# ECOSAVE AUTOMATION, INC. v. DELAWARE VALLEY AUTOMATION, LLC

> District Court, E.D. Pennsylvania · May 19, 2021

URL: https://www.frixlaw.com/law-library/cases/10401032

## Case

- **Court:** District Court, E.D. Pennsylvania
- **Decided:** May 19, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
ECOSAVE AUTOMATION, INC., et al,

Plaintiffs,

v. CIVIL ACTION
NO. 20-5564
DELAWARE VALLEY AUTOMATION, LLC, et
al,

Defendants.

MEMORANDUM OPINION

Schmehl, J. /s/ JLS May 19, 2021

I. INTRODUCTION
Before the Court is the motion for preliminary injunction of Plaintiffs, Ecosave
Automation, Inc., Ecosave, Inc., and Ecosave Holdings, Inc. Defendants are Delaware
Valley Automation, LLC (“DVA”), Energy Transfer Solutions, LLC (“ETS”), Michael
Haggerty, Jr., President of ETS, Matthew Dugan, and thirteen individual defendants, all of
whom recently left the employ of Ecosave Automation to take new roles with DVA. On
November 6, 2020, Plaintiffs filed a Complaint in this matter, as well as a Motion for
Temporary Restraining Order and Motion for Preliminary Injunction. On November 23,
2020, this Court granted Plaintiffs’ temporary restraining order, and on January 7, 2021,
Plaintiffs filed an Amended Complaint.
Presently before the Court is Plaintiffs’ Motion for Preliminary Injunction. Based
upon the parties’ submissions and testimony elicited at the evidentiary hearing held in this
matter, injunctive relief if not warranted and this motion will be denied.
II. BACKGROUND
A. Ecosave
Ecosave Automation, Inc. (“ESA”) is a wholly-owned subsidiary of
Ecosave, Inc. (“ESI”). P-22, ¶ 4. Ecosave Holdings, Inc. (“EHI”) is the parent company

of ESI and ESA. P-22, ¶ 5. ESI provides energy-efficiency solutions for businesses and
has two sides to its business, efficiency and automation. P-1, p. 6. ESI operates its
automation business through ESA. P-22, ¶¶ 1-4. ESA designs, sells and services
temperature control and automation systems. P-1, pp. 8-10. ESI was formed when it
acquired the stock of DVL Automation (“DVLA”) in 2013. Compl., ¶ 40; P-1, p. 12.
When ESI acquired DVLA, it retained all DVLA automation employees. P-1, p. 12.
ESA maintains that it uses proprietary standard operating procedures, tools and
methods which are unique from those of its competitors and which provide ESA with a
competitive advantage in the marketplace. Specifically, ESA lists the following as trade
secrets and confidential information: the identity of its customers and preferences of its

customers; the status of particular projects; design drawings; pricing-related information
such as labor and materials rates and the margins on particular jobs; the number of hours
required to complete a particular job; and customer-specific “clipping” files containing
sequences and methodologies for running particular buildings’ systems; and energy
saving strategies. ESA’s Proposed Findings of Fact, ¶ 36.
B. Defendants DVA, ETS and Haggarty
Delaware Valley Automation is a limited liability company that has three members:
Energy Transfer Solutions, Matthew Dugan and Joel Nace. P-248. Defendant Michael J.
Haggarty is President of ETS. 2/26/21 hrg, p. 125. DVA is engaged in the building
automation industry and is a competitor of ESA.
C. Individual Defendants

Defendant Matthew D. Dugan (“Dugan”) was President of ESA until his
termination in 2020. Dugan was originally an employee of DVLA and owned a quarter of
the company when it was acquired by ESI in 2013. 2/18/21 hrg, p. 32. In connection with
ESI’s acquisition of DVLA, Dugan received $243,810 in cash and $890,000 worth of
stock in ESI. 3/2/21 hrg, p. 74. Dugan signed an Employment Agreement with ESI on
July 16, 2013. P-10. This agreement committed him to work for three years with ESI. Id.
The agreement did not include a noncompetition restriction, and there was also no
prohibition against him doing business with any customer or prospective customer of
Plaintiffs. Id. The agreement did include a two-year non-solicitation clause which
restricted Dugan from directly or indirectly soliciting any Ecosave customer (identified as

having done business with Plaintiffs in the 12 months preceding Dugan's termination) or
prospective customer (solicited or identified as a prospect and with whom Dugan actually
engaged during his employment). Id. at section 5.1(a)(i) and (ii). The non-solicitation
restriction contained a carve-out that expressly permits Dugan to solicit, directly and
indirectly, all customers and prospective customers with which or with whom Dugan
conducted business prior to his employment with ESA. Id. The agreement also includes
covenants not to a) solicit customers and prospective customers not to do business with
Plaintiffs; b) solicit existing suppliers, vendors, or agents of Plaintiffs to terminate or take
any action that would "reasonably be expected to negatively affect" the relationship with
Plaintiffs; and (c) solicit employees or consultants to terminate their employment or
consulting relationship with Plaintiffs. Id., at section 5.1(a) (iii), (iv) and (v). Dugan
became a shareholder in DVA and serves as its Chief Executive Officer. P-351,¶ 4h.
Defendant Joel C. Nace was ESA’s Sales Manager. He began his relationship

with ESA through its predecessor DVLA on September 5, 2000. Nace resigned his
employment with ESA on October 16, 2020, and became a shareholder in and President
of DVA. 3/5/21 hrg, p. 14. Defendant Andrew Warwick was a Project Manager for ESA
until his resignation on October 16, 2020. P-321. Warwick is now a Project Manager for
DVA. P-68, ¶ 5. Defendant John K. Carey was an Engineering Manager for ESA until his
resignation on October 16, 2020, and is now employed by DVA as an Engineering
Manager. P-55, ¶ 5. Defendant John A. Crane was a Sales Engineer for ESA until his
resignation on October 16, 2020 and is now employed by DVA as a Sales Engineer. P-56,
¶ 5. Defendant Harry J. Irrgang, Jr. was a Senior Project Manager for ESA until his
resignation on October 16, 2020, and is now employed by DVA as a Senior Project

