Astro-Med, Inc. v. Nihon Kohden America, Inc.
Full Opinion (html_with_citations)
Astro-Med, Inc. (Astro-Med) and Nihon Kohden America, Inc. (Nihon Kohden) are rivals in the highly competitive life sciences equipment market, and in October 2006, when Nihon Kohden hired away Kevin Plant, a valuable Astro-Med employee, Astro-Med reviewed its legal options. When first hired at Astro-Med in 2002, Plant signed an employee agreement that contained non-competition and nondisclosure provisions. Relying in large part on those provisions, in December 2006, Astro-Med filed suit against Plant alleging breach of contract and misappropriation of trade secrets. Astro-Med later added a third claim of unfair competition against Plant and joined Nihon Kohden as a defendant, against whom it alleged claims of tortious interference and misappropriation of trade secrets.
I.
Background
Astro-Med is a Rhode Island corporation with its principal place of business in West Warwick, Rhode Island. Its Grass Technologies product group manufactures, sells, and distributes instruments for sleep and neurological research and clinical applications of sleep science and brain wave recording and analysis. Although the identity of some of its customers is well known, Astro-Medâs financial arrangements with its sales people, its marketing strategy, and its pricing and cost structures are all highly confidential, and Astro-Med makes strenuous efforts to protect its trade secrets and other confidential information.
In October 2002, even though Plant had no prior experience in the medical industry or in medical equipment sales, Astro-Med hired him as a Product Specialist, responsible for the demonstration and training of its Grass Technologies product line. Astro-Med provided Plant with extensive training about its business, products, customers, and competitors, and it was AstroMedâs training that later made him marketable to Nihon Kohden. When AstroMed hired Plant, he signed an Employee Agreement, which contains a non-competition clause:
I recognize that the Company sells its products throughout North America and Europe; as such, upon termination of my employment at the Company, for whatever reason, I shall not directly or indirectly enter into or engage in a business that competes with the Company, in a territory consisting of North America, and Europe, either as an individual, partner, joint venturer, employee, agent or salesman for any person, or as an officer, director or stockholder of a corporation or otherwise, for a period of one year thereafter.
And a trade secrets clause:
[I hereby agree] [t]hat any inventions, discoveries or improvements and any technical data, trade secrets, (including, but not limited to, customer lists), information or know-how, made, discovered or conceived or acquired by me during the period of my employment, whether patentable, patented or not, are to be and remain the property of the Company; that, without the written authorization of the Company, I will neither use nor disclose to any person other than my superiors in the Company, any information, trade secrets, technical data or know-how relating to the Companyâs products, processes, methods, equipment and business practices, which I have acquired during my employment.
The Employee Agreement also contained a choice-of-law and forum-selection clause, which stated that it shall be governed by the laws of the state of Rhode Island and that Plant consented to jurisdiction in Rhode Island for any dispute arising out of the Agreement.
Subsequently, Plant asked to be transferred to the state of Florida and become a field sales representative; Astro-Med granted his request and paid to relocate him to Florida. On July 12, 2004, AstroMed promoted Plant to District Sales
Nihon Kohden, a California corporation, has its principal place of business in Foothill Ranch, California. As a manufacturer of instrumentation for patient monitoring, sleep assessment, and neurology, Nihon Kohden competes directly with Astro-Med. In 2006, Brian Kehoe, the Florida sales representative for Nihon Kohden, was about to leave the company, and on July 21, 2006, he emailed Gary Reasoner, the Director of the Neurology Business Unit for Nihon Kohden, and informed him that he had met a man, Kevin Plant, who was a potential replacement for the Florida sales territory. Plant was indeed interested in employment with Ni-hon Kohden and in subsequent discussions, he emphasized his Astro-Med experience. He reminded Nihon Kohden that he was âcoming from the industry and one of the competitors in the fieldâ and in his employment application, he touted his âin-depth knowledge of neurology-based applications.â
In September 2006, Plant sent a resume to Reasoner, and Reasoner interviewed Plant several times over the telephone. In late September 2006, Plant traveled to Foothill Ranch and met with Michael Ohsawa, the Director of Operations for Nihon Kohden, and with Reasoner. Directly after the interview, Nihon Kohden made Plant a job offer, which he accepted. After Plant accepted the Nihon Kohden position, Kehoe emailed Plant: âI will be interested in seeing what you have in the works with Grass [Technologies].â Plant replied, âSounds good.â
Before offering Plant employment, Ni-hon Kohden became aware of the AstroMed Employment Agreement with Plant and referred the contract to counsel for review. Nihon Kohdenâs lawyer advised Nihon Kohden that there was some minimal risk in hiring Plant; notwithstanding that advice, Nihon Kohden hired Plant to sell its products in competition with AstroMed in the sales territory he had covered for Astro-Med.
