NOT FOR PUBLICATION

 

United States District Court,

D. New Hampshire.

C & S WHOLESALE GROCERS, INC.

v.

GROCERY HAULERS, INC., et al.

 

Civil No. 11–cv–127–LM.

Sept. 28, 2011.

 

Benjamin L. Hincks, Laurence A. Schoen, Michael J. Ticcioni, Mintz Levin Cohen Ferris Glovsky & Popeo PC, Boston, MA, Gordon J. McDonald, Nixon Peabody LLP, Manchester, NH, for C & S Wholesale Grocers, Inc.

 

Kerry K. Jardine, Stephen B. Selbst, William R. Fried, Herrick Feinstein LLP, New York, NY, Arnold Rosenblatt, Cook Little Rosenblatt & Manson PLLC, Manchester, NH, for Grocery Haulers, Inc., et al.

 

ORDER

LANDYA McCAFFERTY, United States Magistrate Judge.

In this diversity action, C & S Wholesale Grocers, Inc. (“C & S”) sues Grocery Haulers, Inc. (“GHI”) seeking declaratory relief. Before the court is GHI’s motion to transfer venue of this lawsuit to the United States District Court for the Southern District of New York. C & S objects. The court heard oral argument on this motion on August 31, 2011. For the reasons that follow, the court denies the motion (doc. no. 7).

 

Factual Background

Except where noted, the factual summary is drawn from C & S’s complaint and GHI’s Answer and Counterclaims. GHI is a trucking company with a principal place of business in Avenel, New Jersey, that has for many years provided trucking and consulting services to C & S, a grocery wholesaler whose principal place of business is located in Keene, New Hampshire. On July 5, 2001, the parties executed a contract (the “Trucking Agreement”) that provided, inter alia, that GHI would transport and provide consulting for C & S’s wholesale business with grocery stores owned by Key Food Stores Co-operative, Inc. (“Key Food”) and The Great Atlantic & Pacific Tea Company (“A & P”). Per its terms, the Trucking Agreement is governed by New York law. Doc. no. 7–3, at 28. At the time C & S and GHI entered into the Trucking Agreement, C & S’s principal place of business was located in Brattleboro, Vermont. Doc. no. 7–3, at 1. C & S moved its corporate headquarters to New Hampshire in 2004. Doc. no. 25 ¶ 4.

 

Over the years, the Trucking Agreement was amended by C & S and GHI, and their business relationship appeared to flourish. For example, in 2005, C & S significantly expanded its wholesale business with A & P. At the same time, C & S and GHI agreed to amend the Trucking Agreement to modify the compensation calculus to reflect GHI’s increased transportation services for C & S’s additional A & P business. In short, the parties agreed to change GHI’s fee from an annual basis to a “per load” amount. The amendment (referred to hereinafter as “the 2005 Amendment”) became effective on July 1, 2005.

 

To provide services under the Trucking Agreement, GHI operated two trucking terminals. To service the A & P stores, GHI made deliveries from its trucking terminal in Avenel, New Jersey, and to service the Key Food stores, it made deliveries from its terminal in the Bronx, New York. Doc. no. 7–2, ¶¶ 9–11.

 

Prior to executing the Trucking Agreement, the parties had entered into a Labor Consulting Agreement dated January 1998 (“Labor Consulting Agreement”). Pursuant to the Labor Consulting Agreement, C & S agreed to pay GHI a fee of $10 million (over five years) in return for GHI’s assistance with respect to the handling of certain collective bargaining agreements. In 2005, the Labor Consulting Agreement expired, and according to C & S, the parties agreed, on an “oral and at-will” basis, that C & S would pay GHI an annual fee of $1 million fee in return for GHI’s continued consulting services. GHI attempted, according to C & S, to convert that oral agreement into a written amendment of the Labor Consulting Agreement to extend the $1 million annual fee to a ten-year term and to tie that fee to the A & P portion of the Trucking Agreement. C & S asserts that it repudiated that proposal and refused to sign it.

 

Beginning in early 2011, the business relationship began to deteriorate. By separate letters dated January 7 and February 17, 2011, C & S sent GHI notice of the termination of both the A & P portion of the Trucking Agreement and the agreement to pay the $1 million annual consulting fee. In a letter to C & S dated March 11, 2011, counsel for GHI wrote:

 

… Plainly, the parties are in disagreement over C & S’s termination of the Trucking Agreement. Accordingly, pursuant to the terms of the Trucking Agreement, we plan to commence arbitration to resolve this dispute no later than March 16, 2011. Please advise me prior to that date whether C & S will consent to arbitrate … in New York City….

 

Doc. no. 1–5.

