# ADP, LLC v. PITTMAN

> District Court, D. New Jersey · October 18, 2019

URL: https://www.frixlaw.com/law-library/cases/10266986

## Case

- **Court:** District Court, D. New Jersey
- **Decided:** October 18, 2019
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10266986

## How later opinions describe it (automated extraction)

- holding it was error to water down the irreparable harm requirement from “likelihood” to “possibility.” even where likelihood of success was strong
- reasoning that a restrictive covenant “if enforced at all, it must be enforced according to its terms”

## Opinion text

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

ADP, LLC,
Civ. No. 19-16237 (KM) (MAH)
Plaintiff,
OPINION
v.
SUMMER PITTMAN,
Defendant. □

KEVIN MCNULTY, U.S.D.J.:
Defendant Summer Pittman spent nine years employed in various sales
positions by Plaintiff ADP, LLC. During that time, she and ADP signed several
restrictive covenants in which she agreed that in the event of her non-
employment by ADP, she would for a period not (1) compete with ADP, (2)
disclose its confidential information, or (3) solicit its clients. In June 2019,
Pittman abruptly left ADP and accepted a position with one of its competitors.
ADP considers this a violation of several provisions of the restrictive covenants
and now moves this Court for entry of an order enjoining Pittman from: (1)
continuing to breach her non-compete obligations; and (2) breaching the other
restrictive covenant obligations owed to ADP. (DE 3).
For the reasons that follow, APD’s motion is GRANTED.
I. BACKGROUND!
A. Pittman’s Employment
ADP employed Pittman for about nine years in various sales positions,
always in the Pacific Northwest. (DE 3-5 4 3) ADP first hired her on February

| Certain key items from the record will be abbreviated as follows:
DE _ = Docket entry number in this case
Compl. = Complaint and jury demand (DE 1)

22, 2010. (id.). On September 12, 2016, the company promoted her to Pacific
Northwest district sales manager in its Global Enterprise Solutions division.
(Id.). Pittman remained in that role until she voluntarily left ADP on June 14,
2019. (id.).
As a district sales manager, Pittman sold ADP’s products and services to
existing and prospective clients. (/d.). Her market and territoria! designation
consisted of companies employing between 1,000 and 10,000 people, in Alaska,
Oregon, Vancouver, and Washington.? (Id. 4 4). In that role, Pittman was
responsible for cultivating, developing, and maintaining business relationships
with existing and prospective clients. (/d.}. She was also charged with
marketing and selling products that provide payroll, time and attendance,
human resources management, and other tools to employers. (id.). These
products included WorkForce Now, Vantage, Global View, and Lifion. (/d.).
However, Pittman primarily sold WorkForce Now. (DE 13-2 4 5). She rarely
attempted to sell other ADP products and even more rarely succeeded. (Id.).

2 While working for ADP, Pittman was not assigned a territory per se. (DE 13-2
4 7). Instead, she was tasked with serving the accounts of specific, designated existing
and prospective clients. {/d.). ADP gave Pittman a database that identified
approximately 80 to 120 existing and prospective clients to which she was assigned to
sell ADP products. (/d.}. Those clients were in Alaska, Oregon, Vancouver, and
Washington. Pittman was not the only ADP salesperson selling to the existing and
prospective clients in Oregon and Washington. (Jd.). There were four other ADP
salespeople servicing accounts in those states. (/d.}. Thus ADP never assigned Pittman
to solicit business from ail client prospects in Oregon and Washington. (/d.). She
recalls that ADP directed her only to solicit two existing or prospective clients in
Alaska and two or three existing or prospective clients in Vancouver. (Id.).
While working for ADP, Pittman did not cold-call existing or prospective clients
who had not been specifically identified on her database. (/d.). In fact, Pittman was
prohibited from selling to existing or prospective clients without prior authorization.
(DE 13-2 4 8). Instead, Pittman’s responsibilities consisted of selling additional
business to existing ADP clients and prospecting for new business from clients on the
same database. (/d.). ADP employed other sales representatives who sold to the same
ADP clients as those assigned to Pittman, but those representatives sold benefit
services, time and attendance solutions, global solutions, recruiting solutions and
health compliance solutions—products and solutions that Pittman did not sell. (DE
13-2 7 9).

After Pittman would close a deal, ADP expected her to move on to the
next deal. (Id.). She was expected not to “waste time getting close to a client.”
(DE 13-2 4 10). Instead, that responsibility was passed on to client relationship
managers, the employees ADP specifically tasked with maintaining those
ongoing relationships. (Jd.).
B. The Nondisclosure Agreement and the Sales Representative
Agreement
On March 1, 2010, when Pittman was hired, she and ADP—as a routine
matter—signed a non-disclosure agreement (“NDA”). 3 (DE 1-1). The NDA is
intended to bind ADP and its new employee before the associate is exposed to
ADP’s confidential business information and other data about ADP’s existing or
prospective clients. (Id. 9). The NDA contains restrictions designed to protect
those confidences and client goodwill, as well as other protectable business
interests. (DE 3-5 4 10). The NDA also contains a return-of-property provision.
(DE 1-1 4 1{a)-(b)).
ADP requires new sales associates to sign the NDA because it wants to
protect the confidential information that sales associates obtain in the course
of their duties. (DE 3-5 | 11). In this manner, ADP hopes to protect the client
relationships and goodwill that sales associates develop during their time at the
company. (fd.).
At the same time, Pittman also signed a Sales Representative Agreement
(“SRA”), which includes non-solicitation, non-disclosure, non-use and non-hire
provisions.
C. ADP’s Training
After Pittman began working for ADP, the company provided her with
specialized training. (DE 3-5 4 17). ADP claims that this training is unique and
unmatched by its industry competitors. (/d.). In the course of training, ADP
provides sales associates like Pittman significant information about ADP and

3 The NDA is a condition of employment for all new ADP sales associates.
(DE 1-1).

its products and services. (Id. J 14). Sales associates also obtain information
about the specific clients they service. (id.). The training information includes
the strengths and weaknesses of ADP’s products and services; the strengths
and weaknesses of other ADP sales associates; the way ADP sells its products
and services; the way ADP differentiates its products and services from its
competitors; the relative advantages and disadvantages between ADP’s
products and services and those of its competitors; the methods by which ADP
effectively competes with its competitors; ADP’s pricing models and costs;
ADP’s planned improvements and expected new products; and complaints
made by ADP customers. (Id.). This information is generally confidential to
ADP, and ADP prohibits its disclosure or use by former employees. (/d.). During
her time at ADP, Pittman gained substantial access to this sort of confidential
information. (id. 4 17). She also had significant and direct contact with ADP’s
existing and prospective clients. (Id. 4 17).
During her time at ADP, Pittman also had access to, and regularly used,
ADP’s confidential, proprietary, and trade secret information. (/d.). This
information included ADP’s confidential business methods; procedures,
pricing, and marketing strategies; client information, including names,
preferences, and needs; and information regarding the terms of client
contracts. (Id.}. ADP attempts to maintain the secrecy of this proprietary
information by requiring employees to sign NDAs; limiting access to proprietary
information on a need-to-know basis; requiring security and password
protection on its work systems; and reminding and training its employees
about the sensitive nature of this information. (Compl. { 21).
D. ADP’s Restricted Stock Award Program and Restrictive
Covenant Agreements.
As an incentive program, ADP offers to certain high-performing
employees the opportunity to participate in a stock-award program. (DE 3-5
12). Under the terms of that program, sales‘employees who meet their sales
targets are annually offered restricted stock in ADP. (/d.). ADP conditions the
receipt of restricted stock awards on the acceptance by eligible sales associates

of restrictive covenants. (Id. | 13). The restricted stock is designed to be a
reward to attract, retain, and motivate ADP employees and to strengthen the
mutual interest between the employees and ADP. (Id. 4 12).
As part of the electronic acceptance process in connection with the award
of stock, ADP requires employees to accept the terms of these restrictive
covenants. (DE 3-8 4 7). An employee is unable to accept an award of restricted
stock without first acknowledging that he or she has read the associated
agreements and has accepted the restrictive covenant agreement. (/d.). This
acceptance scheme is designed to require acceptance or rejection of the entire
agreement associated with the award. (Id. J 11).
E. Terms and Conditions of the RCA
The restrictive covenants associated with the the receipt of restricted
stock are more extensive than those found in the standard NDA. (DE 3-5 4 13).
ADP believes that sales associates who achieve annual sales targets have
demonstrated that they maintain the strongest relationships with ADP’s
existing and prospective clients, best utilize ADP’s marketing strategies and
resources, effectively leverage their knowledge about ADP’s products and
services and unique information about ADP’s existing and prospective clients,
use their external networks, and best trade on ADP’s reputation in the
marketplace. (/d.). Sales associates who receive restricted stock awards are
generally involved with and have the most information about the largest
numbers of ADP’s existing and prospective clients. (Id.).
During their duties, ADP sales associates obtain significant information
about ADP and its products and services and about the specific clients they
service. (id. { 14). Again, this includes the strengths and weaknesses of ADP’s
products and services; the strengths and weaknesses of other ADP sales
associates; the way ADP selis its products and services; the way ADP
differentiates its products and services from its competitors; the relative
advantages and disadvantages between ADP’s products and services and those
of its competitors; the methods by which ADP effectively competes with its

