MThree Corporate Consulting Limited v. Wascak

Background

MThree Corporate Consulting Limited, doing business as Wiley Edge, provides education and staffing services using a “hire, train, and deploy” business model. Christopher Wascak was its Senior Director, and Robert Rolle was its Business Development Director and head of a global sales team. Both signed employment agreements containing restrictions on competition and solicitation after their employment ended. Wascak also signed restricted share unit grant agreements.

The agreements restricted competition in the New York metropolitan area or within 50 miles for six months after termination. They also restricted interference with MThree’s business for 12 months, including soliciting certain employees and clients. Wascak gave notice of termination on June 1, 2022, and Rolle gave notice on June 27, 2022. The parties disputed whether the defendants could make their resignations effective earlier than the notice periods stated in the agreements.

On July 28, 2022, Wascak and Rolle incorporated HTD Talent in North Carolina. A press release said the company would use the same general “hire, train, and deploy” model and target minority and underrepresented communities. MThree sued for breach of contract, breach of the duty of loyalty and the faithful servant doctrine, and misappropriation of trade secrets and confidential information under the Defend Trade Secrets Act. MThree sought a temporary restraining order and a preliminary injunction barring the defendants from operating HTD Talent during the restricted period, violating the agreements, or using or disclosing MThree’s protected information.

Court’s Analysis

The court denied MThree’s request for a temporary restraining order and reviewed its request for a preliminary injunction. To obtain a preliminary injunction, MThree had to show a likely success on the merits, likely irreparable harm without immediate relief, a favorable balance of the equities, and consistency with the public interest. The court concluded that MThree had not shown either likely success or irreparable harm.

Regarding the contract claim, the court found that MThree had not shown a breach without factual discovery. HTD Talent was established in North Carolina, outside the geographic area specified in the restrictive covenants, and MThree had not shown that HTD Talent operated or intended to operate within that area.

The court also rejected MThree’s theory that the defendants had already breached the agreements by announcing an intention not to comply with the restrictions. Under New York law, when one party anticipatorily repudiates a contract—that is, declares before performance is due that it will not perform—the other party must choose either to treat the contract as broken and seek damages or to continue treating it as valid and later enforce it. The court found that MThree had tried to do both: it continued to assert that the restrictions were valid and sought an injunction, while also treating the defendants’ conduct as an immediate breach.

MThree also had not shown that the defendants possessed or misappropriated protected trade secrets. The court noted that MThree obtained clients through public requests for proposals and that the identities and key contacts of those clients were publicly available. It further found that MThree had not shown that its sales strategies were unique or materially different from information available to other staffing or recruitment professionals. The court described the evidence of breach as speculative.

The court separately found no showing of irreparable harm. MThree had provided no evidence that the defendants had competed within the restricted geographic area or solicited MThree’s employees or customers. MThree also had not shown present or likely future losses of business or goodwill. Any possible loss of salary resulting from the defendants’ attempts to shorten their notice periods could be compensated with money damages and therefore did not justify an injunction.

Disposition

The court denied MThree’s motion for a preliminary injunction. The defendants were ordered to answer or otherwise respond to the complaint by September 30, 2022. A status conference was set for October 28, 2022, and the Clerk of Court was directed to terminate the motion. The opinion did not dismiss the underlying claims.