Court Opinion

ID: 9521318
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:02:34.236648+00
Date Added: 2024-06-11T12:49:39.794070
License: Public Domain

Goodman, J.
(dissenting). I cannot agree that Kroeger must forfeit over $29,000 because he worked for no more *324than six months1 for an Ohio company (Pneumo) operating a chain of retail food stores.2 There is nothing in the record which indicates that during those five or six months in 1971 Kroeger used any “confidential data” (New England Canteen Serv., Inc. v. Ashley, 372 Mass. 671, 674 [1977]) or indeed any information which in any way frustrated any of Stop & Shop’s plans for expansion, novel marketing arrangements or was otherwise inimical to Stop & Shop. There is not the slightest indication of any damage to Stop & Shop or any competition with Stop & Shop prior to 1975 when both companies had stores in Manchester, New Hampshire, long after the contract as cut down by the trial judge had expired (see n. 1). Indeed, there is nothing in the record to indicate just what Kroeger did during those five or six months.
1. This record does not show that Kroeger, during these last five or six months in 1971, was “working in circumstances in which a covenant not to compete would be enforceable . . . [and in these circumstances] the burden of justification . . . becomes particularly onerous on the former employer. In such a case, the former employee’s loss may assume the character of a forfeiture in the classical sense.” Cheney v. Automatic Sprinkler Corp. of America, 377 Mass. 141, 148 (1979). It is significant that the plaintiff in Cheney (at 149) is given an opportunity to show “that the forfeiture is an unenforceable penalty clause . . . supported by a reference to facts which warrant the legal consequences asserted.”
Cheney (at 146), cites Food Fair Stores, Inc. v. Greeley, 264 Md. 105, 116-119 (1972), for the proposition that “for*325feiture of rights under [a] pension plan [is] an invalid restraint where [a] former employee’s work for an indirect competitor created little, if any, hardship to his former employer.” In our case there is not even evidence of indirect competition during the last six months or so of 1971. See Bennett v. Les Schwab Tire Centers of Or., Inc., 48 Or. App. 909 (1980), following Lavey v. Edwards, 264 Or. 331, 336-337 (1973), also cited in the Cheney case at 146. In the Bennett case the court refused to permit a forfeiture of proceeds of various bonus provisions, characterized in the contract as “liquidated damages,” which was tied to a noncompetition agreement the employee had violated. The court held (at 915) that “the amount thus available as compensation for the breach does not bear any relationship to the amount of damages from a breach,” and that “the stipulation does not liquidate damages but imposes a penalty.” Thus, too, in Wilson v. Clarke, 470 F.2d 1218 (1st Cir. 1972), in which a former employee was required to pay the former employer 15 % of his income if he entered into the employ of a competitor, the court held (at 1223) that “the employer may not require its ex-employee to make payments to it unrelated to the employer’s damage, simply as a penalty to discourage or punish a job change.” Cf. Economy Grocery Stores Corp. v. McMenamy, 290 Mass. 549, 552 (1935). Of more significance for our case is n.4 of the Wilson case at 1224, which is set out in the margin.3
These cases, consistent with Cheney, hold that the reasonableness required is some reasonable relationship between the forfeiture provision and the damages sustained. Here there is none.
2. I find nothing in the findings to indicate that “confidential data” are involved. The general findings describe no more than the duties of a high level executive in the chain *326supermarket business. There is nothing to indicate any specific confidential data which Kroeger took with him and used. Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. 625, 673 (1960);4 Note, Trade Secret Protection of Non-Technical Competitive Information, 54 Iowa L. Rev. 1164, 1178-1179 (1969). It was Stop & Shop’s burden to isolate any such specific data from the skill and knowledge gained from (as the trial judge found) “the business activity that had constituted his life’s work and expertise.” Dynamics Research Corp. v. Analytic Sciences Corp., 9 Mass. App. Ct. 254, 268 (1980); see also 274; Note, Trade Secret Protection of Non-Technical Competitive Information, 54 Iowa L. Rev. at 1179. Thus, there was no showing that Kroeger took from Stop & Shop anything which gave it a demonstrable competitive advantage. See Restatement of Torts § 757, Comment b (1939). Further, Kroeger did not start at the bottom of the “corporate ladder.” He joined Stop & Shop at the age of thirty-eight or thirty-nine as controller, and we do not know just what experience he brought with him. See Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. at 684-685, quoted in Dynamics Research Corp. v. Analytic Sciences Corp., 9 Mass. App. Ct. at 268; Note, Trade Secret Protection of Non-Technical Competitive Information, 54 Iowa L. Rev. at 1179. Moreover, there is no hint of misconduct by Kroeger (he was, as put by the trial judge, “forced” out). And there is nothing to indicate that Stop & Shop “demonstrate[d] that [it] pursued an active course of conduct designed to inform [its] employees that such secrets and information were to remain confidential.”5 Jet Spray Cooler, Inc. v. Crampton, 361 Mass. *327835, 841 (1972). Dynamics Research Corp. v. Analytic Sciences Corp., 9 Mass. App. Ct. at 276. It is true, of course, that no business concern wants to publicize its affairs, but this is not enough to bind Kroeger. Chomerics, Inc. v. Ehrreich, 12 Mass. App. Ct. at 8 n.13; Dynamics Research Corp. v. Analytic Sciences Corp., 9 Mass. App. Ct. at 279, both citing New Method Die & Cut-Out Co. v. Milton Bradley Co., 289 Mass. 277, 281 (1935), and other cases. Nor is the contract itself, without more, indicative of a confidential relationship. Dynamics Research Corp. v. Analytic Sciences Corp., 9 Mass. App. Ct. at 277, citing and quoting from Wheelabrator Corp. v. Fogle, 317 F. Supp. 633, 637 (W.D. La. 1970), affd., 438 F.2d 1226 (5th Cir. 1971). See Motorola, Inc. v. Fairchild Camera & Instrument Corp., 366 F. Supp. 1173, 1185-1186 (D. Ariz. 1973). Though Stop & Shop may look for “new worlds to conquer,” it cannot for that reason exclude Kroeger from those worlds.6 Absent misconduct or the exploitation of specific confidential information, he may go to a competitor in such new worlds. See Dynamics Research Corp. v. Analytic Sciences Corp., 9 Mass. App. Ct. at 274.
Reed, Roberts Associates v. Strauman, 40 N.Y.2d 303, 309 (1976) (although not using the phraseology of our cases) is an apt summary of our case. “Apparently, the employer *328is more concerned about Strauman’s knowledge of the intricacies of their business operation. However, absent any wrongdoing, we cannot agree that Strauman should be prohibited from utilizing his knowledge and talents in this area (see Restatement (Second) of Agency § 396, Comment b). A contrary holding would make those in charge of operations or specialists in certain aspects of an enterprise virtual hostages of their employers. Where the knowledge does not qualify for protection as a trade secret and there has been no conspiracy or breach of trust resulting in commercial piracy we see no reason to inhibit the employee’s ability to realize his potential both professionally and financially by availing himself of opportunity.”
*327“In a case such as ours, information which is so ‘closely tied to the intrinsic knowledge of the inventor . . . [that it is not] possible to sort the process from the inner workings of a man’s knowledge’ is not protectible. Amoco Prod. Co. v. Lindley, 609 P.2d [733, 745 (Okla. 1980) ]. We do not require an employee ‘upon terminating his employment [to] search his mind for all thoughts relating to the business of his employer and set these down for the employer’s reference ... [so that] thereafter, he is forever precluded from employing such thoughts in a competitive enterprise.’ Koehring Co. v. E.D. Etnyre & Co., 254 F. Supp. [334, 355 (N.D. Ill. 1966)]. To do this would be to give insufficient weight to the employee’s right to use ‘the product of his knowledge acquired previous to [his] employment, and of the use of his faculties, skill and experience in the ordinary course of his employment . . . .’ New Method Die & Cut-Out Co. v. Milton Bradley Co., 289 Mass. at 282-283.”
*3283. I am constrained to add that I find no “temptation to hold Kroeger to the bargain which he so obviously understood.” It would require that we restrict the contract to its words and eliminate the notion of reasonableness and good faith. See Fortune v. National Cash Register Co., 373 Mass. 96 (1977). It would thus erode the well-settled law of contracts restricting competition which as the majority points out comes to us from the Sixteenth Century. Nor am I tempted, as the majority are, to make an analysis of contracts restricting competition in terms of the equality of bargaining power between the parties. Quite apart from the fact that nothing in the record indicates any equality in bargaining power, an inquiry on that basis would mire the courts in speculation as to whether the employee could get a new job and whether the employer could get a replacement — and perhaps as to the net worth of the parties. Further, quite apart from the equality of bargaining power such a “temptation” ignores the public interest motivating the analysis which has been used in these contracts since the Sixteenth Century. Such an analysis ignores that “ [t]he ‘right [of an employee] to use [his] general knowledge, experience, memory and skill’ (J. T. Healy & Son v. James A. Murphy & Son, 357 Mass. 728, 740 [1970]), promotes the public interest in labor mobility and the employee’s freedom to practice his profession and in mitigating monopoly. The law thus maxi*329mizes the benefit of the national store of skill and knowledge.” Dynamics Research Corp. v. Analytic Sciences Corp., 9 Mass. App. Ct. at 267. Indeed, as Blake points out, “[T]he loss to the individual and the economic loss to society are both greatest when a highly trained and specialized person is prevented from employing his special abilities.” Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. at 684-685, quoted in Dynamics Research Corp. v. Analytic Sciences Corp., 9 Mass. App. Ct. at 268. See also Note, Trade Secret Protection of Non-Technical Competitive Information, 54 Iowa L. Rev. at 1178, 1180.
I agree with the result reached in part 3 of the majority opinion and with part 4 of the opinion; I would therefore award Kroeger the entire $71,000 in retirement benefits.