Manager. P-149.
Defendant Lyle J. Gmoser was a Sales Engineer, Project Executive and Account
Salesman for ESA until his resignation on October 16, 2020. Gmoser is now employed
by DVA as an Account Executive. P-61, ¶ 5. Defendant Christian Sweeney was ESA’s
Network Operations Center Manager until his resignation on October 16, 2020, and he is
now employed by DVA as Network Operations Center Manager. P-66, ¶ 5. Defendant
Howard Weitzner was ESA’s Design Engineer until his lay off from ESA in September
of 2020. P-23, ¶ 29. Weitzner is now employed by DVA as a Project Engineer. P-69, ¶ 5.
Defendant Matthew Davis was ESA’s Chief Estimator until his resignation on October
16, 2020, and he is now employed by DVA as Chief Estimator. P-58, ¶ 5. Defendant
William Van Ess was a Service Technician for ESA until his retirement on October 16,
2020. Van Ess briefly accepted employment with DVA, but is now retired. P-67, ¶ 5.
Defendant Andrew J. Gilbert was an Operations Technician for ESA until his resignation

on October 16, 2020 and is now employed by DVA as a Control Technician. P-60, ¶ 5.
Defendant Joao A. Leonardo was a Service Technician for ESA until his resignation on
October 16, 2020 and is now employed by DVA as a Controls Technician. P-64, ¶ 5.
Defendant Nick Daniels was a Field Technician for ESA until his resignation on October
16, 2020 and is now employed by DVA as a Technician. P-57, ¶ 5.
Daniels, Davis, Gilbert and Weitzner each allegedly entered into contracts upon
their hire with ESA that included a limited covenant not to compete during employment
and for a period of six (6) months following the conclusion of same; non-solicitation
clauses applicable during employment and for a period of twelve (12) months following
the conclusion of same; and confidentiality clauses. P-15, ¶¶ 8, 12; P-12, ¶¶ 8, 12; P-13,

¶¶ 8, 12, P-14, ¶¶ 8, 12. Davis, Gilbert, Daniels and Weitzner are not engaged in sales on
behalf of DVA, and no member of DVA’s sales team has a non-solicitation agreement
with ESA. 3/2/21 hrg, pp. 55-56.
D. Formation of Delaware Valley Automation
It is undisputed that Dugan and Nace began talks with Haggarty and ETS sometime
in mid to late 2020 about forming a new company. As this new company would be doing
the exact same type of work as ESA, it is inevitable that this company would be a
competitor of ESA. Dugan approached ETS’ Goodstein and Haggarty about such a start-
up company in August of 2020. 2/26/21 hrg, pp. 49-50. Dugan, Goodstein and Haggarty
had multiple meetings and conversations about a potential new company throughout
August and September of 2020. P-153; P-154; P-250; P-251; P-254. The parties
discussed Dugan’s non solicitation agreement prior to forming DVA, and Haggarty
testified that he knew Dugan “would not be able to solicit.” 2/29/21 hrg, pp. 51, 149-150.

On August 30, 2020, Dugan sent Goodstein a document that he had developed
with Nace. P-152. ESA refers to this document as a business plan, while DVA states that
it is merely a marketing document. This document stated “Ecosave/DVLA team-
members become Delaware Valley Automation.” P-152. The document references 18
people being “transferred” to DVA from ESA and describes DVA’s target customers as
those “with service contracts held with 30 day cancellation clause.” P-152. The document
also identified specific target customers, all of which were ESA customers. P-152. The
plan also referenced that ESA’s ALC license was set to expire in October of 2020. P-152.
Dugan and Nace believed that because ESA’s ALC license was set to lapse, DVA would
be able to acquire such a license, which Goodstein admitted made DVA a more attractive

business. 2/28/21 hrg, pp. 74-76, 79. There is no real dispute that DVA contacted
numerous ESA customers in the days and weeks following the departing employees’
resignations, and it is clear that DVA and the departing employees wanted to pick up as
DVA where they had left off when they departed ESA.
E. The Departing Employees and the Mass Resignation
In late summer of 2020, Nace approached numerous ESA employees to let them
know that he was looking to leave ESA and start a new company. He stated that this was
done to “save” ESA’s employees, as he alleged poor management, salary cuts, and
reduced commission payments. 3/2/21 hrg, p. 70. ESA was having financial difficulties,
as evidenced by its financial statements for 2016 through 2019. Defs’ Exhs 6 and 7.
Further, in the summer of 2020, ESA informed sales personnel that it would not pay them
commissions due on sales they had made over the past several years, and it was
restructuring its sales commission to reduce compensation to personnel by 33%. 3/5/21