II.
Discussion
A. The Jurisdictional Issue
From the very outset of this litigation, Nihon Kohden has vigorously maintained that, as a California business, it should not have been haled into court in Rhode Island to defend its hiring of a Florida resident to sell its product in Florida.
To hear a case, a court must have personal jurisdiction over the parties, âthat is, the power to require the parties to obey its decrees.â United States v. Swiss Am. Bank, Ltd., 191 F.3d 30, 35 (1st Cir.1999). Early on, Nihon Kohden moved to dismiss the lawsuit under Federal Rule of Civil Procedure 12(b)(2) on the ground that the district court did not have personal jurisdiction. The district court denied the motion. On a motion to dismiss for want of personal jurisdiction, the plaintiff ultimately bears the burden of persuading the court that jurisdiction exists. McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); Mass. Sch. of Law at Andover, Inc. v. Amer. Bar Assân, 142 F.3d 26, 34 (1st Cir.1998). Faced with a motion to dismiss for lack of personal jurisdiction, a district court â âmay choose from among several methods for determining whether the plaintiff has met [its] burden.â â Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir.2007) (quoting Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50-51 (1st Cir.2002)).
Here, the district court used the âprima facie methodâ or the âprima facie evidentiary standard,â rather than adjudicating the jurisdictional facts. Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 145-47 (1st Cir.1995) (describing the prima facie, preponderance, and likelihood standards). The district court considered âonly whether the plaintiff has proffered evidence that, if credited, [was] enough to support findings of all facts essential to personal jurisdiction.â Daynard, 290 F.3d at 51. Where, as here, the district court employed the prima facie standard, we review âboth the district courtâs decision to use the prima facie standard and its conclusion under that standard de novo.â Adelson, 510 F.3d at 48; Daynard, 290 F.3d at 51; Nowak v. Tak How Invs., Ltd., 94 F.3d 708, 712 (1st Cir.1996). In this case, the parties âdo not object to the courtâs choice of method; the defendant contends only that it was misapplied.â Adelson, 510 F.3d at 48.
Applying the prima facie standard, we â âmust accept the plaintiffs (properly documented) evidentiary proffers as true for the purpose of determining the adequacy of the prima facie jurisdictional showing.â â Id. (quoting Foster-Miller, 46 F.3d at 145). We âaccept those facts as true, irrespective of whether the defendant disputes them, and in so doing, construe them in the light most congenial to the plaintiffs jurisdictional claim.â Id. (internal quotation omitted). The facts put forward by the defendant âbecome part of the mix only to the extent that they are uncontradicted.â Id.
In assessing personal jurisdiction over a non-resident defendant, a federal court exercising diversity jurisdiction is âthe functional equivalent of a state court sitting in the forum state.â N. Laminate Sales, Inc. v. Davis, 403 F.3d 14, 24 (1st Cir.2005) (internal quotation omitted). To establish personal jurisdiction over Nihon Kohden, Astro-Med must demonstrate that Rhode Islandâs long-arm statute grants jurisdiction and that the exercise of jurisdiction under the statute is consistent with the Due Process Clause of the United States Constitution. Daynard, 290 F.3d at 52. The Rhode Island long-arm statute is coextensive with the permissible reach of the Due Process Clause.
There are two means of establishing jurisdiction over a defendantâs person available under the Fourteenth Amendment: specific and general jurisdiction. For specific jurisdiction, the plaintiffs claim âmust be related to the defendantâs contacts.â Harlow v. Childrenâs Hosp., 432 F.3d 50, 57 (1st Cir.2005). For general jurisdiction, âin which the cause of action may be unrelated to the defendantâs contacts, the defendant must have continuous and systematic contacts with the state.â Id. Here, the district court concluded that it had both specific and general jurisdiction. Since we conclude that the district court correctly concluded it had specific jurisdiction, we will address only that issue.
