CHRISTOPHER C. CONNER, Chief Judge.
Presently before the court in the above-captioned matter are the motion (Doc. 63) for summary judgment by defendant and counterclaimant Wells Fargo Insurance Services, USA, Inc. ("Wells Fargo") and the motion (Doc. 66) for partial summary judgment by plaintiff and counterdefendant Darrell Diodato ("Diodato"), each pursuant to Federal Rule of Civil Procedure 56(a). These motions present manifold issues, several of which are nuanced and complex. For the reasons that follow, the court will grant in part and deny in part each motion.
Through summary adjudication the court may dispose of those claims that do not present a "genuine issue as to any material fact" and for which a jury trial would be an empty and unnecessary formality. See FED. R. CIV. P. 56(a). The
Darrell Diodato ("Diodato") was employed by Wells Fargo Insurance Services USA, Inc. ("Wells Fargo") and its predecessor entities for thirty-six years as an insurance producer. (Doc. 65 ¶ 3; Doc. 73 ¶ 3). In that role, Diodato serviced existing insurance business and originated new insurance business. (Doc. 65 ¶ 4; Doc. 73 ¶ 4). Wells Fargo paid Diodato an annual salary of approximately $230,000, provided benefits, and purportedly covered his overhead costs and business expenses. (Doc. 65 ¶¶ 5-8; Doc. 73 ¶¶ 5(a)). Diodato contends that he paid certain business expenses directly, without reimbursement, including: (1) contributions to support fundraising activities; (2) funds to entertain business contacts at annual meetings of the Bowling Proprietors Association of Pennsylvania ("BPAP") and the Bowling Proprietors Association of America ("BPAA"); (3) a $12,000 annual deduction from his gross commission revenue to account for costs relating to the annual endorsement of the BPAP; and (4) various amounts paid to maintain the goodwill of the two Wells Fargo account executives ("AEs") who supported him. (Doc. 73 ¶ 6).
Diodato specialized in brokering insurance for bowling alleys and family entertainment centers. (Doc. 65 ¶ 10; Doc. 73 ¶ 10). Diodato developed "numerous personal and business relationships with owners of family entertainment centers (including bowling centers)" and considers himself to be "the godfather" of the bowling alley insurance industry. (Doc. 65 ¶¶ 10-11; Doc. 73 ¶¶ 10-11). Diodato also developed relationships with the principals of four other entities who were insured as part of a captive insurance program: Caretti, Inc., Sun Motor Cars, Inc., United Drilling, Inc., and Meckley Limestone Products, Inc. (Doc. 73 ¶ 10). Throughout his employment, Diodato gained an encyclopedic knowledge of bowling center operators and their specific insurance needs and risk management issues. (Doc. 65 ¶ 14; Doc. 73 ¶ 14). Diodato testified that approximately seventy percent (70%) of the revenue he generated was derived from bowling center owners and operators. (Doc. 65 ¶ 15; Doc. 73 ¶ 15).
At the request of his supervisor, James Voltz ("Voltz"), Diodato executed the Wells Fargo Agreement Regarding Trade Secrets, Confidential Information, NonSolicitation, and Assignment of Inventions (the "TSA") subject to this litigation on December 17, 2009. (See Doc. 65 ¶ 18; Doc. 73 ¶ 18; see also Doc. 65-3, Diodato Dep. Ex. A at 1-3, July 3, 2013 ("Diodato Dep."). Diodato simultaneously executed the Wells Fargo Producer Plan ("Producer Plan"). (See Doc. 65 ¶ 19; see also Diodato Dep. Ex. E)). According to Diodato, Voltz
The TSA identifies the consideration supporting the agreement as follows: "continued employment by a Wells Fargo company ..., the ability to participate in a new compensation plan containing new and additional benefits which include, but are not limited to, a guaranteed draw and an increased commission percentage for new and net new revenue generated in 2010." (Diodato Dep. Ex. A at 1). The TSA also contains a confidentiality and non-disclosure provision. This provision expressly identifies the following information as falling within the ambit of protected trade secrets: "the names, address, and contact information for any of the Company's customers and prospective customers, as well as other personal or financial information relating to any customer or prospect." (Id.) The TSA further contains a non-solicitation provision, which provides, in pertinent part:
(Id. at 2). The TSA contains an integration clause acknowledging that the document constitutes the entire agreement between the parties and is a final expression of their collective intent. (Id. at 3). It explicitly states that Diodato's employment with Wells Fargo is "at will," and that the TSA does not alter or modify his employment status. (Id. at 3). The companion Producer Plan identifies the "TSA Consideration" as follows: "For the 2010 Plan year only (January 1, 2010, through December 31, 2010), Participant will receive the following consideration for signing the new TSA for [Wells Fargo]: Additional 1% on New Revenue and Additional 1% on Net New Revenue." (Id. Ex. E at 1). The Plan defines "Net New Revenue"
On April 27, 2011, Wells Fargo placed Diodato on administrative leave with pay, and on May 16, 2011, terminated his employment. (See Doc. 65 ¶¶ 37, 41; Doc. 73 ¶¶ 37(a), 41). Unsurprisingly, the parties offer drastically different accounts as to the reasons for Diodato's discipline and ultimate termination. Diodato alleges that the TSA and Producer Plan were never a condition of producer employment with Wells Fargo. He contends that these agreements were part of an elaborate scheme by Wells Fargo to end his employment and eliminate Diodato's access to his book of business. (Doc. 73 ¶ 18). According to Diodato, Voltz's end game was to increase profitability by shedding Diodato's salary while retaining revenues from his original book of business. (Id. ¶ 18(c)). The court notes that the only evidence supporting this version of events is Diodato's declaration. (See id. (citing Doc. 73-1, Diodato Dec. ¶¶ 18-24 ("Diodato Dec. II"))).
Contrarily, Wells Fargo asserts that Diodato brokered business without a properly executed brokerage agreement, solicited insurance business without a license, bound insurance coverage without the proper documentation, attempted to issue "dummy invoices", and instructed staff to disregard rules, all in violation of Wells Fargo's company policy. (Doc. 65 ¶ 27; Doc. 65-6, Voltz Dep. Ex. 40 July 12, 2013 ("Voltz Dep.") (formal disciplinary notice identifying concerns)). In a formal warning letter to Diodato, Voltz also asserts that Diodato disrupted sales meetings "with abrasive and angry comments." (Id.)
Wells Fargo identifies an April 2011 incident as the final trigger for its decision to terminate Diodato. (Doc. 65 ¶ 29). According to Wells Fargo, Diodato forged the signature of Sun Motor Cars' ("Sun") chief financial officer on a warranty form appended to Sun's insurance application, warranting that vehicles valued over $75,000 would be garaged overnight. (Id. ¶¶ 29-31). Diodato concedes that he signed the form as Sun's chief financial officer, but he claims that he simply sought to obtain a quote for Sun's insurance coverage. (See Doc. 73 ¶¶ 30-31). He flatly denies that his actions constitute "forgery," noting that Sun's officer ultimately signed the final application before coverage was bound. (See id.) The issue of the forged signature came to the surface when a luxury vehicle was stolen from Sun's outdoor lot in April of 2011. (Id. ¶ 33). The insurer denied coverage because Sun did not garage the vehicle as warranted. (Id. ¶¶ 30, 33). Wells Fargo eventually reimbursed Sun for the $82,107 loss in lieu of the booked insurance. (See id. ¶ 34). Wells Fargo thereafter placed Diodato on administrative leave. (Id. ¶ 37). Following an audit in which many of Diodato's accounts scored poorly,
Following Diodato's termination, Wells Fargo generated and distributed to its clientele approximately fifty three (53) insurance-related documents which identified Diodato as the producer on their respective accounts. (See Doc. 65 ¶ 48; Doc. 73 ¶ 48). Wells Fargo continued to run advertisements in Roller Skating International
In approximately July of 2011, Diodato began working with Christian Baker Company ("Christian Baker"), a competitor of Wells Fargo. (Doc. 67 ¶ 45; Doc. 77 ¶ 45). Diodato remained with Christian Baker from July of 2011 until "early 2013," when he began working for American Insurance Administrators, Inc. ("AIA"), another competitor of Wells Fargo. (See Doc. 67 ¶¶ 45-46; Doc. 77 ¶¶ 45-46). In his declaration, Diodato "denies that he solicited contacts that he previously managed at [Wells Fargo]" but also "freely acknowledges that he maintained long-standing personal connections with many of his contacts and regards many of these persons as personal friends." (Doc. 67 ¶¶ 47-48; Doc. 77 ¶¶ 47-48). Diodato admits that many of the clients he serviced at Wells Fargo "left or removed their accounts from [Wells Fargo] in the period following [his] termination." (Doc. 67 ¶ 51; Doc. 77 ¶ 51). He also acknowledges that some of these customers asked him how to transfer their business from Wells Fargo to another broker. (Doc. 67 ¶ 54; Doc. 77 ¶ 54). Diodato does not deny that he was in regular business-related contact with his Wells Fargo customers throughout the duration of the non-solicitation period. (See Doc. 67 ¶¶ 65-69; Doc. 77 ¶¶ 65-69 (citing inter alia Doc. 75, Ex. A, Diodato PP (email response to Diodato from client noting that he "sent that request for transfer to Wells Fargo as you had asked"))). Wells Fargo sent cease and desist letters to Christian Baker and AIA in September of 2011 and September of 2012, informing both firms of Diodato's breach of the TSA and demanding that each ensure Diodato's compliance with the TSA's terms. (See Doc. 67-6 at 12-27). As of June 2013, approximately seventy three (73) of Diodato's former accounts had transferred to another broker. (Doc. 67 ¶ 73; Doc. 77 ¶ 73).