hrg, p. 3, Defs’ Exh. D at 19.
Nace and Dugan had multiple meetings throughout the summer and fall of 2020
with the departing employees. P-104, P-105, P-107, P-109, P-112, P-155. Nace also
assisted in coordinating the resignation of the departing employees, and on October 15,
2020, he sent an email to all departing employees with instructions regarding how to
handle their resignations from ESA, including a sample resignation letter. P-106.
Crane also emailed all departing employees that same day, instructing them to
back up their work phones to their iCloud that evening, so that “when you start your new
phone up you will be able to log into your icloud and download your latest icloud
backup.” P-106. Upon resigning, some of the departing employees returned their ESA

cell phones without unlocking them or providing password information and some
returned them wiped clean of data. P-21, ¶ 9; 2/19/21 hrg, p. 72. None of the departing
employees provided ESA with information to access their Cloud storage accounts. P-21,
¶ 13, 2/19/21 hrg, p. 64.
When DVA extended offers of employment, it instructed all future employees not
to bring any of their former employer’s documents or information with them. 2/26/21
hrg, p. 151. Then prior to starting employment at DVA, all prospective employees were
again told not to bring any ESA documents or information with them to DVA. Id., p. 57.
Nick Clift testified that no DVA employee had access to Ecosave’s network after October
16, 2020. 2/26/21 hrg, pp. 5-9.
In October of 2020, the departing employees began compiling customer
information files for ESA customers in folders labelled “Covid 19.” P-21, ¶ 17-21. It is

undisputed that the contents of these files were not limited to the subject of Covid-19.
Further, Irrgang, Crane, Nace and Gmoser attempted to email these Covid-19 files to
ESA’s customers. P-21, ¶¶ 17, 21; P-158; P-219; P-1, 32. When some of the emails failed
to send due to the size of the attachment, the departing employees made arrangements to
drop USB sticks that contained these Covid-19 files off at the customers’ locations.
3/2/21 hrg, p. 159. The departing employees then attempted to delete the Covid-19 files
from ESA’s system. P-21, ¶¶ 22-23; 12/2/20 hrg, pp. 32-33. After the departing
employees resigned from ESA, they made efforts to obtain the Covid-19 files back from
the ESA customers to whom they had been provided.
Some of the departing employees made statements that may have misled some

ESA customers into believing that ESA was no longer in business. P-51; P-134; P-291;
P-293. Further, Nace had clearly implied to some customers that DVA was a spinoff of
ESA. P-50.
Nace communicated with ESA’s clients after the mass resignation and informed
them that DVA’s ownership “includes our CEO Matt Dugan.” P-50. However, there was
no evidence presented that Dugan knew these emails were being sent, let alone
participated in drafting or sending them. Nace specifically testified that Dugan was not
involved in the drafting of such emails and that he did not tell Dugan about them. 3/5/21
hrg, p. 10.
III. PROCEDURAL HISTORY
On November 9, 2020, ESA filed suit against Defendants, bringing the
following claims: (1) Breach of contract against Dugan, relating to his employment

contract with Ecosave; (2) Breach of contract against Daniels, Davis, Gilbert and
Weitzner relating to their alleged employment contracts with Ecosave; (3) Breach of
contract against Warwick relating to his alleged employment contract with Ecosave; (4)
Breach of fiduciary duty of loyalty against Nace, Gmoser, Van Ess, Davis, Irrgang,
Warwick, Crane and Sweeney; (5) Aiding and abetting breaches of duty of loyalty
against DVA, Dugan, Nace, ETS and Haggarty; (6) Tortious interference with contractual
and business relationships against all Defendants; (7) Tortious interference with
contractual relations with employees against DVA, Dugan, Nace, ETS and Haggarty; (8)
Defend Trade Secrets Act claim against DVA, Dugan and the individual defendants; (9)
Pennsylvania Uniform Trade Secret Act claim against DVA, Dugan and the individual

defendants; (10) Computer Fraud and Abuse Act claim against Nace, Warwick, Crane,
Gmoser and Sweeney; (11) Conversion of business information against DVA, Dugan and
the individual defendants; (12) Unfair competition against all Defendants; (13) Civil
conspiracy against all Defendants; and (14) Unjust enrichment against all Defendants.
ESA moved for injunctive relief, and on November 23, 2020, after a telephone
hearing, the Court granted the majority of its requested relief in the form of a temporary
restraining order. Specifically, the Court ordered Weitzner, Gilbert, Davis and Daniels to
cease all activities on behalf of DVA, ETS or any other entity seeking to engage in
competition with ESA, ordered all Defendants to cease soliciting or engaging in business
activities with ESA’s customers, prospects, employees, vendors, and other business
partners, ordered all Defendants to cease making disparaging statements or
misrepresentations about ESA, as well as about DVA’s relationship to ESA and the
former employees’ employment status with ESA, ordered all Defendants to return to ESA

all of its confidential information and trade secrets and ordered all Defendants to not
disclose ESA’s confidential information and trade secrets to any third party or use such
information for any purpose. ECF No. 20.
IV. LEGAL STANDARD
“A plaintiff seeking a preliminary injunction must establish that he is likely to
succeed on the merits, that he is likely to suffer irreparable harm in the absence of
preliminary relief, that the balance of equities tips in his favor, and that an injunction is in
the public interest.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). The
“failure to establish any element . . . renders a preliminary injunction inappropriate.”
NutraSweet Co. v. Vit-Mar Enters., Inc., 176 F.3d 151, 153 (3d Cir. 1999). The movant