2. Specific Jurisdiction
This circuit âdivides [the] minimum contacts analysis into three inquires: relatedness, purposeful availment, and reasonableness.â N. Laminate Sales, 403 F.3d at 25; Cardinale, 567 F.3d at 16 (stating that âpersonal jurisdiction under International Shoe, allowing jurisdiction to be asserted as to a specific claim, can be established where the defendants availed themselves of the opportunity to do business in the state, the claim in question is related to that access and the so-called gestalt factors are consistent with requiring an out of-state defendant to defend within the stateâ); Phillips v. Prairie Eye Ctr., 530 F.3d 22, 27 (1st Cir.2008); Childrenâs Hosp., 432 F.3d at 57. âQuestions of specific jurisdiction are always tied to the particular claims asserted.â Phillips Exeter Acad. v. Howard Phillips Fund, Inc., 196 F.3d 284, 289 (1st Cir.1999). Astro-Medâs claims against Nihon Kohden sound in tort,
(a) Relatedness
The first inquiry, relatedness, asks whether â âthe claim underlying the litigation ... directly arise[s] out of, or relate[s] to, the defendantâs forum-state activities.â â N. Laminate Sales, 403 F.3d at 25 (quoting United Elec. Workers v. 163 Pleasant St. Corp., 960 F.2d 1080, 1089 (1st Cir.1992)). The relatedness test is a â âflexible, relaxed standard.â â Id. (quoting Pritzker v. Yari, 42 F.3d 53, 61 (1st Cir. 1994)).
Focusing on the tortious interference with a contractual relationship claim, to prove such a claim, a plaintiff in Rhode Island must establish the following elements: â â(1) the existence of a contract; (2) the alleged wrongdoerâs knowledge of the contract; (3) his intentional interference; and (4) damages resulting there
Despite this formidable array of Rhode Island connections, Nihon Kohden insists that because it is a California corporation and because all its direct dealings with Plant, a Florida resident, took place either in Florida or in California, jurisdiction cannot lie in Rhode Island. Nihon Kohdenâs argument, however, emphasizes too fine a point. Consistent with Colder v. Jones, 465 U.S. 783, 789, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), a defendant âneed not be physically present in the forum state to cause injury (and thus âactivityâ for jurisdictional purposes) in the forum state.â N. Laminate Sales, 403 F.3d at 25. Nihon Kohdenâs conduct in Florida and California was a cause of the breach of contract â the actual injury â that occurred in Rhode Island. That in-forum injury was clearly related to Astro-Medâs tortious interference claim, satisfying the first prong of the minimum contacts analysis.
(b) Purposeful Availment
To satisfy the second requirement, âthe defendantâs in-state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that stateâs laws and making the defendantâs involuntary presence before the stateâs courts foreseeable.â N. Laminate Sales, 403 F.3d at 25 (quoting United Elec. Workers, 960 F.2d at 1089). The focus is on âvoluntariness and foreseeability.â Id. (quoting Sawtelle v. Farrell, 70 F.3d 1381, 1391 (1st Cir.1995)).Here, Nihon Kohden was fully aware of the Astro-Med â Plant Employee Agreement, including its Rhode Island provisions, and persisted in negotiations in the face of legal advice from its own counsel that to do so would pose a risk. It must have been foreseeable to Nihon Kohden that it âmight be held accountable for [its actions] in a [Rhode Island] forum.â Id. at 26.
(c) Reasonableness
To evaluate the reasonableness requirement, the Supreme Court has provided a set of âgestalt factorsâ to consider. N. Laminate Sales, 403 F.3d at 26; United Elec. Workers, 960 F.2d at 1089. These factors include: the defendantâs burden of appearing, the forum Stateâs interest in adjudicating the dispute, the plaintiffs interest in obtaining convenient and effective relief, the interstate judicial systemâs interest in obtaining the most efficient resolution of the controversy, and the shared interest of the several States in furthering fundamental substantive social policies. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985); N. Laminate Sales, 403 F.3d at 26.
Nihon Kohdenâs position becomes manifestly untenable when Astro-Medâs companion litigation against Plant is factored into the mix. As Nihon Kohden concedes, Astro-Med had the legal right to initiate a lawsuit for breach of the Employment Agreement against Plant in Rhode Island, the state where the contract was formulated and executed. Once Rhode Island asserted uncontested jurisdiction over the breach of contract claim and the related misappropriation of trade secrets and unfair competition claims, the Florida and California witnesses and evidence were heading for trial in Rhode Island. Nihon Kohdenâs earnest complaint about undue burden rings hollow, when its alternative would have resulted in two separate cases in two jurisdictions on opposite ends of the country â either Rhode Island and Florida or Rhode Island and California. Contrary to Nihon Kohdenâs position, the gestalt factors militate strongly in favor of jurisdiction in Rhode Island.
(d) Specific Jurisdiction â Conclusion
Applying the specific jurisdiction tripartite analysis, we conclude that the district court properly asserted jurisdiction over Astro-Medâs claims against Nihon Kohden. We need go no further.
B. Venue
Nihon Kohden argues that Rhode Island was not the proper venue for Astro-Medâs lawsuit, and the district court should have either dismissed the claim or transferred the case to a different district in accordance with 28 U.S.C. § 1404.