competitors; ADP’s pricing models and costs; ADP’s planned improvements and
expected new products; and complaints made by ADP customers. (/d.). Most of
this information is confidential to ADP and is thus never to be disclosed or
used by former employees. (Jd.).
ADP also recognizes that the loss of a high-performing sales associate to
a competitor poses a particularly high risk to ADP with respect to client and
prospect relationships, ADP’s goodwill, and the use and misappropriation of its
confidential trade secret information relating to its operations, clients and
prospects. (id. | 15).
ADP thus requires more extensive restrictive covenants in exchange for
its restricted stock awards, in recognition of the fact that those high-performing
sales associates—because of their unique knowledge, skills, and job
performance—have the greatest potential to disrupt ADP’s relationships with
its existing and prospective clients, to harm the goodwill ADP has generated in
the market, and to misappropriate confidential and trade secret information
about ADP and its existing and prospective clients. (Id. J 16).
. 1. Non-Solicitation
The RCA imposes on its employee-signatories a greater burden than the
SRA and NDA do, and the RCA’s terms make it more difficult for a former
employee to compete with ADP after he or she leaves the company. The RCA
contains a non-solicitation provision that is stronger than the one found in the
SRA. The RCA’s provision prohibits employees, for one year after their
departure from ADP, from soliciting any clients to whom ADP (1) provides; (2)
has provided; or (3) reasonably expects to provide business within the two-year
period following the employee’s departure.*
Unlike the SRA, which only prohibits solicitation of those ADP clients
with whom the former employees were involved or exposed, the RCA also

4 For clarity, the two-year period following the employee's departure refers to
clients to whom ADP reasonably expects to provide business; the one-year period
following the employee’s departure refers to the (former) employee’s non-solicitation
obligation.

prohibits solicitation of all current and prospective ADP clients. IN addition,
while the SRA prohibits former employees from soliciting ADP’s marketing
partners, the RCA also prohibits former employees from soliciting ADP’s referral
partners.®
2. Non-Compete
The RCA also contains a non-compete provision, which the SRA and the
NDA do not have. The non-compete provides that, for one year after their
departure from ADP, employees may not “participate in any manner with a
Competing Business” in the geographic area where the employee worked or had
contact with ADP clients if working in that area would require the employee to
“provide the same or substantially similar services to a Competing Business as
those which [they] provided to ADP while employed.” The non-compete
provision also prohibits (former) employees from using or disclosing ADP’s
trade secrets or other confidential information.
F. The 2017 Restrictive Covenant Agreement
The 2017 RCA contains the following pertinent provisions:
1. Definitions.

d. “Competing Business” means any individual (including
me), corporation, limited liability company, partnership, joint
venture, association, or other entity, regardless of form, that
is engaged in any business or enterprise that is the same as,
or substantially the same as, that part of the Business of
ADP in which I have worked or to which | have been exposed
during my employment with ADP (regardless of whether I
worked only for a particular segment of that part of the
business in which I worked—for example, business segments
based on the number of employees a Client has or a
particular class of business using an ADP product or
service).

5 Together, ADP defines referral partners and marketing partners as its Business
Partners.

j. “Territory” means the geographic area where I worked,
represented ADP, or had Material Business Contact with
ADP’s Clients in the two (2) year period preceding the
termination of my employment with ADP.

3. Non-Competition. I agree that during my employment and for a
period of twelve (12) months from the voluntary or involuntary
termination of my employment for any reason and with or without
cause, I will not, directly or indirectly, own, manage, operate, join,
control, finance, be employed by or with, or participate in any
manner with a Competing Business anywhere in the Territory
where doing so will require me to (i) provide the same or
substantially similar services to a Competing Business as those
which I provided to ADP while employed, or (ii) use, disclose or
disseminate ADP’s Confidential Information or trade secrets.
However, after my voluntary or involuntary termination of my
employment for any reason and with or without cause, nothing
shall prevent me from owning, as an inactive investor, securities of
any competitor of ADP which is listed on a national securities
exchange.
4. Non-Solicitation of and Non-Interference with Clients, Business
Partners, and Vendors.
a. Clients: I agree that during my employment and fora
period of twelve (12) months following the voluntary or
involuntary termination of my employment for any reason
and with or without cause, I will not, either on my own
behalf or for any Competing Business, directly or indirectly,
solicit, divert, appropriate, or accept any business from, or
attempt to solicit, divert, appropriate, or accept any business
from any Client for the purposes of providing products or
services within the United States of America that are the
same as or substantially similar to those provided in the
Business of ADP. I also agree that I will not induce or
encourage or attempt to induce or encourage any Clients to
cease doing business with ADP or materially alter their
business relationship with ADP.

b. Business Partners: I agree that during my employment
and for a period of twelve (12) months following the
voluntary or involuntary termination of my employment for
any reason and with or without cause, | will not, either on
my own behalf or for any Competing Business, directly or
indirectly engage, contract with, solicit, divert, appropriate or
accept any business from, or attempt to engage, contract
with, solicit, divert, appropriate or accept any business from
any Business Partner for the purpose of providing to me or
any Competing Business any product or service within the
United States of America that is (a) the same as or
substantially similar to the product or service provided to
ADP and which ADP uses for, uses for obtaining, or
distributes to, its Clients or (b) specialized, customized or
designed by the Business Partner for ADP. This provision
applies only to a Business Partner: (i) with whom ADP
currently has a commercial or business relationship in
connection with the Business of ADP; (ii) with whom ADP
has had a commercial or business relationship in connection
with the Business of ADP within the one (1) year period prior
to my voluntary or involuntary termination of employment,
for any reason, with or without cause, from ADP; or {iii)
about whom I have any Confidential Information or trade
secret information. I also agree that I will not induce or
encourage or attempt to induce or encourage any Business
Partner to cease doing business with ADP or materially alter
their business relationship with ADP.
c. Vendors: I agree that during my employment and fora
period of twelve (12) months following the voluntary or
involuntary termination of my employment for any reason
and with or without cause, | will not induce or encourage or
attempt to induce or encourage any Vendor to cease doing
business with ADP within the United States of America or
materially alter their business relationship with ADP within
the United States of America.

6. Non-Disclosure and Non-Use of Confidential Information and
Trade Secrets. During my employment, except as authorized and
required to perform my duties for ADP, and after the voluntary or
involuntary termination of my employment for any reason and with

or without cause, I will not access, disclose, use, reproduce,
distribute, or otherwise disseminate ADP’s Confidential
Information or trade secrets or take any action causing, or fail to
take any action necessary in order to prevent, any such
information to lose its character or cease to qualify as Confidential
Information or a trade secret. | agree to inquire with ADP if I have
any questions about whether I am authorized or required to
access, disclose, use, reproduce, distribute, or otherwise
disseminate ADP’s Confidential Information or whether particular
information is Confidential Information or a trade secret before
accessing, using or disclosing such information. I understand,
however, that nothing in this Restrictive Covenant Agreement
prohibits me from reporting possible violations of federal law or
regulation to any governmental agency or entity or from
communicating with any such agency or entity regarding the same.
I also agree to immediately return to ADP all property and
information belonging to ADP such as keys, credit cards,
telephones, tools, equipment, computers, passwords, access codes,
pin numbers, and electronic storage devices, as well as all
originals, copies, or other physical embodiments of ADP’s
Confidential Information or trade secrets (regardless of whether it
is in paper, electronic, or other form), including any such
information in any programs, business forms, manuals,
correspondence, files, databases, or on computer disks or any
other storage medium, including but not limited to cloud storage,
whether or not owned or controlled by me or ADP (e.g., social and
business networking websites, web-based email servers, Notability,
or cloud storage services), immediately upon termination of my
employment or upon any earlier request by ADP, and I agree not to
keep, access, disclose, use, reproduce, distribute, or otherwise
disseminate any copies, electronic or otherwise, of any of the
foregoing. I also understand that my obligations under this
paragraph, as well as the other covenants in this Agreement,
extend to my activities on the internet, including my use of
business oriented social networking sites such as LinkedIn and
Facebook. This shall include deleting any business related
connections or contacts, including all ADP Clients and Business
Partners, that I] inputted in or with whom I connected on any
business oriented social networking sites, my LinkedIn account,
any cloud storage, any electronic device, or any cell phones while
employed at ADP. Pursuant to 18 U.S.C. § 1833(b), and as set forth