bears the burden of showing that these four factors weigh in favor of granting the
injunction. See Opticians Ass’n of Am. v. Indep. Opticians of Am., 920 F.2d 187, 192 (3d
Cir. 1990). Plaintiffs must prove the first two factors (likelihood of success and risk of
immediate and irreparable harm), and if they should fail on either, their request must be
denied. Reilly v. City of Harrisburg, 858 F.3d 173 (3d Cir. 2017).
A likelihood of success on the merits “requires a showing significantly better than
negligible but not necessarily more likely than not.” Reilly, 858 F.3d at 179. “To establish
a reasonable probability of success on the merits, the moving party must produce
sufficient evidence to satisfy the essential elements of the underlying cause of action. See
Punnett v. Carter, 621 F.2d 578, 582–83 (3d Cir. 1980); McCahon v. Pa. Tpk. Comm’n,
491 F. Supp. 2d 522, 527 (M.D. Pa. 2007). In determining whether success is likely, the
Court must look to the legal principles controlling the claim and the potential defenses
available to the opposing party. See BP Chems. Ltd. v. Formosa Chem. & Fibre Corp.,

229 F.3d 254, 264 (3d Cir.2000).
In addition, a “plaintiff seeking a preliminary injunction must make a “clear
showing of immediate irreparable injury.” Cont’l Grp., Inc. v. Amoco Chems. Corp., 614
F.2d 351, 358 (3d Cir. 1980) (citation omitted). The injury must constitute “potential
harm which cannot be redressed by a legal or an equitable remedy following a trial.”
Acierno v. New Castle Cnty., 40 F.3d 645, 653 (3d Cir. 1994) (internal quotation marks
and citation omitted). The preliminary injunction “must be the only way of protecting the
plaintiff from harm.” Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 801
(3d Cir. 1989).
The risk of harm must not only be irreparable but also imminent. Hohe v. Casey,

868 F.2d 69, 72 (3d Cir. 1989) (“establishing a risk of irreparable harm is not enough. A
plaintiff has the burden of proving a clear showing of immediate irreparable injury”);
ECRI v. McGraw–Hill, Inc., 809 F.2d 223, 226 (3d Cir.1987); Cont’l Grp., Inc., 614 F.2d
at 359). In order to be imminent, the injury cannot be remote or speculative; it must be
poised to occur before the District Court can hold a trial on the merits. See BP Chems.
Ltd. v. Formosa Chem. & Fibre Corp., 229 F.3d 254, 263-64 (3d Cir. 2000).
V. DISCUSSION
ESA has set forth numerous claims in this matter and I will address each
separately below. As will be discussed, ESA did not meet its burden of proving the
factors necessary for injunctive relief. Accordingly, its motion for a preliminary
injunction must be denied.
A. Trade Secrets

ESA brings trade secrets claims under the Pennsylvania Uniform Trade Secrets
Act (“PUTSA”) and the Defend Trade Secrets Act (“DTSA”). Under the PUTSA, the
elements of a misappropriation of trade secrets claim are: “‘(1) the existence of a trade
secret; (2) communication of the trade secret pursuant to a confidential relationship; (3)
use of the trade secret, in violation of that confidence; and (4) harm to the plaintiff.’”
Accurso v. Infra-Red Servs., Inc., 2018 WL 924985, at *7-8 (E.D. Pa. Feb. 16, 2018)
(quoting Moore v. Kulicke & Soffa Indus., Inc., 318 F. 3d 561, 566 (3d Cir. 2003)). To
state a claim under the DTSA, a plaintiff must show “(1) that they own a trade secret and
(2) that the defendant misappropriated the trade secret.” Herley Industries, Inc. v. R
Cubed Engineering, LLC, 2021 WL 229322 (E.D. Pa. 2021). Both the DTSA and the

PUTSA define “trade secret” as information that: “(a) the owner has taken reasonable
means to keep secret; (b) derives independent economic value, actual or potential, from
being kept secret; (c) is not readily ascertainable by proper means; and (d) others who
cannot readily access it would obtain economic value from its disclosure or use.” Teva
Pharm. USA, Inc. v. Sandhu, 291 F.Supp.3d 659, 675 (E.D. Pa. 2018) (citing 18 U.S.C. §
1839(3); 12 Pa. Stat. § 5302)).
To prevail on a misappropriation of trade secrets claim, ESA must first establish the
existence of a trade secret. See Christopher M’s Hand Poured Fudge v. Hennon, 699
A.2d 1272, 1275 (Pa. Super. 1997). The alleged trade secret must be particular to ESA
and not to the industry itself and must not be available through an independent source
such as customers. National Risk Mgmt, Inc., v. Bramwell, 819 F.Supp. 417, 429 (E.D.
Pa., 1993).
There is clearly conflicting testimony as to whether trade secrets exist in this matter.

ESA claims that its “BAS control sequences, proprietary design and build processes, the
intimate and long-term knowledge developed as to each of ESA’s customer’s buildings
(i.e., how they operate, what they need and how that translates into a business
opportunity), and ESA’s costs, including materials, labor rates, overhead, and pricing
strategies, all qualify as trade secrets.” Ecosave Proposed Concl. of Law, ¶ 17. However,
Defendants offered testimony from Goodstein, Haggarty, Dugan, and Nace that the BAS
industry is governed by industry standards and there are no trade secrets in the BAS
business. 2/26/21 hrg, p. 53 (Goodstein); 2/26/21 hrg, pp. 141-142 (Haggarty); 3/2/21
hrg, pp. 46-47 (Dugan); 3/2/21 hrg, p. 167 (Nace). Further, there was testimony and
documentary evidence presented that program files, as-built drawings, sequence of

operations, submittal documentation and software are definitely customer records that are
owned by the customer where the system is installed. 2/26/21 hrg, pp. 141-142, Defs’
Exhs. 28, 30 and 31.
There was also conflicting testimony regarding “clipping files,” which Nick Clift,
IT Director at ESA, testified were the “secret sauce” of ESA’s business that he, Nace and
Dugan had several discussions about trying to protect from competitors. 2/26/21 hrg, p.
29. However, Nace testified that clipping files are not secret at all; rather, they were the
“system backup that people use, technicians used, engineers used across the industry on a
daily basis.” 3/2/21 hrg, pp. 161, 167.
ESA had the burden to present sufficient evidence that it even possessed trade
secrets worthy of protecting. It failed to meet that burden. I cannot find that ESA has a
likelihood of proving any existence of trade secrets in this matter due to the amount of
conflicting evidence on this issue; therefore, I cannot conclude that there is a likelihood

of success on the merits of this claim.
Assuming, arguendo, that ESA did possess trade secrets worthy of protecting, ESA
cannot produce sufficient evidence that Defendants misappropriated said trade secrets.
First, ESA did not provide evidence that any defendant had taken any of ESA’s
documents with him when he left ESA. There is evidence that the departing employees
looked at ESA’s files, but no evidence has been presented that any files were copied by
the departing employees. Further, ESA’s IT Director admitted that no DVA employee
had access to ESA’s network after October 16, 2020. 2/26/21 hrg, pp. 5-9. ESA
performed an analysis of the company laptops of Nace, Gmoser and Crane and said
analysis produced no evidence of a single confidential record of ESA taken by Nace,

Gmoser or Crane. There simply was no evidence presented that Defendants are in
possession of ESA’s alleged trade secrets. At most, ESA presented evidence that Nace,
Gmoser and Crane accessed ESA files while employed by ESA, which is hardly
improper.
ESA then argues that Defendants sent customer records to certain customers while
Defendants were still employed by ESA, purportedly for Defendants to access and use
once they were no longer with ESA. There is no dispute that this occurred, as Defendants
admitted that they sent customer records to customers, as they believed that the records in
question were owned by the customers. ESA has failed to provide evidence that the
customer files that were sent to customers contained trade secrets that were not the
property of the customer to whom they were delivered. ESA did not present testimony
from an expert in the industry as to what is a trade secret and what is the property of the
customer. Also, ESA did not present any evidence that any defendant is currently in

possession of any of its trade secrets, nor did it present evidence that any defendant has
used or is currently using any of its trade secrets. Trade secrets “will not be protected by
the extraordinary remedy of injunction on mere suspicion or apprehension of injury.
There must be a substantial threat of impending injury before an injunction will issue.”
National Risk Mgmt, Inc. v. Bramwell, 819 F.Supp. 417, 429, 432 (E.D. Pa. 1993).
I find that there is no evidence of misappropriation of a trade secret, even assuming
trade secrets existed in this matter. Therefore, there is not a reasonable likelihood of
success on the merits of ESA’s claims under the PUTPA and the DTSA. Accordingly,
injunctive relief is denied as to those claims. As ESA has failed one of the first two
factors for injunctive relief on its trade secrets claim, I do not need to address the other
factors.1

B. Breach of Contract
Under Pennsylvania law, to prevail on a claim for breach of contract, a plaintiff
must prove: “‘(1) the existence of a contract, including its essential terms[;] (2) a breach
of the contract; and[ ] (3) resultant damages.’” Liberty Fencing Club LLC v. Fernandez-
Prada, 2017 WL 3008758, at *7 (E.D. Pa. July 14, 2017) (quoting Meyer, Darragh,

1 If I were to continue the analysis of the trade secrets claims I would find that ESA has failed to prove
immediate and irreparable harm, as it failed to present evidence that any Defendant is currently using or
threatening to use any trade secrets or confidential information. Further, Defendants’ prior access to ESA
laptops does not present a threat of immediate and irreparable harm, as it had occurred in the past.
Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C.,137 A.3d
1247, 1258 (Pa. 2016) (citations omitted)). A restrictive covenant is enforceable when it
is: a) ancillary to an employment relationship between the parties to the covenant; b)
supported by adequate consideration; c) reasonably limited in duration and geographic

scope; and d) reasonably necessary to protect the employer’s interests. Volunteer
Fireman’s Ins. Servs., Inc. v. Cigna Prop. and Cas. Ins. Agency, 693 A.2d 1330, 1337
(Pa. Super 1997).
First, there are numerous individual defendants in this case that had no restrictive
covenant of any sort with ESA; therefore, these defendants cannot be liable for breach of
contract. Those individuals are Defendants Nace, Carey, Irrgang, Van Ess, Leonardo,
Crane, Gmoser and Sweeney.2 ESA has presented no evidence of any sort of non-
compete agreements as to those defendants. Accordingly, the analysis below pertains
only to Defendants Dugan, Daniels, Davis, Gilbert, Weitzner, and Warwick.
First, I will analyze the situations involving Daniels, Davis, Gilbert, Weitzner and

Warwick, five of the departing employees with alleged non-compete agreements. I find
that these defendants did not breach any agreement that they may have entered with ESA
and injunctive relief is denied as to those defendants. It is undisputed that Daniels, Gilbert

