Case 8:07-cv-01182-AW Document 14 Filed 06/06/07 Page 1 of 24
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF MARYLAND
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`CoSTAR REALTY INFORMATION, INC., et. al. *
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`Plaintiffs,
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`v.
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`CENTERS & MALLS, LLC, et. al.
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`Defendants.
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`PLAINTIFFS’ REPLY TO DEFENDANTS’
`OPPOSITION TO PLAINTIFF’S MOTION FOR A
`TEMPORARY RESTRAINING ORDER
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`Plaintiffs, CoStar Realty Information, Inc. (“CoStar”), and National Research Bureau,
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`Case No.: 07 CV 01182 AW
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`Inc. (“NRB”),1 through counsel and pursuant to Rule 65 of the Federal Rules of Civil Procedure,
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`respectfully move this Court for a temporary restraining order against defendants Centers &
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`Malls LLC (“Centers & Malls”), Robert Galvin (“Galvin”) and Guy Hays (“Hays”). In support
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`of this motion, CoStar states as follows:
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`I.
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`INTRODUCTION
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`Centers & Malls’ founder and President Garrett Van Siclen has admitted to stealing the
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`Shopping Center Directory, a copyrighted database owned by CoStar.2 Without authorization,
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`Mr. Van Siclen took a CD Rom that contained this copyrighted database from his former
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`1 NRB has recently assigned all of its’ intellectual property rights to CoStar and has been merged into CoStar. An
`Amended Complaint reflecting this change will be filed shortly.
`2 The Shopping Center Directory was created and initially copyrighted by National Research Bureau. CoStar
`purchased the rights to the Shopping Center Directory when it acquired National Research Bureau, Inc. in January of
`2005. CoStar paid millions of dollars to obtain the rights of the Shopping Center Directory. Mr. Van Siclen and
`Centers & Malls brazenly and illegally misappropriated the Shopping Center Directory without permission or any
`payment.
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`Case 8:07-cv-01182-AW Document 14 Filed 06/06/07 Page 2 of 24
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`employer, copied the data and used it to create the Centers & Malls database.3 Centers & Malls
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`is now selling its database to customers for a profit. In addition, former CoStar employees
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`Robert Galvin and Guy Hays each executed employment agreements with CoStar that contained
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`a non-competition provision prohibiting them from working for a competitor within one year of
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`the termination of their employment with CoStar.4 Centers & Malls is a direct competitor of
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`CoStar. See Deposition of Robert Galvin, attached hereto as Exhibit 3, pp. 91:15-92:17.
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`Within one year of leaving CoStar Mr. Galvin became Centers & Malls’ Vice President for Sales
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`and Strategic Partnerships, and Guy Hays became its Director of Client Relations. Mr. Galvin
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`and Mr. Hays remain in these capacities with Centers & Malls today.5
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`Due to the above actions, Plaintiffs respectfully request this Court enter a temporary
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`restraining order enjoining Defendants and any third parties from continuing to disseminate the
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`Centers & Malls’ database which was created by copying information from the copyrighted
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`Shopping Center Directory. Plaintiffs also respectfully request a temporary restraining order
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`enjoining Defendants Galvin and Hays from continuing their employment with Centers & Malls.
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`As will be more fully set forth below, the Court should issue the requested relief for the
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`following reasons:
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`3 Mr. Van Siclen estimates that approximately 70-80% of the data contained on the Centers & Malls database at its
`inception was taken directly from the Shopping Center Directory. See Deposition of Garrett Van Siclen, attached
`hereto as Exhibit 1, p. 186:5-15.
`4 Upon termination of his employment with CoStar, Galvin was paid $30,806.33 in consideration for entering into a
`Confidential Separation Agreement and General Release. See Galvin Separation Agreement, attached hereto as
`Exhibit 2.
`5 It should be noted that there is an inherent conflict of interest with Galvin, Hays, and Centers & Malls all being
`represented by the same counsel. Galvin and Hays both testified at their depositions that they showed their CoStar
`employment agreements to Centers & Malls President Garrett Van Siclen and Centers & Malls’ legal counsel, and
`that after discussions with Centers & Malls’ counsel, Mr. Van Siclen informed Galvin and Hays that working for
`Centers & Malls would not violate the non-competition provisions of these agreements. See Exhibit 3, p. 130:4-
`132:8; see also deposition of Guy Hays, attached hereto as Exhibit 4, p. 29:13-30:20. This creates the potential for a
`cause of action by Galvin or Hays against Garrett Van Siclen and/or Centers & Malls. Further, this is direct
`evidence of Centers & Malls intentional interference with CoStar’s contractual relations.
