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Amazon.com Inc v. Moyer

United States District Court, W.D. Washington, Seattle

October 24, 2019

AMAZON.COM, INC., Plaintiff,
v.
PHILIP MOYER, Defendant.

          ORDER GRANTING IN PART AMAZON'S MOTION FOR PRELIMINARY INJUNCTION

          RICARDO S. MARTINEZ, CHIEF UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Plaintiff Amazon.com, Inc. (“Amazon”) seeks to prevent Defendant Philip Moyer (“Moyer”) from working for Google as its Vice President, Healthcare, Google Cloud. Dkt. #19.[1]Moyer previously worked for Amazon as a sales executive for Amazon Web Services (“AWS”), selling its cloud computing services to the financial services sector. As a condition of his employment, Amazon required Moyer to accept restrictions on his future employment, should he ever stop working for Amazon.

         Two years later and unhappy with his opportunities for growth at AWS, Moyer sought opportunities outside of Amazon. Google Cloud, a competing cloud services provider, ultimately hired Moyer. Cognizant of Moyer's prior obligations to Amazon, but interested in effectively utilizing his skills, Google Cloud plans to have Moyer serve as Google Cloud's Vice President of sales for the healthcare and life sciences sectors (“healthcare”).

         Amazon maintains that Moyer's new position will force him to violate his prior obligations to Amazon and seeks a preliminary injunction preventing him from performing in the position. Dkt. #19. Moyer resists Amazon's effort to restrict his work on the basis that his new role will not involve the same customers and that he will not be forced to violate his agreement because the needs of healthcare customers are distinct from those of financial services customers. Dkt. #43.

         The Court heard oral argument in this matter on September 12, 2019, and took the matter under advisement. Having further considered the matter, the Court grants the Motion in part.

         II. BACKGROUND

         A. Cloud Computing Sales

         AWS and Google Cloud directly compete, and compete with others, in providing cloud computing services.[2] “Cloud computing is the on-demand delivery of computing power, software, storage, and other information technology services via the internet.” Dkt. #23 at ¶ 3. Cloud computing services essentially allow customers to “rent” hardware and software that they can then access remotely. Id. This allows customers to avoid upfront computing costs and better account for fluctuations in their computing needs. Id.

         Individual cloud computing services can have application across industries. AWS, for instance, develops a variety of services performing specific functions and makes those services available to all its customers. Id. at ¶ 9. However, customer needs across industries vary. For this reason, AWS groups its “cloud sales teams into ‘verticals'” that have similar computing needs-whether by industry or customer attribute. Dkt. #21 at ¶ 4. Financial services customers, for instance, are highly regulated and have a heightened need for reliability, security, and privacy. Dkt. #19 at 2.

         B. Moyer's Background

         Moyer has worked in technology sales since 1991. Dkt. #45 at ¶ 2. Through his career he has served as a general manager with Microsoft, served as the CEO of a company providing access to financial data, and managed a technology portfolio at a venture capital firm investing in enterprise cloud, financial technology, and healthcare technology. Id. at ¶¶ 2-5. In March 2017, Amazon hired Moyer as its “Director of Sales” for AWS Global Financial Services. Dkt. #30 at 2 (¶¶ 3-5), 12. As a condition of his employment, Moyer was required to sign a Confidentiality, Noncompetition, and Invention Assignment Agreement (the “Agreement”) with Amazon. Id. at 6-10. The Agreement required Moyer to maintain the secrecy of confidential information learned during his employment[3] and, most relevant here, restrained Moyer's post-Amazon employment:

During employment and for 18 months after the Separation Date, Employee will not, directly or indirectly, whether on Employee's own behalf or on behalf of any other entity (for example, as an employee, agent, partner, or consultant), engage in or support the development, manufacture, marketing, or sale of any product or service that competes or is intended to compete with any product or service sold, offered, or otherwise provided by Amazon (or intended to be sold, offered, or otherwise provided by Amazon in the future) that Employee worked on or supported, or about which Employee obtained or received Confidential Information.

