
USCA1 Opinion

	




        August 6, 1992           ____________________        August 6, 1992           ____________________        No. 92-1594        No. 92-1594                              FERROFLUIDICS CORPORATION,                              FERROFLUIDICS CORPORATION,                                 Plaintiff, Appellee,                                 Plaintiff, Appellee,                                          v.                                          v.                      ADVANCED VACUUM COMPONENTS, INC., ET ALS.,                      ADVANCED VACUUM COMPONENTS, INC., ET ALS.,                               Defendants, Appellants.                               Defendants, Appellants.                                 ____________________                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF NEW HAMPSHIRE                          FOR THE DISTRICT OF NEW HAMPSHIRE                    [Hon. Martin F. Loughlin, U.S. District Judge]                    [Hon. Martin F. Loughlin, U.S. District Judge]                                              ___________________                                 ____________________                                 ____________________                                        Before                                        Before                                  Cyr, Circuit Judge,                                  Cyr, Circuit Judge,                                       _____________                            Roney,* Senior Circuit Judge,                            Roney,* Senior Circuit Judge,                                    ____________________                            and Pieras,** District Judge.                            and Pieras,** District Judge.                                          ______________                                 ____________________                                 ____________________             Edward W. Smithers,  with whom  Merrill &  Broderick and  Gibson,             Edward W. Smithers,  with whom  Merrill &  Broderick and  Gibson,             __________________              ____________________      _______        Dunn & Crutcher were on brief for appellants.        Dunn & Crutcher were on brief for appellants.        _______________             E.  Donald Dufresne, with whom  George R. Moore  and Devine, Mil-             E.  Donald Dufresne, with whom  George R. Moore  and Devine, Mil-             ___________________             _______________      ____________        limet & Branch were on brief for appellee.        limet & Branch were on brief for appellee.        ______________                                 ____________________                                 ____________________                                 ____________________                                 ____________________         *Of the Eleventh Circuit, sitting by designation.         *Of the Eleventh Circuit, sitting by designation.        **Of the District of Puerto Rico, sitting by designation.        **Of the District of Puerto Rico, sitting by designation.                    CYR,  Circuit Judge.   Plaintiff Ferrofluidics Corpora-                    CYR,  Circuit Judge.                          _____________          tion (Ferro) is a Massachusetts corporation which has its princi-          pal place of business in New Hampshire.  Ferro developed, and now          makes  and markets, an item  called a magnetic  fluid rotary seal          for  use in the manufacture of semiconductor chips.  The magnetic          fluid rotary seal is a state-of-the-art gadget, and Ferro invests          upwards  of a million dollars a year to refine the technology and          diversify its applications.  Ferro dominates the American market,          accounting for  about ninety-five  percent of the  magnetic fluid          rotary seals sold in the United States.                    At one time, Nippon Ferrofluidics Corporation (NFC) was          Ferro's Japanese subsidiary.  In 1987, Ferro sold NFC to Japanese          investors.   Akira  Yamamura  is NFC's  chief executive  officer.          Ferro gave NFC  a license  to manufacture and  sell its  magnetic          fluid rotary  seals,  and  has since  delivered  to  NFC  updated          product formulas.  The license  appears to limit NFC's  territory          to Japan and Asia.   NFC, however, has disputed  that territorial          restriction and evidenced a desire to sell in the United States.                    Ferro hired defendant Todd  Sickles in December 1985 as          a  product manager  in its  "Seals Division,"  which handled  the          manufacture and marketing of magnetic fluid rotary seals.  On his          first  day at work, Sickles signed a document that contained both          a  nondisclosure agreement  and a  covenant prohibiting  him from          competing with Ferro for  five years after he left  the company's                                          2          employ  (the  "restrictive  covenant"  or the  "covenant  not  to          compete").   According  to the  document, both  the nondisclosure          provision and  the restrictive covenant  were to "be  governed by          the  laws of Massachusetts," and  the parties were  to submit any          disputes for arbitration in Boston.                    Sickles prospered  in  his work,  and Ferro  eventually          promoted him to general manager of the Seals  Division.  