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`1.
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`Defendants do not contest that Plaintiffs will be irreparably harmed if their
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`activities are permitted to continue.
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`2.
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`Defendants will not be irreparably harmed if the requested relief is granted, since
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`Centers & Malls does not have any employees or centralized office, and Galvin and Hays have
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`alternative means of generating income.
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`3.
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`It is not in the public interest to permit the theft of intellectual property and the
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`breach of voluntarily bargained for agreements.
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`4.
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`Centers & Malls has the requisite “minimum contacts” with the State of Maryland
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`for this Court to exercise either general or specific jurisdiction over it. Centers & Malls’ contacts
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`with Maryland include but are not limited to: licensing agreements with at least 5 Maryland
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`customers, the distribution of marketing materials to thousands Maryland residents, the direct
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`solicitation of several Maryland residents by Centers & Malls Director of Client Development
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`Guy Hays, and the listing of over 500 Maryland properties on the Centers & Malls website.
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`5.
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`Galvin and Hays contractually bound themselves to jurisdiction in Maryland with
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`the execution of their employment agreements with CoStar. These agreements expressly state
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`that consideration for the agreement is the employee’s access to confidential information, thus
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`they are enforceable.
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`6.
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`Plaintiffs are likely to succeed in their breach of contract claims against Galvin
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`and Hays because Galvin and Hays have violated the non-competition provisions of their
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`employment agreements with CoStar by working for one of CoStar’s direct competitors within
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`one year of the termination of their employment. The non-competition provisions of the Galvin
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`and Hays employment agreements are reasonable as to geography, scope, and breadth of activity,
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`and are therefore enforceable.
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`7.
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`Plaintiffs are likely to succeed in their copyright infringement claim against
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`Defendants, because they have proof that the Shopping Center Directory is copyrighted, is an
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`original and creative work, and Centers & Malls President Garrett Van Siclen has admitted that
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`he copied this database.
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`8.
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`There are several other Counts against Defendants in this litigation that Plaintiffs
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`are likely to succeed upon, including but not limited to intentional interference with contractual
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`relations, violation of §43(a) of the Lanham Act, and misappropriation.
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`II.
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`STANDARD OF LAW
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`The parties do not dispute the legal standard required for obtaining a temporary
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`restraining order. In determining whether or not to award injunctive relief, a court usually must
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`weigh and evaluate the evidence to assess four interrelated factors: 1) the likelihood that the
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`plaintiff will succeed on the merits; 2) the likelihood of irreparable harm to the plaintiff if the
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`injunctive relief is denied; 3) the likelihood of irreparable harm to the defendant if the requested
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`relief is granted; and 4) the public interest. NaturaLawn of America, Inc. v. West Group, LLC,
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`No. 06-3325, 2007WL1191131 at 3 (4th Cir. 2007); Rum Creek Coal Sales, Inc. v. Caperton, 926
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`F.2d 353, 359 (4th Cir. 1991); Blackwelder Furniture Co. v. Selig Manufacturing Co., 550 F.2d
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`189, 193 (4th Cir. 1977).
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`III. ARGUMENT
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`CoStar has suffered, and will continue to suffer irreparable injury for each day that the
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`above activities by Defendants are permitted to continue. Defendants do not deny that Plaintiffs
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`will be irreparably harmed if Centers & Malls or other third parties are permitted to continue
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`disseminating information unlawfully copied from the Shopping Center Directory, and if Galvin
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`and Hays are permitted to continue working for Centers & Malls. Nor do Defendants assert that
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`they will be irreparably harmed if they are enjoined from continuing these activities. On this
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`point it is worth noting that Centers & Malls claims that it has no employees and no centrally
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`located office. See Exhibit 1, p. 24:20-26:18. Mr. Galvin claims he is an independent consultant
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`performing independent work for Centers & Malls. See Exhibit 3, p. 9:5-16. Mr. Hays states
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`that he is an independent contractor for Centers & Malls who has other sources of income. See
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`Exhibit 4, p. 133:14-134:9. The address listed on Centers & Malls correspondence is in fact the
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`address for a box in a Mailboxes, Etc. store. See Exhibit 1, 26:14-27:4. Thus, if the Court were
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`to enter an Order shutting down the entire Centers & Malls operation, the harm would be
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`minimal and would affect a limited number of individuals. Finally, Centers & Malls does not
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`assert that it is in the public interest to permit the theft of intellectual property, or to encourage
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`the breach of freely bargained for agreements.
