Zambelli Fireworks Manufacturing Co., Inc. v. Wood

592 F.3d 412 (3rd Cir. 2010)

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Nature of the Case

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Facts

P is one of the oldest and largest fireworks companies in the United States, doing business in approximately 40 states. P is a corporation incorporated under the laws of Pennsylvania. Pyrotecnico F/X, LLC (D) has been a direct competitor of Pi in the fireworks industry for many years. Wood (D) is a resident of Florida, and works in the fireworks industry as a pyrotechnician and choreographer, executing fireworks displays in combination with music through the use of computer software. Wood (D) had obtained an associate's degree in technical theater from Vincennes University and a bachelor's degree in theater from Indiana State University. Wood (D) also had prior pyrotechnics experience in the areas of sales, agreements, design work, effects, and pyrodigital software. He had little experience in aerial fireworks displays on the scale of P's major shows. P hired Wood (D) to work in its Florida office pursuant to the terms of an employment agreement containing a two-year non-compete provision. Wood (D) was privy to many of the inner workings of P's business. In 2005, P asked Wood (D) to sign an updated employment agreement that would ensure Wood's (D) continued commitment to the company. In 2007 Wood (D) jumped ship to LLC (D). It was a condition of Wood's employment with LLC (D) that he not take or use any P information or bring any trade secrets or proprietary information. LLC (D) was aware of the restrictive covenant and agreed to pay Wood his salary for two years if the covenant were enforced and to indemnify Wood (D) for his litigation expenses. P sued Ds in federal court under diversity jurisdiction to enforce its covenant not to compete. P alleged it was a citizen of Pennsylvania, Wood (D) was a citizen of Florida, and LLC (D) was a citizen of Nevada. At trial, the managing member of LLC (D), Stephen Vitale, testified that he resided and worked in LLC's (D)Pennsylvania headquarters. The District Court enforced P's agreement, and Ds appealed. The court of appeals sua sponte sought briefs on jurisdiction.