By 1990,          however,  Ferro was suffering, along with much of the New England          high-tech  industry, from a downturn in the economy.  The company          had  laid off employees and cut back salaries and other benefits.          Morale  was low, and many  employees were looking  for work else-          where. Sickles was  among them.   His duties  as general  manager          included maintenance of corporate relations with NFC, and on  two          occasions he  had been  told by  representatives of  the Japanese          company that if he ever decided to leave Ferro and wanted another          job, he should get in touch with them.                    Now,  in 1990, Sickles  took up the  offer, although he          had not yet left Ferro's employ.  He met with Akira Yamamura, and          with Yamamura's lieutenant,  Dr. Goto,  and began to  work out  a          plan under  which he would  set up  a company to  market magnetic          fluid rotary seals in the United States.  NFC  would provide both          the financing and the  seals    seals manufactured, it  should be          noted, according to the formulas supplied to NFC by Ferro itself.          In other words, Sickles  intended not merely to compete  with his          soon-to-be-formeremployer,butto competewithitusingits ownproduct.                                          3                    Sickles  did not scheme alone.  At one time or another,          four  other Ferro employees were  members of the  cabal:  Timothy          Barton, the Northeast  Regional Sales Manager of  the Seals Divi-          sion;  defendant Perry  Barker,  Regional Sales  Manager for  the          Southeast, Southwest and  Rocky Mountain  regions; Mark  Granoff,          Product Manager  of the Seals  Division; and Robert  Kuster, then          manager  of  Ferro's customer  service  department.   At  length,          however, Granoff, afflicted by his conscience, dropped out of the          group  and quit his job  at Ferro; Sickles  rescinded the invita-          tions to Barton  and Kuster;  and only Sickles  and Perry  Barker          remained.                    The  planning was  marked  by a  number of  underhanded          tactics.   A few examples will illustrate.    Sickles did much of          the  groundwork for the new venture on Ferro's company time using          company resources,  including business  trips  to California  and          Japan at Ferro's expense.  In deciding where to trim his  depart-          ment's payroll during a second  round of layoffs, Sickles  spared          Barton, Barker and Granoff and let the axe  fall on two employees          who had  shown no  interest in  leaving  Ferro and  who were  not          involved  in the new venture.  Finally, the district court found,          and we have  no reason to doubt, that when  Sickles left Ferro he          carried with him two copies of the company's customer list.                    Sickles's  machinations also  reflect his  awareness of          the covenant not to compete and his concern that it  might inter-          fere  with his  ambitions.   He received  advice from  lawyers on                                          4          several  occasions,  some of  which he  in  turn related  to NFC,          including the nugget that  "[l]egal complications will be greatly          reduced by  incorporating [the  new venture] in  California since          this state  strongly protects  the entrepreneur and,  in general,          does not recognize non-compete  agreements. . . ."   Not surpris-          ingly, then, when  the new  venture finally took  shape in  April          1991  as Advanced Vacuum Components,  Inc. (AVC), it was incorpo-          rated  and headquartered in California.  Sickles owned 75% of the          voting stock in AVC; Barker the remaining 25%.                    Advanced  Vacuum Components  dwells  in  NFC's  shadow,          though  there is  no  direct link  between  the companies.    AVC          obtains its magnetic fluid rotary seals from NFC through a second          Japanese company, Advanced Vacuum Seals.  A Hong Kong firm called          Advanced Materials Research Limited, termed  a "front" for NFC by          the district court,  is AVC's source of  financing.  It has  paid          AVC's legal fees  and provided it  with several hundred  thousand          dollars  in financing;  in  return,  Advanced Materials  Research          Limited receives 70% of AVC's operating income and owns preferred          stock  which  it can  convert  into a  controlling  percentage of          voting stock were AVC to go public.                    Sickles  and Barker quit Ferro in late May 1991 and AVC          began operating  soon after.  Between  May 1991 and  the trial of          this case  in April 1992,  AVC sold  only about $34,000  worth of          magnetic  fluid rotary  seals, a  minuscule amount  compared with          Ferro's  $7,400,000 in rotary seal  sales during 1991.   The dis-                                          5          trict court found,  however, that  "AVC is a  definite threat  to          Ferrofluidics,"   noting that  AVC eventually expects  to capture          54% of a market in which Ferro currently enjoys a 95% share.                    Under  the  circumstances,   litigation  probably   was          inevitable.   Ignoring  the  arbitration clause  in the  document          containing  the restrictive covenant,  both sides filed lawsuits.          