10

fully therein, notice is hereby given that an individual shall not be
held criminaily or civilly liable under any federal or state trade
secret law for the disclosure of a trade secret that is made in
confidence to a federal, state, or local government official, either
directly or indirectly, or to an attorney, solely for the purpose of
reporting or investigating a suspected violation of law; or is made
in a complaint or other document filed in a lawsuit or other
proceeding, if such filing is made under seal. An individual who
files a lawsuit for retaliation by an employer for reporting a
suspected violation of law may disclose the trade secret to the
attorney of the individual and use the trade secret information in
the court proceeding, if the individual files any document
containing the trade secret under seal and does not disclose the
trade secret, except pursuant to court order.
7. Prior Agreements and Disclosure of Agreement to Third Parties. |
represent that I am not a party to any agreement with any former
employer or any other person or entity containing any
nondisclosure, non-compete, non-solicitation, non-recruitment,
intellectual property assignment, or other covenants that will affect
my ability to devote my full time and attention to the Business of
ADP that has not already been disclosed to ADP in writing. I also
agree to provide a copy of this Agreement to any subsequent
employer, person, or entity to which J intend to provide services
that may conflict with any of my obligations in this Agreement
prior to engaging in any such activities and to provide ADP in
writing the name and address of any such employer, person, or
entity and a description of the services I intend to provide prior to
engaging in any such activities. I agree that ADP may also provide
a copy of this Agreement or a description of its terms to any Client,
subsequent employer, or other third party at any time as it deems
necessary to protect its interests, and I agree to indemnify ADP
against any claims and hold ADP harmless from any losses, costs,
attorneys’ fees, expenses, fees, and damages arising out of my
failure to comply with this paragraph or ADP’s providing a copy of
this Agreement or a description of its terms to any Client,
subsequent employer, or other third party.

9. Choice of Law, Venue, and Jurisdiction. The interpretation,
validity, and enforcement of this Agreement will be governed by the
laws of the State of New Jersey, without regard to any conflicts of

11

law principles that require the application of the law of another
jurisdiction. I agree that any action by me to challenge the
enforceability of this Agreement must be brought or litigated
exclusively in the appropriate state or federal court located in the
State of New Jersey. I also agree that any action by ADP to enforce
this Agreement, as well as any related disputes or litigation related
to this Agreement, may, but do not have to, be brought in the
appropriate state or federal court located in the State of New
Jersey. I agree and consent to the personal jurisdiction and venue
of the federal or state courts of New Jersey for resolution of any
disputes or litigation arising under or in connection with this
Agreement or any challenge to this Agreement and waive any
objections or defenses to personal jurisdiction or venue in any
such proceeding before any such court.

11. Relief, Remedies, and Enforcement. 1 acknowledge that ADP is
engaged in a highly competitive business, and the covenants and
restrictions contained in this Agreement, including the geographic
and temporal restrictions, are reasonably designed to protect ADP’s
legitimate business interests, including ADP goodwill and client
relations, Confidential Information and trade secrets, and the
specialized skills and knowledge gained by me and ADP’s other
employees during our employment. I acknowledge and agree that a
breach of any provision of this Agreement by me will cause serious
and irreparable damage to ADP that will be difficult to quantify and
for which a remedy at law for monetary damages alone may not be
adequate. Accordingly, I agree that if ADP should bring an action
to enforce its rights under this Agreement and ADP establishes
that I have breached or threatened to breach any of my obligations
under this Agreement, ADP shall be entitled, in addition to all
remedies otherwise available in law or in equity, to a temporary
restraining order, a preliminary injunction, and a permanent
injunction enjoining such breach or threatened breach in any
court of competent jurisdiction without the necessity of posting a
surety bond, as well as an equitable accounting of all profits or
benefits arising out of any violation of this Agreement. | also agree
that nothing in this Agreement shall be construed to prohibit ADP
from pursuing any and all other legal or equitable remedies
available to it for breach of any of the provisions of this Agreement,
including the disgorgement of any profits, bonuses, commissions,

12

or fees realized by me, any subsequent employers, any business
owned or operated by me or to which I provide services, or any of □□
my agents, heirs, or assigns. I also agree that that the knowledge,
skills, and abilities | possess at the time of commencement of my
employment are sufficient to permit me to earn a livelihood
satisfactory to me without violating any provision of paragraphs
three (3) through seven (7) above, for example, by using such
knowledge, skills, and abilities, or some of them, in the service of
business that is not competitive with ADP. I further agree to pay
any and all legal fees, including without limitation, all attorneys’
fees, court costs, and any other related fees and/or costs incurred
by ADP in enforcing this Agreement.
12. Tolling. The restricted time periods in paragraphs three (3)
through six (6) above shall be tolled during any time period that |
am in violation of such covenants, as determined by a court of
competent jurisdiction, so that ADP may realize the full benefit of
its bargain. This tolling shall include any time period during which
litigation is pending, but during which I have continued to violate
such protective covenants and a court has declined to enjoin such
conduct or I have failed to comply with any such injunction.

15. Electronic Signature. I agree that ADP may enforce this
Agreement with a copy for which | have provided an electronic
signature.

19. Opportunity to Review. I agree that I have read this Agreement
before signing it, understand its terms, and that I have had the
opportunity to have legal counsel review this agreement, prior to
signing it, and 1 acknowledge that I have not been forced or coerced
in any manner to sign this Agreement and do so of my own free
will.
(DE 3-8).
G. Pittman’s Acceptance
ADP offered, and Pittman accepted, a restricted stock award on three
separate occasions: September 19, 2012; September 2, 2014; and September 1,
2017. (DE 3-8 fj 5, 14 & 15). In each instance Pittman agreed to an RCA in

13

exchange for an award of ADP restricted stock. (/d. ] 14-16). Each RCA
contained non-competition, non-solicitation, non-disclosure, and non-use
restrictive covenants.
H. Pittman’s Association with Ultimate
Pittman left ADP on June 14, 2019 and accepted a position with Ultimate
Software Group (“Ultimate”) shortly thereafter. (DE 3-5 | 6; Compl. {] 32-35)).
At Ultimate, Pittman holds the title “Business Development Manager.” (DE 13-2
4| 16). In that position, she solicits business from approximately 115
specifically identified prospective clients that each have more than 2,500
employees. (Id.). Ultimate assigned each client to Pittman by way of a database
it provided to her. (/d.). At Ultimate, Pittman’s designated clients are located in
Alaska, Hawaii, Idaho, Montana, Oregon, and Washington. (/d.). Pittman claims
that none of her former ADP clients or prospective clients appear on her
Ultimate database. (Id.).
ADP and Ultimate are direct competitors. (Comp!. 4 35}. Ultimate’s
UltiPro product directly competes with an ADP product called Workforce Now.
(Compl. 4 35). Unlike ADP, however, Ultimate sells UltiPro as a bundled
product/service that includes payroll, human resource, and talent
management products and services. (DE 13-2 □ 13-15}. As a result, the cost to
clients of UltiPro is nearly always greater than the cost resulting from a client’s
selection among the unbundled products and services provided by ADP. (/d.).
ADP contends that Pittman’s position at Ultimate is expressly forbidden
by the non-compete provisions of the RCA. (Compl. 37). ADP further alleges
that because Pittman performs on behalf of Ultimate the same job functions as
those she performed for ADP in the same sales territory, it is inevitable that she
has already or at some point will have used or disclosed ADP’s proprietary
information for the benefit of Ultimate and to the detriment of ADP. (Jd. 39).
Pittman claims that since she joined Ultimate, she has not solicited any
of ADP’s existing or prospective clients with whom she had any contact or
communications while she was worked at by ADP. (DE 13-2 { 16). She also