 

C & S elected not to respond to that letter and, instead, on March 18, 2011, C & S filed this declaratory judgment action. In a letter to GHI dated May 5, 2011, C & S informed GHI that it was terminating the Trucking Agreement in its entirety on the basis of GHI’s alleged diversion of goods with respect to certain Key Food stores. Shortly thereafter, on May 9, 2011, GHI filed an action in the United States District Court for the Southern District of New York, seeking a temporary restraining order and a preliminary injunction to prevent C & S from terminating the Key Foods portion of the Trucking Agreement. On May 10, 2011, the New York court granted GHI’s temporary restraining order and, on May 11, 2011, set a discovery schedule. Doc. nos. 7–6 & 7–7.

 

On May 23, 2011, GHI filed its Answer and Counterclaims in this court, seeking declaratory relief, and damages for breach of contract, conversion and unjust enrichment related to C & S’s termination of the Trucking Agreement. Contemporaneously with the filing of its Answer, GHI filed the instant motion to transfer venue to the Southern District of New York. On June 3, 2011, C & S filed its Answer and Counterclaim in the New York court. Doc. no. 24–6.

 

In sum, therefore, there are two separate actions involving these parties and their disputes under the Trucking Agreement, one pending here and the other in New York. In this court, the lawsuit concerns the portion of the Trucking Agreement that deals with the A & P stores; in New York, the lawsuit concerns the portion of the Trucking Agreement that deals with the Key Food stores. At oral argument, GHI conceded that the lawsuits are distinct and deal with different provisions of the Trucking Agreement.

 

Legal Discussion

GHI moves, pursuant to 28 U.S.C. § 1404(a), to transfer this case to the United States District Court for the Southern District of New York. Section 1404(a) provides: “For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any district where it might have been brought.” Authority to transfer a case under this statute “is committed to the court’s broad discretion.” Pure Distribs., Inc. v. Baker, No. CIV. 99–412–M, 2000 WL 1499472, at(D.N.H. May 10, 2000); see also Huffington v. T.C. Grp., LLC, 637 F.3d 18, 24 (1st Cir.2011) (describing 1404(a) as calling for a “broad-based balancing” test) (internal quotation marks omitted); Astro–Med, Inc. v. Nihon Kohden Am., Inc., 591 F.3d 1, 12 (1st Cir.2009) (courts adjudicate motions for transfer “according to an individualized, case-by-case consideration of convenience and fairness”) (internal quotation marks omitted).

 

Although no single factor is dispositive, a court should consider: (1) the convenience of the parties, (2) the convenience of the witnesses, (3) the relative ease of access to sources of proof, (4) the availability of process to compel attendance of unwilling witnesses, (5) the cost of obtaining willing witnesses, and (6) any practical problems associated with trying the case most expeditiously and inexpensively.

 

Pure Distribs., 2000 WL 1499472, at(internal quotations omitted). Additional factors include “the order in which jurisdiction was obtained by the district court, the availability of documents, and the possibilities of consolidation.” Cianbro Corp. v. Curran–Lavoie, Inc., 814 F.2d 7, 11 (1st Cir.1987) (citing Codex v. Milgo Elec. Corp., 553 F.2d 735, 737 (1st Cir.1977)). While no single factor is dispositive, the “most important factor in deciding whether to transfer an action is the convenience of witnesses.”   Demers v. Pilkington N. Am., Inc., No. 10–cv–296–JL, 2010 WL 4683780, at(D.N.H. Nov. 10, 2010) (quoting Buckley v. McGraw–Hill, Inc., 762 F.Supp. 430, 440 (D.N.H.1991)).

 

“The burden of justifying a transfer under § 1404(a) rests with the party seeking it, and ‘there is a strong presumption in favor of plaintiff’s choice of forum.’ “ Demers, 2010 WL 4683780, at(quoting Coady v. Ashcroft & Gerel, 223 F.3d 1, 11 (1st Cir.2000)). Courts generally assign more weight to a plaintiff’s choice of forum where the plaintiff is a resident of that forum. See Demers, 2010 WL 4683780, at(“strong presumption” applies where plaintiff resides in its choice of forum) (citing Sousa v. TD Banknorth Ins. Agency, Inc., 429 F.Supp.2d 454, 457 (D.N.H.2006)); see also DSM Research, B.V. v. Verenium Corp., 686 F.Supp.2d 159, 161 (D.Mass.2010).

 

GHI makes the following arguments in support of its transfer motion: (1) other than the fact that New Hampshire is C & S’s domicile, there is no connection between the state of New Hampshire and the New Hampshire lawsuit; (2) the non-party witnesses, most of whom work for A & P, live and work in the New York metropolitan area where A & P is headquartered; (3) all of GHI’s witnesses and documents related to the New Hampshire lawsuit are located at its headquarters in New Jersey, which is a mere 20 miles from New York but 230 miles from New Hampshire; (4) both lawsuits involve disputes under the Trucking Agreement, which contract is governed by New York law; and (5) the New York lawsuit is moving at a faster pace, with a temporary order already issued and a discovery schedule in place.