1. Determining Venue
The applicable venue provision of Title 28 states:
A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.
28 U.S.C. § 1391(a). Although Nihon Kohden is a California business, it resides for purposes of venue in Rhode Island.
Under subsection (2), the question becomes whether the District of Rhode
Astro-Med and Plant entered into an employment contract in Rhode Island, the district in which Astro-Med was headquartered, that contained the non-compete and non-disclosure clauses at issue here. With full knowledge of the Employee Agreement and its contents, Nihon Kohden hired away Plant, thereby interfering with Astro-Medâs contract and misappropriating its trade secrets. Because AstroMed was headquartered in Rhode Island, this district is one of the places where the tortious interference and misappropriation of trade secrets occurred and where the harms from these torts were felt. See Bates, 980 F.2d at 868 (2nd Cir.1992). In addition, Rhode Island was the forum selected by the Employee Agreement to resolve disputes. See Lambert v. Kysar, 983 F.2d 1110, 1118 n. 11 (1st Cir.1993) (upholding forum selection clause). Taken together, these facts constitute a substantial part of Astro-Medâs claims against Nihon Kohden.
Further, Plant did not contest venue in Rhode Island and that portion of the lawsuit was, for venue purposes, going to proceed in Rhode Island. Thus, the convenience of the parties strongly militated in favor of retention of venue in Rhode Island. Uffner, 244 F.3d at 43 (â[T]he general purpose of the venue rules is âto protect the defendant against the risk that a plaintiff will select an unfair or inconvenient place of trial.â â) (quoting Leroy v. Great W. United Corp., 443 U.S. 173, 183-84, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979)). Given that a substantial part of AstroMedâs claims involved Rhode Island and proceeding in Rhode Island would not thwart the underlying purpose of the venue statute, we conclude that the district court did not err in refusing to dismiss the claims pending against Nihon Kohden in Rhode Island for improper venue.
2. Transfer of Venue
Nihon Kohden also appeals the district courtâs denial of its motion for change of venue under 28 U.S.C. § 1404(a). âSection 1404(a) is intended to place discretion in the district court to adjudicate motions for transfer according to an âindividualized, case-by-case consideration of convenience and fairness.â â Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964)). Where the contract between the parties, here speaking of Astro-Med and Plant, contains a forum-selection clause, the clause âwill be a significant factor that figures centrally in the District Courtâs
C. The Verdict
Following the verdict, Nihon Kohden and Plant moved for judgment as a matter of law under Federal Rule of Civil Procedure 50(b) and moved for new trial under Federal Rule of Civil Procedure 59 or in the alternative for remittitur. The district court denied each post-trial motion. Defendants object both to a number of the district courtâs legal rulings and to the verdict, claiming that âthe evidence strongly supported (almost mandated) a defense verdict.â We disagree.
1. Legal Standards
âWe review the district courtâs denial of a motion for judgment as a matter of law, including legal decisions made therein, de novo.â Mass. Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47, 57 (1st Cir.2009). However, a juryâs verdict âmust be upheld âunless the facts and inferences, viewed in the light most favorable to the verdict, point so strongly and overwhelmingly in favor of the movant that a reasonable jury could not have [returned the verdict].â â Borges Colon v. Romaiv-Abreu, 438 F.3d 1, 14 (1st Cir.2006) (alteration in original) (quoting Acevedo-Diaz v. Aponte, 1 F.3d 62, 66 (1st Cir.1993)). We must affirm â âunless the evidence, together with all reasonable inferences in favor of the verdict, could lead a reasonable person to only one conclusion, namely, that the moving party was entitled to judgment.â â N. Laminate Sales, 403 F.3d at 26 (quoting Shells Title Co. v. Commonwealth Land Title Ins. Co., 184 F.3d 10, 19 (1st Cir.1999)).