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`While not seriously contesting any of the above factors, Defendants’ Opposition to
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`Plaintiff’s Motion for a Temporary Restraining Order (“Opposition”) relies entirely on technical
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`arguments which, as will be set forth more fully below, are without merit. To protect the interests
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`of CoStar, and of its approximately 550 Maryland-based employees, this Court should issue a
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`temporary restraining order enjoining Defendants and any third parties from continuing to
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`disseminate information unlawfully copied from the Shopping Center Directory, and enjoining
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`Galvin & Hays’ continued employment with Centers & Malls.
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`A.
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`The Court is within its’ authority to exercise personal jurisdiction over Centers
`& Malls
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`When determining whether a court has authority to exercise personal jurisdiction over a
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`non-resident defendant, “the burden on the plaintiff is simply to make a prima facie showing of
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`sufficient jurisdictional basis in order to survive the jurisdictional challenge.” Combs v. Bakker,
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`886 F.2d 673, 676 (4th Cir. 1989). “In deciding whether the plaintiff has proved a prima facie
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`case of personal jurisdiction, the district court must draw all reasonable inferences arising from
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`the proof, and resolve all factual disputes, in the plaintiff’s favor. Mylan Labs, Inc. v. Akzo, N.V.,
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`2 F. 3d 56, 60 (4th Cir. 1993).
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`“Maryland courts have concluded that the State's longarm statute, Md.Code Ann., Courts
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`& Jud. Proc. §6-103, expands Maryland's exercise of personal jurisdiction to the extent allowed
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`by the Due Process Clause of the Fourteenth Amendment.” ALS Scan, Inc. v. Digital Service
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`Consultants, Inc., 293 F.3d 707, 710 (4th Cir. 2002). “Because the limits of Maryland's statutory
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`authorization for the exercise of personal jurisdiction are coterminous with the limits of the Due
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`Process Clause, the statutory inquiry necessarily merges with the constitutional inquiry, and the
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`two inquiries essentially become one.” Id (internal citations omitted). The Supreme Court has
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`held that for a state to exercise personal jurisdiction over a non-resident defendant, the defendant
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`must have certain minimum contacts with the state such that the maintenance of the suit does not
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`offend “traditional notions of fair play and substantial justice.” International Shoe Co. v.
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`Washington, 326 U.S. 310, 316, 66 S. Ct. 154 (1945)(internal citations omitted).
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`Defendants contend in their Opposition that Centers & Malls does not have the requisite
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`“minimum contacts” with the State of Maryland for this Court to exercise personal jurisdiction.
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`Preliminary discovery in this matter has revealed that this contention is untrue. First, Centers &
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`Malls has contracted to supply its database service to at least five customers within the State of
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`Maryland. See Centers & Malls License Subscription form for John Dimeo of DLC
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`Management Corporation, attached hereto as Exhibit 5; see also Centers & Malls License
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`Subscription Form for Frank Kenan, Sam Judd, and Jessica Bruner of Edens & Avant, attached
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`hereto as Exhibit 6; see also Centers & Malls License Subscription form for Richard Hynes,
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`attached hereto as Exhibit 7. Each of these Maryland subscribers was bound by the Centers &
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`Malls Terms and Conditions of use form. See Centers and Malls Terms and Conditions Form,
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`attached hereto as Exhibit 8; see also Exhibit 1, p. 245:8-20. These five Maryland customers, by
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`themselves, establish sufficient contacts for the Court to exercise personal jurisdiction over
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`Centers & Malls. See, e.g. Digital Equipment Corp. v. Alta Vista Technology, Inc., 960 F. Supp.