14

claims not to have solicited any firms whose names appeared on my ADP
database. (Id.).
I. ADP Moves to Enjoin Pittman’s Employment
On August 1, 2019, ADP filed a complaint for injunctive relief, (DE 1),
and moved for a temporary restraining order, (DE 3). On October 1, the Court
held a show-cause hearing as to why an order should not be entered
preliminarily enjoining Pittman from competing with ADP in violation of her
agreements. (DE 19). The hearing consisted solely of legal argument based on
the parties’ submissions; neither side sought to introduce live testimony.
Il. APPLICABLE STANDARDS
A. Federal Preliminary Injunction Factors
The standards governing grant or denial of a preliminary injunction in
this court are a matter of federal procedural law. “A plaintiff seeking a
preliminary injunction must establish (1) that he is likely to succeed on the
merits, (2) that he is likely to suffer irreparable harm in the absence of
preliminary relief, (3) that the balance of equities tips in his favor, and (4) that
an injunction is in the public interest.” Winter v. Natural Res. Def. Council, Inc.,
555 U.S. 7, 20 (2008) (numbering added); accord Am. Express Travel Related
Servs., Inc. v. Sidamon-Eristoff, 669 F.3d 359, 366 (3d Cir. 2012), Because a
preliminary injunction is “an extraordinary and drastic remedy,” the plaintiff
must establish each element by a “clear showing.” Mazurek v. Armstrong, 520
U.S. 968, 972 (1997) (quoting 11A C. Wright, A. Miller, & M. Kane, Federal
Practice and Procedure § 2948, at 129-30 (2d ed. 1995)). Even then, a trial
court’s decision to issue a preliminary injunction is “an act of equitable
discretion.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).7
A Court will consider all four factors, but the first two are essential. See
Adams v. Freedom Forge Corp., 204 F.3d 475, 484 (3d Cir. 2000); accord
Hoxworth v. Blinder, Robinson & Co., 903 F.2d 186, 197 (3d Cir, 1990) (placing
particular weight on the probability of irreparable harm and the likelihood of
success on the merits, stating: “[W]e cannot sustain a preliminary injunction

Pg.
15

ordered by the district court where either or both of these prerequisites are
absent.” (quoting In re Arthur Treacher’s Franchisee Litig., 689 F.2d 1137, 1143
(3d Cir. 1982))); Morton v. Beyer, 822 F.2d 364, 367 (3d Cir. 1987); Freixenet,
S.A. v. Admiral Wine & Liquor Co., 731 F.2d 148, 151 (3d Cir. 1984); Am.
Express, 669 F.3d at 366, 374. But see Conestoga Wood Specialties Corp. v.
Sec’y of U.S. Dep’t of Health & Human Services, 724 F.3d 377 (3d Cir. 2013)
(debating whether there is a “sliding scale” of the four factors).
B. State Substantive Law
The substantive rule of decision in this diversity case is New Jersey state
law. This Court's “role in diversity cases is to apply state law as announced by
the state's highest court.” LaBarre v. Bristol-Myers Squibb Co., 544 F. App'x
120, 125 (3d Cir. 2013) (citing Sheridan v. NGK Metals Corp., 609 F.3d 239,
253 (3d Cir. 2010) (“A federal court under Erie [R.R. v. Tompkins, 304 U.S. 64,
78, 58 S. Ct. 817 (1938)] is bound to follow state law as announced by the
highest state court.” (internal citations omitted)). “In the absence ofa
controlling decision by the [state] Supreme Court, we must predict how it
would decide the questions of law presented in this case.” Wolfe v. Allstate
Prop., & Cas. Ins. Co., 790 F.3d 487, 492 (3d Cir. 2015) (citing Berrier v.
Simplicity Mfg., Inc., 563 F.3d 38, 45-46 (3d Cir. 2009)); Travelers Indem. Co. v.
Dammann & Co., 594 F.3d 238, 244 (3d Cir.2010); New Castle County DE v.
National Union Fire Ins. Co. of Pittsburgh, PA, 243 F.3d 744, 749 (3d Cir. 2001).
A federal district court in that position should consider “relevant state
precedents, analogous decisions, considered dicta, scholarly works, and any
other reliable data tending convincingly to show how the highest court in the
state would decide the issue at hand.” Berrier, 563 F.3d at 46 (quotation and
citation omitted).°

6 A difficult issue of interpretation arises where a Court of Appeals’ prediction of
state law has been undermined by subsequent state authority. Must the district court
continue to follow the Court of Appeals’ interpretation, or can it take later state court
authority into account? Does the answer depend on whether the intervening authority
is a decision of the State’s highest court? Compare In re Swinton, 287 B.R. 634, 636
(W.D. Pa. 2003) (district court may consider intervening developments in state law),

16

Ill, RAFFERTY AND KUSINS
Although I do not have the benefit of a decision on point by the New
Jersey Supreme Court, I do not write on a clean slate. Many decisions, both
state and federal, have interpreted the very ADP agreements at issue here. All
have analyzed them in light of the so-called Solari factors: whether the
restriction
[1] is reasonably necessary to protect [an employer’s] legitimate
interests,
[2] will cause no undue hardship on the defendant, and
[3] will not impair the public interest.
Solari Industries, Inc. v. Malady, 55 N.J. 571, 576 (1970) (numbering and line
breaks added for clarity).
Two recent cases in particular structure the Court’s analysis: ADP, LLC v.
Rafferty, 923 F.3d 113 (2019), and ADP, LLC v. Kusins, __ N.J. Super __, No.
A-0692-17T3, 2019 WL 3367212 at *22 (App. Div. July 26, 2019). Rafferty,
reversing a considerable body of district court case law, held that the RCA
“second-tier” restrictions were enforceable, and remanded so that the district
courts could apply its holding to the facts of individual cases. Kusins, decided
after Rafferty, endorsed its reasoning and applied it to the facts of the cases
before it, involving six departing ADP employees. The task now before me is
similar to that performed by the Kusins court. Because Rafferty sets forth the
applicable standard, and because Kusins is the highest state court decision
applying that standard, it is worth discussing those two cases at some length.

with Itzkoff v. F & G Realty of N.J., Corp., 890 F. Supp. 351 (D.N.J. 1995) (district court
continues to be bound by Court of Appeals ruling); Heindel v. Pfizer, Inc., 381 F. Supp.
2d 364, 385 (D.N.J. 2004) (citing Itzkoff and holding that “[t]his Court is bound by the
Third Circuit's prediction of Pennsylvania law.”); Jackson v, Louisville Ladder, Inc., No.
11-1527, 2014 WL 460849, at *2 (M.D. Pa. Feb. 5, 2014) (“Once the United States
Court of Appeals for the Third Circuit predicts how a state’s highest court would
resolve an issue, district courts within the circuit are bound by this prediction ‘unless
the state supreme court issues a contrary decision or it appears from a subsequent
decision of the appellate courts that the court of appeals erred.”), aff'd, 586 F. App’x
882 (3d Cir. 2014). No such issue is presented here, however.

17

A. The Third Circuit’s Rafferty Decision
On April 26, 2019, the Third Circuit filed a precedential opinion in ADP,
LLC v. Rafferty, 923 F.3d 113 (2019). Rafferty was an appeal from other cases
in this district involving the same ADP restrictive covenant agreements. There,
two district courts deciding applications for preliminary injunctions had
enforced the NDA and SRA but declined to enforce the RCA. The Court of
Appeals reversed as to the RCA and remanded.’ Because Rafferty sets forth the
Third Circuit’s view of the governing legal standards under New Jersey state
law, I quote it at length.
Rafferty first laid out well-established principles of New Jersey law
regarding the legitimate scope of restrictive employment covenants and the
nearly universal practice of judicial “blue penciling” of such covenants to bring
them within acceptable bounds:
For more than a century, New Jersey has upheld restrictive
covenants in employment agreements, see Sternberg v. O’Brien, 48
N.J. Eq. 370, 22 A. 348, 349-50 (1891); Mandeville v. Harman, 42
N.J. Eq. 185, 7 A. 37, 41 (1886), but the state initially applied an
inflexible rule rendering overbroad covenants completely
unenforceable, Althen v. Vreeland, 36 A. 479, 481 (N.J. Ch. 1897)
(reasoning that a restrictive covenant “if enforced at all, it must be
enforced according to its terms”)....
In its seminal decision in Solari Industnes, Inc. v. Malady, 55 N.J.
571, 264 A.2d 53 (1970), the New Jersey Supreme Court jettisoned
the complete-invalidation rule, permitting the partial enforcement
of restrictive covenants where consistent with public policy. See
264 A.2d at 61. Under its prior approach, the New Jersey Supreme
Court recognized, courts struck down restrictive covenants even
when “justice and equity seemed to cry out for the issuance of
appropriately limited restraints.” Jd. at 60. That is, employers may
“act in full good faith” only to “find that the terms of the

? Before Rafferty was decided, in ADP, LLC v. Trueira, 18-3666, 2018 WL
3756951 (D.N.J. Aug. 8, 2018), I followed the lead of those earlier district court
decisions and enforced the NDA and SRA, while declining to enforce the RCA. After
vacating and remanding those district court decisions in Rafferty, the Court of Appeals
entered a separate order vacating and remanding Trveira for further proceedings. My
decision on remand in Trueira is filed simultaneously herewith.