Diodato commenced this civil action by filing an eleven (11) count complaint (Doc. 1-2) on November 9, 2012, in the Court of Common Pleas for Cumberland County, Pennsylvania. Wells Fargo timely removed the litigation to this court on December 10, 2012, pursuant to 28 U.S.C. § 1446, (Doc. 1), and filed an answer and counterclaim (Doc. 5)
Diodato asserts the following eleven claims in his complaint: fraudulent misrepresentation and inducement (Count I); breach of contract — good faith and fair dealing (Count II); breach of contract (Count III); violation of Pennsylvania's Wage Payment and Collection Law ("WPCL"), 43 PA. STAT. § 260.1 et seq. (Count IV); defamation (Count V); commercial disparagement (Count VI); unauthorized use of name or likeness in violation of 42 PA. CONS.STAT. § 8316 (Count VII); unjust enrichment (Count VIII); declaratory judgment (Count IX); unfair competition (Count X); and violation of 15 U.S.C. § 1125 (the "Lanham Act") (Count XI). Wells Fargo moves for summary judgment as to each claim, asserting that the record is devoid of evidence supporting Diodato's theories of liability and that it is entitled to judgment as a matter of law.
The gravamen of Diodato's fraudulent inducement claim
At the outset, the court rejects Wells Fargo's argument with respect to at-will employment. Wells Fargo is correct that the courts of the Commonwealth generally adhere to the employment at-will doctrine, which allows employers to terminate employees "for any reason or for no reason" unless a contract between the parties provides otherwise. Pipkin v. Pa. State Police, 548 Pa. 1, 693 A.2d 190, 191 (1997) (quoting Stumpp v. Stroudsburg Mun. Auth., 540 Pa. 391, 658 A.2d 333, 335 (1995)); see also Fraser v. Nationwide Mut. Ins. Co., 352 F.3d 107, 111 (3d Cir. 2003) (noting the general rule in Pennsylvania that "at-will employees may be terminated for any reason or for no reason... [unless] doing so would offend ... public policy"). The doctrine does not bar every claim arising from at-will employment relationships; rather, it precludes only those claims arising from the decision to terminate the employee. See Martin v. Hale, 699 A.2d 1283, 1287 (Pa.Super.Ct.1997). Pennsylvania courts have held, for example, that tort claims arising independently of the decision to terminate employment are not barred by the at-will
That the claim is not barred outright does not end the court's inquiry, however, because Wells Fargo also lodges a three-fold attack at the merits of the fraudulent inducement claim, contending: first, that the gist of the action and economic loss doctrines bar the claim; second, that Diodato fails to adduce evidence of fraud; and third, that the parol evidence rule precludes admission of the evidence Diodato does cite. Because the court concludes that Diodato's fraudulent inducement claim sounds in contract and is barred by the gist of the action doctrine, the court will not address Wells Fargo's remaining arguments.
For breach of a contract to constitute an actionable common law tort, the allegedly tortious conduct at issue "must be the gist of the action, the contract being collateral." eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 14 (Pa.Super.Ct.2002). The gist of the action doctrine bars a tort claim when (1) the claim arises from a contract between the parties; (2) the duties breached were created by the contract; (3) liability derives from the contract; or (4) the success of the tort claim is wholly dependent upon the contract's terms.
Diodato cites Sullivan v. Chartwell Investment Partners, LP, 873 A.2d 710 (Pa.Super.Ct.2005) for the proposition that the gist of the action doctrine does not operate to "bar a fraud claim stemming from the fraudulent inducement to enter into a contract." (Doc. 74 at 14 (citing Sullivan, 873 A.2d at 719)). Diodato ignores a crucial caveat in the Sullivan decision: the Commonwealth's Superior Court did not find that the doctrine is categorically
This court recently had the opportunity to analyze the current state of this area of law in Agrotors, Inc. v. Ace Global Markets, No. 1:13-cv-1604, 2014 WL 690623, at *4-5, 2014 U.S. Dist. LEXIS 22560, at *11-13 (M.D.Pa. Feb. 22, 2014) (Conner, C.J.). Rejecting Agrotor's position that all fraudulent inducement claims are necessarily collateral to the contract, the court observed that, in reality, "the state of the case law is much more complex." Id. at *4, 2014 U.S. Dist. LEXIS 22560 at *11. In Agrotors, this court adopted the comprehensive analysis of the doctrine undertaken by the Honorable Stewart Dalzell in Vives v. Rodriguez, 849 F.Supp.2d 507 (E.D.Pa.2012), summarizing that decision as follows:
Agrotors, 2014 WL 690623, at *4, 2014 U.S. Dist. LEXIS 22560, at *11-13 (citing Vives, 849 F.Supp.2d at 518-20). Other district courts within the Third Circuit Court of Appeals have adopted the Vives decision. See Irish Isle Provision Co., Inc. v. Polar Leasing Co., Inc., No. 4:12-cv-00778, 2013 WL 6077362, at *5-6, 2013 U.S. Dist. LEXIS 164349, at *14-18 (M.D.Pa. Nov. 19, 2013); Oldcastle Precast, Inc. v. VPMC, Ltd., No. 12-6270, 2013 WL 1952090, at *9-11, 2013 U.S. Dist. LEXIS 67481, at *27-30 (E.D.Pa. May 13, 2013); Bengal Converting Servs. v. Dual Printing, Inc., No. 11-6375, 2012 U.S. Dist. LEXIS 33156, at *8-11 (E.D.Pa. Mar. 12, 2012). Neither the Pennsylvania Supreme Court nor the Third Circuit has ruled otherwise since this court's decision in Agrotors.
Hence, the court must examine the relationship between Diodato's simultaneously pleaded fraudulent inducement and contract claims and determine whether the two are "interwoven," precluding his tort claim, or whether the fraud claim is "collateral" to the TSA. See Bengal, 2012 U.S. Dist. LEXIS 33156, at *10 ("In other
In fact, Diodato's fraudulent inducement claim is not based on a single representation that is not contemplated by his breach of contract claim. In other words, nothing in the record establishes that Wells Fargo made a representation beyond the scope of the TSA. Cf. Williams, 93 Fed.Appx. at 386 (when defendants induced plaintiffs to buy gaming assets for a set price on an exclusive basis while secretly marketing to other buyers, fraud in the inducement claim sounds in contract and is barred by gist of the action doctrine); Plexicoat Am., LLC v. PPG Architectural Finishes, Inc., 9 F.Supp.3d 484, 488 (E.D.Pa.2014) (observing that gist of the action doctrine bars fraudulent inducement claim unless "pre-contractual statements were outside the scope of the eventual contract"); Irish Isle Provision Co., 2013 WL 6077362, at *6, 2013 U.S. Dist. LEXIS 164349, at *17 (dismissing fraudulent inducement claim when statements "do not demonstrate a relationship collateral to the contract as required to survive the gist of the action doctrine"); Penn City Invs., Inc. v. Soltech, Inc., No. 01-5542, 2003 WL 22844210, 2003 U.S. Dist. LEXIS 22321 (E.D.Pa. Nov. 25, 2003) (when "pre-contractual statements concerned specific duties that the parties later outlined in the contract," doctrine bars fraudulent inducement claim). Measured against this authority, the court concludes that Diodato's breach of contract claim subsumes any separate claim for fraudulent inducement. The court will grant summary judgment to Wells Fargo with respect to Count I.
Diodato sets forth two contract claims in his complaint: one for breach of the terms of the TSA, and one for breach of the TSA's implied duty of good faith and fair dealing. (Doc. 1-2 ¶¶ 120-36).
To prevail on a claim for breach of contract under Pennsylvania law, a plaintiff must prove the following: (1) the existence of a contract, including its essential terms; (2) defendant's breach of duty imposed by the terms; and (3) actual loss or injury as a direct result of the breach. See Ware v. Rodale Press, Inc., 322 F.3d 218, 225 (3d Cir.2003) (quoting CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058 (Pa.Super.Ct.1999)). Diodato asserts that Wells Fargo breached the TSA by failing to pay him earned compensation subsequent to his termination and by enforcing the agreement in bad faith. The court will address each of the alleged breaches in turn.
Diodato contends that Wells Fargo failed to compensate him as required by the TSA. He specifically alleges that Wells Fargo failed to pay him a guaranteed draw, increased commission for new revenue and net new revenue generated in 2010, and an "additional one percent (1%) payment." (See Doc. 1-2 ¶¶ 131-34). Wells Fargo responds that undisputed record evidence establishes that Diodato was paid in accordance with the Producer Plan and that it is entitled to summary judgment on this claim. (Doc. 64 at 19-20). Wells Fargo cites the deposition testimony of John Kluxen, a Wells Fargo employee, who reviewed Diodato's paycheck dated March 18, 2011, and testified that Diodato received a $1,186.79 payment on that date, representing one percent (1%) of new and net new revenue generated by accounts he serviced in 2010. (See Doc. 65-5, Kluxen Dep. 71:5-74:10, May 31, 2013 ("Kluxen Dep.")).