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`456, 472 (D. Mass. 1997)(totality of Defendant’s contacts with Massachusetts, including three
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`sales to Massachusetts residents through Defendant’s website, made personal jurisdiction over
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`Defendant appropriate); see also American Network, Inc. v. Access America, 975 F. Supp. 494,
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`496 (S.D.N.Y.1997)(court asserted personal jurisdiction over an internet company with
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`approximately 7500 subscribers, 6 of whom came from New York).
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`In addition to the above, Centers & Malls regularly solicits business within the State of
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`Maryland. The Centers & Malls’ website, which is available to any Maryland resident with
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`access to the internet, touts the company as serving the needs of professionals in the real estate
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`industry “worldwide”. See Centers and Malls website, attached hereto as Exhibit 9. Since the
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`company’s founding in 2006, Centers & Malls has issued six “e-mail blasts”, each sending
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`marketing materials to over 30,000 potential customers chosen from the International Council of
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`Shopping Center’s (“ICSC”) membership lists. See Exhibit 1, p. 129:1-130:19. Centers & Malls
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`also sent out a mass postal mailing to this same customer list when Centers & Malls was first
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`formed. See Exhibit 4, p. 111:5-13. The list of ICSC members located within the State of
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`Maryland is over 90 pages long.6 Also, Centers & Malls places a monthly advertisement in
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`“Shopping Center Today”, a publication of the International Council of Shopping Centers. This
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`publication is sent to all ICSC members. See Exhibit 1, p. 168:3-15. In fact, CoStar employees
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`6 Due to this list’s length, CoStar has not attached it as an exhibit to this motion, however, Plaintiffs will supply
`copies of this list at the June 8, 2007 hearing on its motion for a temporary restraining order.
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`who are ICSC members have received this advertisement in Maryland. See Centers & Malls
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`advertisement sent to CoStar employee, attached hereto as Exhibit 10.
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`More specifically, Centers & Malls and its Director of Client Development Guy Hays
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`have regularly transacted and/or solicited business directly from Maryland residents. For
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`example, Centers & Malls sent a letter to the Mills Corporation in Chevy Chase, Maryland on
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`January 8, 2007 requesting to enter into an agreement which would give it access to the Mills’
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`Corporation’s website. See January 8, 2007 letter, attached hereto as Exhibit 11. In addition, Mr.
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`Hays engaged in e-mail communications with the hopes of obtaining business with Janet Gribble
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`of Federal Realty Investment Trust in Rockville, Maryland. See Hays November 27, 2006 e-
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`mail, attached hereto as Exhibit 12. He did the same with Gary Barks of Citifinancial, and Scott
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`Planks of Under Armour, both based in Baltimore, Maryland. See Hays April 16, 2007 e-mail,
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`attached hereto as Exhibit 13; see also Hays May 15, 2007 e-mail, attached hereto as Exhibit 14.
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`In fact, Citifinancial was regularly listed on Mr. Hays “pipeline reports” to Mr. Van Siclen
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`throughout 2007 as a potential business opportunity. See Hays pipeline reports, attached hereto
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`as Exhibit 15. Mr. Hays admitted at his deposition that his goal in communicating with these
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`Maryland residents was to make a sale. See Exhibit 4, p. 102:18-103:21. Mr. Hays also received
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`e-mail communications and data for property listings from General Growth Properties, Inc.’s
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`Columbia Maryland office. See May 8, 2007 Hays e-mail, attached hereto as Exhibit 16. Mr.
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`Hays further testified at his deposition that he has recently reduced his efforts in soliciting
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`potential Maryland customers for Centers & Malls as a result of the present litigation and the
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`advice of Mr. Van Siclen. See Exhibit 4, p. 125:9-127:6. Thus, it is quite possible that
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`Defendants would have solidified even more contacts with the State of Maryland but for their
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`conscious efforts to evade jurisdiction in this matter.
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`The Centers & Malls database lists various information about retail shopping centers
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`worldwide. The database currently contains over 26,000 listings. Of these, there are 505 listings
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`for retail shopping centers within the State of Maryland. See Exhibit 1, p. 143:16-144:9. Of the
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`505 Maryland properties listed on the Centers & Malls website, 391 contain photographs of the
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`properties. Id. Centers & Malls President Garrett Van Siclen admitted at his deposition that he
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`has contracted to have photographs taken of properties located in Maryland. See Exhibit 1, p.