2 Marcelo Rouco testified that it was his understanding that both Gmoser and Nace had entered into
confidentiality agreements as well as non-competes when they were hired by DVLA in 2000 and 2004,
respectively. 12/2/20 hrg, p. 15. Moreover, offer letters were produced from DVLA to both Nace and
Gmoser reflecting that defendants would be asked to enter non-compete agreements at the completion of
their internships. P-6 and P-7. Despite these offer letters stating “the nature of this position allows you
access to confidential information, therefore, you will be required to sign a standard non-compete
agreement upon completion of your internship,” no executed agreements as to Nace and Gmoser were
produced. Id. Further, Nace testified that he did not have any type of non-solicitation or non-compete
agreement with ESA. 3/2/21 hrg, p. 138. Accordingly, I find that these two individual defendants did not
have valid non-competes with ESA. The mere fact that Mr. Rouco believed these defendants had non-
compete agreements does not create a valid contract.
and Weitzner executed offer letters upon commencing their employment with ESA that
contained standard terms and conditions.3 These terms and conditions included covenants
not to compete, not to solicit employees or clients, and not to use or disclose confidential
information. Davis was sent the same offer letter and never returned an executed copy of

it, although he did accept the job offer via email and commence employment with ESA.
Warwick executed a Confidentiality Agreement when he began employment with DVLA,
and ESA argues that this contract was assigned to ESA when it purchased DVLA.
Assuming, arguendo, that Daniels, Davis, Gilbert and Warwick all have validly executed
confidentiality agreements with ESA, ESA still cannot prove that it will likely succeed on
the merits of a breach of contract claim as to these individuals.
I find no evidence that Daniels, Davis, Gilbert, Weitzner or Warwick breached the
terms of any post-employment restrictive covenant that they may have entered. ESA
presented evidence that none of these defendants met with ESA to review their laptop and
phone upon their resignation, and that some of them deleted emails from their ESA email

accounts prior to their resignation. This evidence is minor and clearly insufficient to meet
ESA’s burden that it will likely succeed on breach of contract claims as to these
individual defendants. 4
ESA also presented evidence that employees contacted numerous ESA customers in
the days and weeks after their resignations in an attempt to divert business from ESA.

3 There is some dispute as to whether these agreements were properly entered into by these Defendants
with ESA or with another related Ecosave entity, but for purposes of the instant analysis, I will assume
these agreements were entered into between the departing employees and ESA.

4 Even if ESA could prove a likelihood of success on the merits on its breach of contract claims against
Daniels, Davis, Gilbert, Weitzner and Warwick, it cannot prove that there is a risk of immediate irreparable
harm if these defendants are not enjoined. Any conduct of the five defendants in question that may have
breached their non-competes occurred in the past and can be compensated with money damages.
Accordingly, ESA also fails the second factor for the grant of injunctive relief.
Pls’ Proposed Finding of Fact, ¶¶ 319-320. However, a review of the evidence shows that
none of these customer contacts were made by the individuals with non-competes, Davis,
Gilbert, Daniels, Weitzner or Warwick. Further, these defendants are not involved in
sales and did not attempt to solicit any ESA customers. Gilbert and Daniels are field

techs, who have no sales responsibilities. Weitzner is a draftsman who lives and works in
New York and has no customer contact of any kind. Davis is an estimator who also does
not have customer contacts. Warwick is a project manager and there has been no
evidence presented that he has customer contacts. Accordingly, there was no breach by
these defendants.
As I have found that ESA is unable to establish a likelihood of success on the
merits, I do not need to go further and analyze the additional factors for injunctive relief.
Accordingly, ESA’s request for injunctive relief due to the alleged breach of contract of
Daniels, Davis, Gilbert, Weitzner and Warwick is denied.
Next, I will address the non-solicitation agreement entered by Defendant Dugan.

Defendants do not dispute the fact that Dugan has valid, enforceable, non-solicitation
agreement with ESA which restricts him from directly or indirectly soliciting any ESA
customer or prospective customer. P-10. There is also no dispute that this agreement
contains a carve-out that allows Dugan to solicit, directly or indirectly, any customer or
prospective customer with whom Dugan did business prior to his employment with ESA.
P-10. ESA has presented no evidence that Dugan directly solicited any of its customers.
Rather, the issue here focuses on whether Dugan indirectly solicited ESA’s customers
when former ESA employees, now DVA employees, solicited said customers on behalf
of DVA. In essence, ESA is arguing that Dugan’s non-solicitation restriction is applicable
to DVA and all its employees because actions of DVA employees would constitute
indirect solicitation by Dugan.
There is no caselaw directly on point regarding the indirect solicitation issue.
However, several state court cases are instructive in this matter. Custom Building

Systems, LLC v. Nipple, 2017 WL 4949001 (Pa. Super. Oct. 21, 2017), is cited by
Defendants in support of their position that Dugan did not indirectly solicit ESA
customers. In that case, Defendant Ron Nipple was fired from his job managing a
company. He then formed his own competitor company and hired a number of the prior
employer’s employees, including some sales personnel who did not have non-solicitation
restrictions. Like Dugan, Nipple had a non-solicitation agreement, but not a non-compete.
The sales personnel Nipple hired from his ex-employer then successfully went after the
ex-employer’s customers. Nipple and his company were sued for breach of his non-
solicitation agreement on the grounds that he owned and managed the business, and
everything done was under his leadership. He was granted summary judgment by the trial

court, which concluded that none of the employees of the new company nor the entity
itself were prohibited in any way by the contract between Defendant Nipple and his
former employer. Custom Building Systems, LLC v. Nipple, 2017 WL 11020209 (C.P.
Snyder Dec. 30, 2016). The court noted that under such an argument, “[a]ny potential
employer of Mr. Nipple would be precluded from sales to the prohibited customers
simply by hiring Mr. Nipple regardless of his involvement with sales. This far exceeds
the contract’s limitations as written.” Id., at *3. On appeal, the Superior Court affirmed,
holding that:
… although Icon [the new company] made sales to prohibited customers
during the restricted covenant period, no facts of record indicate Mr.
Nipple was involved in sales to any of CBS’ customers; … non-
solicitation provision does not prohibit employees of Icon nor Icon itself
from contracting with CBS customers; to apply terms of non-solicitation
provision per [Icon’s] interpretation would effectively prohibit [Nipple]
from continuing his career in modular home industry in any capacity;
under [Icon’s] view, employer in modular home industry that hired Mr.
Nipple in any capacity would be unable to sell to prohibited customers
during the restricted period….

