C.H. Robinson Worldwide, Inc. v. Traffic Tech, Inc.

Background

C.H. Robinson Worldwide, Inc. sued Traffic Tech, Inc., James Antobenedetto, Spencer Buckley, Wade Dossey, Brian Peacock, and Dario Aguiniga. C.H. Robinson alleged three causes of action: breach of contract against the individual defendants; tortious interference with contractual relationships against all defendants; and tortious interference with prospective economic advantage against all defendants.

The individual defendants had worked for C.H. Robinson in California and later began working for Traffic Tech in California. Their Confidentiality and Protection of Business Agreements contained post-employment restrictions lasting two years. The restrictions generally barred certain dealings with C.H. Robinson’s customers, carriers, vendors, and other business partners, and barred efforts to cause those business partners to reduce or end their relationships with C.H. Robinson. The agreements generally selected Minnesota law and Minnesota courts, although Brian Peacock’s agreement contained different provisions for disputes arising in California. The defendants moved for summary judgment, which is a request to decide the case without a trial because no genuine dispute of important facts remains.

Choice of Law

The court applied Minnesota’s choice-of-law rules because the case was in federal court based on diversity jurisdiction. Those rules generally honor contractual choice-of-law provisions, but not when applying the chosen law would violate the fundamental policy of a state with a materially greater interest in the issue.

The court applied the factors approved by the Eighth Circuit for evaluating an anti-waiver statute. Although Minnesota was C.H. Robinson’s principal place of business and was named in the agreements, the individual defendants lived and worked in California, and most of the agreements were signed there. The court found that the contacts favored California. It also found unequal bargaining power because most of the defendants were entry-level employees when they signed the agreements, and the agreements were essentially identical and not negotiated. The court further found that California had a strong public policy against employment restrictions, and that applying California law was not contrary to Minnesota public policy because Minnesota also disfavors non-compete agreements.

California Labor Code § 925 prevents an employer from requiring an employee who primarily lives and works in California to agree to a provision requiring an employment dispute arising in California to be adjudicated outside California or depriving the employee of California’s substantive legal protections. The court found that the claims arose in California because the individual defendants were hired, lived, and worked there and allegedly breached the restrictions while working there for Traffic Tech.

Although Antobenedetto, Buckley, Dossey, and Aguiniga signed their original agreements before January 1, 2017, the court found that later Bonus Incentive Agreements changed their compensation and required them to reaffirm their prior restrictions. The court concluded that these agreements modified the original agreements after § 925 became effective. Peacock signed his agreement in 2017. The individual defendants elected to void the choice-of-law provisions, so the court applied California law to C.H. Robinson’s claims against them. The court also rejected C.H. Robinson’s argument that the defendants waived their right to void those provisions by waiting too long to assert it.

Enforceability of the Restrictions

California Business and Professions Code § 16600 generally makes void a contract that restrains someone from engaging in a lawful profession, trade, or business. The court found that the non-solicitation provisions were very broad because they were not limited to protecting confidential information and extended to customers, vendors, partners, and carriers. The court held that the provisions unreasonably restricted the individual defendants’ ability to engage in their lawful profession and were unenforceable under California law. The court noted that it would also have found the restrictions overbroad and unenforceable under Minnesota law.

Tortious Interference Claims

For C.H. Robinson’s claims involving customer and carrier contracts, the court explained that tortious interference with a contract requires a contract, the alleged wrongdoer’s knowledge of it, intentional procurement of a breach, lack of justification, and damages. C.H. Robinson’s representatives testified that its customers and carriers were free to do business with other companies. C.H. Robinson did not show that it had customer or carrier contracts that the defendants caused to be breached. The court therefore granted summary judgment to the defendants on the claims involving interference with customer or carrier contracts.

The court also rejected the claims based on interference with the individual defendants’ restrictive covenants. Because those covenants were unenforceable and did not otherwise prevent Traffic Tech from hiring C.H. Robinson employees, C.H. Robinson had not shown material factual issues about whether the defendants acted intentionally or wrongfully by recruiting employees, accepting employment, or soliciting customers.

Disposition

Judge Michael J. Davis granted Defendants’ Motion for Summary Judgment. The order states: “This matter is dismissed with prejudice,” meaning the case was dismissed in a manner that bars refiling the same claims. Judgment was ordered to be entered accordingly.