18

noncompetitive agreement are later judicially viewed as
unnecessarily broad.” Id. at 56. Under these circumstances, Solari
recognized that tailoring overbroad restrictive covenants better
accorded with the parties’ written agreement than wholesale
invalidation. See id. In other instances, the complete-invalidation
rule encouraged courts to fully enforce “sweeping noncompetitive
agreements” where, if given a choice, “they would have cut them
down to satisfy the particular needs at hand.” /d. at 60. Under the
new approach, while an employer that “extracts a deliberately
unreasonable and oppressive noncompetitive covenant” should
receive no benefit, courts should partially enforce an overbroad
covenant as long as it is “[1] reasonably necessary to protect [an
employer's] legitimate interests, [2] will cause no undue hardship
on the defendant, and [3] will not impair the public interest.” Jd. at
36, 61.
Following Solari, New Jersey courts have strived, if possible, to
salvage restrictive covenants, construing the opinion’s three-part
test as rarely justifying the total invalidation of a restrictive
covenant. See, e.g., Coskey’s Television & Radio Sales & Serv., Inc.
vy. Foti, 253 N.J. Super. 626, 602 A.2d 789, 793, 796 (App. Div.
1992) (blue penciling a restrictive covenant that had “devastating
effects” on the employee and “only limited” effects on the employer
to permit “substantially narrower enforcement”). As to what
business interests qualify as “legitimate,” Solari, 264 A.2d at 61, an
“employer has no legitimate interest in preventing competition as
such” or simply prohibiting an employee from exercising her
“general knowledge” within the industry, Whitmyer Bros., Inc. v.
Doyle, 58 N.J. 25, 274 A.2d 577, 581 (N.J. 1971); see Ingersoll-
Rand Co. v. Ciavatta, 110 N.J. 609, 542 A.2d 879, 892-93 (1988).
But New Jersey courts have stressed that employers have “patently
legitimate” interests in their trade secrets, confidential business
information, and customer relationships. Whitmyer Bros., 274 A.2d
at 581; Cmty. Hosp. Grp., 869 A.2d at 897. As long as the
restrictive covenant reasonably protects one of these matters, the
employer has adduced a “strong” business interest. Ingersoll-Rand,
542 A.2d at 892.
Most relevant here, in A. T. Hudson & Co., Ine. v. Donovan, 216
N.J. Super. 426, 524 A.2d 412 (App. Div. 1987), the Appellate
Division enforced a management consulting firm’s restrictive
covenant to protect its former employee’s client relationships. Id. at

19

416. The restrictive covenant, the court recognized, safeguarded
the “significant investment of time, effort and money” the
consulting firm expended “soliciting clients and developing projects
for their benefit.” Id. A restrictive covenant protects this
substantial investment in a discrete set of clients, especially for
employees who maintained close, continual contact with the
employer’s business partners. See id. at 413-14, 416; Coskey’s,
602 A.2d at 795.
If a restrictive covenant reaches beyond an employer’s legitimate
interests, courts applying New Jersey law have typically resorted to
blue penciling to fulfill the contract’s lawful ends. See Coskey’s,
602 A.2d at 796. For instance, where a restrictive covenant covers
products for which no trade secrets existed, courts have blue
penciled the agreement to extricate them. See, e.g., Raven v. A.
Klein & Co. Ine., 195 N.J. Super. 209, 478 A.2d 1208, 1211-12
(App. Div. 1984); see also Saccomanno v. Honeywell Int'l, Inc., 2010
WL 1329038 at *5 (N.J. Super. Ct. App. Div. Apr. 7, 2010) (limiting
an agreement covering all “information” to just “trade secrets or
confidential information”). Or, if a restrictive covenant seeks to
protect client relationships, courts have narrowed the covenant to
clients with which the employee interfaced. See, e.g., Saturn
Wireless Consulting, LLC v. Aversa, No. 17-1637, 2017 WL
1538157 at *12 (D.N.J. Apr. 26, 2017).
The other two Solari factors—undue hardship and the public
interest—likewise rarely favor the complete nullification of a
restrictive covenant. The second Solari factor’s focus on undue
hardship lends itself to blue penciling, not complete invalidation.
Seldom could an employee credibly contend that, even where an
employer has proffered a legitimate business purpose, any
enforcement of a restrictive covenant would pose an undue
burden. See Ingersoll-Rand, 542 A.2d at 892 (a court must balance
the employer’s interest against the hardship inflicted). And under
the “public interest” factor, New Jersey has recognized only two
professions for which a client’s freedom to choose or the “uniquely
personal” nature of the relationship militate against enforcing any
restrictive covenant. Comprehensive Psychology Sys., P.C. v. Prince,
375 N.J. Super. 273, 867 A.2d 1187, 1190 (App. Div. 2005)
(psychologists); see Jacob v. Norris, McLaughlin & Marcus, 128 N.J.
10, 607 A.2d 142, 151 (1992) (attorneys); Cmty. Hosp. Grp., 869
A.2d at 895 (noting that “[e]xcept for attorneys and ...

20

psychologists, our courts have consistently utilized a
reasonableness test to determine the enforceability of restrictive
covenants” (internal citations omitted)).
Simply put, New Jersey accepts that “non-compete agreements are
a common part of commercial employment,” and its Solari
framework “recognizes that noncompete agreements can serve a
useful purpose so long as the agreement is not unreasonable.”
Maw, 846 A.2d at 609. To ensure that such agreements remain
reasonable, New Jersey courts do not hesitate to blue pencil a
covenant but will rarely invalidate one in full. See, e.g., Cmty.
Hosp. Grp., 869 A.2d at 899-900.
Rafferty, 923 F.3d at 120-22.
Rafferty accepted the parties’ mutual position that the first-tier
restrictions contained in the SRA and NDA, which applied to all employees,
were reasonable. It then considered whether an employer could reasonably
impose more onerous “second-tier” restrictions, like the RCA here, on a small
group of high-performing employees.
The departure of such high-performing employees, the Court held, may
implicate especially weighty employer interests:
The preservation of client relationships and the goodwill they
generate are among the business interests that New Jersey courts
consistently recognize as legitimate and worthy of protection. See
Whitmyer, 274 A.2d at 581; A.T. Hudson & Co., 524 A.2d at 415.
As aclient services business, ADP’s viability depends on its ability
to attract—and retain—its clients. And by setting sales goals for its
employees and identifying the subset of employees that meet or
exceed those goals, ADP has the ability to empirically measure
which of its employees have more extensive client contact.
Employees can achieve this more extensive client contact in one of
two ways—by virtue of selling to a greater number of customers or
by selling more products to a smaller number of customers. Either
way, post-termination competition from those employees or their
solicitation of ADP’s clients and Business Partners would pose a
greater threat to ADP’s business than would that of employees who
failed to meet their sales goals and thus, necessarily, have less
contact with ADP’s clients. ADP therefore has a legitimate business
interest in imposing the RCA on this subset of employees, and the

21

RCA’s heightened restrictive covenants, over and above those in
the SRA and NDA, are reflective of the greater damage those
employees could inflict on ADP upon their departure.
Rafferty, 923 F.3d at 123.
Rafferty therefore held that such second-tier restrictions served
legitimate employer interests and could not be considered unreasonable per se.
It rejected Laidlaw, Inc. v. Student Transp. of America, Inc., 20 F. Supp. 2d 727
(D.N.J. 1998), which held that a second-tier restrictive covenant tied to a stock-
option award was an unenforceable because its “primary purpose” was “to buy
out potential competition.” See Rafferty, 923 F.3d at 123.
Next, Rafferty considered the RCA in relation to the second Solari factor,
hardship to the employee. Surveying prior cases, it noted that some had
confined the RCA’s non-solicitation provision to include only customers that
the employee had learned of through employment at ADP, as opposed to all
ADP customers. Others had confined the non-compete to encompass only a
particular territory, or a particular market segment of customers (such as
those with fewer than fifty employees). 923 F.3d at 126. While indicating that
some blue penciling would be appropriate (as ADP had conceded), the Court of
Appeals remanded for consideration of “facts relevant to the extent of the
hardship Appellees will suffer if the RCA is enforced, including whether it
would preclude the employee from being able to earn a living in his or her
occupation, and the fact that both Appellees voluntarily resigned from ADP and
chose to immediately join Ultimate, a direct competitor, thereby arguably
br[inging] any hardship upon [themselves].” Id. (internal citations and
quotations omitted).
The final Solari factor of “harm to the public” carried no particular
weight. Rafferty noted that this dispute occurred in an ordinary commercial
context with no special public component. Thus, the first two Solari factors
sufficed to balance the relative interests of ADP and the employees. Id. at 127.
On May 28, 2018, the Court of Appeals denied the defendants’ petition
for a panel rehearing or review en banc.