Custom Building Systems, LLC v. Nipple, 2017 WL 4949001, *5.
In response, Plaintiffs cite to Huntington Bancshares Inc. v. Burke, 2020 WL
6364755 (W.D. Pa. Oct. 29, 2020) for the proposition that “individuals may not use third
parties as puppets to avoid restrictive covenant obligations.” Docket No. 19, p. 2.
Burke, the employee-defendant in Huntington, was bound to post-employment
restrictions on his direct or indirect solicitation of his former employer’s customers and
employees. Burke was terminated from employment, then he and his father called on
Burke’s customers from Huntington (his former employer), told them of his termination,
and provided an explanation. When Burke eventually joined a new company, he
compiled lists of his Huntington customers and provided them to his new employer,
Alliant, which sent out email announcements regarding Burke’s new employment. Burke
also provided Alliant with the names of employees whom he thought “could [be]
entice[d] to leave” Huntington, which Alliant used to solicit those individuals for hire. Id.
Huntington sued Burke and Alliant, and after a hearing a preliminary injunction was
entered, as the judge found a substantial likelihood that Burke breached his covenants
with Huntington and Alliant tortiously interfered with Burke’s contractual obligations to
Huntington. Id. This was based on Burke having “directly and indirectly solicited his
customers” to join him at his new company, having “confidential and proprietary
information” of his prior employer in his possession well after his termination, and
having supplied information about Huntington’s customers and employees to Alliant that
it used to solicit them for employment and business opportunities competitive to
Huntington. Id. at *10.

I find the instant situation to be more factually similar to Custom Building Solutions
than to Huntingdon. In CBS, the former employee had a non-solicitation agreement with
CBS and was fired. His wife and son-in-law then created Icon, a competitor company.
Nipple had an office at Icon and Icon made sales to customers that were prohibited by
Nipple’s non-solicitation agreement. However, there were no facts to indicate that Nipple
was involved in sales to any of the restricted customers in any way. The record showed
that Nipple merely functioned in an advisory role, and there was no evidence offered that
his role exceeded an advisory capacity. The mere fact that Nipple had an office at Icon,
created the company, and his family worked there was insufficient to prove indirect
solicitation.

Huntingdon v. Bancshares is distinguishable from the instant set of facts. Although
it involved a former employee with a post-employment non-solicitation agreement, the
employee in question, was directly involved in soliciting his former employer’s
customers. Burke readily admitted that he spoke to most of his customers after he was
terminated by Huntingdon and that he “texted, called, email[ed] and/or personally met
with Huntingdon customers.” Id at *5. This type of solicitation is much more direct than
the actions of Nipple in the CBS case.
To find a former employee engaged in indirect solicitation of his former employer’s
customers, that employee must make specific acts of personal involvement in the
solicitation. This aligns with courts in some other jurisdictions. See PCRE v. Unger, 2010
WL 2364267 (Conn. Super. Apr. 30, 2010) (finding that a bar on indirect solicitation of
an individual’s prior employer’s employees did not prohibit the new employer itself from
soliciting and hiring those employees, so long as the ex-employee did not participate in

those efforts); see also Dominion Enters. v. Dataium, LLC, 2013 WL 6858266 (Tenn.
App. Dec. 27, 2013) (finding no indirect solicitation when the new employer, but not the
ex-employee, solicited and hired other employees of plaintiff company where “the
employee merely had knowledge that a third party was soliciting other employees” and
“there was no evidence that the defendant arranged interviews or took other steps to
recruit plaintiff’s employees.”)
In the instant matter, ESA argues that Dugan engaged in indirect solicitation
because he started DVA and allowed DVA to solicit ESA customers. However, the
evidence of Dugan’s participation in DVA’s solicitation is minimal. Dugan testified that
he did not solicit any ESA employees to join DVA, did not solicit any ESA customers on

behalf of DVA, did not assist any DVA employee in soliciting ESA customers, did not
encourage any ESA customer not to do business with ESA and has no plans to do any
type of solicitation. 3/2/21 hrg, p. 71. Further, not one customer or employee has
offered testimony to contradict Dugan’s testimony. There is no evidence of Dugan’s
solicitation on behalf of DVA or his indirect solicitation through direction of his
employees.
ESA presented evidence of emails where DVA employees mentioned to others that
Dugan was now with DVA as the CEO. 3/2/21 hrg, p. 118. However, Dugan specifically

testified that he did not approve or have knowledge of those emails. 3/2/21 hrg, p. 118.
Further, Nace testified that Dugan was not involved in drafting any emails to customers
and that Nace did not tell Dugan about them. 3/5/21 hrg, p. 10. ESA failed to present any
evidence that Dugan personally assisted anyone else at DVA in soliciting ESA
customers. Accordingly, ESA failed to prove that Dugan indirectly solicited in violation