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`139:21-140:13. Therefore, by having photographs taken of Maryland properties, Centers & Malls
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`contracted to have work performed within the State of Maryland.
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`Courts may exercise judicial power over out of state defendants in two ways: by finding
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`specific jurisdiction based on conduct connected to the suit, or by finding general jurisdiction.
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`ALS Scan, Inc. v. Digital Service Consultants, Inc., 293 F. 3d 707, 711-12 (2002). General
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`jurisdiction arises out of a defendant’s general, more persistent, but unrelated contacts with the
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`state. Id at 712. “To establish general jurisdiction over the defendant, the defendant’s activities
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`within the State must have been ‘continuous and systematic’, a more demanding standard than is
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`necessary for establishing specific jurisdiction.” Id citing Helicoptoros Nacionales de Colombia
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`S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868 (1984). Under the present circumstances, this
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`Court may assert either general or specific jurisdiction over Centers & Malls.
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`Since its inception, Centers & Malls’ contacts with the State of Maryland have been
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`continuous and systematic. Centers and Malls has signed up at least five Maryland customers to
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`subscribe to its database. It has issued marketing materials to thousands of prospective
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`customers in Maryland. It has listings for over 500 Maryland properties on its database. It has
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`sent contractors into the State of Maryland to take photographs of Maryland properties, which
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`are then posted on the Centers & Malls database. Centers & Malls and its’ Vice President of
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`Client Development have directly communicated and continue to communicate directly with
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`prospective clients in Maryland in the hopes of soliciting business. The above activities
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`conducted within he State of Maryland are continuous and systematic, and are therefore enough
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`for this Court to exercise general jurisdiction over Centers & Malls.
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`With respect to specific jurisdiction as it relates to business activity transmitted over the
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`internet, the Fourth Circuit Court of Appeals has adopted the three part Zippo test. See ALS
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`Scan, Inc., 293 F. 3d at 714; citing Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F.
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`Supp. 1119 (W.D. Pa. 1997). This test states that “a State may, consistent with due process,
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`exercise judicial power over a person outside of the State when the person (1) directs electronic
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`activity into the State, (2) with the manifested intent of engaging in business or other interactions
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`within the State, and (3) that activity creates, within a person within the State, a potential cause
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`of action cognizable in the State’s Courts.” Id. These three prongs have all been satisfied in the
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`present case.
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`First, there can be no dispute that Centers & Malls has directed electronic activity into the
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`State of Maryland. Any Maryland resident with access to the internet may visit the Centers &
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`Malls database and take a “test drive” of the Centers & Malls database. See Exhibit 9. Second,
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`there is also no dispute that Centers & Malls has displayed a manifested intent of engaging in
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`business within the State of Maryland. As was stated above, Centers & Malls has registered five
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`Maryland subscribers to its services, has sent e-mail blasts and other marketing materials to
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`thousands of prospective Maryland customers, lists information and photographs on its database
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`of hundreds of properties located within the State of Maryland, has contracted to have
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`photographs taken of hundreds of properties within the State of Maryland, and has actively
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`solicited business from potential Maryland customers through letters, e-mails, and telephone
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`calls. Third, Centers & Malls President Garrett Van Siclen has admitted that Centers & Malls’
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`database was created by copying the Shopping Center Directory. The Shopping Center
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`Directory is a copyrighted compilation. By purposefully providing Maryland residents with
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`subscriptions and access to its database, Centers & Malls is creating, within Plaintiffs, a potential
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`cause of action for copyright infringement that is cognizable in Maryland courts.
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`B.
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`The CoStar Employment Agreements are Supported by Consideration and Thus
`Provide Jurisdiction over Galvin and Hays
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`There is no dispute that Mr. Galvin and Mr. Hays executed employment agreements in
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`connection with their employment with Plaintiff CoStar. See Employment Agreement of Robert
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`Galvin, attached hereto as Exhibit 17; see also Employment Agreement of Guy Hays, attached
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`hereto as Exhibit 18. By executing these agreements, Mr. Galvin and Mr. Hays expressly agreed
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`that any proceeding arising out of an alleged breach of these agreements would be held in either
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`the Circuit Court for Montgomery County or the United States District Court for the District of
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`Maryland. See id at Paragraph 4.4. Defendants’ Opposition alleges that Mr. Galvin and Mr.
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`Hays’ consent to jurisdiction within the State of Maryland is unenforceable because their
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`employment agreements with CoStar lacked consideration. This contention is blatantly false.
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`First, the Galvin and Hays employment agreements with CoStar explicitly state:
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`“Employee acknowledges and agrees that in consideration for entering into this Agreement
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`Employee will come into contact with, have access to and learn various technical and non-
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`technical trades secrets and other Confidential Information, which are the property of the
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`Company.” Id at Paragraph 2.5(a)(emphasis added). At their depositions, both Mr. Galvin and
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`Mr. Hays conceded that they were exposed to confidential information while employed by
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`CoStar. See Exhibit 3 at p. 123:8-125:14; see also Exhibit 4 at p. 17:20-19:7. Thus, there is no
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`dispute that by their very terms, the Galvin and Hays employment agreements were supported by
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`consideration thereby making them enforceable. As a result, Mr. Galvin and Mr. Hays’
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`contractual consent to jurisdiction in the United States District Court for the District of Maryland
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`should be upheld by this Court.
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`Even if the Court were to find that Galvin and Hays’ access to CoStar’s confidential
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`information did not provide ample consideration, the agreements were supported by additional
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`consideration in the form of employment with CoStar. At their depositions, both Mr. Galvin and
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`Mr. Hays stated that they would not have been permitted to work with CoStar had they refused to
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`execute these employment agreements. See Exhibit 3 at p. 129:5-14; see also Exhibit 4, at p.
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`29:8-11. Defendants’ Opposition argues that Galvin and Hays’ employment with CoStar is
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`excluded as consideration based on the parol evidence rule. Defendants’ argument however, is
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`based on a misapplication of this rule. In Maryland, parol or extrinsic evidence “is inadmissible
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`to vary, alter or contradict a writing which is complete and unambiguous, where no fraud,
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`accident or mistake is claimed.” Pumphrey v. Kehoe, 261 Md. 496, 504, 276 A.2d 194, 199
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`(1971)(internal citations omitted). In the instant case, Plaintiffs are not attempting to introduce
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`evidence of consideration to vary, alter, or contradict the terms of the Galvin and Hays
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`employment agreements. Instead, Plaintiffs are introducing this evidence to establish the valid
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`formation of a contract. Evidence used to establish the formation of a contract is not parol
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`evidence. See, e.g. Catholic University of America v. Bragunier Masonry Contractors, Inc., 139
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`Md. App. 277, 300, 775 A.2d 458, 472 (2001)(evidence is not “parol evidence” if not being
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`offered to vary the terms of an integrated writing). Defendants’ Opposition cites to a footnote in
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`a recent Maryland Court of Appeals decision that stated that parol evidence may be used to
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`contravene the existence of a contract. See Opposition, p. 8-9, citing Cochran v. Norkunas, 919
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`A.2d 700 (2007). From this footnote, Defendants jump to the inexplicable conclusion that parol
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`evidence may not be used to establish the existence of a contract. Defendants cite absolutely no
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`authority to support this proposition. If anything, the adverse inference that parol evidence may
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`be used to establish the formation of a contract should be drawn from this footnote.
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`Thus, the express terms of the Galvin and Hays employment agreements with CoStar
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`provide for consideration in the form of exposure to Confidential Information. Galvin and Hays
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`do not dispute that they were exposed to confidential information during their employment with
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`CoStar. See Exhibit 3 at p. 123:8-125:14; see also Exhibit 4 at p. 17:20-19:7. Further, Galvin
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`and Hays were both provided additional consideration for their employment agreements in the
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`form of employment with CoStar. On top of this, Galvin was provided with even more
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`consideration upon the termination of his employment with CoStar, by being given over $30,000
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`in severance. See Exhibit 2. For all of these reasons, the Court can exercise jurisdiction over
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`Galvin and Hays pursuant to paragraph 4.4 of these agreements.
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`C.
