to brief it. Therefore, the issue is As to his argument regarding adhesion, although the defendant raised

allows the party prevailing at trial to collect its attorney’s fees, is contrary to that the “prevailing party” provision of his non-competition agreement, which Moreover, suspending benefits until its obligation to pay them is established competition agreement, we address them together. The defendant contends relevant part, “The prevailing party in any litigation arising under this covenants. This conduct is not of the same type as that proscribed by the CPA. Section 5 of the defendant’s non-competition agreement states, in payments based upon its reasonable belief that he had violated his restrictive A. Enforceability of the Provision

enforceability and operation of the “prevailing party” provision of his non- Because the final two arguments raised by the defendant concern the of ACAS in this case. We agree. ACAS suspended the defendant’s severance V. “Prevailing Party” Provision

tumble of the world of commerce.

Here, the trial court found that RSA 358-A:2 did not apply to the conduct

rascality that would raise an eyebrow of someone inured to the rough and Under the rascality test, the objectionable conduct must attain a level of his agreements. In essence, he argues that the granting of the injunction and

work for Accura, there was no need for a trial to enforce his obligations under because he stated that he would agree to an order stating that he would not non-competition and non-disclosure agreements by working for Accura, and after that ruling he amended his answer to state that he would not violate his

argument, for the reasons stated above, we agree with the trial court that the counterclaims and ACAS should not have been seeking its fees. As to the first disclosure agreements; and (2) the trial ought to have been confined to his

obligation in this Section 3(a). the trial court granted ACAS’ request for a preliminary injunction, because provision is unreasonable because he believed he was not competing. Regarding the defendant’s second contention, he argues that, because

attorney’s fees because: (1) he did not violate his non-competition and non- The defendant contends that the trial court erred in awarding ACAS its

B. Award of Fees one.” as to whether such proposed business activity violates any [ACAS] shall respond within 15 days of such notice with its opinion avail himself of that right, we do not agree that enforcing the “prevailing party” all the details of any proposed business activity on my part and defendant had the contractual right to ACAS’ opinion and because he did not “firmly and reasonably” held belief that he was not competing. Because the not violate the agreement, he might have been able to claim that he had a provides that: so, and had ACAS stated that it believed his interactions with Accura would that logic does not apply here. The defendant’s non-competition agreement as to whether he was violating his non-competition agreement. Had he done Thus, the defendant had the right under his contract to obtain ACAS’ opinion

reasonably believed that his new job would not be competitive with his old employee’s position would run the risk of losing at trial, even if he firmly and the provision should not be enforced because “[o]therwise, no one in such an competition period, to provide written notice to [ACAS] containing I [the defendant] will have the right, at any time during the non-

case would be unreasonable because it would impose a hardship on employees, While the defendant contends that enforcing such a provision in a close

in a “flagrant case.” The defendant argues that this is a “close case,” and that employee requires that an employer only be permitted to recover attorney’s fees p. 22 22

ACAS its attorney’s fees under the terms of the parties’ contract. because it prevailed on those claims, the trial court did not err by awarding pursuing them. Because ACAS was justified in pursuing its claims, and of his agreements. Thus, ACAS’ claims were not moot and it was justified in

that it was justified in suspending his severance payments due to his violation Also, even if he did not continue to work for Accura, ACAS still sought a ruling ACAS was justified in pursuing its claim that he had violated his agreements. position at Accura. Thus, regardless of his agreement not to work for Accura,

BRODERICK, C.J., and DALIANIS, DUGGAN and HICKS, JJ., concurred. his non-competition and non-disclosure agreements prior to accepting the

The defendant had, by aiding Accura prior to his termination, violated

disagree. his agreement not to work for Accura rendered ACAS’ claims moot. We