Id. at 7 (Sec. 4.1). Moyer also agreed not to solicit Amazon customers and partners or seek to recruit Amazon employees. Id. (Secs. 4.2 and 4.3). Despite agreeing to these provisions, Moyer maintains that he was informed, both at the time of his hire and after, that Amazon generally negotiated its broad noncompete provision to a more limited scope if a salesperson left to work with a different customer base. Dkt. #45 at ¶¶ 9-11.

         C. Moyer's Work at Amazon

         As the Director of Sales for Global Financial Services, Moyer's primary responsibility was “selling AWS services to companies in the financial services industry.” Dkt. #23 at ¶ 8; see also Dkt. #45 at ¶ 19; Dkt. #49-3 at 19:4-20:4, 81:14-83:11, 89:20-98:3. This required him to have a firm understanding of existing AWS services as well as planned services (AWS's “roadmap”). Dkt. #23 at ¶ 10.

[L]ike other AWS executives, Moyer was responsible for understanding: (1) AWS's existing and projected services; (2) the value and efficiency those services deliver to customers; (3) the limitations, gaps, and weaknesses, of those services; (4) what AWS services are forthcoming to address customer needs and service gaps; (5) how to obtain customer specific cloud service features and functionalities; (6) the service, pricing, storage volume, and workload capacity terms on which AWS provides those services to its customers; and (7) how AWS positions itself against other cloud computing companies-including [Google Cloud]-to best satisfy customer needs.

Id. Moyer was not necessarily selling a specialized product. Id. at ¶ 9 (AWS services are developed to have “broad applicability” and support specific industries with limited modifications). Rather, Moyer knew the industry requirements for his thirty-two financial services customers[4] and highlighted how AWS services could meet their existing and future needs.

         Outside of his core function, Moyer's position also involved him in several other aspects of AWS's operations. First, Amazon involved Moyer in identifying and removing barriers to the sale of AWS services both within financial services and in other sales verticals. For instance, due to his prior work experience with Independent Software Vendors[5] (“ISVs”), Moyer aided AWS in its relationships with ISVs across sales verticals, fostering better integration with AWS services. Dkt. #45 at ¶¶ 24-26. More generally, Moyer served as an intermediary between customers and AWS development teams to solve any issues or service gaps customers encountered while using AWS services. Dkt. #49-3 at 134:1-140:17. Customers shared any issues or gaps with Moyer who sought out solutions or work-arounds. Dkt. #45 at ¶¶ 31-34. Moyer's team would track and relay common issues or gaps that could not be resolved for possible action by development teams, but, other than advocating for certain changes, Moyer did not play an active role in determining the AWS roadmap. Moyer's financial services vertical also served as a sort of development and testing ground because of the heightened regulatory, audit, and security requirements of its customers. Dkt. #24 at ¶ 11. Moyer also took a proactive approach to removing adoption barriers. For example, Moyer's financial services customers relied on computing resiliency-assuring that outages are avoided or shortened-, so Moyer aided AWS in developing a report to demonstrate that AWS could satisfy the stringent industry requirements. Dkt. #45 at ¶¶ 28-30.

         Second, Moyer was also involved in formulating sales strategies of AWS services both within financial services and across other sales verticals. Within financial services, Moyer contributed to “financial services sales strategy planning documents for 2019 and 2020 that set AWS's worldwide sales goals through the end of 2021.” Dkt. #24 at ¶ 21. Outside of financial services, Moyer was involved in setting “sales strategy for the entirety of AWS cloud globally.” Dkt. #19 at 10 (citing Dkt. #21 at ¶¶ 4-6). This included being involved in decisions about where to focus resources to maximize sales. Dkt. #24 at ¶ 21. The parties disagree as to whether Moyer's involvement was limited to focusing on his financial services customers or whether he played a more expansive role.

         D. Moyer Leaves for Google

         From the beginning, Moyer anticipated a promotion within AWS to Vice President of Sales for AWS financial services. When that plan was delayed and did not materialize, Moyer began to explore his other employment opportunities. By April 2019, he planned to leave AWS for a position as a CEO of a company providing “governance, risk, compliance advisory services, and technology solutions.” Dkt. #46 at ¶ 60. Amazon attempted to retain him but was unwilling to meet his salary request.

         During the process of his anticipated job change, Moyer contacted Ms. Kliphouse, a colleague from Microsoft, to serve as a reference. Ms. Kliphouse was in the process of being hired as Google Cloud's North American President. Id. at ¶ 60. Ms. Kliphouse encouraged Moyer to apply to Google Cloud and supported him within Google Cloud. Dkt. #39 at 30:8- 31:14; Dkt. #49-2 at 21:9-22:6. Google Cloud ultimately decided to make Moyer an offer and, aware of Moyer's offer for the CEO position, made it a high one. Dkt. #45 at ¶ 62. Moyer indicated to AWS, on May 22, 2019, that he was joining Google Cloud “as their Vice President of Healthcare.” Dkt. #23 at ¶ 26.

         III. DISCUSSION

         A. Standard of Review

         In determining whether to grant a preliminary injunction, courts consider: (1) the likelihood of the moving party's success on the merits; (2) the possibility of irreparable injury to that party if an injunction is not issued; (3) the extent to which the balance of hardships favors the moving party; and (4) whether the public interest will be advanced by the injunction. See Miller v. Cal. Pac. Med. Ctr., 19 F.3d 449, 456 (9th Cir. 1994); Los Angeles Mem'l Coliseum Comm'n v. Nat'l Football League, 634 F.2d 1197, 1201 (9th Cir. 1980). The Ninth Circuit has often compressed this analysis into a single continuum where the required showing of merit varies inversely with the showing of irreparable harm. See Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 874 (9th Cir. 2000). Thus, Plaintiff will be entitled to preliminary relief if it is able to show either: (1) probable success on the merits and the possibility of irreparable harm; or (2) the existence of serious questions going to the merits and a fair chance of success thereon, with the balance of hardships tipping sharply in favor of an injunction. Miller, 19 F.3d at 456.

         B. Likelihood of Success on the Merits

         Amazon's Complaint pursues a single cause of action: breach of a noncompetition agreement. Dkt. #1-1 at ¶¶ 29-34. Amazon argues that if Moyer is not restrained from performing his new role, he will necessarily breach his promises not to compete with Amazon. Washington law[6] provides for the enforcement of reasonable noncompete clauses. Labriola v. Pollard Grp., Inc., 152 Wash.2d 828, 846, 100 P.3d 791, 799-800 (2004) (J. Madsen concurring). “The determination of whether a covenant is reasonable is a question of law.” Emerick v. Cardiac Study Ctr., Inc., P.S., 189 Wash.App. 711, 721, 357 P.3d 696, 701 (2015) (citing Alexander & Alexander, Inc. v. Wohlman, 19 Wash.App. 670, 684, 578 P.2d 530 (1978)).

         To determine reasonableness, the Court considers:

(1) whether the restraint is necessary to protect the employer's business or goodwill, (2) whether it imposes on the employee any greater restraint than is reasonably necessary to secure the employer's business or goodwill, and (3) whether enforcing the covenant would injure the public through loss of the employee's service and skill to the extent that the court should not enforce the covenant, i.e., whether it violates public policy.

Emerick, 357 P.3d at 701 (citing Perry v. Moran, 109 Wash.2d 691, 698, 748 P.2d 224 (1987), judgment modified on recons. on other grounds, 111 Wash.2d 885, 766 P.2d 1096 (1989)).

Washington courts are relatively deferential to employers in enforcing agreements restricting a former employee's work with the employer's clients or customers. Courts are less deferential to general restrictions on competition that are not tied to specific customers. An employer can demonstrate that more general restrictions are necessary, but can do so only by pointing to specific information about the nature of its business and the nature of the employee's work. Finally, although courts are somewhat deferential about the duration or geographic extent of noncompetition agreements, they will readily shorten the ...

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