Seemingly, AVC and  Sickles won  the race to  the courthouse,  by          filing  a declaratory judgment  action in the  United States Dis-          trict Court for the  Northern District of California in  November          1991.  The complaint  requested a judicial declaration invalidat-          ing the restrictive covenant under California law.                    After  initiating  the California  declaratory judgment          action, however,  AVC and Sickles hung fire.   They did not serve          the  complaint on Ferro until  after Ferro had  filed the instant          lawsuit in the United  States District Court for the  District of          New Hampshire.   Ferro's  complaint, naming AVC,  Sickles, Barker          and Akira  Yamamura  as defendants,  contained six  counts:   (1)          misappropriation  of trade  secrets  by Sickles  and Barker,  (2)          breach of  Sickles's nondisclosure agreement and  covenant not to          compete, (3) breach of Sickles's and Barker's fiduciary duties to          Ferro, (4) false representations  to Ferro customers in violation          of the  Lanham Act, 15 U.S.C.   1125(a),  (5) unfair competition,          and (6) tortious interference, by  Yamamura and AVC, with Ferro's          employment contracts  with Sickles  and Barker, and  by Yamamura,                                          6          AVC, Sickles and Barker, with the employment contracts of Barton,          Kuster and Granoff.                    The district court heard  Ferro's motion for a prelimi-          nary  injunction  on March 16,  1992.   Rather  than rule  on the          motion, the court set trial for March 25.  As service of  process          could not be obtained on Yamamura during the short interval prior          to trial, he was  dropped as a defendant.  At the  same time, the          defendants  moved to dismiss under Fed. R. Civ. P. 19 for failure          to join an indispensable party (identified not as Yamamura but as          NFC).                    The trial began on  March 25 and lasted five days.   On          April 22,  the district  court issued  its findings  of fact  and          conclusions of law.   Briefly put,  the court ruled (1)  that NFC          was  not an  indispensable  party under  Rule  19, (2)  that  the          enforceability of the  restrictive covenant should  be determined          under New Hampshire law, rather than either Massachusetts law, as          specified in the  document, or  California law, as  urged by  the          defendants,  (3) that  the  five-year term  of  the covenant  was          excessive,  but that the covenant should be enforced for a three-          year  term, (4) that Sickles  had violated the  covenant, and (5)          that both Sickles and Barker  had violated their fiduciary duties          to Ferro.  The court granted Ferro no relief on its other claims,          but issued a permanent injunction prohibiting the defendants from          engaging in  the magnetic fluid  rotary seal business  until June                                          7          1994.   This appeal followed;  we expedited the  hearing, and now          affirm.                                          8                                      DISCUSSION                                      DISCUSSION                                      __________                    The defendants  assert three claims on  appeal:  first,          that  the district  court  erred when  it  decided to  apply  New          Hampshire law; second, that  it erroneously modified the term  of          the restrictive covenant; and  third, that it abused  its discre-          tion by denying defendants' motion to dismiss for failure to join          an indispensable party.          1.  Choice of Law          1.  Choice of Law              _____________                    The district court actually made two choices concerning          the law governing the  restrictive covenant.  First, it  chose to          nullify  the  parties' contractual  choice of  Massachusetts law,          then  to apply New Hampshire  law, rather than  California law as          the defendants had urged.  As  we will explain, the first  ruling          probably was  erroneous, but any  error was harmless;  the second          ruling likely was unnecessary, but in any event entirely correct.                    Where  the  contracting parties  select  the  law of  a          particular jurisdiction  to govern their  affairs, as a  rule New          Hampshire courts will honor  their choice "if the  contract bears          any  significant  relationship  to  that  jurisdiction."   Allied                                                                     ______          Adjustment Service  v. Heney,  484 A.2d  1189, 1191  (N.H. 1984).          __________________     _____          The Allied Adjustment Service court cited, and the New  Hampshire              _________________________          rule echoes, the Restatement (Second)  of Conflict of Laws   187-          (2)(a), which  favors enforcing  the parties'  contractual choice          unless  "the chosen state has  no substantial relationship to the                                          9          parties or the transaction and there is no other reasonable basis          for the parties' choice. . . ."                    