Diodato does not respond to this evidence or otherwise support the allegations of his complaint in opposition to Wells Fargo's motion. (See Doc. 74 at 22-26). Courts within the Third Circuit have routinely held that a non-movant's failure to offer any response to an opposing party's summary judgment arguments constitutes an abandonment of claims left undefended. See Nissan World, LLC v. Mkt. Scan Info. Sys., No. 05-2839, 2014 WL 1716451, at *10, 2014 U.S. Dist. LEXIS 59902, at *31 (D.N.J. Apr. 30, 2014) ("Failing to raise an argument in opposition to a motion for summary judgment constitutes a waiver of that argument."); Mills v. City of Harrisburg, 589 F.Supp.2d 544, 558 n. 15 (M.D.Pa.2008) (deeming abuse of process and emotional distress claims to be "abandoned" and granting summary judgment to defendants when counsel failed to respond to arguments raised against those claims) (citing Smith v. Lucas, No. 4:05-cv-1747, 2007 WL 1575231, at *3-4, 2007 U.S. Dist. LEXIS 39655, at *10 (M.D.Pa. May 31, 2007) (holding that plaintiff abandoned claims by failing to respond to them in opposition to summary judgment); Clarity Software, LLC v. Allianz Life Ins. Co. of N. Am., No. 2:04-cv-1441, 2006 U.S. Dist. LEXIS 56217, at *5 (W.D.Pa. Aug. 11, 2006) (same); Cacciatore v. Cnty. of Bergen, No. 02-1404, 2005 WL 3588489, at *1 n. 1, 2005 U.S. Dist. LEXIS 37568, at *1 n. 1 (D.N.J. Dec. 30, 2005)). In the exercise of caution, the court notes that the record is devoid of probata in support of the allegata. See Morris v. Orman, No. 87-5149, 1989 WL 17549, at *8, 1989 U.S. Dist. LEXIS 1876, at *8 (E.D.Pa. Mar. 1, 1989) (emphasizing that "the burden is on the [non-movant], not the court, to cull the
In lieu of defending the allegations of his complaint, Diodato articulates an amended claim for breach of contract in his opposition brief, contending for the first time that Wells Fargo failed to pay more than one year's worth of commission due upon his termination and failed to reimburse him for work-related expenses. (See Doc. 74 at 22 (alleging that Wells Fargo terminated Diodato when "approximately one year of his past commissions had been lawfully earned but unpaid" and "his expenses for April 2011 ... were on his desk ... and never provided to him despite demand")).
It is well-settled that Diodato "may not amend his complaint in his brief in opposition to a motion for summary judgment." Bell v. City of Phila., 275 Fed.Appx. 157, 160 (3d Cir.2008) (non-precedential) (citing Shanahan v. City of Chi., 82 F.3d 776, 781 (7th Cir.1996)).
Notwithstanding Bell, Diodato fails to offer evidence which, if accepted by the jury, establishes that Wells Fargo breached a payment obligation under the TSA. Diodato acknowledges that the Producer Plan governed his compensation structure during his tenure with Wells Fargo and that the Plan provides: "Credited Commissions are deemed earned once the Participant's Eligible Revenue has been collected by [Wells Fargo]." (Doc. 73 ¶ 5(d)). According to the Plan, "[c]ommission payments earned under the Plan will be made within 45 days after the Participant's payment period ends" and that "payments earned ... must be made to the Participant no later than March 15th after the end of the Plan year." (Diodato Dep. Ex E at ¶ 5(E)). The Plan further states that terminated participants "will be paid Credited Commissions earned through the Participant's termination date less any Draw paid." (Id. at ¶ 6(A)).
Diodato also argues that Wells Fargo must reimburse him for an estimated $750 in expenses. (Doc. 74 at 24 (citing Diodato Dec. 2 ¶ 60)). The Producer Plan provides that Wells Fargo will reimburse its producers for "reasonable business, travel and entertainment expenses" subject to its reimbursement and auto policies with prior management approval. (Diodato Dep. Ex. E at ¶ 5(E)). Wells Fargo admits that it often reimbursed Diodato for business expenses. (See Doc. 65 ¶ 8). As a result, it is plausible that Wells Fargo may, under certain circumstances and assuming requisite proof, be liable to Diodato for breach of contract for failure to reimburse expenses. (Id.) Diodato contends that "the information that would substantiate [his expenses] was on his desk as of his last day at [Wells Fargo] and [Wells Fargo] has refused to provide the same to him." (Diodato Dec. ¶ 60). Wells Fargo notes — and Diodato does not refute — that Diodato never sought any such documents in his fifty-eight (58) separate requests for documents. (See Doc. 64 at 23 n. 5).
On this matter, the court concludes that Diodato has not established a genuine issue of material fact sufficient to survive summary judgment. Notwithstanding months of discovery and ample opportunity to develop a record, Diodato is before the court with nothing but his own unsupported assertion that he is entitled to some vague and ill articulated amounts of compensation and reimbursements. (Doc. 74 at 23 (quoting Producer Plan but contending, with reliance only on his own assertion, that Wells Fargo did not follow it); id. at 24 (requesting expenses of "approximately" $750)). Diodato fails to direct the court to any objective evidence in support of his assertions. The Third Circuit has held repeatedly that such a showing cannot survive a motion for summary judgment. See Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156, 161 (3d Cir. 2009) ("Conclusory, self-serving affidavits are insufficient to withstand a motion for summary judgment."); Podobnik v. United States Postal Serv., 409 F.3d 584, 594 (3d Cir.2005) ("[T]o survive summary judgment, a party must present more than just `bare assertions, conclusory allegations or suspicions' to show the existence of a genuine issue."); Solomon v. Soc'y of Auto.
This evidentiary vacuum similarly defeats Diodato's WPCL claim in Count IV. Claims for violation of the WPCL are entirely contingent upon proof of a contractual obligation to pay wages and an attendant breach of that obligation. See Sheils v. Pfizer, Inc., 156 Fed.Appx. 446, 451-52 (3d Cir.2005) (affirming district court's grant of summary judgment on WPCL claim when plaintiff failed to prove that defendant breached a contractual obligation to pay him earned wages); see also Oberneder v. Link Comp. Corp., 548 Pa. 201, 696 A.2d 148, 150 (1997) ("The [WPCL] provides employees a statutory remedy to recover wages ... that are contractually due to them." (emphasis added) (citing Killian v. McCulloch, 850 F.Supp. 1239, 1255 (E.D.Pa.1994))). Although Diodato does not expressly concede this point, he conflates his WPCL and breach of contract analyses in his opposition papers, implicitly agreeing that the claims rise and fall together. (See Doc. 74 at 22-26). For these reasons, the court will grant Wells Fargo's motion with respect to the WPCL claim.
Diodato states a separate claim against Wells Fargo for breach of the implied duty of good faith and fair dealing under the TSA. Pennsylvania courts have adopted Section 205 of the Restatement (Second) of Contracts, which provides that every contract imposes a "limited duty" of good faith and fair dealing on each party in performing and enforcing the same. See Baker v. Lafayette College, 350 Pa.Super. 68, 504 A.2d 247, 254 (1985) (citing and adopting RESTATEMENT (SECOND) OF CONTRACTS § 205).
In any event, a claim for breach of the duty of good faith and fair dealing does not lie separately from the terms of the contract itself. See Burton v. Teleflex, Inc., 707 F.3d 417, 432-33 (3d Cir.2013); see also Stewart v. SWEPI, LP, 918 F.Supp.2d 333, 343-44 (M.D.Pa.2013) ("Pennsylvania does not recognize a separate cause of action for breach of the covenant `because such a breach is merely a breach of contract.'") (citing LSI Title Agency, Inc. v. Eval. Servs., Inc., 951 A.2d 384, 392 (Pa.Super.Ct.2008) (observing that a "claim for breach of the implied covenant of good faith and fair dealing is subsumed in a breach of contract claim")); McHale v. NuEnergy Grp., No. 01-4111, 2002 WL 321797, at *8, 2002 U.S. Dist. LEXIS 3307, at *22-23 (E.D.Pa. Feb. 27, 2002) (concluding that "Pennsylvania law would not recognize a claim for breach of covenant of good faith and fair dealing as an independent cause of action separate from the breach of contract claim"). Stated differently, a good faith and fair dealing claim "must always be grounded in a specific provision of a contract" rather than some abstract or perceived social policy. Nationwide Ins. Indep. Contrs. Ass'n v. Nationwide Mut. Ins. Co., 518 Fed.Appx. 58, 62 (3d Cir.2013) (citing Burton, 707 F.3d at 433; Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78, 91 (3d Cir.2000) (noting that a claim for breach of the duty of good faith and fair dealing cannot be "divorced from the specific clauses of the contract")); see also Heritage Surveyors & Eng'rs, Inc. v. Nat'l Penn Bank, 801 A.2d 1248, 1253 (Pa.Super.Ct.2002) (explaining that duty of good faith arises under the law of contracts rather than implicating the broader social policies of the law of torts).