22

B. The Appellate Division’s Kusins Decision
ADP, LLC v. Kusins, __ N.J. Super __, No. A-0692-17T3, 2019 WL
3367212 (App. Div. July 26, 2019), is the highest state court decision
interpreting the ADP agreements, particularly post-Rafferty.
“In the absence of guidance from the state’s highest court, we are to
consider decisions of the state’s intermediate appellate courts for assistance in
predicting how the state’s highest court would rule.” Downs v. U.S. Pipe &
Foundry Co., 441 F. Supp. 2d 661, 663 (D.N.J. 2006) (quoting Gares v.
Willingboro Twp., 90 F.3d 720, 725 (3d Cir. 1996)). “The rulings of intermediate
appellate courts must be accorded significant weight and should not be
disregarded absent persuasive indication that the highest court would rule
otherwise.” U.S. Underwriters Ins. Co. v. Liberty Mut. Ins. Co., 80 F.3d 90, 93
(3d Cir. 1996).
In Kusins, the Superior Court of New Jersey, Appellate Division,
interpreted ADP’s RCA agreements in relation to six departing employees. 2019
WL 3367212 at *22 (App. Div. July 26, 2019). All six had executed RCAs
substantially similar to the one at issue here, had left ADP, and had gone to
work for competing firms, including Ultimate. 2019 WL 3367212 at *1. Kusins
approvingly cited and followed Rafferty, applying its reasoning to the facts of
the six cases before it. In a sense, then, Kusins performed the post-Rafferty
task that is now before this Court, and in doing so pointed the way to this
Court’s decision.
Kusins first surveyed existing New Jersey case law in terms substantially
similar to the Rafferty analysis, supra. It then approvingly cited the holdings of
Rafferty:
Earlier this year, the Third Circuit considered ADP’s 2014 and
2015 RCAs, concluding that, although the covenants were
overbroad, the RCAs were not unenforceable in their entirety. ADP,
LLC v. Rafferty, 923 F.3d 113 (3d Cir. 2019). In applying the Solari
criteria, the Third Circuit found ADP had “a legitimate business
interest in imposing the RCA on [its successful salespeople], and
the RCA’s heightened restrictive covenants, over and above those

23

in the SRA and NDA, are reflective of the greater damage those
employees could inflict on ADP upon their departure.” Jd. at 123,
We agree.
Kusins, 2019 WL 3367212 at *15.
Like Rafferty, Kusins found that the departure of certain high-performing
employees posed a particularly acute threat to ADP’s legitimate interest in its
relations with its customers. Thus, ADP could reasonably require additional
second-tier restrictions in connection with rewarding those employees’
performance. Id. at *15-16.8
Kusins then turned to the counterbalancing factor of hardship to the
employees—essentially, the subject of the remand in Rafferty. Some hardship,
of course, was inevitable; the question was whether any such hardship was
undue in light of ADP’s legitimate interests. The non-solicitation and non-
compete provisions of the RCA were found to impose an undue hardship and
were therefore blue penciled in the following fashion.

& Recall that those additional restrictions, as relevant here, are as follows:
The RCA’s non-compete provision provides that for a one-year period after their
departure from ADP, employees may not “participate in any manner with a Competing
Business” in the geographic area where the employee worked or had contact with ADP
clients if working in that area would require the employee to “provide the same or
substantially similar services to a Competing Business as those which [they] provided
to ADP while employed.”
The non-solicitation provision of the RCA prohibits employees—for one year
after their departure from ADP—from soliciting any clients to whom ADP (1) provides;
(2) has provided; or (3) reasonably expects to provide business within the two-year
period following the employee’s departure.
The RCA also prohibits employees from using or disclosing ADP’s trade secrets
or other confidential information.
9 Taking up the hint in Rafferty, Kusins rejected any claim of hardship based on
termination, because the departing employees had left voluntarily:
We also note that because defendants all voluntarily left ADP to join a
direct competitor [Ultimate], they cannot assert their termination as a
hardship for our consideration. See More, 183 N.J. at 59, 869 A.2d 884
(“If the employee terminates the relationship, the court is less likely to

24

Restrictions as to clients with which employee was involved, The
employees, Kusins noted, could hardly function at all without approaching any
of ADP’s 620,000 customers, prospective clients, or businesses with which ADP
could expect to do business within two years. Kusins therefore narrowed the
non-solicitation and non-compete clauses, “conclud[ing] that a non-solicitation
clause and non-compete clause may prevent an employee from having any
dealings with existing ADP clients that the employee was actively involved with
or whose names the employee learned during his or her employment.” Id. at
*17 (citing ADP’s concession regarding non-solicitation clause in Rafferty).
Geographical restrictions and restrictions as to market segment. Kusins,
citing geographical limitations upheld in other cases, only briefly discussed the
validity of the RCA’s geographical limitation because parties did not dispute it.
Id. at 17. In some of the cases under review, the trial court had “loosened the
covenant’s restriction by blue-penciling the geographical limitation in these
clauses to also inchide a market segment.” Id.
The only market-segment restriction proposed was based on the size of
the customer, measured in number of employees. The Kusins court declined to
impose such a restriction:
We cannot discern any rationale in the record to blue-pencil a
market segment component into the RCA. There is no evidence
that the specialized training, information, or strategic client skills
defendants obtained at ADP differed according to the number of
employees in the companies they serviced. The customer
relationships ADP seeks to protect are the same, regardless of how
many employees the client might have.
Id.
Kusins was not quite explicit as to whether “competition,” for purposes of
the non-compete clause, is (like the non-solicitation clause) confined to certain
actual or prospective clients of ADP. Much of the confusion arises from

find undue hardship as the employee put himself or herself in the
position of bringing the restriction into play.”).
2019 WL 3367212 at *17.

25

statements in the opinion that refer to the “RCA” generally or fail to distinguish
between non-compete and non-solicitation clauses. Thus, the opinion states
“that a non-solicitation clause and non-compete clause may prevent an
employee from having any dealings with existing ADP clients that the employee
was actively involved with or whose names the employee learned during his or
her employment.” 2019 WL 3367212 at *17 (emphasis added).!° The
surrounding context of that statement, however, was a discussion of
“hardship” limitations on the non-solicitation clause; I do not believe that this
stray reference was intended to imply that a non-compete clause could not
impose different restrictions.!!

10 In similar fashion, the discussion (but not the holding) of Kusins elsewhere
appears to conflate the non-compete and non-solicitation clauses. See, e.g., 2019 WL
3367212 at *8 (stating that “portions of the non-compete and non-solicitation clauses
that prohibit defendants from providing services for a competitor or soliciting ADP’s
clients within the same territory they worked in at ADP are enforceable”).
This sentence may have been intended as a shorthand reference to the
combined effect of the two clauses. Nevertheless, the territorial restriction referred to
is contained in the non-compete clause, not the non-solicitation clause. The Kusins
court did not misapprehend this; deciding one of the six consolidated appeals, it
clearly stated the following:
It is of no import that the ADP clients Hopper solicited were not located
in his previous geographic territory. The RCA seeks to protect existing
customer relationships, and, as we have established, is enforceable. A
geographic limitation is not necessary. As a result, Hopper breached the
RCA in soliciting ADP’s current clients and employees.
Id. at *19.
To be clear, I do not give effect to any dicta in Kusins that appear to lump the
two clauses. The Rafferty decision, which Kusins was citing and interpreting, did not
do so. See Rafferty, 923 F.3d at 126 (noting cases that had restricted the non-
solicitation clause to ADP customers, or restricted the non-compete clause toa
geographic area or market share). And indeed, the Kusins case’s definitive statement of
its holding, quoted at page 27, infra, did not contain any such imprecision. See id. at
*21.
i The more restrictive interpretation is also in some tension with the
fundamental rationale of Rafferty: that ADP was entitled, in exchange for additional
consideration, to impose additional and further restrictions on high-performing
employees. To limit the RCA’s non-compete clause in this manner would render it not
quite, but nearly, superfluous; the SRA, in particular, already prohibits all ex-
employees from having actual or attempted contact or communication of any kind

