Staffing company sued for tortious interference

Where a staffing company allegedly engaged in “sharp dealing” when it induced employees to breach valid restrictive covenants with their prior employer, the tortious interference claim survived a motion to dismiss.

Background

Apex Systems LLC alleges that Beacon Hill Staffing Group LLC tortiously interfered with its employment contracts by inducing its employees to accept jobs with Beacon Hill that breached legitimate restrictive covenants. Beacon Hill moved to have the case dismissed for lack of personal jurisdiction and for failure to state a claim. Merriam and Scott, the former Apex employees whose alleged poaching instigated this case, also filed a joint motion to dismiss Apex’s claims against them.

Jurisdiction

Section 8.01-328.1(A)(1) confers jurisdiction over a person “as to a cause of action arising from the person’s (1) Transacting any business in this commonwealth.” If Merriam, after taking a position at Beacon Hill, began working with some client in northern Virginia, that work appears to be in breach of the noncompete agreement in Merriam’s Apex contract. There is, then, little doubt that the events at issue in this case, as alleged in the complaint and as presented by the record so far, satisfy subsection (1) of Virginia’s long-arm statute.

Moreover, Apex’s alleged facts and the materials that subsequently emerged from jurisdictional discovery satisfy the requirements of subsection (4). The elements in subsection (4) are that the event: (i) causes tortious injury; (ii) in Virginia; (iii) by an act or omission outside Virginia (iv) by a party that regularly does business in Virginia. All elements are satisfied here.

The due process analysis looks to whether Beacon Hill purposefully directed its actions at Virginia, whether its contacts with Virginia are related to this suit and whether subjecting Beacon Hill to suit comports with fair play and substantial justice. Once again, all elements are satisfied here.

Merits

Beacon Hill challenges the sufficiency of Apex’s allegations as to each element of tortious interference. Beacon Hill argues, in short, that the Apex employment contract was not a valid contract to begin with; that Beacon Hill used no improper means in recruiting and hiring Merriam and Scott and had no knowledge of the relevant terms of their Apex contracts and that Apex cannot make the requisite showing of damages to bring this cause of action.

Validity

Beacon Hill’s first challenge to the validity of the contract takes aim at the 50-mile territorial limitation. Beacon Hill claims that the restriction is invalid because it is both ambiguous and overly broad. Those arguments are extraordinarily strained. Beacon Hill’s argument on the restraint on competition point is likewise strained.

The non-recruitment term has no direct relevance to this suit but Beacon Hill challenges its validity anyway, hoping in doing so to show that the contract’s purported overbreadth invalidates it in its entirety. Beacon Hill cites a variety of inapplicable cases in arguing that this term is unenforceable. Beacon Hill next argues that the contract’s definition of confidential information is overbroad and thus unenforceable. Amid stiff competition, this is the most groundless of Beacon Hill’s objections to the Apex contract’s terms.

Methods

Beacon Hill argues that Apex “does not allege that Beacon Hill induced or caused a breach of any specific provision of either agreement, much less used improper means to do so.” Apex points to case law establishing that use of improper methods is not an element of a tortious interference claim where, as here, the allegedly tortious acts concern clauses (the noncompete provisions) that are not terminable at will. Even were this not the case, Beacon Hill’s claim would be hard to credit at this stage of the litigation because Apex has certainly alleged a number of ways in which Beacon Hill engaged in sharp dealing.

Damages

Beacon Hill argues that Apex does not assert or show evidence of having already suffered concrete harms as a result of Merriam’s and Scott’s alleged breaches of their employment contracts. But Beacon Hill has vanishingly little in the way of authority to support this demanding standard for what a plaintiff needs to show to satisfy the injury element of this cause of action at the pleading stage.

Arbitration

Merriam and Scott make the additional argument that the arbitration clauses in their contracts are valid and enforceable, and that those clauses require that Apex’s claims against them be brought in arbitration rather than in federal court. Because the arbitration provision does not apply to a suit seeking injunctive relief, however, and because the only relief sought against Merriam and Scott right now is injunctive relief, Merriam and Scott’s motion does not succeeded in its argument and Apex’s complaint will not be dismissed.

Defendants’ motions to dismiss denied.

Apex Systems LLC v. Beacon Hill Staffing Group LLC, Case No. 3:21-cv-165, Dec. 3, 2021. EDVA at Richmond (Payne). VLW 021-3-544. 37 pp.