These principles defeat Diodato's claim. Diodato offers broad, conspirative theories with respect to Wells Fargo's intentions in terminating his employment but does not identify a single provision of the TSA that Wells Fargo allegedly violated. (See Doc. 74 at 19-21). Nothing about Diodato's claim is "grounded in a specific provision of the contract." Nationwide Ins., 518 Fed.Appx. at 62. Indeed, rather than identifying a breach of the TSA, Diodato's summary of the law devolves rapidly into an attack of Wells Fargo's reasons for terminating his employment. (See Doc. 74 at 19-21). Diodato clearly attempts to circumvent the at-will employment doctrine by transforming a prohibited wrongful termination claim into a contractual bad
Diodato asserts the following in support of his defamation and commercial disparagement claims: (1) that Voltz informed John Zukus ("Zukus"), a Wells Fargo business manager, that Diodato's actions were "not in Wells Fargo's best interests"; (2) that he "painted a picture" to Richard Fiato ("Fiato"), head underwriting officer for North Pointe Insurance ("North Pointe"), that Diodato's "business practices were suspect and that he was insubordinate"; and (3) that Wells Fargo's counsel advised both Christian Baker and AIA by letter that Diodato was in violation of the TSA by contacting and soliciting his former clients to transfer their insurance business to Christian Baker or AIA. (Doc. 74 at 26-27).
To prevail on a claim for defamation, Diodato must adduce evidence of the following elements: (1) the defamatory character of the communication; (2) its publication by the defendant; (3) its application to the plaintiff; (4) understanding by the recipient of its defamatory meaning; (5) understanding by the recipient of it as intended to be applied to the plaintiff; (6) special harm resulting to the plaintiff from its publication; and (7) abuse of a conditionally privileged occasion. See 42 PA. CONS.STAT. § 8343(a).
Record evidence supports Diodato's allegation that Voltz informed Zukus that Diodato's actions "weren't in the best interests of Wells Fargo" on the Monday following Diodato's termination. (Doc. 73-14, Zukus Dep. 49:25-50:4, ("Zukus Dep.") Mar. 8, 2013). Similarly, Richard Fiato states in his affidavit that Voltz, on more than one occasion, "was more than willing to discuss Diodato's termination and paint a picture that [Diodato's] business practices were suspect and [Diodato] was insubordinate." (Doc. 73-5, Fiato Dec. ¶¶ 12-13 ("Fiato Dec.") (stating that "I told [Voltz] that I did not want to `be involved in that soup,' but he insisted on talking to me about it")). McKendrick states that the North Pointe meeting took place on August 3, 2011. (See Doc. 73-2, McKendrick Dec. ¶ 4 ("McKendrick Dec.")). Wells Fargo admits that it sent multiple cease and desist letters to both Christian Baker and AIA highlighting Diodato's perceived violations of the TSA. (See Doc. 79 at 18 (acknowledging that it sent letters to alleged "co-conspirators" seeking assistance in obtaining Diodato's compliance with the TSA)). Hence, Diodato sufficiently identifies the statements at issue for present purposes — the inquiry for the court's resolution is whether the communications are sufficient to establish defamation liability.
Wells Fargo contends first that Voltz's statement to Zukus regarding the reasons for Diodato's termination is merely a statement of opinion not subject to civil liability for defamation. (See Doc. 79 at 16-17). As a general rule, statements of opinion are immune from defamation liability. See Green v. Mizner, 692 A.2d 169, 174 (Pa.Super.Ct.1997) (citing Mathias v. Carpenter, 402 Pa.Super. 358, 587 A.2d 1, 2-3 (1991)). In order for a statement of opinion to be actionable, it must be reasonably understood to "imply the existence of undisclosed defamatory facts." Mzamane v. Winfrey, 693 F.Supp.2d 442, 481 (E.D.Pa.2010) (quoting Veno v. Meredith, 357 Pa.Super. 85, 515 A.2d 571, 575 (1986)); see also RESTATEMENT (SECOND) OF TORTS § 566 ("A defamatory communication may consist of a statement of an opinion but a statement of this nature is actionable only if it implies the allegation of undisclosed defamatory facts as the basis for the opinion."). Whether a given statement is opinion or fact is a question of law for the trial court. Green, 692 A.2d at 174.
The court concludes that Voltz's statement that Diodato's actions "weren't in the best interests of Wells Fargo" is ambiguous, obscure, and, does not imply the existence of specific defamatory facts. Mzamane, 693 F.Supp.2d at 481 (quoting Veno, 515 A.2d at 575); see also RESTATEMENT (SECOND) OF TORTS § 566. The opinion, without contextual facts, neither "impugns" Diodato's professional skills as an insurance broker, see Baker, 504 A.2d at 251, nor implies his violation of any particular duty or other responsibility as a Wells Fargo employee. (See Zukus Dep. 49:25-50:4 (offering no factual context other than "best interests" statement)). In other words, this statement of Voltz's personal opinion, even if taken as true by another, is non-specific and fails to imply any fact that impairs Diodato's business reputation or raises questions as to his professional character. See Baker, 504 A.2d at 251 (only communications that "ascribe[] to another conduct, character or a condition that would adversely affect his fitness for the proper conduct of his lawful business, trade or profession'" are defamatory (quoting RESTATEMENT (SECOND) OF TORTS § 573)). The court will grant summary judgment to Wells Fargo with respect to this claim.
Wells Fargo raises only one argument with respect to Voltz's statements to Fiato during the North Pointe meeting: it posits that Diodato fails to sufficiently identify an actual statement in support of his claim. (See Doc. 64 at 23-25; Doc. 79 at 15-16). On the present record, the court must disagree.
Wells Fargo's argument that the North Pointe statement is insufficiently identified as to time, place, and content is refuted by the record. With respect to the North Pointe meeting, the record establishes that: (1) the meeting occurred on August 3, 2011, (McKendrick Dec. ¶ 4); (2) the meeting was attended by Voltz, Fiato, and Linda Petrella, (id.); and (3) during the meeting, Voltz explicitly described Diodato as "insubordinate" and his business practices as "suspect."
Wells Fargo also cites Holewinski v. Children's Hosp., 437 Pa.Super. 174, 649 A.2d 712 (1994), as support for its position that Diodato's evidence falls short of identifying "specific defamatory statement(s) attributable to [Wells Fargo]." (Doc. 79 at 15). Holewinski is entirely distinguishable and, in fact, weighs in Diodato's favor. Holewinski was hired in 1980 by Children's Hospital and received "position upgrades" (ostensibly promotions) over time. Id. at 714. In 1991, the hospital hired a new chief of pediatric neurosurgery who advised the plaintiff that he planned to increase the qualifications for her position, which would effectively disqualify her for the job. Id. The new chief did so in April of 1992, and plaintiff was terminated effective June 30, 1992; her replacement was hired and commenced employment in mid-May of 1992. Id. At the motion to dismiss stage, the plaintiff urged the court to draw inferences of defamation from the "nature of her termination," the meeting between herself and the new chief of pediatric neurosurgery, her replacement's hiring, and her replacement's actions while Holewinski was still employed. Id. at 715-16. The court held that failure "to set forth a specific statement" is fatal to a defamation claim. Id. at 716. In other words, inferences and an opportunity for defamation are insufficient, and plaintiffs must identify a specific statement in order to prevail. See id. As noted supra, and in stark contrast to Holewinski, Diodato has set forth specific statements made by Voltz during the August 3, 2011, meeting. (See McKendrick Dec. ¶ 4; Fiato Dec. ¶¶ 12-13). This claim survives summary judgment.
Diodato also bases his defamation claim on the contents of various letters sent by Wells Fargo to Christian Baker and AIA following his termination. These letters advised Christian Baker and AIA principals of the terms of Diodato's TSA and alleged that Diodato was violating the TSA with the assistance of Christian Baker and AIA. The Christian Baker letter provided, in pertinent part, as follows:
(Doc. 67-6 at 12-15). Wells Fargo additionally demanded that Christian Baker ensure Diodato's compliance with the terms of the TSA and advised that it would enforce its rights in court if necessary. (Id.) The content and demands of the AIA letter are virtually identical to the language of the Christian Baker letter quoted above, with relevant substitutions pertinent to the recipient. (Id. at 16-19). Wells Fargo additionally informed AIA that it had "learned that Diodato has advised clients that, while he does not currently work for AIA, he will be working for AIA in the future and ... can continue to provide insurance brokerage services to them despite the fact that he does not work for AIA." (Id. at 18).
Wells Fargo does not deny authoring or mailing these letters. (See Doc. 79 at 18). Rather, it contends that each of the letters is subject to a competitors privilege. (Id.) It directs the court to Gresh v. Potter McCune Co., 235 Pa.Super. 537, 344 A.2d 540 (1975) as support. Gresh involved similar facts: a plaintiff salesman voluntarily terminated his employment with defendant company after executing a restrictive covenant including non-solicitation provisions and thereafter went to work for a competitor and commenced solicitation of the defendant company's customers. Id. at 541. The defendant company sent a cease and desist letter to plaintiff's new employer, advising that it intended to take all legal steps necessary to ensure plaintiff complied with terms of the restrictive covenant. Id. In response, plaintiff's new employer terminated his employment, and plaintiff brought suit against the defendant company alleging, inter alia, that the cease and desist letter constituted defamation. Id. The court held that because the defendant company had introduced evidence of the interest it sought to protect in sending its cease and desist letters, a conditional privilege applied. Id. at 543. The plaintiff failed to prove that the defendant company had abused this privilege, and, therefore, the court granted summary judgment in the defendant's favor. Id.
