Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_14-cv-00673/USCOURTS-azd-2_14-cv-00673-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

American Realty Capital Properties 

Incorporated, 

Plaintiff, 

v. 

Jeffrey C. Holland, et al., 

Defendants. 

No. CV14-0673 PHX-DGC

ORDER 

 This morning, the Court held a hearing on Plaintiff’s amended application for a 

temporary restraining order (“TRO”). Doc. 10. For the reasons set forth below, the 

Court will deny Plaintiff’s application. 

 A TRO may be granted only where the movant shows that “he is likely to succeed 

on the merits, that he is likely to suffer irreparable harm in the absence of preliminary 

relief, that the balance of equities tips in his favor, and that an injunction is in the public 

interest.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). Plaintiff has 

not shown that it is likely to succeed on the merits.1

 

 Defendant Jeffrey Holland formerly worked as an executive at Plaintiff ARCP, 

which manages and markets investments in Real Estate Investment Trusts (“REITs”). 

 

1

 The Ninth Circuit test for injunctive relief includes a sliding scale. If a plaintiff shows that the balance of hardships tips sharply in its favor, the existence of serious questions may be sufficient. Alliance for Wild Rockies v. Cottrell, 632 F.3d 1127, 1134-

35 (9th Cir. 2011). Plaintiff has not argued that this test is satisfied, and, given the clear Maryland and Arizona law cited below, the Court doubts that serious questions have been 

raised. 

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Plaintiff asks the Court to restrain Defendant Holland from making contact with 

Plaintiff’s clients for purposes of marketing Defendant Carlyle’s non-REIT investment 

products, alleging that such contacts will damage Plaintiff’s business and trade on its 

confidential customer information and good will. Plaintiff seeks to enforce nonsolicitation and confidentiality provisions in an Employment Agreement (Doc. 10-2 at 6) 

and a Covenants Agreement (Doc. 10-2 at 34) executed by Holland. 

 The non-solicitation provisions appear to be unreasonably broad. Read literally, 

they would prevent Defendant Holland from soliciting any form of business from any 

client of Plaintiff, anywhere in the world. The provision would apply to solicitations for 

purposes entirely unrelated to Plaintiff’s REIT business, such as attempts to sell computer 

software or landscaping services. The provision would also prohibit Defendant Holland 

from contacting customers of Plaintiff with whom he had no dealings while employed by 

Plaintiff. Apparently recognizing this over-breadth, Plaintiff asks the Court for narrower 

relief – prohibit Defendant Holland from contacting Plaintiff’s customers, with whom he 

had personal dealings while employed at Plaintiff, for the purpose of selling Defendant 

Carlyle’s investment products. Plaintiff essentially asks the Court to re-write the nonsolicitation provisions to make them enforceable. 

 The Employment and Covenants Agreements are governed by Maryland and 

Arizona law, respectively. Neither state permits this Court to re-write non-solicitation 

provisions. See Deutsche Post Global Mail, Ltd. v. Conrad, 292 F. Supp. 2d 748, 757-58 

(D. Md. 2003) (recognizing that under Maryland law, “blue penciling must be limited to 

the removal of offending language and cannot include the addition of words or phrases in 

an effort to make the restrictive covenant reasonable”)2

; Valley Med. Specialists v. 

Farber, 982 P.2d 1277, 1286 (Ariz. 1999) (holding that courts can eliminate 

grammatically severable, unreasonable provisions, but may not rewrite the agreement in 

 

2

 The Maryland case cited by Plaintiff during the hearing, Holloway v. Faw, 

Casson & Co., 552 A.2d 1311, 1327 (Md. Spec. App. 1989), was reversed on appeal without approval of the flexible approach discussed by Plaintiff, see 572 A.2d 510, 524 

(Md. App. 1990), and has not been followed by subsequent Maryland cases. See 

Deutsche Post Global Mail, 292 F. Supp. 2d at 757. 

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an attempt to make it enforceable). Because revising the non-solicitation provisions to 

achieve the narrowing suggested by Plaintiff would require far more than removing 

offending words or phrases, the Court concludes that Plaintiff is not likely to succeed in 

enforcing the provisions. 

 Nor can the Court conclude that Plaintiff is likely to succeed in enforcement of the 

confidentiality provisions. The provisions are very broad, prohibiting Defendant Holland 

from using or sharing “Confidential Information,” which is defined to include names, 

lists, “other information relating to customers,” strategy and business plans, “tactics,” 

marketing and development plans, “marketing techniques,” any information which 

Plaintiff “treats as proprietary,” any information Defendant Holland “should reasonably 

have known to be confidential,” and “other information of a similar nature.” Doc. 10-2 at 

17-18. In addition, the confidentiality provisions contain no time limitation. Thus, if the 

provisions do in fact prevent Holland from calling on Plaintiff’s customers as Plaintiff 

contends, they do so forever, a limitation that would not survive scrutiny under Maryland 

or Arizona law. See Silver v. Goldberger, 188 A.2d 155, 158 (Md. 1963) (restrictive 

employment covenants “will be sustained if the restraint is confined within limits which 

are no wider as to area and duration than are reasonably necessary for the protection of 

the business of the employer”); Amex Distrib. Co., Inc. v. Mascari, 724 P.2d 596, 603 

(Ariz. App. 1986) (“While a true trade secret is entitled to protection of indefinite 

duration, the same is not true of customer information, especially in a field where 

customers are known and generally accessible to competitors. . . . [P]aragraph 6 of the 

Employment Agreement simply boils down to a noncompetition covenant, which is 

wholly without temporal limitation” and is therefore unenforceable) (citations omitted). 

And as noted above, under Maryland and Arizona law, the confidentiality provisions 

cannot be narrowed through re-writing or the insertion of a time limitation not included 

by the parties. 

 In sum, Plaintiff has not shown that it is likely to succeed on its claim that the nonsolicitation and confidentiality provisions are enforceable. As a result, Plaintiff’s request 

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for a TRO must be denied. 

IT IS ORDERED that Plaintiff’s amended application for temporary restraining 

order (Doc. 10) is denied. 

 Dated this 8th day of April, 2014. 

Case 2:14-cv-00673-DGC Document 23 Filed 04/08/14 Page 4 of 4