2008 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 8-7-2008 

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ru s t B ank v . S t ephe n R ies P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 08-1662

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2008

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2008 D e c i sion s b y an author i z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion " AMG Natl T

r us t B ank v

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ie s " (2008). 2008 D e cisio n s . P ape r 696. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2008/6961 NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT N os . 07- 4051 & 08- 1662

. ____________ AM G NAT I ONAL T RU S T BA NK A ppel l ee v s . STEP HEN C. RI ES A ppel l ant

____________ APP EAL F ROM THE UNI TE D ST ATE S DI S TRI CT C OURT F O R T H E E A S T E R N D IS T R IC T O F P E N N S Y L V A N IA

( D . C . C i v. N o. 06- cv- 04337) D i s t r i ctJ udge: J . C ur t i s J oyner

____________ Subm i t t ed U nderT hi r d C i r cui tL . A . R . 34. 1( a)

J ul y25, 2008 B efore: M C K E E , F U E N T E S and W E IS, C i rcui tJudg es.

( Fi l ed: A ugus t7, 2008)

____________ OP I NI ON W E I S, C i r cui tJ udge.

D ef en d an t Step h en C . R ies ap p ea ls from an o rde r gra n ti n g a p reli m inary2

i nj unct i on t o pl ai nt i ff A M G N at i onal T rus tB ank and a n or deri m pos i ng s anct i ons for cont empt of a Tem por aryR es t r ai ni ng O r der . W e w i l l aff i r m i n par tand r emand t o t he D i stri ctC ou rtfor further proceedings. I.

R i es fi r s tchal l enges the i nj unct i on. H e ar gues thatthe D i s t r i ctC our terr ed byhonor i ng t he choi ce of l aw pr ovi s i on i n t he Em pl oym entA gr eementbetw een Ri es and A M G and appl y i ng C ol or ado r atherthan Penns y l vani a l aw . T he D i s t r i ctC our tpr ovi ded s uffi ci entfi ndi ngs t o s how t hatC ol or ado bor e a r eas onabl e r el at i ons hi p t o t he part i es and the tran sac ti o n . B erg C h il li n g S y stem s, Inc . v . H u ll C o rp., 4 3 5 F . 3 d 4 5 5 , 4 6 3 -64 (3d C ir . 2 0 0 6 ) ( c i t i n g Re s t a t e me n t( S e c o n d ) o f Co n f l i c t s o f L a w § 1 8 7 ( 2 ) ) . Ri e s h a s n o ts h o wn thatthe choi ce of

l aw pr ovi s i on vi ol at es a funda m ent al publ i c pol i cyi nt er es tof P e n n s y lv a n ia . Id .

R i es al s o ar gues t hatt he r es t r i ct i ve cove nanti n t he Em pl oym entA gr eement i s notenfor cea bl e underC ol or ado’ s pol i cydi s favor i ng covena nt s nott o compet e. See C ol o. R ev. St at . §8- 2- 113( 2) . T he D i s t r i ctC our tpr oper l yconcl uded thatthe r es t r i ct i ve covena ntfal l s undert he tr ade s ecr et s exce pt i on t o t he pol i cy . C ol o. R ev. St at . §8- 2- 113( 2) ( b) . T he r ecor d s how s t hatA M G t ook num er ous s t eps t o pr ot ectthe cl i ent i nform at i on t hati tdes cr i bed as confi dent i al i n t he A gr eementand pr ovi ded t o R i es . See C ol o. R ev. St at . § 7- 74- 102( 4) ; C ol or ado Suppl yC o. , I nc. v. St ew art , 797 P. 2d 1303, 1 3 0 6 (C o l. A p p . 1 9 9 0 ).3 R i es ar gues t hatt he r es t r i ct i ve cove nantfai l s underboth Penns y l vani a and C ol or ado l aw beca us e i tw as nots uppor t ed byaddi t i onal cons i der at i on. A ddi t i onal c o n sid e ra tio n w a s u n n e c e ss a ry , h o w e v e r, b e c a u se th e A g re e m e n t w a s s u f f icie n tly cont empora neous w i t h R i es ’ acc ept ance of empl oym ent . See G eor ge W . K i s t l er , I nc. v. O ’ B r i en, 464 Pa. 475, 484, 347 A . 2d 311, 316 ( Pa. 1975) ; Fr eudenthal v. E s pey , 45 C ol o. 4 8 8 , 5 0 0 , 1 0 2 P . 2 8 0 , 2 8 4 (C o lo .1 9 0 9 ). R ies h a d n o tice o f th e A g re e m e n t p rio r to b e g in n in g w o rk a n d s ig n e d th e a g re e m e n t o n h is f ir s t d a yo f

w o rk . II. R i es chal l enges t he amountof s anct i ons the D i s t r i ctC our taw ar ded for R i e s ’ c o n t e m p t . T h e D i s t r i c tC o u r to r d e r e d R i e s t o p a y A M G $ 1 3 8 , 1 4 0 . 7 3 i n a t t o r n e ys f e e s a n d $ 1 8 0 ,0 5 1 .3 8 in lo s t r e v e n u e .