26

Here I am guided by the closing passage of the Kusins opinion, in which
the Appellate Division definitively stated its holding:
In sum, we reverse the orders granting summary judgment. We
blue-pencil the RCAs to prohibit the direct or indirect
solicitation of ADP’s actual! clients defendants had substantial
dealings with while at ADP or who defendants had knowledge of
during their prior employment. We also blue-pencil the clauses to
prevent the direct or indirect solicitation of ADP’s prospective
clients that a former employee gained knowledge of during his
employment at ADP.
The geographical limitation in the non-compete clause is a
reasonable restriction. A market segment restriction is not.
Because ADP demonstrated a legitimate protectable business
interest and the RCAs as blue-penciled did not impose an
unreasonable hardship on defendants, the RCAs are enforceable.
We are satisfied these blue-pencil modifications result in “narrowly
tailored” provisions that “ensure the covenant is no broader than
necessary” with respect to its duration, area, and scope of
prohibited activities in order to “protect the employer’s interests.”
Id. at *21 (emphasis added) (quoting Cmty. Hosp., 183 N.J. at 58-59).
« This, in my view, constitutes a clear statement that the non-solicitation
clause is limited to certain actual and prospective ADP clients, without respect
to geography; the non-compete clause, on the other hand, encompasses a
broader class of customers but is limited geographically. Both, of course, are
temporally limited to a term of one year.
IV. APPLICATION OF PRELIMINARY INJUNCTION FACTORS
ADP argues that the four preliminary injunction factors weigh in its favor
and asks the Court to enjoin Pittman from: working for Ultimate or any
competitor in Alaska, Oregon, Vancouver, and Washington for twelve months;
violating the RCA; using or disclosing confidential information, or trade secrets,
interfering with any contract, client relationship, prospective client
relationship, or marketing partner relationship; and breaching any loyalty

with “clients, bona fide prospective clients or marketing partners of businesses of the
Company with which the Employee was involved or exposed.” (SRA { 4, quoted above}

27

obligation to ADP. Pittman maintains that ADP has not met its burden and that
injunctive relief is not merited.
The enforceability of the NDA and SRA does not appear to be contested at
this point. Realistically, the dispute here is over the scope and enforceability of
the additional restrictions contained in the RCA.
1. Likelihood of Success on the Merits
On a motion for a preliminary injunction, ADP must demonstrate its
likelihood of success on the merits. See SK & F. Co. v. Premo Pharm. Labs., Inc.,
625 F.2d 1055, 1066 (3d Cir. 1980). That is, ADP need only establish “a
reasonable probability, not the certainty, of success on the merits.” Id.
ADP takes the position that Pittman’s conduct violates the RCA. Pittman
insists it does not, noting that ADP cannot point to a single client she has
taken from her former employer. However, this argument misstates both the
scope of the RCA and relevant case law. In light of the recent decisions by the
Third Circuit and the Appellate Division that hold that ADP’s non-compete
agreement is enforceable—though potentially overbroad—ADP is likely, under
Solari, to prevail on the merits of this action.
(a) Legitimate Business Interest
Preservation of client relationships is a legitimate business interest that
is worthy of protection. See Whitmyer, 58 N.J. at 33; A.T. Hudson & Co., 82
N.J. Super. at 508. ADP depends on its ability to attract and retain clients.
Both Rafferty and Kusins have identified ADP’s “legitimate and protectable
interest in its customer relationships sufficient to justify enforcement of its
RCA.” Kusins, 2019 WL 3367212 at *16.
By setting goals for its employees and identifying those who meet them,
ADP can identify the employee-sources of the most client contact. To increase
client contact, an employee can either (1} sell to a greater number of customers
or (2) sell more products to an existing customer base. Either represents an
increase in revenue if the employee is selling on behalf of ADP, and either
represents a decrease in revenue if the employee is selling on behalf of a

28

competitor. Thus, ADP has a legitimate business interest in imposing the RCA
restrictions on its best-performing employees, who have been commensurately
rewarded with a stock bonus. The increased burden of the RCA reflects the
greater danger those employees pose if they were to leave ADP for a competitor.
Here, Pittman has accepted a position with Ultimate, a direct competitor.
That new position carries responsibilities that are substantially similar to those
she had at ADP. AT Ultimate, Pittman sells substantially similar and
overlapping products and services. Finally, she sells in some of the same
territories in which she worked when at ADP.
It is difficult to imagine that Pittman would not gain an advantage over
ADP simply by having been a party to its trade secrets and confidential
information. The resulting diversion of business from ADP, whether inadvertent
or intentional, necessarily harms the firm. With the benefit of the intervening
authority of Kusins and Rafferty, | find that ADP’s imposition of the RCA to
limit the spread of its trade secrets and confidential information, and to
otherwise limit the damages arising from turnover of some of its most effective
employees, is a reasonable means of furthering a legitimate business purpose.
(b) Tailoring and Burden
Under New Jersey’s Solari test, even where a covenant serves legitimate
business interests, “it may be limited in its application concerning its
geographical area, its period of enforceability, and its scope of activity” so that
those interests are not outweighed by the hardship the covenant inflicts on the
employee. Coskey’s, 235 N.J. Super at 635 (citations omitted). To determine
the degree, if any, to which the RCA must be blue penciled, the Court must
“balance the employer’s need for protection and the hardship on the employee
that may result.” Ingersoll-Rand, 110 N.J. at 635.
The RCA’s non-compete provision provides that for a one-year period
after their departure from ADP, employees may not “participate in any manner
with a Competing Business” in the geographic area where the employee worked
or had contact with ADP clients if working in that area would require the

29

employee to “provide the same or substantially similar services to a Competing
Business as those which [they] provided to ADP while employed.” The non-
compete provision also prohibits (former) employees from using or disclosing
ADP’s trade secrets or other confidential information.
To enforce the RCA would sure impose some burden on Pittman and
other former ADP employees who move laterally to positions with competing
firms. “The question remains, however, whether this hardship [is] ‘undue,’
when balanced against the legitimate interest of the employer.” Coskey’s, 235
N.J. Super at 636. Kusins, analyzing the RCA, picked up on the suggestion of
the Third Circuit in Rafferty that the RCA, while potentially overbroad, is
enforceable as modified.
Kusins held that, after blue-penciling, the non-solicitation and non-
compete clauses would prohibit the following:
The direct or indirect solicitation of ADP’s actual clients defendants
had substantial dealings with, or knowledge of, while at ADP.
The direct or indirect solicitation of ADP’s prospective clients that a
former employee gained knowledge of during [her] employment at
ADP.
Competition with ADP within the geographical limits of the non-
compete clause, not confined to any market segment.
2019 WL 3367212 at *21.
I agree with Kusins’ implementation and application of the holdings of
Rafferty. Moreover, I defer to Kusins, an on-point decision of the State’s
intermediate appellate court, because it is the most authoritative indicator of
how the New Jersey Supreme Court would view the ADP agreements. See
Section III.B, supra, and cases cited.
The non-solicitation clause, as blue penciled by Kusins, is not very
controversial. The Kusins court determined that the blue penciled non-
solicitation portion of the RCA should operate to (1) prohibit the direct or
indirect solicitation of ADP’s actual clients with whom the employee dealt
substantially while at ADP or of whose identity the employee learned during his

30

or her employment at ADP; and (2) prevent the direct or indirect solicitation of
ADP’s prospective clients of whose identity the employee learned during his or
her employment at ADP.
Pittman has much to say, however, about the non-compete and the
geographical and market-segment limitations. She argues that the relevant
geographic territory should be based on ZIP codes. And she contends that the
relevant market segment should be analyzed based on the number of
employees that ADP’s prospective and actual clients have.
During the final years of her time at ADP, Pittman sold its products and
services to particularly identified employers with between 1,000 and 10,000
employees in Oregon, Vancouver, and Washington. Pittman’s assignment was
not explicitly defined in terms of a geographic territory, but rather in terms of
those specific accounts. That is, Pittman was limited to the 80-120 clients
provided to her in ADP’s database. Even within Oregon, Vancouver, and
Washington, she was not authorized to deal with other existing or prospective
ADP clients.
At Ultimate, Pittman is assigned to the geographic region and market
segment encompassing employers with 2,500 or more employees in Alaska,
Hawaii, Idaho, Montana, Oregon, and Washington. Only two of those states,
Oregon and Washington, overlap with her former assignment at ADP.
Approximately 35% of her clients at Ultimate are located outside of Oregon and
Washington. Pittman also now sells a single bundled solution called UltiPro,
which includes payroll, human resources, and talent management solutions.
The product that Pittman sold at ADP, recall, was a standalone payroll
solution, not a bundled product. It seems that ADP’s individual products
overlap the components of Ultimate’s bundled product, but ADP does not sell a
bundled product.
On these facts, Pittman insists that at Ultimate she does not serve the
same market segment or territory that she did at ADP. Pittman also
emphasizes that at ADP only 15% of her clients had more than 2,500
employees (the market size of her target clients at Ultimate). However, the

31

Appellate Division has rejected the relevance of this datapoint, noting a lack of
“any rationale in the record to blue-pencil a market segment component into
the RCA... . The customer relationships ADP seeks to protect are the same,
regardless of how many employees the client might have.” Kusins, 2019 WL
3367212 at *17.
Contrary to Pittman’s contention, a state is an appropriate unit to define
the geographic limits of the RCA. Pittman insists that she was not assigned toa
territory, but there is sufficient evidence to infer that she was acting within
assigned states. (See DE 23 (listing Pittman’s assigned cities in Oregon and
Washington)). Her territory during her last two years at ADP included Oregon
and Washington, and at Ultimate, her territory now includes both. Thus, she
currently provides similar services to Ultimate as she did for ADP in direct
violation of the RCAs. Pittman insists that that ZIP codes are an appropriate
market division, but this is an arbitrary—and meaningless—dividing line
because her accounts at ADP were located in most of the largest cities in both
Oregon and Washington.!? Thus, to excise with precision from both states the
ZIP codes in which Pittman may operate would be a laborious and ultimately
meaningless exercise. While the Kusins court did not discuss geography
because the parties there conceded that point, the cases cited by Kusins on
that issue,!3 hold that it should correspond to the employee’s territory while at
ADP. For the sake of consistency, and because it makes sense here, I adopt
that approach.
The scope of the RCA, as blue penciled in accord with Kusins, is
reasonably tailored to protect ADP’s interest, while ensuring Pittman’s ability to
ply her trade. Although ADP’s business is international, the non-compete

12 Le, Portland, Salem, and Eugene in Oregon and Seattle, Spokane, and Tacoma
in Washington. (DE 23).
13 See ADP, LLC v. Lynch, Nos. 16-1053, 16-01111, 2016 WL 3574328, at *7-9
(D.N.J. June 30, 2016); ADP, LLC v. Jacobs, No. 15-3710, 2015 WL 4670805, at *5
(D.N.J. Aug. 5, 2015); ADP, LLC v, Manchir, No. 16-02541, 2017 WL 5185458, at *6-9
(Tenn. Ct. App. Nov. 8, 2017).

32

provision is limited to the geographic territory in which Pittman worked while
at ADP. Pittman has many opportunities to work for Ultimate (or, presumably,
another competitor) outside her ADP territory. Indeed, Pittman’s territory at
Ultimate includes states she did not cover while at ADP and in which she may
continue to operate if she does not otherwise violate the RCA.
In sum, when balanced against ADP’s legitimate interests, the provisions
of the RCA do not severely restrict Pittman from maintaining her livelihood in
the same profession, and hence do not impose an undue hardship.
Accordingly, the language of the restrictive covenants, as blue penciled, are
reasonable and enforceable against Pittman.
(c) Public Interest
The final Solari factor instructs courts to consider the fact that
“enforcement of the restriction should not cause harm to the public.” Cmty.
Hosp., 183 N.J. at 60 (citing Karlin, 77 N.J. at 424). Like the ADP cases
reviewed in Rafferty, this case contains “no major public component.” The
imposition of restrictive covenants here creates no injury, for example, to “the
rights of the public to have free access to the advice of professionals licensed by
the State,” as it may do in the context of physicians and accountants.
Coskey’s, 253 N.J. Super. at 634. Like Rafferty, I find the public interests here
to be generic and equivocal.
* * *
I therefore find that ADP has a likelihood of success in its attempt to
enforce the RCA, as blue-penciled by the Court here. Pittman appears to be
violating the RCA into which she entered with ADP. Pittman has taken a
position with one of ADP’s direct competitors, a position in which she sells
competing products. ADP has demanded her compliance with the obligations
into which she and it entered and has, moreover, identified case law that
recognizes its legitimate business interest in enforcing the agreement.
Nonetheless, Pittman has remained in her position at Ultimate and refuses to
conform her behavior to accord with the agreement. Her counsel has responded

33

on her behalf, admitting that she works for Ultimate in three states in which
she worked for ADP—Alaska, Oregon, and Washington—in violation of the non-
compete. Despite the restricted scope of the RCA, it nonetheless appears that
ADP has shown its likelihood of success on the merits.
2. Irreparable Harm
Harm is considered “irreparable” if it is not redressable by money
damages later, in the ordinary course of litigation. Instant Air Freight Co. v. C.F.
Air Freight, Inc., 882 F.2d 797, 801 (3d Cir. 1989) (citing Sampson v. Murray,
415 U.S. 61, 90 (1964)). ADP has the burden of proving a “clear showing of
immediate irreparable harm” absent injunctive relief. ECRI v. McGraw-Hill Inc.,
809 F.2d 223, 225 (3d Cir. 1987); see also Winter, 555 U.S. at 21 (holding it
was error to water down the irreparable harm requirement from “likelihood” to
“possibility.” even where likelihood of success was strong).
ADP argues that the irreparable harm it will suffer is the loss of existing
and prospective clients, employees, marketing partners, confidential and
proprietary information, and customer goodwill. Courts in the Third Circuit
and this District have had no difficulty in finding that the loss of business
opportunities and goodwill constitutes irreparable harm. Likewise. New Jersey
courts recognize that “the diversion of a company’s customers may. . .
constitute irreparable harm . .. . [T]his is so because the extent of the injury to
the business as a result of this type of conduct cannot be readily ascertained,
and as such, does not lend itself to a straightforward calculation of money
damages.” Fluorarnics, Inc. v. Trueba, No, 408-05, 2005 WL 3455185 at *8 (N.J.
Super. Ct. Ch. Div. Dec. 16, 2005) (citation omitted). Improper use of trade
secrets constitutes irreparable harm. See U.S. Food Serv., Inc. v. Raad, 2006
WL 1029653 at *6 (N.J. Super. Ch. Div. Apr. 12, 2006) at *7 (“Damages will not
be an adequate remedy when the competitor has obtained the secrets. The cat
is out of the bag and there is no way of knowing to what extent their use has
caused damage or loss.”).

34

At a minimum, there is overlap between ADP and Ultimate’s lines of
business. UltiPro and WorkForce Now are overlapping products; Ultimate is a
direct competitor of ADP; and Pittman works in her former ADP territory.
Together these facts indicate that ADP has made a clear showing that Pittman’s
behavior establishes a strong likelihood of irreparable harm to ADP that is
independent of competitive harm. Such harm consists of potential misuse of
confidential information, loss of business opportunities, and impairment of
business goodwill. ADP has demonstrated that its injuries cannot be redressed
post hoc by money damages. This prong therefore favors a preliminary
injunction to prevent irreparable harm.
3. Balancing the Equities and the Public Interest
The final two prongs, balancing of the harms and the interest of the
public, require little additional discussion. They weigh in favor of granting
injunctive relief.
No doubt enforcement of the RCA will cause Pittman some countervailing
hardship. But that alleged hardship—requiring her to adhere to the RCA—is
neither precisely established nor unduly burdensome. For now, she may not
compete with ADP in two states. She may not solicit ADP’s actual or
prospective clients with which she had substantial dealings, or of which she
gained knowledge, while at ADP. She may continue to do everything short of
that (provided that her conduct does not otherwise violate the RCA). After a
year has passed, Pittman may continue working for Ultimate in the fullest
capacity. She may not disclose or exploit confidential information. The
opportunities open to Pittman remain substantial.
The public interest, for the reasons stated above, is a neutral factor.
Balancing the four relevant factors, I find that a preliminary injunction is
well justified. Accordingly, Pittman is for a period of twelve months enjoined
from: (1) directly or indirectly soliciting ADP’s actual clients with whom she
dealt substantially while at ADP or of whose identity she learned during her
employment at ADP; and (2) directly or indirectly soliciting ADP’s prospective

ao

clients of whose identity she learned during her employment at ADP. In line
with the RCA, the non-competition, non-solicitation, and non-interference
provisions shall be enforced for twelve months following Pittman’s severance
from ADP on June 14, 2019, except that the RCA’s tolling provision shall also
be enforced.!4

Vv. CONCLUSION
For the foregoing reasons, ADP’s motion for a preliminary injunction is
GRANTED.
Pursuant to the terms of the RCA, I will grant ADP preliminary injunctive
relief. Pittman shall be restrained, for a period of one year after the date of
entry of this preliminary injunction, from violating the agreements to the extent
stated above.
An appropriate Order granting ADP’s motion follows. Within seven days.
the parties shall submit an agreed form of preliminary injunction, which shall
specify the relief granted to implement the above rulings, and shall propose an
amount for the bond, which shall be posted within 15 days. See Fed. R. Civ. P.
65(c) (providing that this Court “may issue a preliminary injunction ... only if
the movant gives security in an amount that the court considers proper to pay
the costs and damages sustained by any party found to have been wrongfully
enjoined”).

14 The RCA’s tolling provision provides that:
The restricted time periods in paragraphs three (3) through six (6) above
shall be tolied during any time period that I am in violation of such
covenants, as determined by a court of competent jurisdiction, so that
ADP may realize the full benefit of its bargain. This tolling shall include
any time period during which litigation is pending, but during which I
have continued to violate such protective covenants and a court has
declined to enjoin such conduct or I have failed to comply with any such
injunction.
(DE 3-8)

36

Dated: October 18, 2019

ka {
Hon. Kevin McNulty
United States District Judge

37

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10266986. Public record. Not legal advice.