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Perficient, Inc. v. Munley

United States District Court, E.D. Missouri, Eastern Division

September 5, 2019

PERFICIENT, INC., Plaintiff,



         This matter is before the Court on Plaintiff Perficient, Inc.'s request for a preliminary and permanent injunction preventing Defendant Thomas Munley from continuing to work for Defendant Spaulding Ridge, LLC, ("Spaulding") on the grounds that Spaulding is a competitor and that Munley's employment violates non-compete, non-solicit, and non-disclosure covenants that he accepted when working for Perficient. (Doc. 1.)

         Legal Standard

         Perficient must show the following elements to obtain a permanent injunction: (1) actual success on the merits of its claims; (2) threat of irreparable harm; (3) that the threatened harm to it outweighs any possible harm to others; and (4) that an injunction serves the public interest. Cmty. of Christ Copyright Corp. v. Devon Park Restoration Branch of Jesus Christ's Church, 634 F.3d 1005, 1012 (8th Cir. 2011). Missouri law considers injunctive relief appropriate for enforcing restrictive covenants. A.B. Chance Co. v. Schmidt, 719 S.W.2d 854, 859 (Mo.Ct.App. 1986).

         Ordinarily, courts enter a permanent injunction after a trial on the merits of the underlying claims. See, e.g., Tovaritch Spirits Int'l SA v. Luxco, Inc., No. 4:11CV950 JCH, 2012 WL 6652949, at *1 (E.D. Mo. Dec. 21, 2012). This case is somewhat unique insofar as the parties agreed to an expedited briefing schedule and combined hearing on the preliminary and permanent injunctions (Doc. 47), meaning the Court is left to rule on the merits of the relevant underlying claims without the benefit of a full trial. The Court therefore makes the following findings of fact, for purposes of this hearing, related to the claims on which Perficient seeks injunctive relief, Counts I, VI, and VII, and its direct request for injunctive relief, Count II.

         Findings of Fact[1]

         1. Perficient is a "leading digital transformation consulting firm serving Global 2000® and enterprise customers throughout North America," specializing in the sale and implementation of customized third-party enterprise software from IBM, Microsoft, Oracle, Adobe, and Salesforce. PERFICIENT, About Us, (last visited Aug. 20, 2019).

         2. Spaulding was formed in 2018 by the acquisition and merger of Plan Rocket-a firm specializing in Anaplan software-and Buan Consulting-which specialized in Salesforce products. Spaulding markets itself as providing consulting services to help its clients "transform their business, from strategy through implementation and business transformation" relating to numerous software companies, including Salesforce and SpringCM SPAULDING RIDGE,, (last visited Aug. 20, 2019).

         3. Munley joined Perficient in 2014 and was ultimately named Vice President for Strategy, Business Transformation & Applications Consulting, [2] where his duties included direct responsibility for Perficient's Salesforce practice and five other business units. He also served for a time as the acting General Manager of the Salesforce practice where he had direct supervision of the sales and service of Salesforce projects.

         4. is one of the largest creators and sellers of cloud-based computer programs to assist with customer relationship management ("CRM")-the process of recruiting, landing, servicing, and billing clients.

         Munley's Employment at Perficient

         5. Under Munley, most of Perficient's Salesforce business was in the implementation of Salesforce's core CRM products-Sales Cloud, Service Cloud, Marketing Cloud, and Community Cloud-which are databases of external and internal information about current and potential customers that allow the user to develop and manage their sales business.

         6. Salesforce also sells dozens of applications that utilize the CRM databases to improve the front-line, day-to-day functions of selling, servicing, and marketing to customers, such as Salesforce CPQ-Salesforce's version of the Configure, Price, Quote tool-which allows users to quickly and efficiently generate custom sales quotes by automatically performing functions such as inputting price, suggesting related products, and applying customer- or order-specific discounts.

         7. The major source of CPQ business by far is referrals from Salesforce's internal CPQ sales team, known as the "channel." 8. When a company wants to buy Salesforce CPQ software, Salesforce introduces a third-party consulting firm to assist the company with integrating and implementing the program;" those referrals are known to the consulting firms as "channel sales." 9. Salesforce strictly controls to whom it will offer channel sales-a consulting firm must meet minimum certification requirements before Salesforce will refer them for implementation jobs.

         10. Spaulding CEO Jay Laabs testified that there are around 300 consulting firms certified to receive channel sales for Salesforce's core CRM products but fewer than ten firms to whom Salesforce will direct CPQ channel sales.

         11. While at Perficient, Munley's compensation included salary, benefits, and several awards of Perficient stock. (Exs. 60, 63, 64, 65, 66.)

         12. In exchange for his employment and compensation, Munley executed multiple contracts containing restrictive covenants:

a. not to work for a "Competing Business" or perform "Competitive Duties" for twenty-four months following his departure (Ex. 60 at ¶ 15(e)(iii)-(iv));
b. not to use or disclose Perficient's trade secrets or other proprietary information and to "hold in the strictest confidence and [to use] best efforts and the utmost diligence to protect and safeguard" such information (Id. at ¶ 15(a), (c); Ex. 61 at 2-3); and
c. not to solicit Perficient's clients or employees for a period of twelve or twenty-four months following his departure (compare Ex. 61 at 3 with Ex. 62 at ¶ 8(a), (b) and Ex. 63 at ¶ l5(e)(i), (e)(ii)).

         13. As a vice president, Munley had direct access to confidential and trade secret information relating to the six business units he oversaw and, in high-level strategy meetings, was exposed to similar information about Perficient's other business units, including: customer-focused information such as lists of potential customers and current customer's buying behavior and contact information; strategic information regarding marketing and sales techniques, sales volume, and future investment areas for all of Perficient's business units; potentially harmful information regarding delivery issues and operational difficulties; and financial data, including profit margins, budgets, sales projections, and pricing models.

         14. As acting General Manager for the Salesforce practice, Munley had additional extensive knowledge of confidential proprietary information. He approved statements of work, was authorized to vary from standard pricing and profitability metrics and was involved in some capacity with the sale and service for all of Perficient's Salesforce projects.

         15. Munley did not actively participate in sales, but he oversaw the directors to whom the sellers reported and, on rare occasion, was called in to help close a big sale or to address a major client's concern.

         16. In 2017, Munley oversaw two failed attempts at Salesforce CPQ implementation in the form of projects for Haggar and Roche Diagnostics. Perficient quickly ran into functionality issues and neither project progressed beyond the initial proof-of-concept stage. As a result, there was a period of time where Perficient did not further pursue CPQ implementation projects.

         17. At Salesforce's annual Dreamforce Conference in late 2018, Munley was approached by internal Salesforce personnel who told him that there was significant need for CPQ-certified implementers and that, because Perficient did not have trained CPQ consultants, Perficient should subcontract the hands-on implementation to Advanced Technology Group ("ATG"), a firm that was already doing CPQ work.

         18. Following the Dreamforce meeting, Munley developed and directed Perficient's strategy for pursuing CPQ business. He reassigned Suresh Krishnan from the Oracle practice to investigate the viability of a Perficient CPQ practice, contacted ATG about a potential partnership, and listed CPQ as an area to "Nurture & Invest" in his go-to-market plan for Perficient's 2019 Salesforce practice, estimating that CPQ represented a market opportunity of $500, 000 in 2019 CPQbusiness. (Ex.7.)

         19. Thereafter, Krishnan left Perficient, ATG rejected Perficient's offer to partner on CPQ implementations, and Munley put CPQ "on hold" until he could get a permanent General Manager in place. (Exs. 3, 20, 26.)

         20. At that time and unbeknownst to Munley, Perficient was actively pursuing experienced CPQ firm SunDog Interactive, and had assigned another vice president, Hari Madamalla, to perform the due diligence for an acquisition. Perficient ultimately acquired SunDog in May 2019, after Munley left. (Exs. AN, AO.)

         21. In late April, Munley was notified that May 1, 2019, would be his last day at Perficient.

         22. Prior to leaving, Perficient offered Munley a severance package of a $40, 000 payment and the accelerated vesting of 1, 700 shares of Perficient stock in exchange for executing a separation agreement reaffirming his promises not to compete, solicit, or disclose and releasing Perficient from all claims. (Ex. 62.) Munley engaged in brief negotiations with Perficient's Vice President of Human Resources, Pamela Cannon, regarding the separation agreement. (Ex. AE.[3])

         Munley Joins Spaulding

         23. Only days after leaving Perficient, Munley met with Laabs, who testified that he was impressed by Munley's education and experience and his strong belief that CPQ was a significant market opportunity.

         24. On May 13, 2019, just two weeks after his final day at Perficient, Munley joined Spaulding to oversee the operation of its pre-existing Salesforce business unit according to Spaulding's proprietary internal processes and strategies.

         25. Spaulding's director of sales for Salesforce and DocuSign, Kyle Boston, was left in place to continue managing all aspects of the sales process, but he reported to Munley.

         26. Spaulding's business model is to sell consulting services relevant to an organization's Chief Financial Officer, including software relating to budgeting, forecasting, billing, and accounting. Accordingly, it typically sells its clients a software solution consisting of Salesforce CPQ & Billing-a product that combines the functionality of CPQ with automated billing software-and SpringCM, a ...

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