D a m a g e s a w a rd e d “ in c iv il c o n te m p t p ro c e e d in g s [ a re ] c o m p e n s a to ry ... [and] m us tnotexce ed the ac tual damages caus ed the off ended pa r t ybya vi ol at i on of the cour t ’ s or der . ” Q ui nt erv. V ol ks w agen of A m er i ca, 676 F. 2d 969, 975 ( 3d C i r . 1982) (c itatio n s o m itt e d ). T h e a w a rd o f a tto rn e y s f

e e s w a s w ith in th e C o u rt’s b ro a d p o w e r to pr ovi de A M G ful l r emedi al r el i ef. See R obi n W oods I nc. v. W oods , 28 F. 3d 396, 400 ( 3d C i r . Pa. 1994) . T he C our tgr ant ed fe es and cos t s “i ncurr ed [byA M G ] i n uncover i ng and es t abl i s hi ng M r . R i es ’ cont empt uous behavi or . ” See Li cht ens t ei n v. L i cht ens t ei n, 4 2 5 F .2 d 1 1 1 1 , 1 1 1 3 -1 4 (3 d C ir. 1 9 7 0 ) (a w a rd o f re a so n a b le a tto rn e yf

e e s p e rm iss ib le4

w h e re it h a s s o m e b a s is in th e re c o rd ).

T h e c o m p e n s a to ry n a tu re o f th e a w a rd o f

lo s t r e v e n u e s h e re is u n c le a r. A l l ow abl e damages ar e i nt ended t o r es t or e the i nj ur ed part yt o t he pos i t i on i tw oul d have occupi ed butfort he other ’ s cont empt . R obi n W oods , 28 F. 3d at400. B eca us e the d e t e r mi n a t i o n o f

t h e r e v e n u e s l o s ta s a r e s u l to f Ri e s ’ c o n t e mp ti s s p e c u l a t i v e t o s o me e x ten t an d is in ter tw in e d w ith th e m e rits o f A M G ’s a c tio n , the iss u e is b e st le f t u n til a f in a l d e te rm in a tio n o n th e m e ri ts .

D amages can be det erm i ned atthatpoi ntw i t h m or e pr eci s i on and the re la tio n s h ip b e tw e e n R ie s ’ c o n te m p t a n d A M G ’s a c tu a l d a m a g e s m a yb e c la ri f ie d . N a tio n a l D ry in g M a c h in e ryC o . v . A c k o f f , 2 4 5 F .2 d 1 9 2 , 1 9 4 (3 d C ir. 1 9 5 7 ) (a c iv il c o n tem p t aw a rd “ m u st b e a n a ttem p t to c o m p e n sa te p lain tiff f o r th e a m o u n t h e is out - of- pocketorforw hatdefe ndantbyhi s w r ong m aybe s ai d t o have di ver t ed fr om t he p la in tif f ” ). T he D i s t r i ctC our tconcl uded that“ther e i s no ques t i on butthat ” R i es h e lp e d s o m e c lie n ts “ d e -l in k ” th e ira c c o u n ts a n d p ro v id e d s p e c if ic s e rv ic e s to tw o o th e rs . I tdet erm i ned thatA M G i s ent i t l ed “t o s om e compens at i on” forthe “l os tpr ofi t s fr om se rv icin g ” th e a c c o u n ts o f f o u r c u sto m e rs. It th e n f o u n d th e e v id e n c e “ su f

f icie n t to j us t i fyaw ar di ng t he pl ai nt i ff f ort w o y ear ’ s l os tr evenue , ” w hi ch r epr es ent ed the r evenue lo s t f o r t h e e n tir e p e ri o d o f

th e re s tr ic tiv e c o v e n a n t. Y e t, th e C o u rt d isc u ss e d su b sta n tial e v id e n c e su g g e stin g th a t th e c lien tsRies also argues for the first time on appe al that the damag es issue should be 1 arbitrated under

the Employ

ment agreement. We generally ref use to consider

issues that are raise d f or thefirs t ti meon

a pp e a l.

5 te rm in a te d th e irre la tio n s h ip s w ith A M G b e c a u s e R ie s w o u ld n o lo n g e r b e th e ira d v is o r. A l th o u g h t h e C o u r ta p p e a r e d t o c o n c l u d e th a tth e c l i e n t s ’ a c t i o n s w e r e n o t“ s o l e l y” r el at ed t o R i es ’ departur e, i tdi d notexpl i ci t l yrul e outthatci r cumst ance as a contr i but i ng fac t or . T he C our ts houl d expl ai n w hetheri t s damages aw ar d r efl ect s the ext entthat f a c to rs o th e r t h a n R ie s ’ c o n te m p t c a u s e d th e c lie n ts to le a v e A M G . S e e R o b in W o o d s , 28 F. 3d at401 ( r equi r i ng adj us t m entof damages bas ed on l i m i t ed s ucce s s of cont empt m o tio n ). W e w i l l aff i r m i n partand r emand t o t he D i s t r i ctC our tw i t h i ns t ruct i ons thatthe C our tr econs i deri t s aw ar d of l os tr evenue s aft era fi nal det erm i nat i on of the m er i t s of thi s cas e. 1