of his non-solicitation agreement. ESA does not have a likelihood of success on the
merits as to its breach of contract claim against Dugan either; therefore, a preliminary
injunction will not issue. As I find that ESA cannot establish a likelihood of success on
its breach of contract claims, I do not need to address the remaining factors in the
analysis for a preliminary injunction.
C. Tortious Interference
To set forth a claim for tortious interference with an existing or prospective contract
under Pennsylvania law, a plaintiff must demonstrate four elements: (1) the existence of a
contractual relationship or prospective contractual relationship between the plaintiff and
another party; (2) an intent on the part of the defendant to harm the plaintiff by interfering

with that contractual relationship or preventing the relationship from occurring; (3) the
absence of privilege or justification on the part of the defendant; and (4) the occasioning
of actual damage as a result of defendant's conduct. Synthes, Inc. v. Emerge Med., Inc.,
25 F. Supp. 3d 617, 727 (E.D. Pa. 2014).
Although there may be tortious interference with business relationships here, I do
find that ESA will not suffer immediate and irreparable injury if it is denied injunctive
relief as to its tortious interference claim. “Irreparable harm is injury that cannot
adequately be compensated by monetary relief.” Coventry First, LLC v. Ingrassia, 2005
WL 1625042, at *11 (E.D. Pa. July 11, 2005), quoting Analytic Recruiting, Inc. v.
Analytic Res., LLC, 156 F.Supp.2d 499, 519 (E.D.Pa.2001); see also Morton v. Beyer,
822 F.2d 364, 372 (3d Cir.1987). Defendants argue that all ESA’s alleged injuries can be
compensated through money damages, and I largely agree.
ESA presented extensive evidence that Defendants worked to divert business from

ESA by soliciting its customers after the mass resignation occurred. Pl’s Proposed
Findings of Fact ¶¶ 319, 320. Some existing customers left ESA and took their business
to DVA. The departing employees told customers that ESA was no longer involved in the
automation business, that ESA had become DVA and that all ESA’s employees left and
joined DVA. This is arguably interference with customer relationships and would
adversely impact ESA’s business and goodwill in the industry.
However, despite ESA presenting evidence of loss of goodwill and interference
with customer relationships, I note that this type of harm must still be immediate in order
to justify injunctive relief. Any loss of goodwill and/or interference with customer
relationships that occurred in this matter is now squarely in the past. ESA cannot prove

any immediate threat of harm to its reputation or customer relationships presently, almost
seven months after the mass resignation occurred. Any harm to its reputation or
relationships has already occurred and can properly be compensated for with monetary
damages if actionable. Simply put, a showing of past harm, without more, is insufficient
to justify the issuance of a present-day preliminary injunction. Ali v. FCI Allenwood,
2017 WL 3008545, at * 2 (M.D. Pa. July 14, 2017) (“A preliminary injunction cannot be
issued based on past harm,” but is instead intended “to prevent future irreparable harm.”)
(quoting Fisher v. Goord, 981 F. Supp. 140, 168 (W.D.N.Y. 1997)). Accordingly, ESA
cannot prove immediate irreparable harm under its tortious interference claim, and its
motion for injunctive relief is denied.
Similarly, as to ESA’s argument that DVA, Dugan, Nace, ETS and Haggarty
interfered with ESA’s contractual agreements with its employees, a

preliminary injunction will not issue because there has been no showing that ESA will
suffer immediate irreparable harm in the absence of such relief. To the degree that
Defendants interfered with ESA’s contracts by recruiting the departing employees away
from ESA, such conduct occurred entirely in the past. Any harm that ESA suffered, such
as the departing employees leaving its employment, has already occurred. ESA has not
put forth evidence that Defendants are currently interfering, or are an immediate threat to
interfere with, ESA’s employment contracts. Absent such a showing, injunctive relief
will be denied.
As I find that there is no threat of immediate irreparable harm as to ESA’s tortious
interference claims, I do not need to address the remaining factors of the test for

injunctive relief, and ESA’s motion for a preliminary injunction will be denied.
D. Unfair Competition
Unfair competition is the systematic inducing of employees to leave their present
employment and take work with another in order to cripple and destroy an integral part of
a business, or for the purpose of having the employees commit wrongs, such as disclosing
their former employer’s trade secrets or enticing away his customers, rather than to obtain
the services of particularly gifted or skilled employees. Ozburn-Hessey Logistics, LLC v.
721 Logistics, LLC, 13 F. Supp. 3d 465, 476 (E.D. Pa. 2014) (internal quotation marks
omitted) (citing Albee Homes, Inc. v. Caddie Homes, Inc., 417 Pa. 177, 207 A.2d 768,
771 (1965)).
Similar to the analysis above for ESA’s tortious interference claim, I find that
ESA cannot show that it will suffer immediate irreparable harm if an injunction is not

entered in this matter. Any unfair competition that may have occurred when ESA
employees left and went to work for DVA occurred in the past. There is no immediate
harm that may occur now, almost seven months after the employees’ departure. ESA can
be made whole through money damages if any unfair competition occurred. Therefore, I
do not need to proceed any further with the injunction analysis and ESA’s request for
injunctive relief is denied.
VI. CONCLUSION
For all of the above reasons, Ecosave’s claim for injunctive relief is denied.5

5 I note that despite the instant ruling, Defendant Dugan continues to be bound by the terms of his non-
solicitation agreement and must abide by its terms as written.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10401032. Public record. Not legal advice.