 

As a threshold matter, the venue statute requires the court first to determine whether the case could have been filed in the district to which GHI seeks to transfer it. Neither party disputes that the case could have been filed in the Southern District of New York. Instead, their disagreement focuses on whether convenience and the interest of justice favor transfer. Although the case “might have been brought” in New York, none of the relevant factors weighs heavily in favor of transfer. The court analyzes these factors below.

 

1. Plaintiff’s Choice of Forum

As explained above, the burden is on GHI to persuade the court that the case should be transferred to New York, and “there is a strong presumption” in favor of C & S’s chosen forum. Demers, 2010 WL 4683780, at *6. Where the plaintiff resides in her chosen forum, her choice of forum is given greater weight. See id; see also James Wm. Moore, Moore’s Federal Practice (hereinafter “Moore’s ”) § 111.13[c] (3d ed.2010) (“plaintiff’s choice is given added weight if the plaintiff resides in the chosen forum”). Even in a case where the “factual center of the case” lies elsewhere, plaintiff’s choice of forum is nonetheless still entitled to weight—although the weight given to her choice of forum is reduced in such a case. Demers, 2010 WL 4683780, at *6. GHI must therefore persuade the court that the balance of the relevant factors defeats the strong presumption given to C & S’s choice of this forum.

 

2. Operative Events

GHI argues that the operative events underlying the New Hampshire lawsuit occurred in (or around) New York. On this basis, GHI asserts that C & S’s choice of forum is entitled to minimal weight. “For purposes of the convenience analysis, pinpointing where the operative events took place … is not always an exact science.” Moore’s § 111.13[d][ii]. As a general rule, “[t]he place where the operative events occurred often will be the place where the majority of significant witnesses and physical evidence is located….” Id. § 111.13[c][iii].

 

The New Hampshire lawsuit is, with the exception of GHI’s counterclaim for conversion, a contract dispute that will involve the interpretation of the Trucking Agreement (specifically that portion dealing with the A & P business), and the terms of the parties’ 2005 renegotiation of GHI’s labor consulting fee. The majority of significant witnesses in this case will likely be the principals who negotiated the terms of these contracts. The same is true of the location of the physical evidence, which, because this is a contract dispute, will likely be documentary in nature (e.g., email communications, letters, and other written correspondence concerning the parties’ negotiations of the two contracts at issue). As the principals of C & S reside in or around New Hampshire and those of GHI in or around New York, this factor is neutral. Further, as each side will likely produce any records and documentary evidence from its own corporate headquarters, this factor is likewise neutral. Based on the nature of the underlying dispute, it is difficult to conclude that the “operative events” of this lawsuit occurred in the New York area.

 

There is no question that the services GHI provided C & S under both of these contracts were provided exclusively in the New York metropolitan area. However, the resolution of this dispute will hinge on the meaning of contractual terms. Although New York is unquestionably the epicenter of GHI’s operations, the court is not persuaded that New York is the location where the “operative events” of this lawsuit occurred. C & S’s choice of forum, which is also its place of corporate residence, is therefore entitled to the “strong presumption” described in Demers, 2010 WL 4683780, at *6.

 

3. Convenience of Parties

GHI asserts it would be more convenient for the parties to litigate in New York, where its facility and witnesses are located. The plaintiff’s documents and witnesses, however, are located in New Hampshire.

 

Although it would be more convenient for GHI to litigate in New York, transferring venue would merely shift the inconvenience to C & S. This factor is neutral and tips the scales in neither direction.

 

4. Convenience of Witnesses

Convenience of the witnesses is considered the “most important factor” in deciding whether to transfer an action. Demers, 2010 WL 4683780, at *6. In weighing this factor, courts are generally less concerned with the location of party witnesses and their employees than with the location of “non-party witnesses,” particularly those who can be characterized as “unwilling non-party witnesses.” Moore’s, supra, § 111.13[f][iii]. The party relying on the potential unavailability of “non-party witnesses,” should provide the court with specific information as to their identity. See Moore’s, supra § 111.13[f][iii] (“Therefore, the party relying on the unavailability of the non-party witnesses in one of the respective forums should provide the court with specific information as to their unwillingness to testify.”); see also Demers, 2010 WL 4683780,(“conclusory allegations of unnamed witnesses are insufficient to meet the movant’s burden to transfer”) (internal quotations omitted).

 

Here, according to GHI, there is not a single non-party witness who resides in New Hampshire. C & S does not dispute this fact. However, C & S argues that non-party witnesses will not be crucial to this court’s resolution of this contract dispute. GHI asserts that to the extent any non-party witnesses will be relevant to this lawsuit, such witnesses would be employees of A & P, which is located in the New York metropolitan area. GHI has not, however, provided the court with any specific information with respect to these potential non-party witnesses, such as names, addresses, or the relevant topics on which any such witness would testify. Moreover, it is not clear to the court that, to the extent GHI (or C & S) needs to produce the testimony of a non-party witness from the New York area, such witness would be unwilling to testify in New Hampshire.