An appellantâs âhurdle is no lower on an appeal of a denial of a Rule 59 motion for a new trial.â Transamerica Premier Ins. Co. v. Ober, 107 F.3d 925, 929 (1st Cir.1997). The evidence is again viewed in the light most favorable to the verdict. Baron v. Suffolk County Sheriffs Depât, 402 F.3d 225, 245 (1st Cir.2005). A new trial is warranted âonly if the verdict, though rationally based on the evidence, was so clearly against the weight of the evidence as to amount to a manifest miscarriage of justice.â Bogosian v. Mercedes-Benz of N. Am., 104 F.3d 472, 482 (1st Cir.1997) (internal quotation omitted). We reverse only if âthe verdict is so seriously mistaken, so clearly against the law or the evidence, as to constitute a miscarriage of justice.â Levesque v. Anchor Motor Freight, Inc., 832 F.2d 702, 703 (1st Cir.1987). Similarly, a district courtâs denial of a motion for remittitur will be reversed only if âthe juryâs verdict exceeds âany rational appraisal or estimate of the damages that could be based on the evidence before the jury.â â Smith v. Kmart Corp., 177 F.3d 19 (1st Cir.1999) (quoting Milone v. Moceri Family, Inc., 847 F.2d 35, 37 (1st Cir.1988)). The juryâs damage award must endure unless it is â âgrossly excessive, inordinate, shocking to the conscience of the court, or so high that it would be a denial of justice to permit it to stand.â â Correa v. Hosp. San Francisco, 69 F.3d 1184, 1197 (1st Cir.1995) (quoting
2. The Non-Competition Provision
Astro-Medâs Employee Agreement with Plant contained a one-year non-competition provision:
I recognize that [Astro-Med] sells its products throughout North America and Europe; as such, upon termination of my employment at the Company, for whatever reason, I shall not directly or indirectly enter into or engage in a business that competes with the Company, in a territory consisting of North America, and Europe, either as an individual, partner, joint venturer, employee, agent or salesman for any person, or as an officer, director or stockholder of a corporation or otherwise, for a period of one year thereafter.
Defendants argue that the non-competition provision was unenforceable until it was modified by the district court, that changes in Plantâs employment status voided the agreement, that Astro-Medâs own breach of the employment agreement voided Plantâs obligations under the agreement, that the non-competition provision was unenforceable since it did not protect legitimate business interests, and that Ni-hon Kohden cannot be liable for interfering with an unenforceable contract. We address each contention.
(a) Partial Enforcement
In the district court, defendants objected to the territorial breadth of this provision, which included not only all of North America but also all of Europe, and to the breadth of the activity captured by the provision. Defendants cited Rhode Island state law, which disfavors non-competition covenants. See, e.g., Cranston Print Works Co. v. Pothier, 848 A.2d 213, 220 (R.I.2004); Koppers Prods. Co. v. Readio, 60 R.I. 207, 197 A. 441, 444-45 (1938) (stating that ânoncompetitive employment contracts are carefully scrutinized by the court and only enforced when reasonable and when the restriction does not extend beyond what is apparently necessary for the protection of those in whose favor they are madeâ). Consistent with Rhode Island law, the district court partially enforced the non-competition provision, restricting its territorial application to the state of Florida and to a limited subset of AstroMed customers. See Durapin, Inc. v. Am. Prods., Inc., 559 A.2d 1051, 1058-59 (R.I.1989).
Defendants do not complain about the trial courtâs more restrictive interpretation of the Employee Agreement. Instead, they argue that the non-competition provision was not enforceable until the district court modified it to make it enforceable. We have no quarrel with defendantsâ general contention that under the partial enforcement rule, an overly-broad non-competition provision cannot be enforced until it is modified, a proposition that seems self-evident. But, defendantsâ real contention is that a party to a non-competition agreement cannot breach the agreement until it is judicially modified, and specifically that it was impossible for Plant to breach his agreement with Astro-Med until the district court modified the provision to make it enforceable.
(b) Changes in Plantâs Employment
Defendants next contend that after Astro-Med hired Plant, it made material changes in his employment, which voided the non-competition provision. They note that Plantâs job changed in 2004 from product specialist in Rhode Island to salesperson in Florida, and in 2006, Astro-Med substantially reduced his sales territory. Regarding the job change, defendants point out that the introductory paragraph of the employment agreement states that