The district  court opinion  did not address  the issue          head-on,  but  suggests that  the  court decided  to  nullify the          parties' choice of Massachusetts law because New Hampshire bore a          more significant  relationship to the parties  and their contract          than Massachusetts.  New  Hampshire undeniably has stronger links          to the transaction than Massachusetts:   Ferro has its  headquar-          ters in  New Hampshire, the  contract was executed  and performed          there, and  Sickles lived there  while he worked for  Ferro.  The          more significant  relationship to  New Hampshire  nevertheless is          not an adequate reason to nullify the parties' contractual choice          of Massachusetts  law.   Absent  a mutual  choice of  law by  the          parties, the  law of the  jurisdiction with the  most significant          relationship to the contract normally applies.  Consolidated Mut.                                                          _________________          Ins. Co. v. Radio Foods Corp., 240 A.2d 47, 49 (N.H. 1968).  When          ________    _________________          the parties take the trouble to make a contractual choice of law,          often it is  because they do not want to  have applied, by opera-          tion of the general rule, the law of some other jurisdiction with          the  "most significant" relationship to the contract.  If a court          can nullify a contractual choice of law merely on the ground that          another jurisdiction  has a more significant  relationship to the          transaction than the chosen  jurisdiction, the courts can nullify          virtually any contractual choice    and do so for the very reason          the parties chose to do otherwise.                                          10                    The  nullification analysis, as noted earlier, properly          focuses  on the  nexus between  the  chosen jurisdiction  and the          parties or their  contract; we inquire whether  the chosen juris-          diction  has any  significant relationship,  rather than  whether                       ___          another jurisdiction has a  more significant relationship.  Ferro                                      ____          was incorporated in Massachusetts and did a substantial amount of          business there.   The cases  indicate that this  is a  sufficient          bond  to sustain  the  contractual choice  of  law.   "A  party's          incorporation in a  state is  a contact sufficient  to allow  the          parties to choose  that state's  law to  govern their  contract."          Carlock v.  Pillsbury Co., 719 F. Supp. 791, 807 (D. Minn. 1989).          _______     _____________          See also Gray v. American Express Co., 743 F.2d 10, 17 (D.C. Cir.          ___ ____ ____    ____________________          1984); Hale v.  Co-Mar Offshore  Corp., 588 F.  Supp. 1212,  1215                 ____     ______________________          (W.D. La. 1984); Restatement (Second)  of Conflict of Laws,   187          comment f (fact that  one party is domiciled in  chosen jurisdic-          tion provides "reasonable basis" for their choice).                    Although the preceding exposition  suggests that it may          have been appropriate to enforce the contractual choice of Massa-          chusetts law, we need  not determine the matter  definitively if,          as  the district court  found, New Hampshire  is the jurisdiction          with the  most significant relationship  to the transaction.   As          explained below, this  is so because  both Massachusetts and  New          Hampshire law lead to the same result in the instant case.                    The  defendants argue,  however, that  even though  the          district  court correctly cast off  from the mooring  of the par-                                          11          ties' contractual  choice, the currents of  the "most significant          relationship"  test should have carried it to California, not New          Hampshire.  Unlike the courts of New Hampshire and Massachusetts,          California courts almost invariably refuse to enforce restrictive          covenants.   See  Scott v.  Snelling and  Snelling, Inc.,  732 F.                       ___  _____     ____________________________          Supp. 1034,  1042-43 (N.D. Cal.  1990).   Thus, were  California,          rather than New Hampshire,  the appropriate alternative under the          "most significant  relationship" test,  it would be  necessary to          determine  whether  the  district court  correctly  nullified the          contractual choice-of-law provision.                    It  is very  clear, however,  that California  does not          trump New  Hampshire.  Since the  "most significant relationship"          test is intended to give "effect to the intention of  the parties          and  their reasonably justified  expectations," Consolidated Mut.                                                          _________________          Ins. Co., 240  A.2d at 49, the court applying it must examine the          ________          jurisdiction/contract relationship at the  time the contract  was          executed.   In this  case, Ferro  and Sickles  could have had  no          reasonably justifiable  expectation in  December 1985  that their          agreement would be governed by California law, as California bore          no  relationship to the contract  at that time,  and continued to          have none  until Sickles breached the  restrictive covenant there          in 1991.  