Wells Fargo argues that, like the employer in Gresh, it reasonably believed that its efforts were necessary to protect its interests as identified in the TSA. (Doc. 79 at 18 ("Just like the former employer in Potter McCune, [Wells Fargo] reasonably believed that it had a protectable interest — its customer relationships, goodwill, and customer information — that it had protected by restrictive covenant, and sent a letter to Christian Baker and AIA in an effort to prevent further breaches.")). Such interests are legitimate and protectable. See infra at 568-69. Diodato offers only the conclusory contention that no privilege attaches to the cease and desist letters because "Christian Baker and AIA were competitors" of Wells Fargo and "Diodato was employed by Christian Baker" when the letters were sent. (Doc. 74 at 29). Diodato fails to demonstrate that Wells Fargo abused the competitive privilege. See Wilson, 2013 U.S. Dist. LEXIS 33555, at *28-29 (citing Miketic v. Baron, 450 Pa.Super. 91, 675 A.2d 324, 329 (1996)). For this reason, the court is compelled to
To prevail on a claim for unjust enrichment, Diodato must prove that: (1) he conferred a benefit on Wells Fargo; (2) that Wells Fargo appreciated the benefit; and (3) under the circumstances, "it would be inequitable for the defendant to retain the benefit without payment" to Diodato. Mass. Mut. Life Ins. Co. v. Curley, 459 Fed.Appx. 101, 108 (3d Cir.2012). In Count VIII, Diodato asserts a claim for unjust enrichment and seeks "restitution from [Wells Fargo] for all amounts received by [Wells Fargo] on and after May 16, 2011, deriving from commissions from customers and/or business contacts on account of insurance placed by Diodato." (Doc. 1-2 ¶ 172). Diodato further contends that genuine issues of fact exist with respect to whether Wells Fargo unjustly continued to generate commissions on accounts which Diodato had "worked for thirty-six (36) years to build as part of his business and his life." (Doc. 74 at 32).
With respect to commissions allegedly earned and owing, Diodato transparently attempts to restate his contract claim as one sounding in equity. (See Doc. 74 at 22 (contending, in support of breach of contract claim, that Wells Fargo failed to pay him commission due and owing under the Producer Plan); Doc. 74 at 30 (same in support of unjust enrichment claim)). The court concluded supra that Diodato's breach of contract claim lacks evidentiary support and does not survive summary judgment. See supra at 556-59. Diodato's unjust enrichment claim as to unpaid commissions is entirely contingent upon proof of the same facts underlying his breach of contract claim. His failure to offer any evidence beyond his own ipse dixit assertions is fatal to this aspect of his unjust enrichment claim. See Podobnik v. U.S. Postal Service, 409 F.3d 584, 594 (3d Cir.2005) (plaintiffs "must present more than just `bare assertions, conclusory allegations or suspicions' to show the existence of a genuine issue" to survive summary judgment); see also Kirleis, 560 F.3d at 161; Solomon, 41 Fed.Appx. at 586.
Diodato also alleges that Wells Fargo has been unjustly enriched by continuing to generate commissions on accounts that he secured and serviced throughout his thirty-six (36) year career with Wells Fargo and its predecessor entities. (Doc. 74 at 32). In his opposition materials, Diodato fails to provide any record support for this assertion. (See id.) Indeed, the record is devoid of proof that Wells Fargo continued to unjustly receive any benefit after Diodato's termination. (See id.) Moreover, courts routinely reject unjust enrichment claims when a plaintiff is hired for a particular purpose, accomplishes that purpose, and is compensated for those services. See, e.g., McGoldrick v. TruePosition, Inc., 623 F.Supp.2d 619, 625 (E.D.Pa. 2009) (rejecting unjust enrichment claim for additional compensation when "[plaintiff] performed his job and was compensated with his salary") (quoting Herbst v. Gen. Accident Ins. Co., No. 97-8085, 1999 WL 820194, at *9, 1999 U.S. Dist. LEXIS 15807, at *27 (E.D.Pa. Sept. 30, 1999) (dismissing claim when plaintiff "has not shown that he did anything more than work to the best of his abilities for defendant as he was engaged to do")); Herald v. Star Blends, Inc., No. 90-6810, 1991 WL 158147, at *3, 1991 U.S. Dist. LEXIS 11248, at *8 (E.D.Pa. Aug. 13, 1991) (citing Hershey Foods Corp. v. Ralph Chapek, Inc., 828 F.2d 989, 999 (3d Cir.1987)). Absent proof that Wells Fargo realized a benefit and failed to compensate Diodato in return, the court is compelled to enter
In Count IX, Diodato seeks a declaratory judgment that the TSA is void or voidable: (1) for lacking consideration; (2) as not being executed contemporaneous to any change in his employment terms or conditions; (3) as not being incident to an employment relationship; (4) as unnecessary for the protection of Wells Fargo; (5) as being an unlawful attempt by Wells Fargo to oppress Diodato's attempts to solicit business contacts he generated throughout his career; (6) as being unreasonable in scope; (7) as being unreasonable in duration; (8) for Wells Fargo's failure to comply with its material terms; and (9) as a result of fraud in the inducement. (Doc. 1-2 at ¶¶ 178-185). In his brief in opposition to summary judgment, Diodato abandons many of these theories, asserting only that it is void for fraud in the inducement and that the TSA is not necessary to protect a legitimate Wells Fargo interest. (See Doc. 74 at 36-38 (contending that the covenant is "born out of fraud [and] used to protect interests that are not lawfully capable of protection" and as such unenforceable)).
The parties agree as to the principal terms of the TSA. (See Doc. 65 ¶¶ 18, 20; Doc. 73 ¶ 20). It provides, in relevant part, that in consideration for continued employment with Wells Fargo, the ability to participate in a new compensation plan, and an increased commission on new and net new revenue in 2010, Diodato, upon termination, will return to Wells Fargo all confidential information obtained throughout his employment and will refrain from soliciting Wells Fargo's customers and employees for a period of two (2) years. (Diodato Dep. Ex. C at 1-2). In its motion and brief, Wells Fargo contends that the TSA is supported by adequate consideration insofar as it was executed in exchange for Diodato's continued employment and a one percent (1%) additional commission on new revenue and net new revenue, (Doc. 74 at 27-28), and that it was reasonably limited in scope and duration.
The gist of the action doctrine bars a common law claim for fraudulent inducement arising from the TSA. See supra at 553-56. Hence, Diodato's allegations of fraud are most appropriately analyzed in the context of the TSA itself, as part of his declaratory judgment claim. Diodato argues that the TSA is void because Wells Fargo "obtained his signature by way of false representations" and "falsely represented to [Diodato] that he had to sign the TSA as a condition of retaining his employment." (Doc. 74 at 36). Wells Fargo responds that Diodato adduced no evidence of fraud, and that the evidence proffered is barred by the parol evidence rule. (See Doc. 64 at 12-18, Doc. 79 at 4-7). The court agrees with Wells Fargo that the parol evidence rule bars each representation cited by Diodato.
The parol evidence rule states that when the parties have adopted a writing
In the instant matter, the TSA contains a clear and unambiguous integration clause. (Diodato Dep. Ex. A. at 3 ("This Agreement supersedes any prior written or verbal agreements pertaining to the subject matter herein, and is intended to be a final expression of our Agreement with respect only to the terms contained herein.")). The presence of an integration clause alone encourages application of the parol evidence rule. See, e.g., HCB Contractors v. Liberty Place Hotel Assocs., 539 Pa. 395, 652 A.2d 1278, 1279-80 (1995) (applying rule to plaintiff's attempt to avoid waivers of mechanics liens set forth in an integrated contract).
Moreover, Diodato does not allege fraud in the execution. Rather, he styles his claim as one of fraudulent inducement and contends that Wells Fargo made certain false representations prior to the TSA's execution to induce his agreement to the same. Specifically, he contends that he was misled with regard to whether the TSA was a condition of continued employment with Wells Fargo and as to the additional consideration to be received as consideration for signing the TSA. (See Doc. 74 at 36). Each of the purported representations relate to subjects specifically addressed in the written contract, falling squarely within the parameters of the parol evidence prohibition. (See Diodato Dep. Ex. A at 1 (acknowledging TSA is executed "[i]n consideration for my continued employment by a Wells Fargo company"); Diodato Dep. Ex. E at 1 ("For the 2010 Plan year only (January 1, 2010 through December 31, 2010), [Diodato] will receive the following consideration for signing the new TSA ...: Additional 1% on New Revenue and Additional 1% on Net New Revenue.")). Diodato's claim is based not on a fraud extraneous to the contract or in its execution; it rests entirely on subject matter addressed by the express terms of the agreement. Evidence of these pre-contract representations is expressly excluded by the parol evidence rule. See Yocca, 854 A.2d at 437 n. 26 (parol evidence is unequivocally inadmissible based on a claim of fraud in the inducement). The TSA speaks directly to the representations that Diodato challenges, and, therefore, the
Diodato contends that the TSA was not reasonably necessary to protect Wells Fargo's interests. (Doc. 74 at 37). To ensure that post-employment covenants do not unduly burden a former employee's ability to earn a living, courts in Pennsylvania enforce such restrictions only when they are: (1) incident to an employment relation between the parties to the covenant; (2) reasonably necessary for the protection of the employer; and (3) reasonably limited in geographic and temporal scope. Quaker Chem. Corp. v. Varga, 509 F.Supp.2d 469, 476 (E.D.Pa.2007) (quoting Sidco Paper Co. v. Aaron, 465 Pa. 586, 351 A.2d 250, 252 (1976); see also Insulation Corp. of Am. v. Brobston, 446 Pa.Super. 520, 667 A.2d 729, 733 (1995)). The burden is on the employee seeking to avoid the covenant "to demonstrate that [it] is `unreasonable.'" Id. (quoting John G. Bryant Co. v. Sling Testing & Repair, Inc., 471 Pa. 1, 369 A.2d 1164, 1169 (1977)); see also Fisher Bioservices, Inc. v. Bilcare, Inc., No. 06-567, 2006 WL 1517382, at *10, 2006 U.S. Dist. LEXIS 34841, at *10 (E.D.Pa. May 31, 2006) (noting that the "party challenging the validity of the agreement bears the burden of proving that the terms of the non-compete and other restrictions are ... unreasonable.").
Post-employment restrictions are enforceable as "reasonably necessary for the protection of the employer when ... narrowly tailored to protect an employer's legitimate interests." Colorcon, Inc. v. Lewis, 792 F.Supp.2d 786, 799 (E.D.Pa. 2011) (citing PharMethod, Inc. v. Caserta, 382 Fed.Appx. 214, 220 (3d Cir.2010)); see Hess v. Gebhard & Co., 570 Pa. 148, 808 A.2d 912, 920 (2002) ("Fundamental ... to any enforcement determination is the threshold assessment that there is a legitimate interest of the employer to be protected as a condition precedent to the validity of a covenant not to compete."). Recognized, protectable interests include trade secrets, confidential information, good will, and unique or extraordinary skills. Hess, 808 A.2d at 920-21 (observing that covenants not to compete "for some other purpose, as for example, eliminating or repressing competition or to keep the employee from competing so that the employer can gain an economic advantage,... will not be enforced") (citing Morgan's Home Equip. Corp. v. Martucci, 390 Pa. 618, 136 A.2d 838, 846 (1957)); see also Wellspan Health v. Bayliss, 869 A.2d 990, 995 (Pa.Super.Ct.2005). Customer goodwill is protectable by contractual covenant, even if it is acquired solely through the efforts of an at-will employee. Sidco Paper, 351 A.2d at 252-53 ("An employer's right to protect [its] interest in customer goodwill acquired through the efforts of an employee is well-established in Pennsylvania."); Wellspan Health, 869 A.2d at 995 (same); see also Novus Franchising, Inc. v. Taylor, 795 F.Supp. 122, 128 (M.D.Pa.
The right of employers to protect their various interests by contractual covenant is not without limitation, however, and such covenants are to be strictly construed particularly when an employee involuntarily separates from his former employer. See Colorcon, Inc., 792 F.Supp.2d at 797 (quoting All-Pak, Inc. v. Johnston, 694 A.2d 347, 351 (Pa.Super.Ct.1997) ("Non-competition agreements restrain an employee's ability to practice his or her chosen trade [and] they are `strictly construed against the employer.'")). Thus, recognition of Wells Fargo's legitimate interests does not end the court's inquiry, because the TSA must be narrowly tailored to protect its articulated interests. PharMethod, 382 Fed.Appx. at 220 ("A restrictive covenant is reasonably necessary for the protection of the employer when it is narrowly tailored to protect an employer's legitimate interests.").
Notwithstanding a restriction's general enforceability, courts in equity may limit "enforcement ... to those portions of the restrictions which are reasonably necessary for the protection of the employer." Plate Fabrication & Mach'g, Inc. v. Beiler, No. 05-2276, 2006 WL 14515, at *5, 2006 U.S. Dist. LEXIS 52, at *17-18 (E.D.Pa. Jan. 3, 2006) (quoting Sidco Paper, 351 A.2d at 254); PharMethod, 382 Fed.Appx. at 219 (quoting Hess, 808 A.2d at 917) (although deemed enforceable upon satisfaction of the Sidco Paper test, restrictive covenants are "`not favored in Pennsylvania and have been historically viewed as a trade restraint that prevents a former employee from earning a living'"). A restrictive covenant with protections broader than necessary is not per se unenforceable, but a court, "to be faithful to Pennsylvania law, should not enforce any covenant that is manifestly unreasonable in light of the employer's needs and is excessively burdensome to the employee in pursuing his occupation." PharMethod, 382 Fed.Appx. at 219. In other words, a court may "blue pencil" restrictive covenants which impose broader than necessary post-employment prohibitions by enforcing only those portions reasonably necessary to protect the employer. See PharMethod, 382 Fed.Appx. at 220 (citing Sidco Paper, 351 A.2d at 254).
The court will exercise this discretion in the matter sub judice. In doing so, the court must balance Wells Fargo's legitimate need to protect its investment against Diodato's right to earn a living in his chosen field, and then determine whether the TSA "comes reasonably close to that balance." Victaulic Co. v. Tieman, 499 F.3d 227, 238 (3d Cir.2007) (citing Hess, 808 A.2d at 917). As a threshold matter, the court observes that sections (a) and (b) of the TSA's non-solicitation clause are narrowly tailored, and neither party raises overbreadth concerns. Provisions which temporarily limit a former employee's ability to solicit his former customers and coworkers have long been enforced by Pennsylvania courts, and Diodato does not dispute this fact. It is not the non-solicitation clause, but rather the non-acceptance
The non-solicitation clause contained in Wells Fargo's TSA goes well beyond prohibiting the active solicitation of clients and prohibits the passive acceptance of unsolicited former clients who contact Diodato unilaterally. (See Diodato Dep. Ex. C at 2). Pursuant to its terms, Diodato may not "directly or indirectly ... [a]ccept insurance business from or provide Competitive Products/Services to customers of [Wells Fargo] ... with whom [he] had Material Contact, and/or ... were clients or customers of [Wells Fargo] within six (6) months prior to [his] termination of employment." (Id.) By its disjunctive terms, the TSA prohibits Diodato from accepting the business of both clients of Wells Fargo with whom he had material contact and any customer that was a customer of any Wells Fargo affiliate or entity within six months preceding his termination, regardless of whether Diodato had contact with that client. (Id.)
This non-acceptance provision unreasonably restrains not only Diodato's ability to earn a living following his termination, see PharMethod, 382 Fed.Appx. at 219-20 (courts carefully scrutinize a covenant "that prevents a former employee from earning a living") (quoting Hess, 808 A.2d at 917), but more broadly restrains free trade. By its express terms, the provision purports to restrict the liberty of third parties who, of their own volition, unilaterally seek Diodato's services. Cf. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Moose, 365 Pa.Super. 40, 528 A.2d 1351, 1355 (1987) (affirming trial court's preliminary injunction enjoining only solicitation and noting that "the persons who would be most affected by a more encompassing order would be the innocent customers ... who would be denied the privilege of entrusting their commodities business to the broker of their choice"). Wells Fargo certainly has a legitimate interest in protecting its customer base. See Sidco Paper, 351 A.2d at 254 (recognizing employers' interests in ensuring that a terminated employee does not abscond with its customer base). It has the right to do so through reasonable and narrowly tailored covenants. See PharMethod, 382 Fed. Appx. at 220. However, Wells Fargo has not shown an interest so compelling as to warrant a blanket prohibition on Diodato's acceptance of unsolicited business from former customers, restricting both his ability to earn a living and the free will of the businesses that he formerly serviced. Cf. Latuszewski v. VALIC Fin. Advisors, Inc., No. 03-0540, 2007 WL 4462739, at *15-60, 2007 U.S. Dist. LEXIS 93329, at *40 (W.D.Pa. Dec. 19, 2007) (covenant not unreasonably restrictive when the employees (1) could still earn a living by servicing customers who they had not serviced in the year prior to leaving the employer and (2) could still service former customers who sought them out unilaterally after leaving their employer).
The court concludes that the TSA's post-employment prohibition on accepting the unsolicited business of former clients is broader than necessary to protect against the concerns articulated by Wells Fargo. (See Doc. 64 at 39 (noting that intent of TSA is to protect against solicitation of customer goodwill generated through Diodato's efforts in his capacity as an employee of Wells Fargo)). The court will exercise its discretion and strike the non-acceptance provision from the TSA. Accordingly, as to Diodato's declaratory judgment claim, the court will grant Wells Fargo's motion to the extent it pertains to the non-solicitation provisions of the TSA but deny the motion as to the non-acceptance provision. The latter provision is unenforceable as a matter of law.
In Count IX, Diodato asserts a claims for false advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a).