 

In short, this factor minimally favors transfer to New York, and is not so weighty that it overcomes the “strong presumption” accorded C & S’s chosen forum.

 

5. The Order in Which Jurisdiction Was Obtained

Here, while New Hampshire obtained jurisdiction over this lawsuit before GHI filed its lawsuit in New York, the court gives this no weight in the analysis. The “first-to-file” rule bears relevance only “[w]here identical actions are proceeding concurrently in two federal courts….” Coady, 223 F.3d at 11; see also World Energy Alternatives, LLC v. Settlemyre Indus., Inc., 671 F.Supp.2d 215, 218 (D.Mass.2009) (“[w]here identical actions are proceeding concurrently in two federal courts, the first filed action is generally preferred, even if it is a request for a declaratory judgment”) (emphasis in the original). These two lawsuits are not identical. Therefore, the fact that New Hampshire obtained jurisdiction before New York is of no relevance. Further, the evidence reveals that shortly before C & S filed its lawsuit in New Hampshire, GHI communicated to C & S its intention to arbitrate the disputes under the Trucking Agreement in New York. Under these circumstances, C & S should not benefit from its having defeated GHI in a race to the courthouse.

 

6. Considerations of Efficiency and Judicial Economy

This factor weighs in favor of transfer because the parties have engaged in discovery in New York but have not yet even made initial disclosures here. There is undoubtedly going to be some amount of overlapping, and perhaps redundant, discovery between the New York and New Hampshire cases. Further, the Trucking Agreement is governed by New York law. As a federal court sitting in diversity in New York is likely more familiar with New York law, the New York court is better suited to decide the issues underlying the Trucking Agreement. See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 34 (1988) (Kennedy, J., concurring) (citing 15 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure, §§ 3848–3849, 3851, 3853–3854 (2d ed.1986); Van Dusen v. Barrack, 376 U.S. 612, 643 (1964); Jackson Nat’l Life Ins. Co. v. Economou, 557 F.Supp.2d 216, 223–24 (D.N.H.2008). However, the question of what state’s law applies to the 2005 renegotiation of the labor consulting fee is not as clear.

 

In an ideal world, the goals of efficiency and judicial economy would be best served were these two cases tried in one courthouse. However, GHI has not persuaded the court that, taking into account all the circumstances present here, these goals should override C & S’s choice of forum where C & S also resides in this forum.

 

7. The Interest of Justice

Having weighed the convenience factors, the court concludes that GHI has not met its burden of proving that the interest of justice favor transferring of this case to New York. Because C & S’s choice of forum weighs strongly against transfer and the other factors do not outweigh that presumption, the Court will not transfer venue.

 

SO ORDERED.

United States District Court,

E.D. Wisconsin.

DENTAL HEALTH PRODUCTS, INC., Plaintiff,

v.

Frank RINGO, Defendant.

 

No. 08–C–1039.

Sept. 30, 2011.

 

Kathy L. Nusslock, Heather K. Gatewood, Tara M. Mathison, Davis & Kuelthau SC, Milwaukee, WI, for Plaintiff.

 

Frank Ringo, Grant Park, IL, pro se.

 

FINDINGS OF FACT AND CONCLUSIONS OF LAW

WILLIAM C. GRIESBACH, District Judge.

Dental Health Products, Inc. (DHPI), a Wisconsin corporation, sued its former employee, Frank Ringo, alleging violations of the Computer Fraud and Abuse Act, breach of the duty of loyalty and breach of a non-compete agreement. In a decision and order dated August 25, 2011, I found Ringo liable for the above violations but concluded that establishing damages would require a trial. At the parties’ consent, trial was held to the court on September 19, 2011, with Defendant Ringo appearing pro se. Upon Plaintiff’s motion, I dismissed Ringo’s counterclaim on the ground that he had not provided any evidence of damages. What follows are my findings of fact and conclusions of law as to the Plaintiff’s claims for breach of the duty of loyalty and breach of a non-compete agreement. I also address the claim for punitive damages.

 

DHPI is in the business of selling supplies, equipment and services dentists throughout the United States. The submissions and testimony made clear that the business is a profitable one: DHPI sells dental equipment and merchandise at a profit which generally ranges between 28%–34%. Frank Ringo was a DHPI branch manager and sales representative selling dental supplies to dentists located principally in Illinois and Indiana.

 

I. Breach of Duty of Loyalty

During his six-year tenure (2002–2008) at DHPI, Ringo maintained his own company called J & M Professional Contractors, and in that capacity he sold and installed things like cabinets for dental offices. By 2007, Ringo began purchasing dental supplies and equipment from vendors for J & M with the intention of reselling them to dental customers. Ringo conceded at trial that these sales were made to actual customers of DHPI as well as to customers to whom DHPI otherwise would have been able to sell the same or similar dental supplies. Ringo continued to purchase and sell goods through J & M until September 2008. Ringo’s purchase of dental supplies for J & M from various vendors during the period of his employment at DHPI totaled $482,167.61. Steven Bultman, a CPA and DHPI’s controller, testified credibly that had these purchases and sales been made through DHPI, it would have earned a profit of 29%. DHPI’s loss of profit as a result of Ringo’s diversion of sales of dental supplies purchased by J & M totaled $196,941.70. (Ex. 51.) Ringo did not contest these figures.