Turning first to material change, defendants cite AFC Cable Sys. Inc. v. Clisham, 62 F.Supp.2d 167 (D.Mass.1999) (applying Massachusetts law), for the proposition that a change in an employeeâs job can void a non-competition agreement. It is apparently correct that under Massachusetts law, â[e]ach time an employeeâs employment relationship with the employer changes materially such that they have entered into a new employment relationship a new restrictive covenant must be signed.â Lycos, Inc. v. Jackson, No.2004-3009, 2004 WL 2341335, 2004 Mass.Super. LEXIS 348 (Mass.Super.Ct. Aug. 24, 2004). The genesis of the Massachusetts material change rule is F.A. Bartlett Tree Expert Co. v. Barrington, 353 Mass. 585, 233 N.E.2d 756 (1968). However, as interpreted in Massachusetts, âin both Bartlett Tree and AFC Cable Systems, the court found that the conduct of the parties clearly showed that they had abandoned and rescinded by mutual consent the earlier employment agreement containing the pertinent non-compete provision and had entered into a new employment relationship that included no such non-compete provision.â Intertek Testing Sews. N.A., Inc. v. Curtis-Strauss LLC, No. 98-903-F, 2000 WL 1473126, at *6, 2000 Mass.Super. LEXIS 354, at *20 (Mass.Super.Ct. Aug. 8, 2000). Further, âin both cases, the employer provided the employee with a new employment agreement, which the employee refused to sign.â Id. at *6, 2000 Mass.Super. LEXIS 354, at *21; see Iron Mountain Info. Mgmt., Inc. v. Taddeo, 455 F.Supp.2d 124, 133 (E.D.N.Y.2006) (applying Massachusetts law and stating that â[i]n determining whether there has been a material change to the employment relationship, courts have considered it extremely significant that the employer sought to have the employee sign a new non-compete agreementâ). The question, according to Intertek, is whether the employment agreement had been âmutually abandoned and rescinded.â Intertek, 2000 WL 1473126, at *6, 2000 Mass.Super. LEXIS 354, at *21; Slade Gorton & Co. v. OâNeil, 355 Mass. 4, 242 N.E.2d 551, 554 (1968) (describing the question as whether the contract was âabandoned or superseded by the conduct of the parties prior to [the employeeâs] resignationâ); Bartlett Tree, 233 N.E.2d at 758 (observing that changes in the employeeâs remuneration and sales area, memorialized in a new contract that the employee refused to sign, âstrongly suggest that the parties had abandoned their old arrangement and had entered into a new relationshipâ). Finally, âwhether there has been such a modification of a previous agreement, rather than an implied revocation or termination of the agreement as the result of such a subsequent change, depends upon the intention of the parties.â Mail-Well Envelope Co. v. Saley, 262 Or. 143, 497 P.2d 364, 369 (1972); see Bartlett Tree, 233 N.E.2d at 758 (noting that partiesâ conduct subsequent to changes in employeeâs position was inconsistent with an intention that the original remained in effect).
Assuming that Rhode Island would adopt Massachusettsâ material change rule, the evidence in this case is insufficient to generate its application. See Elizabeth Grady Face First, Inc. v. Escavich, 321 F.Supp.2d 420, 424 (D.Conn.2004) (stating that Bartlett Tree and AFC Cable âstand for nothing more than the unremarkable proposition that contracting parties are free to abandon their prior contracts and form new ones, and an inten
Regarding the supposed restriction in the Employee Agreement to work âinvolving design, development or manufacture of products for the Company,â defendantsâ reading of the agreement is much too narrow. The introductory paragraph of the Employee Agreement provides, in part: âI am now or am about to be employed by Astro-Med, Inc .... and in connection with such employment, I am, may, or will be engaged in work relating to the Companyâs business, involving design, development or manufacture of products for the Company.â On the basis of this recital and in exchange for continued employment and compensation, a signatory of the Agreement, here Plant, makes various promises, including not to compete. The recital cannot fairly be read to apply only to those employees involved in design, development, or manufacture of products for Astro-Med. The subordinate clause, âdesign, development or manufacture of productsâ, describes the nature of Astro-Medâs business; it does not limit the type of work an employee must perform at Astro-Med to become subject to the Agreement.
(c) Astro-Medâs Breach
Defendants claim that by substantially reducing Plantâs sales territory, Astro-Med materially breached the Employee Agreement, thereby releasing Plant from its non-competition provisions. However, as the district judge observed, during trial, Plant admitted that when he accepted the sales position in Florida, Astro-Med informed him that his sales territory might be partly reallocated in the future. When Astro-Med later reduced his sales territory, it was acting in accordance with the agreement of the parties, and viewing the evidence in the light most favorable to the verdict, Astro-Med cannot be said to have breached the contract by implementing its agreed-upon terms.
(d) Legitimate Business Interests
Defendantsâ final argument against the enforceability of the non-competition provision is that it was not designed to protect Astro-Medâs legitimate business interests. Rhode Island law requires that a party seeking to enforce a non-competition agreement demonstrate that âthere exists a legitimate interest that the provision is designed to protect.â Durapin, 559 A.2d at 1053; Max Garelick, Inc. v. Leonardo, 105 R.I. 142, 250 A.2d 354, 357 (1969). While âthe desire to be free from competition, by itself, is not a protectable interest,â Durapin, 559 A.2d at 1057, protecting a businessâs confidential information and goodwill-such as the special relationship its sales force has developed with customers-may qualify as a legitimate interest. R.J. Carbone, 582 F.Supp.2d at 225; Nestle, 836 F.Supp. at 74-75; Dial Media, Inc. v. Schiff, 612 F.Supp. 1483, 1489 (D.R.I.1985); Rego Displays, Inc. v. Fournier, 119 R.I. 469, 379 A.2d 1098, 1102 (1977). At trial, Astro-Med produced evidence of the proprietary nature of the information it disclosed to Plant, including strengths and weaknesses of its products, its pricing strategies, the new products under development, and its customers. The evidence is sufficient to sustain the verdict.
Because defendants have failed to demonstrate that the non-competition provision in the Employee Agreement is unenforceable against Plant, the argument that Nihon Kohden could not have interfered with the Employee Agreement also fails.
3. Evidence of Trade Secret Misappropriation
Based largely on the testimony of Astro-Med employees, defendants insist that there is no evidence that either Plant or Nihon Kohden ever used any of AstroMedâs confidential information. They contend that this failure dooms Astro-Medâs misappropriation claim, which they say requires proof that Astro-Med âshared a confidential relationship with the defendant, possessed a trade secret, disclosed it to the defendant, and that the defendant made use of the disclosure in breach of the confidence reposed in him.â Burten v. Milton Bradley Co., 763 F.2d 461, 463 (1st Cir.1985).
Defendantsâ reliance on our discussion of Massachusetts tort law in Burten is misplaced. Astro-Medâs misappropriation claim arises under the Rhode Island Uniform Trade Secrets Act, R.I. Gen. Laws § 6-41-1 et seq., which defines âmisappropriationâ as follows:
(i) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
(ii) Disclosure or use of a trade secret of another without express or implied consent by a person who:
(A) Used improper means to acquire knowledge of the trade secret; or
(B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was:
(I) Derived from or through a person who had utilized improper means to acquire it;
(II) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
(III) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
(C) Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake!.]
R.I. Gen. Laws § 6^41-1(2). The Actâs definition of âimproper meansâ includes âbreach or inducement of a breach of a duty to maintain secrecy.â Id. § 6-41-1(1). Misappropriation thus includes disclosure of a trade secret by one who acquired it while under a duty to maintain its secrecy and the acquisition of a trade secret by one who knows that it was acquired by breach of a duty to maintain secrecy. Contrary to defendantsâ assertion, Astro-Med need not have shown that either Plant or Nihon Kohden âusedâ Astro-Medâs trade secrets; disclosure or acquisition is sufficient to constitute misappropriation, subjecting defendants to liability for actual loss and unjust enrichment caused by the misappropriation. Id. § 6-41-3(a).
Here, there was ample evidence that the very reason Nihon Kohden hired Plant was to obtain access to his intimate knowledge of Astro-Medâs business.
4. Damages
Defendants next say that AstroMed failed to produce evidence of direct sales that Astro-Med lost to Nihon Kohden as a consequence of its hiring Plant, and that to prove damages, Astro-Med instead relied on sales quotations, not actual sales. Defendants contend that to rely on sales quotations, not actual sales, required the jury to assume a damages verdict based on speculation and conjecture in violation of law. Nestle, 836 F.Supp. at 78 (reiterating the âenduring rule that damages must be established by a reasonable certainty and may not be recovered if purely speculativeâ). At the same time, Astro-Med is not required to prove its damages âwith mathematical precision.â Cordeco Dev. Corp. v. Santiago Vasquez, 539 F.2d 256, 262 (1st Cir.1976). âAll that is required is a reasonable basis of computation and the best evidence obtainable.â Knightsbridge Mktg. Sews., Inc. v. Promociones Y Proyectos, S.A., 728 F.2d 572, 575-76 (1st Cir.1984).
The district court undertook a painstaking analysis of the' damages evidence at the trial and considered as well the reasons why Nihon Kohden did not present evidence of actual sales. We have reviewed the district courtâs careful review of the evidence and can add nothing. It suffices to say, as the district court concluded, that the evidence, again when viewed in the light most favorable to the verdict, supports the damage award.
5. An Inconsistent and Nonsensical Verdict
Defendants correctly observe that the jury issued the following monetary awards: (1) $41,900 against Plant for breach of contract; (2) $41,900 against Nihon Kohden for intentional interference with the Astro-Med â Plant contract; (3) $280,000 against Plant and Nihon Kohden for misappropriation of trade secrets; and, (4) $12,000 against Plant for unfair competition. Nihon Kohden characterizes these awards as ânon-sensical based on their inconsistency and lack of evidentiary support.â Other than strongly telegraphing its resolute disenchantment with the verdict, defendants have not explained why these monetary awards are inconsistent. We are left to guess. It is well settled in this circuit that âissues âadverted to on appeal in a perfunctory manner, unaccompanied by some developed argumentation, are deemed to have been abandoned.â â Piedrahita v. Mukasey, 524 F.3d 142, 144 (1st Cir.2008) (quoting Turn v. Gonzales, 503 F.3d 159, 160 (1st Cir.2007)). We will
6. Evidentiary Rulings and Jury Instruction
Nihon Kohden raises several claims of error in the district courtâs evidentiary rulings. We have carefully reviewed Ni-hon Kohdenâs contentions and conclude that Nihon Kohden failed to preserve some of its claims, and failed to adequately develop others; as to the remainder, we conclude the district court did not err.