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`Plaintiffs are likely to succeed on their breach of contract claims against
`Defendants Galvin and Hays
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`Defendants’ Opposition argues that Plaintiffs’ are unlikely to succeed in their breach of
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`contract claims against Defendants Galvin and Hays because the non-competition provisions of
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`their employment agreements with CoStar are overbroad.7 In Maryland, courts will uphold non-
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`competition provisions in employment agreements “if the restraint is confined within limits
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`which are no wider as to area and duration than are reasonably necessary for the protection of the
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`business of the employer and do not impose undue hardship on the employee or disregard the
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`interests of the public.” Ruhl v. F.A. Bartlett Tree Expert Co., 245 Md. 118, 123-24, 225 A.2d
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`288, 291 (1967)(citing MacIntosh v. Brunswick Corp., 241 Md. 24, 31, 215 A.2d 222, 225
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`7 Defendants Opposition also states that this breach of contract claim is unlikely to succeed because the Galvin and
`Hays employment agreements lacked consideration. Plaintiffs’ adopt and incorporate their arguments with respect
`to this claim in section IIIB above.
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`Case 8:07-cv-01182-AW Document 14 Filed 06/06/07 Page 14 of 24
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`(1965)). Maryland Courts will initially look to whether a non-competition provision is facially
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`overbroad. If the provision is not overbroad on its face, the Court will examine the facts and
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`circumstances of each case. Millward v. Gerstung International Sport Education, Inc., 268 Md.
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`483, 488, 302 A.2d 14, 16 (1973). In the instant case, the non-competition provisions of the
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`Galvin and Hays employment agreements are not facially overbroad. Instead they are
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`specifically limited in duration, geographic scope, and breadth of restricted activities so that
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`these restrictions are no greater than necessary to protect CoStar’s legitimate business interests.
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`In fact, to avoid the possibility that this non-competition provision be construed as overly
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`restrictive, the agreements provide that the provision can be waived by consent of CoStar’s Chief
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`Executive Officer. See Exhibits 17 and 18 at paragraph 2.5(c).
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`The non-competition provision of CoStar’s employment agreements with Mr. Galvin and
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`Mr. Hays prohibit Galvin and Hays, for a period of one year following the date of their
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`termination from employment, ownership, or association with a company “engaged in the
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`provision of real estate information or software”. Id. In recognition of the nationwide and
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`international scope of CoStar’s business, the restrictions are applicable in the United States,
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`Canada, and the United Kingdom. Id.
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`With respect to duration, the non-competition provision of Galvin and Hays’ agreements
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`expire one year after the termination of their employment with CoStar. There can be no dispute
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`that a one-year restriction on competition is reasonable under Maryland law. Maryland courts
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`have often found that agreements that prohibit an employee from competing with a former
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`employer for a period of greater than one year following termination to be a reasonable restraint
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`on trade. Holloway v. Faw, Casson & Co., 319 Md. 324, 572 A.2d 510, 515 (1990)(upholding a
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`five year restrictive covenant after having judicially modified it down to a three year non-
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`Case 8:07-cv-01182-AW Document 14 Filed 06/06/07 Page 15 of 24
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`competition prohibition); see also Griffen v. Guy, 172 Md. 510, 192 A. 359 (1937)(restrictive
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`covenant between barbers upheld although unlimited as to time); Anderson v. Truitt, 158 Md.
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`193, 148 A. 223 (1930)(non-competition covenant for furniture salesman with twenty-five year
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`restriction found reasonable). Thus, if Maryland courts are willing to find the above restraints on
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`employment to be reasonable, there is no doubt that CoStar’s one-year restriction as to Galvin
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`and Hays is reasonable under the present circumstances.
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`Maryland law does not require a non-competition provision to contain a geographic
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`limitation to be considered reasonable. Deutsche Post Global Mail, Ltd. v. Conrad., 292 F.
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`Supp. 2d 748, 756 (D. Md. 2003)(finding that if a restriction is to legitimately prevent
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`competition, it stands even where there is no geographic limitation). Where there is a geographic
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`limitation provision in a non-competition provision, Maryland courts will uphold the provision
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`where there is a logical nexus between the location of the employer’s business activity and the
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`restrictive geographic area. Becker v. Bailey, 268 Md. 93, 299 A. 2d 835 (1973)(covenant not to
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`compete enforceable if restraint confined within limits