 

Twenty-nine percent of $482,167.61 is much less than the $196,941.70 in lost profits claimed. That is because the gross figures (e.g., $482.167.61) are not Ringo’s sales but the amount his company purchased from vendors. His gross sales would incorporate any profit he made. Thus, if DHPI had purchased the same amount of product, its gross sales would be $679,109.31. Twenty-nine percent of that is $196,941.70.

 

J & M was not the only company Ringo used to sell dental products during his employment at DHPI. Ringo purchased dental supplies through a company called DESC at a cost of $2,883.27 during the period of his employment at DHPI. He had approached DESC in 2007 with the intent of starting an affiliated business in Illinois (DESC was based in Iowa). The purchases through DESC and the subsequent sales by Ringo were made to actual customers of DHPI as well as to customers to whom DHPI otherwise would have been able to sell the same or similar dental supplies. Credible testimony established that DHPI would have earned a profit of 34% on these sales if Ringo had sold these dental supplies through DHPI. DHPI’s loss of profit as a result of Ringo’s diversion of sales of dental supplies purchases through DESC during Ringo’s employment with DHPI is $1,485.32.

 

From the above figures, which were supported by the exhibits and the testimony of Steven Bultman, and which were essentially uncontested by Ringo, I conclude that DHPI lost $198,427.02 in profit that it would have earned if Ringo had not been competing with his own employer during his employment. These damages are all the result of Ringo’s breach of his duty of loyalty, as this Court has already found. (Dkt. # 155 at 3–4.)

 

At the hearing Ringo submitted a case to the Court, General Automotive Mfg. Co. v. Singer, (Ex. 10002.) In Singer, which this Court cited in its summary judgment decision, the Wisconsin Supreme Court found that Singer had violated his fiduciary duty to act solely in the interest of his employer. 19 Wis.2d 528, 535, 120 N.W.2d 659, 663 (Wis.1963). Ringo points out that in Singer, the employee was under a contract that bound him to “exercise the utmost faith and loyalty” to his employer. Id. at 531. Ringo argues that he had no such contract, and he believes the absence of a contract means he was under no duty of loyalty. The time for making such an argument was at the summary judgment stage, of course, but because Ringo is pro se I will explain my conclusion that the duty of loyalty has been breached.

 

First, it is not true that Ringo had no contractual obligations to his employer. In the non-compete agreement he signed in 2002, he agreed that DHPI “has a legitimate interest in protecting the goodwill it has developed with its customers” and further agreed that “I will continue to develop such goodwill on behalf of the Employer.” (Ex. 2 at 1.) By agreeing to develop goodwill on behalf of his employer, Ringo was agreeing not to pilfer customers for his own benefit. Moreover, if the non-compete agreement prevents competition with the employer after the employment has terminated, surely it is at least implicit in such an agreement that one will not compete with the employer while he is employed. After all, it would not make sense to expect one’s loyalty to the employer to increase after the employment relationship has ended.

 

Moreover, DHPI noted that its employee handbook, which Ringo acknowledged receiving, contains a prohibition on outside employment that “constitutes a conflict of interest.” (Ex. 3 at 19.) Certainly, creating a business that competes with one’s employer constitutes the very conflict of interest that the company prohibited.

 

But all that is just an aside because this case has been tried as a breach of the common law duty of loyalty rather than a breach of contract. Wisconsin case law confirms that a contract requiring loyalty to the employer is not required. This is because the duty does not arise from contract alone but from general and ancient principles of agency law: in short, if one agrees to act as agent (such as a salesman) for a principal, implicit in that agreement is the duty not to work against the principal’s interest. Working against one’s principal is a tort. For example, the defendant in InfoCorp, LLC v. Hunt argued that because he was a salesman who had no contract with his employer, he could not be found liable for a breach of a duty of loyalty. The court of appeals disagreed. It noted that the employee used his position with his employer to steer business and sales to a new potential employer. “A jury could conclude that Hunt’s breach of loyalty involved direct harm to his employer because of the manner in which he performed his assigned job duties.” 2010 WI App 3, 323 Wis.2d 45, 57, 780 N.W.2d 178, 184 (Wis.Ct.App.2009). That is the scenario we have here.

 

It is true that in some cases an employee’s competition with his employer will not rise to the level of a breach of loyalty. If a greeter at Wal–Mart opens a small booth selling crafts on the weekends, she will not be deemed disloyal. But here we have a key company employee competing for key aspects of his employer’s business. Steven Bultman credibly testified (and Ringo did not dispute) that Ringo was one of the top five salesman in the company, and Ringo also held various management positions with DHPI. He admitted that the products he sold on the side were available from DHPI and he sold them to DHPI clients. The sales he made were directly within the heartland of DHPI’s business model. At trial, counsel for DHPI said that the company had been “robbed” by Ringo, and perhaps that is too strong, but the unrefuted evidence shows that the sales Ringo made on the side to DHPI clients were sales that DHPI itself would have made but were prevented from making by the secret actions of its employee. It was a zero-sum situation: the sales Ringo made for himself equaled the losses to his employer. If company salesmen can moonlight on their own and use their positions to divert business from their employer, then the duty of loyalty has no meaning at all. The breach here was clear, and so are the damages.

 

II. Breach of Non-compete Agreement

Above I have found Ringo liable for damages he caused DHPI during the term of his employment, which ended August 1, 2008. After that date, Ringo was subject to a non-compete agreement that prevented him from “contact[ing] for the purposes of selling dental supplies any of the Employer’s customers with whom I had direct and regular contact while employed by the employer.” (Ex. 2 at 2.)

 

Ringo did not deny contacting several DHPI customers for the purposes of selling them dental equipment. DHPI presented evidence that Ringo purchased dental supplies at a cost of $31,418.99 through his J & M company from various vendors during the period of the non-compete agreement. These products would then have been resold to clients, most of whom were DHPI clients, in violation of the non-compete agreement. In addition, Ringo’s wife had set up a new company called DESI, which purchased dental products at a cost of $233,781.05. Ringo and his wife resold these products primarily to DHPI clients. DHPI lost more than $109,000 in profits on these sales.

 

Ringo’s principal defense is based on his interpretation of the non-compete agreement. In particular, he notes that the agreement precluded him from selling “supplies” to dentists, whereas the only things he sold after leaving DHPI were “equipment” like cabinets, dental chairs, and the like. He testified that dental supplies are things like toothbrushes and gloves, as opposed to things more permanent and substantial. Supplies are things that go in a cabinet (e.g., a “supply cabinet”); they are not the cabinet itself. DHPI did not dispute that the general meaning of “supplies” would normally exclude the kinds of things Ringo sold. Its own witnesses used the term “merchandise” to distinguish such items from equipment. And in fact two of the companies named as defendants in this lawsuit have the terms “equipment” and “supply” in their names, suggesting that the term “supply” does not encompass the equipment items Ringo sold.

 

But DHPI protests that such a narrow reading would not make sense: why would the company prohibit the selling of supplies during a non-compete period but allow an ex-employee to compete against it in the equipment market? There is no practical business reason for such a distinction. Moreover, Lisa Benson, a human resources employee at DHPI, testified that before Ringo signed the agreement in 2002 she had told him that “supplies” meant “everything” that DHPI sold.

 

I did not find either of these arguments persuasive. First, I agree with Ringo that it is difficult to believe Benson would have such a clear memory of a relatively mundane conversation they had nine years ago, and Benson’s explanation was not wholly convincing. In addition, DHPI started out as a supply company (it started out selling gloves to dentists), and so it is reasonable to believe that the non-competition agreement it created at some point before Ringo started in 2002 was deliberately limited to “supplies” because that was all the company sold. It is likely that the company simply failed to update its non-compete agreement as the company’s sales portfolio grew. For these reasons, I find it unlikely that Ringo and Benson had come to some kind of private understanding that “supplies” had a much broader meaning than is commonly understood.

 

Regardless of whether Benson is believed or not, however, an HR employee’s oral explanation of an otherwise-clear contractual term cannot change the meaning of that term. After all, the entire purpose of committing an agreement to writing is to prevent later disputes about who said what. Imagine the chaos that would ensue if the plain language of every contract could be altered by private and ancient conversations about word meanings. The parol evidence rule prevents the use of extrinsic evidence to explain plain contractual terms.   Louis and Karen Metro Family, LLC v. Lawrenceburg Conservancy Dist., 616 F.3d 618, 622 (7th Cir.2010) (“an unambiguous contract should be given its plain and ordinary meaning … and no extrinsic evidence is admissible to explain the terms of such an agreement.”) DHPI argued that the extrinsic evidence about the meaning of “supplies” could be admitted because the term is ambiguous. But “supplies” is not ambiguous. As noted above, everyone in the courtroom seemed to treat supplies like toothbrushes differently from the kinds of things Ringo was selling after he left DHPI. It may be debatable whether a given product constitutes a “supply” or “equipment” or something else, but such line-drawing exercises are common with generic nouns like “supply.” For example, if a contract prevented someone from selling fruit, it would be debatable whether that person could sell tomatoes. But no one would claim that the injunction against fruit sales would apply to spinach or carrots. The fact that there is some room for debate at the margins of a term in specific instances does not render the term “fruit” ambiguous, and neither do any debates about the term “supplies.” Here, Benson’s testimony might be helpful in explaining any contractual ambiguity, but it does not itself create such an ambiguity. “The fact that parties to a contract disagree about its meaning does not show that it is ambiguous, for if it did, then putting contracts into writing would provide parties with little or no protection.” Fed. Deposit Ins. Corp. v. W.R. Grace & Co., 877 F.2d 614, 621 (7th Cir.1989). Ultimately, no one testified that there was any ambiguity in the term “supplies,” and in fact most of the witnesses treated supplies differently from equipment. Accordingly, I conclude that the non-compete agreement does not apply to the products that Ringo sold after he left DHPI.

 

III. Punitive Damages

DHPI also sought punitive damages for what it describes as Ringo’s intentional disregard of its right to have him act as its exclusive agent. Ringo has not argued that such damages are inappropriate, although because he is pro se it is proper to examine the basis for such a claim. The case of Everbrite Elec. Signs, Inc. v. Yezzi is instructive. 144 Wis.2d 949, 425 N.W.2d 39 (Wis.Ct.App.1988). There, unbeknownst to the employer, two employees set up a business to handle the employer’s excess trucking needs. These employees directed the employer’s trucking needs to their own company and thereby earned a profit of some $84,000. When the employer found out, it sued the employees for breach of loyalty and sought disgorgement of the employees’ profits. The trial court awarded punitive damages, but the court of appeals reversed. The court found that the employer was not actually damaged itself because it did not lose any business as a result of the employees’ breach of loyalty. The employer was not in the trucking business itself, but was merely a customer of the company its own employees set up. Because it was not actually damaged, the employer was seeking equitable relief (disgorgement) rather than compensatory damages. Thus, the disgorgement of the employees’ profits was not compensatory damages but a kind of equitable punishment for the employees’ breach of loyalty. The court concluded that allowing punitive damages on top of that equitable penalty would be a double punishment, and it therefore reversed the award of punitive damages.

 

Here, the employer is not seeking disgorgement of Ringo’s profits. It is instead seeking compensatory damages to make it whole for the amount of money it lost as a result of Ringo’s conduct. Id. (“The disloyal agent is therefore subject to two possible sanctions: (1) compensation to its principal for the actual damages suffered and (2) disgorgement of ill-gotten gains.”) When compensatory damages are awarded, as here, punitive damages are allowable. Id.

 

The next question is whether Ringo’s actions meet the evidentiary threshold for punitive damages. Under Wis. Stat. § 895.043(3), a plaintiff must show that a defendant acted maliciously toward the plaintiff or intentionally disregarded the rights of the plaintiff. This does not necessarily mean that the defendant intended to cause harm or injury to the plaintiff. Wischer v. Mitsubishi Heavy Indus. Am., Inc., 2005 WI 26, ¶ 61, 279 Wis.2d 4, 694 N.W.2d 320 (Wis.2005). Any award of punitive damages must be no more than necessary to serve the purposes of such an award, and the award must be proportional to the wrongdoing. Trinity Evangelical Lutheran Church and School–Freistadt v. Tower Ins. Co., 2003 WI 46, ¶ 46, 261 Wis.2d 333, 661 N.W.2d 789 (Wis.2003). DHPI asks for some $715,000 in punitive damages, which is presumably calculated based on twice the compensatory damages it sought. The compensatory damages actually awarded here are $198,427.02. Twice that amount would be $396,854.04.

 

In D.L. Anderson’s Lakeside Leisure Co., Inc. v. Anderson, the Wisconsin Supreme Court addressed a violation of a non-compete agreement arising out of the sale of a business. Anderson sold his business and agreed not to compete with the new owner within 120 miles for an extended period of time. 2008 WI 126, 314 Wis.2d 560, 599, 757 N.W.2d 803 (Wis.2008). Soon enough he re-entered the business and began competing with the business he sold, even using the “Anderson” name to foster familiarity with potential and former clients. The court found that this fact would allow a jury to reasonably conclude that he had acted in intentional disregard of the plaintiffs’ rights. Moreover, Anderson’s failure to abide by the non-compete was so egregious that the trial court chastised him as follows: “[Y]ou’ve got a world of hurt coming at you, sir…. I don’t know what it’s going to take to stop, but every time there’s a line drawn, you seem to go right up to it and over it.” Id. at ¶ 86. Given the jury verdict against Anderson and the judge’s finding that his conduct was extreme, the supreme court found that the award of punitive damages in the amount of $180,000 (twice the compensatory award) was appropriate.

 

Here, Ringo essentially conceded that he was intentionally disregarding his employer’s rights. At the trial, by way of justification for his conduct, Ringo reiterated his view that the clients he sold products to were “his” clients, rather than DHPI’s, because he had worked with them for years and many of those relationships pre-dated his employment at DHPI. Although that attitude evidently allowed Ringo to rationalize taking his employer’s business, it is not justification for his conduct. Many salesmen and others in the service industry (lawyers, physicians, etc.) no doubt share Ringo’s view that their relationship with their clients is more personal than corporate. They are the ones who generate leads, do the legwork, take clients to dinner, travel, etc. Having clients follow a salesman from one employer to another is nothing new. But salesmen in that situation generally recognize that their business is part of a shared enterprise and that although they may have developed the customer relationships, the customer is a client of the firm rather than the individual. If Ringo wanted his clients to truly be “his,” the thing to do was to start his own company after leaving DHPI, not to create a covert enterprise under DHPI’s nose. Instead, Ringo apparently wanted it both ways: to have a stable job as a salesman for a larger company, but also to be able to poach his company’s clients at his employer’s expense. Ringo likely would have continued his efforts as long as he could to build up as large a business as possible before venturing out on his own. But employers are not incubators for their employees’ competing businesses, and even Ringo knew that.

 

In addition, there was credible testimony that upon leaving the company Ringo told Lisa Benson that DHPI’s owners could “wipe their ass” with the non-compete agreement. Ringo did not deny saying this and simply noted that he was probably angry at the time. Although above I found the non-compete inapplicable here, Ringo’s comments about the agreement support my conclusion that he viewed himself has having some kind of entitlement to compete with his employer. This attitude and the nature of his conduct convinces me that Ringo’s actions in competing with his employer were done in intentional disregard for his employer’s rights.

 

The question is what amount would suffice to punish the offense. As a starting point, in my view doubling the compensatory damages to $396,854.04 would be excessive. The facts in Anderson were somewhat more egregious than we have here. Anderson sold his business for nearly a million dollars and then turned around and competed with that business. In the context of a sale of a business, the non-compete can be crucial to the new owners’ ability to make the business survive and thrive. Thus, in Anderson damages were awarded for disparagement of the sold business’s trade name in addition to the non-compete violation. In short, Anderson’s actions threatened the very viability of the business he sold, and the trial judge found his behavior contemptible. Here, it may be argued that stealing business under the nose of one’s employer while employed is just as sordid, but Ringo’s actions, while tortious, did not threaten DHPI’s survival. In addition, there is no hint here that Ringo’s actions were malicious or egregious; he was simply trying to make a dishonest buck for himself through what appears to be a garden-variety breach of loyalty. While this is bad enough in itself, I conclude that a punitive damages award of double the compensatory damages would be excessive.

 

In Anderson the Supreme Court was not expressing a view that double damages was the “correct” amount of punitive damages. It merely found that such an amount was not excessive under the Due Process Clause. Thus Anderson and other punitive damage cases are not strict benchmarks to be used for comparison but are merely guides suggestive of reasonable ranges and factors to consider.

 

Instead, I am satisfied that an award roughly equal to half the compensatory damages for Ringo’s breach of his duty of loyalty to his employer, or $100,000, is appropriate. It is a significant amount likely to deter similar conduct in the future both by Ringo and others who might be tempted to engage in it. It is true that there was no testimony as to Ringo’s finances and ability to pay such an amount. See Anderson, 2008 WI 126, ¶ 80 (wealth of the wrongdoer is relevant). He appeared pro se after his attorneys moved to withdraw because Ringo could not, or would not, pay their fees. It was clear from the evidence, however, that he was able to make significant profits as a salesman of dental equipment through the various clients he had accumulated over the years. It is also noteworthy that throughout the same period of time that Ringo was diverting sales from his employer, he remained one of DHPI’s top salesmen, thereby indicating that his breach was not as egregious as it might have been. On the other hand, DHPI incurred substantial legal fees and other expenses, including lost time of its professional staff, in its efforts to investigate the extent and recover the losses caused by Ringo’s disloyalty. Half the amount of profits Ringo diverted from the company during the period of his employment is a fair award that is commensurate with the severity of his wrongdoing; it is also serious enough to deter such conduct without being too onerous that it would offend Due Process.

 

Initially DHPI also sought disgorgement of what it viewed as its overpayment of salary to Ringo during the period he was competing with the company. But counsel conceded that such a result would produce a double recovery. That is, if the company recovers the profits Ringo would have earned for it, it cannot also recover the amounts it was paying Ringo during that period. Recovery of the lost profits suffices to make the company whole.

 

IV. Conclusion

For the reasons given above, I conclude that Plaintiff is entitled to judgment awarding it $198,427.02 for breach of the duty of loyalty. It is further awarded damages of $15,865.88 for Ringo’s violations of the Computer Fraud and Abuse Act. In addition, Plaintiff is entitled to judgment awarding punitive damages in the amount of $100,000. Defendants’ counterclaims are dismissed. The motions in limine are denied as moot. Claims against Defendant DESI are dismissed. The Clerk is directed to enter judgment in favor of Plaintiff DHPI and against Defendant Frank Ringo in the total amount of $314,292.90 together with costs.

 

SO ORDERED.