Defendants also contend that the district court erred when it instructed the jury on Plantâs failure to produce evidence of the commissions he received as a Nihon Kohden employee. The district court gave the following instruction:
If you find that Kevin Plant failed to produce documents or information concerning the actual sales that he made on behalf of Nihon Kohden in the state of Florida, you may infer from Kevin Plantâs nonproduction that the documents and information are unfavorable to the defense.
Defendants did not object to the instruction and they therefore forfeited their right to object on appeal. See Fed. R.Civ.P. 51(c)(2)(B) (stating that a party must âobject[] promptly after learning that the instruction or request will be, or has been, given or refusedâ); Baron, 402 F.3d at 235. âOur interpretation of Rule 51 is quite strict.â Connelly v. Hyundai Motor Co., 351 F.3d 535, 544 (1st Cir. 2003). âThere is a good reason for this strictness. We enforce our object-or-forfeit rule to compel litigants to afford the trial court an opportunity to cure [a] defective instruction and to prevent the litigants from ensuring a new trial in the event of an adverse verdict by covertly relying on the error.â Flynn v. AK Peters, Ltd., 377 F.3d 13, 25 (1st Cir.2004) (alteration in original) (internal quotation omitted). We review defendantsâ forfeited claim only for plain error. Baron, 402 F.3d at 236.
Defendants acknowledge that an adverse inference instruction may be allowed when a party fails to produce a document that exists or should exist and is within its control. See Grajales-Romero v. American Airlines, 194 F.3d 288, 299 (1st Cir.1999); see also United States v. St. Michaelâs Credit Union, 880 F.2d 579, 597 (1st Cir.1989) (stating that â[t]he failure of a party to produce available evidence that would help decide an issue may justify an inference that the evidence would be unfavorable to the party to whom it is availableâ). But, they say that such an instruction should not have been given in this case, because there was no evidence that a document relating to Plantâs sales as a Nihon Kohden employee existed. Contrary to defendantsâ claim, Plant testified that his paychecks from Nihon Kohden included a document graphing his Florida sales and commission from these sales. Plant also testified that he had not brought these documents with him to court, because he was not asked to do so. Plantâs testimony demonstrates that Nihon Kohden produced a relevant document, and that Plant possessed this document, but had not brought it to court. This testimony properly generated the adverse inference instruction.
D. Miscellaneous Issues
Defendants mention other claims of legal error. They object to the way the charge conference was held, demand a remittitur to zero damages and an order
III.
Conclusion
The district court judgment is affirmed.
It is so ordered.
. Astro-Med originally filed suit in Kent County Superior Court in Rhode Island. Asserting diversity jurisdiction, Plant timely removed the case to the United States District Court for the District of Rhode Island.
. Neither Nihon Kohden nor Plant contests the district courtâs exercise of jurisdiction over Plant.
. R.I. Gen. Laws § 9-5-33(a).
. The claims against Nihon Kohden sound only in tort, but the claims against Plant include a breach of contract claim, which was submitted to the jury by special interrogatory and resulted in a verdict against Plant.
. Plant has not challenged the court's venue decision.
. With regard to corporations, 28 U.S.C. § 1391(c) provides that, "[for] purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.â Because we have concluded that Nihon Kohden is subject to personal jurisdiction in Rhode Island, we can also conclude that Nihon Kohden, a corporation, "residesâ in Rhode Island pursuant to 28 U.S.C. § 1391(c).
. Defendants cite two cases in support of the proposition that a non-competition clause cannot be breached until it is modified: Durapin and Hawkins v. daly. commerce, inc., No.2000-5740, 2003 WL 302358, 2003 R.I.Super. LEXIS 14 (R.I.Super.Ct. Feb. 10, 2003). Neither Durapin nor Hawkins says such a thing. In Durapin, the Supreme Court
. For example, email exchanges between Plant and Nihon Kohden reveal that after Plant accepted the Nihon Kohden job offer, Brian Kehoe, a Nihon Kohden employee, wrote to Plant that he will be "interested to see what you have in the works with Grassâ
. This cannot come as a surprise to defendants. Addressing the same contention with a similar lack of specificity, the district court came to the same conclusion.