INTEAM ASSOCIATES, LLC, a Delaware limited liability company, as successor-in-interest to SL-TECH TECHNOLOGIES, INC., a Delaware corporation, Plaintiff,
HEARTLAND PAYMENT SYSTEMS, LLC, Defendant. HEARTLAND PAYMENT SYSTEMS, LLC, Counterclaim Plaintiff,
LAWRENCE GOODMAN, III and INTEAM ASSOCIATES, LLC, Counterclaim Defendants.
ORDER CRAFTING REMEDY FOLLOWING REMAND
Montgomery-Reeves Vice Chancellor
on September 30, 2016, this Court issued a post-trial
memorandum opinion in the instant case;
on August 17, 2017, the Delaware Supreme Court issued an
opinion affirming in part and reversing in part this
WHEREAS, the Supreme Court "remand[ed] the case to the
Court of Chancery to exercise its broad discretion to craft a
remedy" consistent with its opinion;
THEREFORE, THE COURT HEREBY FINDS AND ORDERS AS FOLLOWS: 1. I
have reviewed the parties' briefs, supporting
submissions, and the applicable law.
detail only the facts necessary to craft a remedy pursuant to
the Supreme Court's instruction. For a full
recounting of the events leading up to this case, see
Heartland Payment Systems, LLC v. inTEAM Associates,
LLC, 171 A.3d 544 (Del. 2017).
Heartland Payment Systems, Inc. ("Heartland") is a
credit card payment processor for industries including K-12
schools. Tr. 611-12 (Lawler). Additionally, Heartland
produces computer software to manage school meal programs for
the K-12 foodservice industry. Id. In September
2011, Heartland entered into a purchase agreement (the
"Asset Purchase Agreement") to acquire the assets
of School Link Technologies, Inc. ("SL-Tech"), a
producer of computer software for food service operations
management. JX 25. The Asset Purchase Agreement excluded one
division of SL-Tech from the acquisition, a consulting
business spun off to create inTEAM Associates, LLC
("inTEAM"). Id. at Ex. A, at A-4;
Id. at Ex. M. Lawrence Goodman, III, SL-Tech's
former CEO, became CEO of inTEAM. PTO ¶ III.A.3.
parties executed two additional agreements concurrent with
the Asset Purchase Agreement. A co-marketing agreement (the
"Co-Marketing Agreement") granted Heartland and
inTEAM the right to market one another's products. JX 23
§ 2.1. Under a consulting agreement (the
"Consulting Agreement"), Goodman served as a
strategic advisor to Heartland in exchange for a monthly
salary. JX 22 ¶¶ 1, 3. The Asset Purchase
Agreement, Co-Marketing Agreement, and Consulting Agreement
each contain non-compete provisions. The Asset Purchase
Agreement states that "[f]or a period of five (5) years
from and after the Closing Date, neither [SL-Tech] nor
[Goodman] will engage directly or indirectly . . . in
providing any Competitive Services or Products or any
business that School-Link conducts as of the Closing Date in
any of the Restricted Territory." JX 25 § 5(n). The
Co-Marketing Agreement states that "inTEAM shall not
engage, directly or indirectly, on its own behalf or as a
principal or representative of any person, in providing any
services or products competitive with the HPS Business."
JX 23 § 9.1.1(B). It also states that "[Heartland]
shall not engage, directly or indirectly . . . in providing
any services or products competitive with the inTEAM Business
Id. §9.1.1. The Consulting Agreement states:
[Goodman] shall not directly or indirectly, on behalf of
himself or on behalf of any other person, firm or business
entity: (i) become an owner of any outstanding capital stock,
or a member or partner, of any company, partnership, or
entity that engages in Competitive Business within the
Restricted Territory; or (ii) perform or provide any
services, whether as an employee, owner, consultant or
otherwise, to, for or on behalf of any company, partnership,
or entity that engages in Competitive Business within the
Restricted Territory, if such services are the same or
similar in character to the services performed or provided by
[Goodman] to Heartland pursuant to this Agreement.
JX 22 ¶ 11(a).
Despite the multitude of non-compete provisions, each of the
parties began taking competitive actions. "inTEAM
developed a new software program module . . . with
overlapping capabilities with" an SL-Tech software
program acquired by Heartland. Heartland, 171 A.3d
at 546. "Goodman tried to solicit one of Heartland's
customers. Heartland paired with one of in TEAM's biggest
competitors to submit a bid to provide software to the Texas
Department of Agriculture." Id.
parties subsequently brought claims and counterclaims in the
Court of Chancery, with inTEAM seeking to enjoin
Heartland's actions and Heartland seeking to enjoin the
behavior of inTEAM and Goodman. in TEAM, 2016 WL
5660282, at *1. Following a four-day trial, this Court held
that Heartland breached its non-compete obligations under the
Co-Marketing Agreement, id. at *17, but that neither
inTEAM nor Goodman violated any non-compete provisions.
Id. at *14, *23. This Court also held that Goodman
violated certain non-solicitation obligations contained in
the Consulting Agreement. Id. at *25. This Court
enjoined Heartland from engaging in competitive activities
from September 30, 2016 to March 21, 2018, id. at
*27, and ordered Goodman to disgorge his consulting fees from
"July, August, and September 2014, totaling $50,
003.01" due to his breach of the non-solicitation
obligations contained in the Consulting Agreement.
Id. at *28.
appeal, the Supreme Court affirmed that "Heartland
breached its contractual obligations by collaborating with an
inTEAM competitor, and Goodman breached by soliciting a
customer of Heartland." Heartland, 171 A.3d at
547. Further, the Supreme Court noted that the Court of
Chancery "did not abuse its discretion... [in the]
assessed damages against Goodman." Id. The
Supreme Court, however, "reverse[d] the Court of
Chancery's finding that Goodman and inTEAM did not breach
their non-compete obligations under the various agreements,
" holding instead that Goodman and inTEAM each breached
their non-compete obligations in 2012. Id. The
Supreme Court "remand[ed] the case to the Court of
Chancery to exercise its broad discretion to craft a remedy
sufficient to compensate Heartland for Goodman's and
inTEAM's breaches of the transaction documents."
Id. The Supreme Court also noted that the Court of
Chancery may "consider certain affirmative defenses . .
. [that were] properly raised and briefed ... at trial
[which] the Court of Chancery did not reach . . . because it
found no violation" of the non-compete obligations by
inTEAM and Goodman. Id. at 572.
remand, the parties primarily seek injunctive relief to
enforce the contractual non-compete provisions against each
other. Heartland seeks to (i) vacate the standing injunction
against it and (ii) enjoin inTEAM and Goodman from selling
competing products. Def.'s Opening Br. 9. inTEAM asks the
Court to let the existing injunction against Heartland stand.
PI. & Countercl. Def.'s Answering Br. 39. Both
parties raise the affirmative defense of unclean hands.
Def.'s Opening Br. 12; PI. & Countercl. Def.'s
Answering Br. 23. I agree and conclude that the doctrine of
unclean hands bars either party from receiving the equitable
relief of an injunction. See, e.g., Alpha
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