 The noncompetition agreement was cut to one year from “so long as [Kroeger] lives.” The court found that “about six months later the plaintiff secured employment with Pneumo . . . . As of June 1,1971, the plaintiff became Vice President-Retail Foods [for Pneumo].” The letter dated August 16,1971, at the end of the appellant’s brief, indicates that the employment may not have started before July 23, 1971.

 In just what States the Ohio company was operating in 1971 is not clear. The court found in 1980 that “the outlets are in New York, New Hampshire, Vermont and Massachusetts.” (Emphasis supplied.)

 “To the extent Clarke’s less than 1 % of professional psychological services (i.e. for feedbacks and assessments) fit the literal language of the contract, we decline to enforce the 15% clause because of the obvious lack of correspondence between any proven damage to Nordli and the liquidated sum.” Wilson v. Clarke, 470 F.2d at 1224 n.4.

 “Although particular business data of a company are in one sense unique to the company and are typically not widely publicized, it is submitted that information representing the normal accretion of day-to-day routines, as contrasted with the valuable product of special creative endeavors, should seldom, of itself, be sufficient to support an employee restraint.” Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. at 673.

 We note that no distinction is here made between confidential information and trade secrets. See Chomerics, Inc. v. Ehrreich, 12 Mass. App. Ct. 1, 10 n.17 (1981).

 In Chomerics, Inc. v. Ehrreich, 9 Mass. App. Ct. at 9 n.16, we said: