Fractal Analytics Inc v. Gomez

1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 7 AT SEATTLE 8 9 FRACTAL ANALYTICS INC., a New York Case No. C25-733RSM 10 corporation, ORDER DENYING MOTION FOR 11 Plaintiff, PRELIMINARY INJUNCTION AND MOTION FOR EXPEDITED DISCOVERY 12 v. 13 GREG GOMEZ, individually and in his 14 marital community, 15 Defendant. 16 17 I. INTRODUCTION 18 This matter comes before the Court on Plaintiff Fractal Analytics Inc. (“Fractal”)’s 19 Motion for Preliminary Injunction, Dkt #5. Defendant Greg Gomez opposes. Dkt. #19. 20 Neither party has requested oral argument. After a full review of the briefing and attached 21 22 documents, the Court now rules that this Motion is DENIED as set forth below, along with the 23 related Motion for Expedited Discovery, Dkt. #6. 24 II. BACKGROUND 25 This is a case to enforce a noncompete agreement. Plaintiff Fractal is a New York 26 27 corporation that “provides artificial intelligence products to Fortune 500 companies for 28 business intelligence, sustainability, revenue growth management, and sales and customer service uses.” Dkt. #7 (“Bhat Decl.”) at 1. Defendant Gomez is a former employee who now 1 2 resides in Bothell, Washington. Dkt. #1 at 1. 3 In December 2021, Fractal bought Neal Analytics. Dkt. #7 at 2. Mr. Gomez was one of 4 the “key employees” of this acquired company. Id. Fractal had these new employees sign 5 employment agreements along with noncompetition and nonsolicitation agreements. Id. 6 However, the timing of these agreements was a bit staggered. Defendant Gomez signed an 7 8 “Employment Agreement” with Fractal on December 28, 2021, but did not sign the 9 noncompetition and nonsolicitation agreements until May 4, 2022. Id. at 2–3. The 10 employment agreement spelled out that these two additional agreements were coming and 11 would be in exchange for stock options. Id.; see also Dkt. #1-2 (“Employment Agreement”) at 12 13 3 (“Following the Closing, the Company will recommend to the Board of Directors of the 14 Company (the ‘Board’) that [Gomez] be granted an option to purchase shares of Company… 15 provided that such option grant shall only become issuable upon receipt by the Company of a 16 Non-Competition and Non-Solicitation Agreement executed by [Gomez].”). 17 Mr. Gomez states via declaration that there were no attached noncompetition or 18 19 nonsolicitation agreements when he signed the Employment Agreement in 2021. Dkt. #20 at 2. 20 He says he received the Fractal shares as “part of the of the acquisition of Neal Analytics and 21 represented an exchange of my existing shares of Neal for shares of Fractal when Fractal 22 bought Neal.” Id. at 1–2. This is relatively consistent with Fractal’s argued position. See Dkt. 23 #5 at 2 (“[Gomez was] one of several ‘Key Employees’ who was to receive significant 24 25 compensation for his ownership interest in Neal.”). 26 Mr. Gomez served Fractal as a Vice President of Sales, Partnerships & Alliance at 27 Fractal until February 21, 2025. Dkt. #1 at 1. 28 On that date, Gomez joined Tiger Analytics (“Tiger”), an alleged “direct competitor.” 1 2 Dkt. #7 at 4. Fractal’s CFO states via declaration that “Gomez’s role at Tiger appears to be 3 substantially similar, if not identical, to his role at Fractal – to pursue the same business 4 partnership at Microsoft he pursued while at Fractal.” Id. Gomez disputes this 5 characterization, essentially saying that his work with Tiger does not impact Fractal’s 6 relationship with Microsoft. See Dkt. #19 at 14–15; Dkt. #20 at 3–4. 7 8 Fractal filed this case on April 22, 2025, alleging breach of contract, tortious 9 interference, unfair business practices in violation of RCW 19.86.020, and unjust enrichment. 10 See Dkt. #1. 11 III. LEGAL ANALYSIS 12 13 Granting a preliminary injunction is “an extraordinary remedy that may only be 14 awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v. NRDC, 15 Inc., 555 U.S. 7, 22, 129 S. Ct. 365, 172 L. Ed. 2d 249 (2008). A party can obtain a 16 preliminary injunction by showing that (1) it is likely to succeed on the merits, (2) it is likely to 17 suffer irreparable harm in the absence of preliminary relief, (3) the balance of equities tips in its 18 19 favor, and (4) an injunction is in the public interest. Id. at 555 U.S. 20. A preliminary 20 injunction may also be appropriate if a movant raises “serious questions going to the merits” 21 and the “balance of hardships . . . tips sharply towards” it, as long as the second and third 22 Winter factors are satisfied. All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134-35 (9th 23 Cir. 2011). 