Wells Fargo argues in support of its motion only that Diodato failed to assert a claim for false advertising in his complaint and is precluded from pursuing such a claim now. The court rejects this argument. As noted supra, Diodato's complaint clearly contemplates a false advertising claim, noting that his Lanham Act claim is one for both false designation and "false or misleading description of representation or fact." (Doc. 1-2 ¶ 193). Diodato also expressly states the statutory requirements of a false designation claim, (see id. ¶ 193(a) (quoting 15 U.S.C. § 1125(a)(1)(A))), and a false advertising claim, (see id. ¶ 193(b) (quoting 15 U.S.C. § 1125(a)(1)(B))). Wells Fargo had notice of this claim from the very outset of this litigation. (See Doc. 1-2 ¶ 193(b)). Wells Fargo does not challenge the merits of Diodato's false advertising claim. Accordingly, the court will deny its motion.
Wells Fargo argues that Diodato's common law unfair competition claim fails as a matter of law because Diodato has failed to prove a violation of the Lanham Act. (See Doc. 64 at 42-43). Wells Fargo is correct to the extent it contends that the Pennsylvania common law of unfair competition generally tracks federal law. See Groupe SEB USA, Inc. v. Euro-Pro Op. LLC, No. 14-137, 2014 WL 2002126, at *5, 2014 U.S. Dist. LEXIS 66616, at *20 (W.D.Pa. May 15, 2014) ("Pennsylvania
Wells Fargo also seeks summary judgment as to Diodato's statutory claim for unauthorized use of his name, in violation of Pennsylvania's Unauthorized Use of Name or Likeness statute. See 42 PA. CONS.STAT. § 8316. Section 8316 creates a cause of action for any "person whose name or likeness has commercial value and is used for any commercial or advertising purpose without written consent...." Id. The statute defines "name or likeness" as any "attribute of a natural person that serves to identify that natural person to an ordinary, reasonable viewer or listener, including, but not limited to, name, signature, photograph, image, likeness, voice, or a substantially similar imitation of one or more thereof." Id. § 8316(e). It defines "commercial value" as "valuable interest in a person's name or likeness" developed by investing "time, effort and money." Id.; see also Facenda v. N.F.L. Films, Inc., 542 F.3d 1007, 1027 (3d Cir.2008). The statute defines "commercial or advertising purpose" to include, inter alia, "the public use or holding out of a natural person's name or likeness ... on or in connection with the offering for sale or sale of a product, merchandise, goods, services or businesses." 42 PA. CONS.STAT. § 8316(e). Diodato argues that Wells Fargo's use of his name on its website and in a nationally distributed industry magazine post-termination violates the statute. (Doc. 74 at 41).
The parties dispute whether Diodato has sufficiently established commercial value in his name for purposes of unauthorized use liability. (Doc. 64 at 43; Doc. 74 at 43-44). Diodato contends that he "is not merely a salesperson" but rather is the "`Godfather' of the bowling insurance industry." (Doc. 74 at 44 (citing Doc. 65 ¶ 11)). The record reveals that Diodato has developed long-standing personal relationships with many of the clients he serviced while working for Wells Fargo, and he argues that, in the context of the roller skating and bowling alley insurance businesses, his name "has significant commercial value." (Id. (citing Doc. 65 ¶¶ 12-13, 17)). Diodato states that he developed this book of business "long before he was ever affiliated with [Wells Fargo]." (Doc. 73 ¶ 12 (quoting Diodato Dec. ¶ 15)). He avers that: (1) he spent his own money supporting various fundraising activities; (2) he entertained contacts at annual industry meetings; and (3) he paid $12,000 annually from his own commission revenue to account for costs relating to Wells Fargo's endorsement of the BPAP. (Id. ¶ 6). He asserts that this evidence
The court agrees: on this record, a jury could reasonably find that Diodato undertook
In addition to denying each of Diodato's principal claims, Wells Fargo asserts five of its own counterclaims for: breach of contract (Count I); misappropriation and misuse of trade secrets in violation of Pennsylvania's Uniform Trade Secrets Act ("PUTSA"), 12 PA. CONS.STAT. § 5301 (Count II); unfair competition (Count III); conversion (Count IV); and tortious interference with prospective and existing business relations (Count V). Diodato moves for summary judgment as to each of these claims. The court addresses each count seriatim.
Wells Fargo first asserts a claim against Diodato for breach of the TSA, specifically for violation of its non-solicitation, non-disclosure, and non-acceptance provisions. (Doc. 5 ¶¶ 53-57). Diodato raises three arguments with respect to this claim: (1) that Wells Fargo does not have standing to request injunctive relief and that, if it does, the doctrine of laches precludes such relief; (2) that Wells Fargo waived its right to request compensatory or punitive damages in the TSA; and (3) that Diodato did not breach the TSA. (Doc. 68 at 4, 10, 21).
Diodato's argument with respect to injunctive relief is two-fold: first, that Wells Fargo is without standing to enjoin him from servicing or soliciting former clients because it abandoned its insurance brokerage services and, second, that Wells Fargo delayed unreasonably in asserting its rights to enjoin any solicitation that did occur. (Doc. 68 at 11-13). Wells Fargo expressly acknowledges that it may no longer seek to enforce the non-solicitation restrictions of the TSA, which expired in May of 2013. (Doc. 79 at 42 ("[Wells Fargo] is not seeking such relief in the form of an injunction; the non-solicitation provision is expired.")). Instead, it seeks equitable relief, in the form of the return of certain intellectual property that Diodato allegedly took with him when he left Wells Fargo. (See id.) Hence, the court will grant Diodato's motion on Wells Fargo's claim for injunctive relief pursuant to the TSA's non-solicitation provisions.
Diodato next asserts that Wells Fargo waived its right to compensatory or punitive damages in the TSA and that, in any event, Wells Fargo failed to prove that it suffered financial damages to any degree of certainty. Regarding waiver, Diodato
(Diodato Dep. Ex. A at 3). Diodato contends that Wells Fargo "limited the scope of its remedy to injunctive relief only" such that its claim for legal damages must be dismissed. Diodato directs the court to Haldeman v. Towers, Perrin, Forster & Crosby, 23 Phila. 427 (Pa.Ct.Com.Pl.1992) as support for the proposition that a remedies provision in a non-solicitation agreement which provides for equitable relief, but is silent as to compensatory relief, prohibits a claim for legal damages. (See Doc. 80 at 24).
Haldeman offers persuasive instruction. In Haldeman, the plaintiff employee accepted an opportunity to become a shareholder of his consulting firm and, by virtue of this acceptance, became subject to its bylaws. Id. at 428-29. The bylaws included a noncompetition clause with the following remedies provision:
Id. at 429. The bylaws further provided that any difference of opinion with respect to these terms would be submitted to arbitration. Id. Plaintiff subsequently left the firm and solicited his former clients in apparent violation of the noncompetition clause. Id. at 427-29. After the firm sought to arbitrate, plaintiff moved the Philadelphia Court of Common Pleas to enjoin arbitration, arguing that the damages provision was not amenable to varying interpretations and thus the dispute not appropriately subject to arbitration. See id.
The court observed that the agreement clearly set forth the firm's available remedies, and that there is "no language ... which provides for compensation to the employer for its losses." Id. at 430-31. It noted that the firm drafted the bylaws, and that plaintiff had neither a role in negotiating nor influence over their terms. See id. at 431. Reciting the oft-reiterated and cardinal principle of contract interpretation that ambiguities shall be construed against the drafter, the court concluded that "any doubt over whether the clause in question entitles the defendant to collect money damages must be resolved against the defendant." Id. (emphasizing that the "well settled ... rule of law governing the interpretation of a noncompetition clause requires an ambiguity to be construed against the drafter"). The court held that damages beyond those identified in the agreements' remedies clause were unavailable to the firm. See Haldeman, 23 Phila. at 429.
Lastly, the court turns to the merits of Wells Fargo's claim for breach of the TSA. As noted above, to prevail on a breach of contract claim under Pennsylvania law, a plaintiff must prove the existence of a contract, its essential terms, and the defendant's breach of a duty imposed by those terms. See Ware, 322 F.3d at 225 (quoting CoreStates Bank, 723 A.2d at 1058). Diodato acknowledges that the TSA strictly prohibits him from soliciting clients of Wells Fargo "with whom [he] had Material Contact" and/or "were clients... of Wells Fargo within six (6) months prior to [his] termination of employment." (See Diodato Dep. Ex. A at 2). In Count I of its counterclaim, Wells Fargo contends that Diodato breached this provision by contacting his former clients following his termination and soliciting them to transfer their business to his new employer. (Doc. ¶¶ 55-57).
Diodato maintains that he did not solicit clients that he previously managed while working for Wells Fargo. (Doc. 67 ¶ 47). In response, Wells Fargo highlights Diodato's own concession that he maintained close and regular contact with former clients during the two-year non-solicitation period, (Doc. 77 ¶ 53), and that initial records reveal that seventy-six (76) of the accounts he serviced at Wells Fargo had transferred their business by June of 2013. (Doc. 67 ¶ 73; Doc. 77 ¶ 73). Diodato's declaration about the nature of his communications with his former clients is vague at best, (see Doc. 67 ¶ 48 ("Mr. Diodato freely acknowledges ... that he maintained long-standing personal connections with many of his contacts and regards many of these persons as personal friends.")), but the record evidence as a whole, viewed in the light most favorable to Wells Fargo as the non-movant, permits an inference that Diodato solicited his former clients in violation of the TSA. (See Doc. 67 ¶ 73; Doc. 77 ¶¶ 53, 73, 65-69 (citing inter alia Doc. 75, Ex. A, Diodato PP (email response to Diodato from client noting that he "sent that request for transfer to Wells Fargo as you had asked"))). Genuine issues of fact persist with respect to whether Diodato solicited his former clients or whether Diodato merely accepted
Diodato's challenge to Wells Fargo's PUTSA claim takes two forms: first, that the gist of the action doctrine bars both the PUTSA claim and the remainder of Wells Fargo's common law tort claims and, second, that Wells Fargo has failed to establish the existence of trade secrets or reasonable efforts to protect them.
Wells Fargo responds to Diodato's gist of the action doctrine argument by observing that no court has ever applied the doctrine to bar statutory claims. (See Doc. 75 at 29-30). Indeed, at least three district courts within the Third Circuit have declined to apply the doctrine to preclude statutory claims in light of the dearth of authority supporting such an application. See Sproul Hill Assocs., L.P. v. Newell Rubbermaid Inc., No. 13-4998, 2013 WL 6731976, at *3, 2013 U.S. Dist. LEXIS 177291, at *8-9 (E.D.Pa. Dec. 16, 2013) ("Counts III and IV [under the Hazardous Sites Cleanup Act and Clean Streams Law] are statutory claims, not common law tort claims. Defendants fail to cite to any case dismissing statutory claims under the gist of the action doctrine." (emphasis added)); Knit With, 2009 WL 3427054, at *7, 2009 U.S. Dist. LEXIS 98217, at *18-19 ("Defendants' briefs fail to cite any case where a federal court has dismissed a sui generis federal statutory claim [pursuant to the Racketeer Influenced and Corrupt Organizations Act] under the gist of the action doctrine as duplicative of a contract claim. Given the absence of any other authority for Defendants' argument ... the Court declines to dismiss Plaintiff's RICO claims."); Clark v. EMC Mortg. Corp., No. 08-1409, 2009 WL 229761, at *4-5, 2009 U.S. Dist. LEXIS 61181, at *18 (E.D.Pa. Jan. 29, 2009) (rejecting application to statutory claims under Pennsylvania's Fair Debt Collection Practices Act and Unfair Trade Practices and Consumer Protection Law ("UTPCPL")); see also Sarsfield v. Citimortgage, Inc., 707 F.Supp.2d 546, 556 (M.D.Pa.2010) (applying gist of the action doctrine to common law tort claims but declining to apply it to UTPCPL claims). Absent compelling argument in support of Diodato's novel application of the doctrine, this court is similarly disinclined to apply the gist of the action doctrine to Wells Fargo's statutory claim for misappropriation of trade secrets.
Diodato alternatively argues that Wells Fargo fails to identify any trade secrets or prove that it reasonably protected those secrets as required by the statute and by case law interpreting the same. (See Doc. 68 at 31-32). PUTSA defines "trade secrets" as follows:
The TSA defines the term "trade secret" to include: the names, addresses, and contact information of Wells Fargo's clients, as well as personal or financial information relating to those customers and information regarding, inter alia, account numbers, balances, maturity or expiration or renewal dates, and policies; any information concerning Wells Fargo's operations, including, inter alia, its methods, services, pricing, costs, margins, markups, finances, business plans and strategies, decision making, marketing, policies, and procedures; and "any other proprietary and/or confidential information relating to the Company's customers, employees, products, services, sales, technologies, or business affairs." (Diodato Dep. Ex. A at 1). Wells Fargo contends that by directing the court to the terms of the TSA, it has specifically identified the trade secrets at issue as: information concerning customers and potential customers; details of its customers' insurance needs and policies; non-public internal procedures, programs, and forms; non-public lists of prospective and insured customers; non-public information regarding such facts as habits and insurance needs of customers, locations, and descriptions of properties; expiration dates of policies; and insurance daily reports. (Doc. 76 at 11-12 (citing Doc. 5 ¶¶ 26, 39-44)). Wells Fargo cites only its pleading in enumerating these alleged trade secrets.
At this juncture, Wells Fargo cannot simply rest on the allegations of its counterclaim; rather, it must come forward with objective evidence that Diodato misappropriated information or property and that the information or property he took constitutes a trade secret as contemplated by Pennsylvania law. Wells Fargo's opposition falls short of this mark. Indeed, when challenged by Diodato to identify specifically the trade secrets that Diodato misappropriated, Wells Fargo cites only to the allegations of its counterclaim and its own personal definition of "trade secret" as set forth in the TSA. (Doc. 76 at 11-12 (citing Doc. 5 ¶¶ 26, 39-44)). Cf. Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102, 105 (3d Cir.2010) (specifically identifying secrets at issue as "code books containing the formulas and process parameters for all of [the employer's] products" and secret recipes and procedures for creating employer's unique product). Wells Fargo directs the court to no record evidence to prove its ipse dixit assertion that the information generally identified in its pleading constitutes a trade secret
On the Rule 56 record, analysis of Wells Fargo's claim is problematic. Wells Fargo devotes two pages in opposition to Diodato's arguments. Wells Fargo does not direct the court to any evidence tending to establish that Diodato retained and misappropriated unique, proprietary information falling within either PUTSA's or the TSA's definition of trade secrets. Wells Fargo's claim rests entirely on the allegations of its pleading, (see Doc. 75 at 11-13 (citing Doc. 5 ¶¶ 26, 39-44 (counterclaim))), which, at first blush, appears to present a prima facie case of trade secret misappropriation. It is one thing to allege misappropriation of a trade secret, which allows a claim to survive the Rule 12 stage. At this stage, however, Wells Fargo must cite evidence — beyond its own allegations — identifying each allegedly misappropriated trade secret and the manner in which that secret was misappropriated by Diodato to Wells Fargo's detriment.
As the court has reiterated throughout this opinion, the Rule 56 standard demands more: "to survive summary judgment, a party must present more than just `bare assertions, conclusory allegations or suspicions' to show the existence of a genuine issue." Podobnik, 409 F.3d at 594; also Kirleis, 560 F.3d at 161. In other words, the conclusory allegations of Wells Fargo's pleadings are entirely insufficient to establish a genuine issue of material fact sufficient to survive summary judgment. See Pastore v. Bell Tel. Co. of Pa., 24 F.3d 508, 511 (3d Cir.1994) (plaintiff "cannot rely upon conclusory allegations in its pleadings ... to establish a genuine issue of material fact"). Wells Fargo is correct that at this stage, the court must view the evidence, and draw all reasonable inferences from the evidence, in the light most favorable to the nonmoving party. (See Doc. 75 at 11 (citing Meyer-Chatfield v. Century Bus. Servicing, Inc., 732 F.Supp.2d 514, 518 (E.D.Pa.2010))). To its detriment, Wells Fargo offers the court no evidence to so construe. It directs the court to no evidence establishing exactly what information it believes Diodato misappropriated or the manner in which he did so. Given this complete failure of proof on a crucial element of Wells Fargo's claim, the court is compelled to grant Diodato's motion.
Diodato lastly contends that the gist of the action doctrine bars Wells Fargo's remaining
As observed above, a breach of a contract does not constitute an actionable tort unless the allegedly tortious conduct is "the gist of the action, the contract being collateral." eToll, 811 A.2d at 14. The Pennsylvania Superior Court has admonished that "a claim should be limited to a contract claim when `the parties' obligations are defined by the terms of the contracts...., and not by the larger social policies embodied by the law of torts." Id. at 14 (quoting Bohler-Uddeholm Am., Inc., 247 F.3d at 104). In other words, when a common law tort claim is wholly derivative of an alleged breach of contract, the court should not entertain both claims simultaneously. See id.
The crux of Wells Fargo's claims against Diodato is his alleged violation of the TSA, specifically its provisions regarding non-solicitation and confidentiality. Wells Fargo's description of various claims in its opposition brief confirms this point. (See Doc. 75 at 33). In describing the proof requisite to support its tortious interference claim, Wells Fargo indicates that it "will draw on the deep well of evidence that Diodato attempted to, and did, direct [Wells Fargo's] clients to AIA, serviced their business at AIA, and was in continuous contact with [Wells Fargo's] customers throughout this period." (Id.) This description is nothing more than Wells Fargo's breach of contract claim restated to eliminate references to the TSA. The conduct underlying Wells Fargo's tortious interference claim is quite plainly and specifically addressed by the non-solicitation provision of Diodato's agreement. eToll, 811 A.2d at 14 (quoting Bohler-Uddeholm Am., Inc., 247 F.3d at 104). Just as Diodato's own common law fraud claims is barred by the gist of the action doctrine, so too are Wells Fargo's common law tort claims against Diodato.
For all of the foregoing reasons, the court will grant in part and deny in part both motions. An appropriate order will issue.
AND NOW, this 8th day of September, 2014, upon consideration of the motion (Doc. 63) for summary judgment by defendant and counterclaimant Wells Fargo Insurance Services, USA, Inc. ("Wells Fargo") and the motion (Doc. 66) for partial summary judgment by plaintiff and counterdefendant Darrell Diodato ("Diodato"), each pursuant to federal Rule of Civil Procedure 56(a), and for the reasons set forth in the accompanying memorandum, it is hereby ORDERED that: