Although Ms. Perry had counsel throughout the litigation 1

and through the bench trial, she is now pro se. 

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

DONNA PERRY : CIVIL ACTION

:

v. :

:

H&R BLOCK EASTERN :

ENTERPRISES, INC. : NO. 04-6108

MEMORANDUM

McLaughlin, J. August 18, 2009

Donna Perry sued H&R Block Eastern Enterprises, Inc.,

for sex and age discrimination, slander, and tortious

interference with contract. H&R Block brought a counterclaim for

breach of contract based on Ms. Perry’s alleged violation of a

non-compete provision in her employment agreement, as well as

various related claims.

The Court granted summary judgment to H&R Block on some

of Ms. Perry’s claims but denied it with respect to the slander

claim. The Court granted summary judgment to H&R Block on its

counterclaim for violation of the non-compete clause. The Court

then presided over a jury trial on the slander claim. The jury

returned a verdict for H&R Block. The Court conducted a bench

trial concerning the damages to be awarded to H&R Block on its

breach of contract claim. This memorandum opinion constitutes

the Court’s decision on that bench trial.1

Case 2:04-cv-06108-MAM Document 129 Filed 08/19/09 Page 1 of 13
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I. Evidence of Damages

H&R Block’s damages calculation relies on a damages

provision in the relevant contract. The contract states that an

employee who breaches the non-compete clause 

shall pay to [the] Company an amount equal to

two times the Average Fee charged by [the

employee] during the term of this Agreement

multiplied by the number of Non-Returning

Company Clients multiplied by [the

employee]’s Baseline Client Retention

Percentage as defined in Section 5 . . . .

See Employment Agreement ¶ 14(b), 8/14/07 Hrg. Ex. D-15 (“Empl.

Ag.”). H&R Block contends that this calculation results in

damages of $46,784.33.

During the bench trial, a representative of H&R Block

explained how the formula worked and whence the numbers related

to Ms. Perry came. A second witness, who was a paralegal at

defense counsel’s firm, testified that he had taken a list of Ms.

Perry’s customers at H&R Block and compared the names on that

list with those on a list of individuals at Jackson Hewitt for

whom she had also prepared tax returns. H&R Block is seeking

damages for all H&R Block customers for whom Ms. Perry prepared

tax returns while at H&R Block who had their tax returns prepared

at Jackson Hewitt.

During cross-examination of the H&R Block

representative, it became clear that under the formula, H&R Block

Case 2:04-cv-06108-MAM Document 129 Filed 08/19/09 Page 2 of 13
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would recover more than its actual damages, as it did not deduct

from the formula amount any commissions that would have been paid

to the tax preparer who prepared the customers’ tax returns had

the customers stayed with H&R Block instead of going to Jackson

Hewitt. See 8/14/07 Tr. at 29-36, 39. 

Prior to the bench trial, neither the plaintiff nor her

counsel had been able to view the Jackson Hewitt documents that

formed the basis of H&R Block’s damages because they had not yet

signed a confidentiality agreement. On November 27, 2007, the

Court issued an order stating that the plaintiff could see the

list of clients for whom Ms. Perry did tax returns at Jackson

Hewitt when Ms. Perry and her counsel sign a confidentiality

order agreeing not to disclose any of this information. See

Docket Nos. 109, 110; see also 4/25/08 Tr. at 3 (Docket No. 117). 

Counsel for the plaintiff was then permitted to withdraw with the

consent of the plaintiff and with the understanding that the

plaintiff would handle the remainder of the damages issue

herself. See Docket No. 112. 

After the plaintiff’s counsel was permitted to

withdraw, the Court received a number of correspondences from Ms.

Perry and from defense counsel regarding difficulties they were

having getting Ms. Perry to view the relevant documents. To

facilitate this matter, the Court decided to hold a status

conference, to which defense counsel was ordered to bring all

Case 2:04-cv-06108-MAM Document 129 Filed 08/19/09 Page 3 of 13
 Defense counsel also agreed that Ms. Perry could review 2

these documents at defense counsel’s law firm.

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documents relied on to support the defendants’ damages

calculations. The Court held a status conference on April 25,

2008, at which the defendant appeared through counsel and Ms.

Perry and her husband appeared without counsel. At the

conference, defense counsel explained to the Court and to Ms.

Perry the nature of the documents that were available and how the

defendant had used those documents in preparing the damages

calculation. 

2

During the conference, defense counsel stated that as

long as a customer was an H&R Block customer whose tax returns

Ms. Perry prepared while at H&R Block, who then went to Jackson

Hewitt, defense counsel added the name of that customer to the

list to be used to calculate damages even if Ms. Perry had not

prepared the tax return at Jackson Hewitt. The Court, upon Ms.

Perry’s objection, stated that it would exclude from H&R Block’s

damages customers whose tax returns Ms. Perry did not prepare at

Jackson Hewitt. It also instructed counsel for H&R Block to

provide to the Court a list excluding those customers whose tax

returns Ms. Perry did not prepare at Jackson Hewitt. 4/25/08 Tr.

at 13, 15, 19-20.

Subsequent to the April 25, 2008, conference, the Court

did not receive from the defendant a damages calculation that

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excluded individuals whose tax returns Ms. Perry had not prepared

at Jackson Hewitt. On October 23, 2008, the Court issued an

Order requiring H&R Block to submit to the Court on or before

November 7, 2008, its damage calculation for only those people

who left H&R Block for Jackson Hewitt whose taxes Ms. Perry

prepared. See Docket No. 120.

In addition, at some point after the April 25, 2008,

conference, Mr. and Mrs. Perry reviewed the customer lists in

defense counsel’s possession. On October 28, 2008, Ms. Perry

submitted a letter, which the Court received on October 31, 2008.

In this letter, Ms. Perry identified eighty-three customers on

the H&R Block list for whom she believed she should not be

charged for a number of reasons, including that the returns were

not prepared by her either at H&R Block or Jackson Hewitt. See

Letter from Donna Perry to Hon. Mary A. McLaughlin (Oct. 28,

2008), attached to Docket No. 124.

On November 5, 2008, H&R Block filed a memorandum

explaining its damages calculation. See Docket No. 121. It now

appears that at the time that H&R Block submitted that

memorandum, it had not received a copy of Ms. Perry’s letter

dated October 28, 2008. Regardless, the memorandum merely

repeated the position taken by defense counsel at the April 25,

2008, hearing regarding the amount of damages under the formula;

it did not, however, take account of the fact that at the status

Case 2:04-cv-06108-MAM Document 129 Filed 08/19/09 Page 5 of 13
 Attached to this filing as “Exhibit A” was a certification 3

from Ms. Perry that her statements regarding the list of clients

she had reviewed were true, correct, and accurate.

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conference on April 25, 2008, defense counsel said that H&R Block

would present to the Court a number that excluded those customers

whose tax returns Ms. Perry did not prepare at Jackson Hewitt.

On January 29, 2009, H&R Block filed a response to Ms.

Perry’s letter of October 28, 2008, which they had received in

January, 2009. See Docket No. 125. In this filing, H&R Block

reiterated the position on damages it had taken in its November

5, 2009, memorandum. The Court received a response from Ms.

Perry on February 23, 2009. Ms. Perry responded to various

statements of fact in H&R Block’s filing and attached a list of

clients for which she contends she should not be charged. 

3

On March 2, 2009, H&R Block filed an objection to and a

motion to strike Ms. Perry’s February 23, 2009, filing on the

basis that it is too late for Ms. Perry to challenge the evidence

presented at the bench trial and to submit further evidence to

the Court. See Docket No. 127. Ms. Perry opposed the motion to

strike on March 9, 2009, arguing that her expectation was that at

some point she would be allowed to view the documents that

supported the damages calculation. She argues that now that she

has seen the lists of customers relied on by H&R Block, she

should be permitted to make objections.

Case 2:04-cv-06108-MAM Document 129 Filed 08/19/09 Page 6 of 13
 Earlier in this litigation, Ms. Perry argued that the 4

employment agreement was not a valid contract, and that

Pennsylvania law should apply to the present dispute.

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II. Legal Standards

H&R Block contends that, under Pennsylvania’s choice of

law rules, Missouri law governs the calculation of damages under

Ms. Perry’s employment agreement. It argues, however, that the

restrictive covenants at issue are enforceable under the law of

either Missouri or Pennsylvania. H&R Block’s memorandum 4

concerning its damages calculation therefore cites to cases

applying both Missouri and Pennsylvania law.

The Court has reviewed the relevant case law from both

jurisdictions, which it will herein review. However, because the

Court determines that the same result obtains under the law of

either jurisdiction, it need not resolve the choice of law

question. See Hammersmith v. TIG Ins. Co., 480 F.3d 220, 229 &

n.6 (3d Cir. 2007).

A. Pennsylvania Law

Under Pennsylvania law, the parties to a contract may

include a liquidated damages provision which ensures recovery in

cases where the computation of actual damages would be

speculative. Brinich v. Jencka, 757 A.2d 388, 401-02 (Pa. Super.

Ct. 2000) (quoting Carlos R. Leffler, Inc. v. Hutter, 696 A.2d

157, 172 (Pa. Super. Ct. 1997)). Liquidated damages clauses are

enforceable provided that, at the time the parties enter into the

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contract, the sum agreed to constitutes a reasonable

approximation of the expected loss rather than an unlawful

penalty. Id. at 402; see also Finkle v. Gulf & Western Mfg. Co.,

744 F.2d 1015, 1021 (3d Cir. 1984); cf. Pantuso Motors, Inc. v.

Corestates Bank, N.A., 798 A.2d 1277, 1282 (Pa. 2002). On the

other hand, a provision that calls for payment of a sum on nonperformance or on default that is disproportionate to the value

of the performance promised or the injury that has actually

occurred will be deemed a penalty. Robins Motor Trans., Inc. v.

Assoc. Rigging & Hauling Corp., 944 F. Supp. 409, 411 (E.D. Pa.

1996) (citing Finkle, 744 F.2d at 1021).

To determine whether the stipulated damages amount is a

reasonable, valid liquidated damages provision or a penalty, a

court should look to the intention of the parties, drawn from the

words of the whole contract, examined in light of its subjectmatter and its surroundings. Geisinger Clinic v. Di Cuccio, 606

A.2d 509, 517 (Pa. Super. Ct. 1992). In making this

determination, the court must “consider the relation which the

sum stipulated bears to the extent of the injury which may be

caused by the . . . breaches provided against, the ease or

difficulty of measuring a breach in damages, and such other

matters as are legally or necessarily inherent in the

transaction.” Brinich, 757 A.2d at 402 (quoting Hanrahan, 614

Case 2:04-cv-06108-MAM Document 129 Filed 08/19/09 Page 8 of 13
 The Geisinger court provided four criteria to help 5

differentiate a liquidated damages provision from a penalty in a

restrictive covenant clause of an employment agreement. 

Geisinger, 606 A.2d at 517 (quoting Stover v. Spielman, 1 Pa.

Super. 526, 530-31 (1896)). The Court concludes that these

criteria do not, in this case, add anything further to the

general analysis prescribed by Geisinger and Brinich.

-9-

A.2d at 750) (internal quotation marks omitted)); Geisinger, 606

A.2d at 517.5

B. Missouri Law

Missouri has adopted the Restatement Second of

Contracts. Valentine’s, Inc. v. Ngo, 251 S.W.3d 352, 354 (Mo.

Ct. App. 2008); Paragon Group, Inc. v. Ampleman, 878 S.W.2d 878,

881 (Mo. Ct. App. 1994). The general rule is that liquidated

damages clauses are valid and enforceable, while penalty clauses

are invalid. Ngo, 251 S.W.3d at 354. To be valid, the damages

called for by a liquidated damages clause must be reasonable in

light of anticipated or actual loss caused by the breach and the

difficulties of proof of loss. On the other hand, a term fixing

unreasonably large liquidated damages is deemed a penalty and is

unenforceable as a matter of public policy. Id. 

For a liquidated damages clause to be valid, (1) the

amount fixed as damages must be a reasonable forecast for the

harm caused by the breach; and (2) the harm must be of a kind

difficult to estimate. Id. To be a reasonable forecast of

damages, the amount must not be unreasonably disproportionate to

the amount of harm anticipated when the contract was made. 

Case 2:04-cv-06108-MAM Document 129 Filed 08/19/09 Page 9 of 13
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Paragon, 878 S.W.2d at 881. Where the difficulty of proving loss

is great, parties have significant latitude in setting the amount

of anticipated damages. Ngo, 251 S.W.3d at 355.

III. Discussion

Ms. Perry has challenged the damages provision of the

contract as unenforceable because it results in H&R Block

receiving more than its actual damages. The Court has reviewed

this claim carefully and declines to enforce the provision. 

As a preliminary matter, even were the Court to

conclude that the formula utilized in H&R Block’s damages

calculation is a reasonable approximation of anticipated or

actual damages, it is without sufficient evidence to apply that

formula reliably in this case. Ms. Perry has challenged the

number of individuals for whom she should be held accountable

under the formula, and the Court has approved a reduction in the

number of customers for whom Ms. Perry should be held

responsible, to the extent that any was not a client of Ms.

Perry’s at Jackson Hewitt. Defense counsel has admitted that the

list provided to the Court contains customers whose tax returns

Ms. Perry did not prepare.

The Court does not see how it could possibly do what

H&R Block suggests - that is, ignore Ms. Perry’s contentions

concerning the customers on the H&R Block’s list when she did not

have an opportunity to view those lists before the trial. The

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Court understands that Ms. Perry’s counsel could have pursued

getting access to the documents with the Court before trial. 

Nevertheless, given the history of this litigation, the Court is

reluctant to ignore evidence that Ms. Perry could not have

presented at the time of trial.

In addition, counsel for H&R Block at the April 25,

2008, conference told the Court that there were customers on the

list whose tax returns were not prepared by Ms. Perry at Jackson

Hewitt. The Court ruled at that time that the Court would not

award damages to H&R Block for such customers. The Court also

instructed defense counsel at the conference to provide a list to

the Court excluding such customers. Approximately six months

later, having received no such list, the Court ordered H&R Block

to provide a number for damages that excluded those customers. 

The Court has not, to date, seen any such number. 

Instead, all of H&R Block’s filings after the Court’s order of

October 23, 2008, appear to utilize the list of customers that

did not exclude the customers whom the Court ruled it would

exclude. H&R Block has not shown, nor has it argued, that such a

list would be difficult to generate, or that it would be

difficult to provide a damages calculation utilizing such a list. 

Indeed, defense counsel stated at the April 25, 2008, conference

that she believed that she already had a list excluding the

customers whose tax returns Ms. Perry did not prepare at Jackson

Hewitt. See 4/25/08 Tr. at 15.

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Nor has H&R Block come to grips with the evidence that

Ms. Perry has presented in her filings since the April 25, 2008,

conference. The Court understands that H&R Block currently does

not have the ability to cross-examine Ms. Perry. However, it

does have access to documents and it has the ability to refute

Ms. Perry’s evidence if it cares to do so. H&R Block was ready

for trial on this matter months and months ago. The Court

assumes that, at that time, it was prepared to justify all of the

customers on the list it provided to the Court.

Even if the Court were simply to reduce the number of

customers for whom Ms. Perry should be held responsible by the

number she has suggested, the Court has further concerns about

whether the formula represents a reasonable approximation of H&R

Block’s expected loss. For example, H&R Block’s witnesses have

admitted that the damages formula does not take out commissions

received by tax preparers. 8/14/07 Tr. at 18-20, 29-36. Without

such a number taken into account, the reasonableness of the

number used by the formula for the employee’s average charge is

called into question. It has not been shown that this number -

or some reasonable approximation thereof - is or would be

difficult to calculate, at the very least in this case, where Ms.

Perry was not a new employee. Finally, although the Court does

not conclude that H&R Block’s formula is necessarily void as an

unenforceable penalty clause, it is not persuaded that, in

Case 2:04-cv-06108-MAM Document 129 Filed 08/19/09 Page 12 of 13
 Under both Pennsylvania and Missouri law, the amount of 6

lost profits resulting from breach of contract generally must be

established with reasonable certainty. Ameristar Jet Charter,

Inc. v. Dodson Int’l Parts, Inc., 155 S.W.3d 50, 54-55 (Mo.

2005); Jahanshahi v. Centura Dev. Co., 816 A.2d 1179, 1184 (Pa.

Super. Ct. 2003). Nevertheless, a breach of contract entitles

the injured party at least to nominal damages. Gee v. Payne, 939

S.W.2d 383, 387 (Mo. Ct. App. 1997); Scobell, Inc. v. Schade, 688

A.2d 715, 719 (Pa. Super. Ct. 1997).

 H&R Block has filed a motion for attorneys’ fees. See 7

Docket No. 128. The Court will deny this motion without

prejudice, in view of the ruling herein on damages, so that H&R

Block may have an opportunity to discuss whether and to what

extent Ms. Perry can be held accountable for its costs and

attorneys’ fees based on the Court’s award of nominal damages. 

H&R Block need not formally re-file its motion for attorneys’

fees or reproduce the analysis contained therein; rather, it

shall submit a supplemental brief only on these issues. In

deciding the issues, the Court will take into account the

arguments and analysis contained in H&R Block’s motion for

attorneys’ fees. After H&R Block files its supplemental brief,

Ms. Perry shall then have an opportunity to file a response.

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circumstances such as these, H&R Block’s actual damages would

necessarily be speculative or difficult to estimate. 

For these reasons, and in view of Ms. Perry’s evidence

in opposition to damages, the Court cannot conclude that the

damages provision of Ms. Perry’s employment agreement is or was a

reasonable approximation of H&R Block’s anticipated or actual

loss. The Court will not enforce the provision against Ms.

Perry. In the absence of further evidence of H&R Block’s actual

damages to a reasonable degree of certainty, the Court will

instead award H&R Block nominal damages of one dollar. The 6

Court expresses no opinion as to whether and to what extent Ms.

Perry is responsible for H&R Block’s costs and attorneys’ fees.7

An appropriate Order shall issue separately.

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