24 25 A. Likelihood of Success on the Merits 26 “To bring a cause of action for breach of contract, [Fractal] must establish the existence 27 of” (1) “a valid and enforceable contract,” (2) “the rights of the plaintiff and obligations of the 28 defendant under the contract,” and (3) “violation of the contract by defendant” causing 1 2 “damages to the plaintiff.” Citoli v. City of Seattle, 115 Wn. App. 459, 476 (2002). 3 This case involves multiple, apparently valid contracts followed by what appears to be 4 breach and potential damages to the Plaintiff. Defendant Gomez’s main argument against the 5 breach of contract and other claims is that the Noncompetition Agreement is void and 6 unenforceable under specific provisions of Washington State law. 7 8 The parties appear to agree that RCW 49.62 applies to noncompetition agreements such 9 as the one here. RCW 49.62.020(1) states that a “noncompetition covenant is void and 10 unenforceable: (a)(i) [u]nless the employer discloses the terms of the covenant in writing to the 11 prospective employee no later than the time of the initial oral or written acceptance of the offer 12 13 of employment and, if the agreement becomes enforceable only at a later date due to changes in 14 the employee’s compensation, the employer specifically discloses that the agreement may be 15 enforceable against the employee in the future; or (ii) [i]f the covenant is entered into after the 16 commencement of employment, unless the employer provides independent consideration for 17 the covenant.” RCW 49.62.005(3) states that “[t]he provisions in this chapter facilitating 18 19 workforce mobility and protecting employees and independent contractors need to be liberally 20 construed and exceptions narrowly construed.” 21 Gomez first points out that “[b]ecause the Noncompete was not provided at the time 22 Gomez entered into the Employment Agreement, the Employment Agreement cannot serve as 23 the consideration for the Noncompete pursuant to RCW 49.62.020(1)(a)(i).” Dkt. #19 at 9. 24 25 Gomez then argues that the Noncompetition Agreement must be “supported by independent 26 consideration to be enforceable.” Id. Later, Gomez argues that the stock options in the 27 28 Employment Agreement were an “illusory” promise because they were at the discretion of the 1 2 board. Id. at 13. Gomez concludes with: 3 If a court were to allow the terms in the December 2021 Employment Agreement to constitute consideration for the as-yet 4 undisclosed May 2022 Noncompete, it would turn RCW 49.62 on 5 its head and allow employers to trap employees into onerous non- compete restrictions by first getting the employee to agree in 6 advance to consideration in exchange for agreeing to sign a noncompete agreement in the future without knowing what the 7 noncompete terms are – and then later springing an onerous 8 noncompete agreement on the employee and arguing that they have already agreed to sign it in exchange for the previously stated 9 consideration. 10 Id. at 12. 11 Fractal fails to adequately rebut these arguments in its Reply, arguing without new 12 13 evidence and in a conclusory fashion that the “noncompetes were thus a part of the transaction 14 itself...” See Dkt. #22 at 5. 15 After examining the evidence before the Court right now and the above law, the Court 16 concludes that Fractal has failed to meet its burden for showing a likelihood of success on the 17 merits. The timing and structure of the Employment Agreement and the Noncompetition and 18 19 Nonsolicitation Agreements could potentially run afoul of RCW 49.62.020(1). The $70,000 20 bonus was most likely received in exchange for signing the 2021 Employment Agreement, not 21 the 2022 Noncompetition Agreement. The Court will not rule on this ultimate issue at this 22 time. Without a valid and enforceable Noncompetition Agreement, Fractal cannot succeed on 23 any of its claims, thus a preliminary injunction cannot be granted. 24 25 B. Remaining Elements 26 Having found that Fractal has failed to demonstrate a likelihood of success on the 27 merits, the Court need not proceed to analyze the remaining elements for a preliminary 28 injunction motion. The Court does note, however, that it agrees with Gomez that the public 1 2 interest is most likely served by denying this Motion given the language of RCW 49.62.005. 3 See Dkt. #19 at 16. 4 IV. CONCLUSION 5 Having considered the briefing from the parties and the remainder of the record, the 6 Court hereby finds and ORDERS that Plaintiff Fractal’s Motion for Preliminary Injunction, Dkt 7 8 #5, is DENIED. Fractal’s related Motion for Expedited Discovery, Dkt. #6 is DENIED. 9 DATED this 13th day of November, 2025. 10 A 11 12 RICARDO S. MARTINEZ 13 UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28