New Hampshire, on the other hand, was both the place of          execution  and the  place  of anticipated  performance.   If  the          parties had any reasonably justified expectation in December 1985          (other than that  their choice of Massachusetts law be enforced),                                          12          it would have been that the covenant be governed by New Hampshire          law.                    Viewed in  the best light, the  defendants' argument is          that since  Sickles presently  lives and works  there, California                              _________          has an interest in  how his rights are interpreted  and enforced.          Quite true, but of  course such an interest hardly  suggests that          California had a more significant relationship than New Hampshire          with an employment contract  performed in New Hampshire by  a New          Hampshire employer  and a  New Hampshire employee  throughout the          employment period.  See  Restatement (Second) of Conflict  of Law                              ___            196 (contracts  for rendition  of services usually  governed by          law of state  where the  contract requires that  the services  be          rendered).   "While [California] certainly has  a strong interest          in monitoring  effects on in-state  competition, [New  Hampshire]          has  an equally  strong  interest in  protecting [New  Hampshire]          businesses from  breaches of employment agreements and consequent          losses of  good will."  Shipley  Co. v. Clark, 728  F. Supp. 818,                                  ____________    _____          826  (D. Mass. 1990).   In sum, even  assuming the district court          properly could have nullified  the contractual choice of  law, in          these circumstances  it could have done  so only in favor  of New          Hampshire law.          2.  Enforcement of Restrictive Covenant          2.  Enforcement of Restrictive Covenant              ___________________________________                    Massachusetts and New Hampshire will enforce reasonable          restrictive  covenants in employment  contracts under essentially                                          13          the same  reasonableness standard.  In  Massachusetts, a restric-          tive  covenant  "is not  invalid and  may  be enforced  in equity          provided it is necessary  for the protection of the  employer, is          reasonably limited in time  and space, and is consonant  with the          public  interest."   Novelty  Bias Binding  Co.  v. Shevrin,  175                               __________________________     _______          N.E.2d  374, 375 (Mass. 1961).   In New  Hampshire, a restrictive          covenant  is considered reasonable so  long as it  is "no greater          than necessary  for the  protection of the  employer's legitimate          interest,  does not impose undue hardship on the employee, and is          not injurious to the public interest."  Moore v. Dover Veterinary                                                  _____    ________________          Hospital, Inc., 367 A.2d 1044, 1047 (N.H. 1976).          ______________                    The district court ruled that  the restrictive covenant          in Sickles's  employment contract was enforceable in  all but one          respect; the five-year term was found excessive.  The reasonable-          ness of a covenant presents a question  of law, see Technical Aid                                                          ___ _____________          Corp. v. Allen, 591 A.2d 262, 265 (N.H. 1991), but  insofar as it          _____    _____          entails the resolution of  issues of fact, a "mixed"  question is          presented which we review only for "clear error."   See DeGuio v.                                                              ___ ______          United States, 920 F.2d 103, 105 (1st Cir. 1990).          _____________                    We agree with the  district court's assessment that the          restrictive covenant was reasonable in the circumstances,  except          for  its  five-year term.   The  closer  question is  whether the          district court permissibly modified the term of the covenant.                    Courts presented with restrictive  covenants containing          unenforceable provisions  have taken  three approaches:   (1) the                                          14          "all  or  nothing" approach,  which  would  void the  restrictive          covenant entirely  if any  part is unenforceable,  (2) the  "blue          pencil" approach, which enables the  court to enforce the reason-          able terms  provided the covenant remains  grammatically coherent          once its unreasonable  provisions are excised, and  (3) the "par-          tial  enforcement"  approach,  which  reforms  and  enforces  the          restrictive  covenant to the extent  it is reasonable, unless the                                __ ___ ______  __ __ __________          "circumstances  indicate bad faith or deliberate overreaching" on          the  part of the employer.   Durapin, Inc.  v. American Products,                                       _____________     __________________          Inc., 559 A.2d 1051, 1058 (R.I. 1989).          ____                    Massachusetts  and  New  Hampshire are  firmly  in  the          "partial  enforcement"  camp.    "Massachusetts courts  will  not          invalidate  an  unreasonable noncompete  covenant  completely but          will enforce  it to  the extent  that it  is  reasonable."   L.G.                                                                       ____          Balfour Co. v. McGinnis, 759 F. Supp. 840, 845 (D.D.C. 1991).  In          ___________    ________          New Hampshire,  "[e]ven if  the trial  court determines that  the          covenant is  unreasonable, the employer nonetheless  may be enti-          tled  to equitable relief in  the form of  reformation or partial          enforcement of an  overly broad  covenant upon a  showing of  his          exercise  of good faith in  the execution of  the employment con-          tract."  Smith, Batchelder & Rugg v. Foster, 406  A.2d 1310, 1311                   ________________________    ______          (N.H. 1979).                    The defendants  argue that the district court impermis-          sibly  reformed the  restrictive covenant  in Sickles's  contract          since  the prerequisite  "good faith"  had not  been established.                                          15          Defendants cite the Smith, Batchelder and Technical Aid cases for                              _________________     _____________          the  proposition that good faith cannot be found where, "as here,          the employee was presented with and required to sign the restric-          tive covenant only  after he  had accepted the  new position  and          left his former job in reliance on an earlier oral agreement  for          employment containing no such term."  In other words, the defend-          ants  contend that  the  lack of  advance  notice to  Sickles  so          tainted the restrictive covenant as to preclude a finding of good          faith.                    The district  court did  find, however, that  Ferro had          given Sickles advance notice of the restrictive covenant.  We may          disturb its  finding only if  "clearly erroneous."   According to          the defendants, the finding of advance notice was clearly errone-          ous because (1) it was based on a letter sent to Sickles by Ferro          on November 18, 1985 (three  weeks before he began work  at Ferro          and  executed the  restrictive  covenant),  (2)  the  November 18          letter merely informed Sickles that he would be required to "sign          a nondisclosure agreement covering  the proprietary activities of          the corporation," and  (3) the  letter made  no explicit  mention          that  the "nondisclosure  agreement" would  contain a  clause re-          stricting  Sickles's ability  to  compete with  Ferro.   Although          defendants'  argument  is not  without  some force,  we  need not          determine whether we  are, "on the entire  evidence[,] . . . left          with the definite  and firm  conviction that a  mistake has  been          committed."   United States v. United States Gypsum Co., 333 U.S.                        _____________    ________________________                                          16          364,  395  (1948).   The  defendants' perspective,  we  think, is          altogether too limited.                    In this  juridical cranny, "[p]recedents are  of little          value."   Reddy v. Community Health Foundation of Man, 298 S.E.2d                    _____    __________________________________          906, 913  n.4 (W.  Va. 1982)  (quoting 54  Am.Jur.2d, Monopolies,                                                                ___________          Restraints of  Trade, and Unfair  Trade Practices,    543).   See          _________________________________________________             ___          also  Novelty Bias  Binding  Co., 175  N.E.2d  at 376  ("What  is          ____  __________________________          reasonable  depends on the facts in each case.").  In urging that          we cleave reflexively to the narrow holdings of two New Hampshire          cases, which turned on the presence or absence of advance notice,          defendants  ignore the breadth  of the "good  faith" concept, the          variety  of factors  (including,  but not  only, advance  notice)          which  may be material to the "good faith" determination, and the          deference due a district court order for partial enforcement of a          restrictive covenant.                    The New Hampshire courts  have adopted the "good faith"          requirement in  the Restatement  (Second) of  Contracts   184(2),          and  such cases as  Raimonde v. Van Vlerah,  325 N.E.2d 544 (Ohio                              ________    __________          1975), Insurance Center,  Inc. v.  Taylor, 499  P.2d 1252  (Idaho                 _______________________     ______          1972),  and  Solari Indus.,  Inc. v.  Malady,  264 A.2d  53 (N.J.                       ____________________     ______          1970).   See Smith, Batchelder  & Rugg, 406 A.2d  at 1313 (citing                   ___ _________________________          cases).  These  sources tell  us that "good  faith" and  "advance          notice"  are  not coextensive  concepts,  but  rather that  "good          faith" denotes  a broader  and more complex  principle reflecting          the reformation doctrine's origin in the courts' "inherent equity                                          17          powers to modify and enforce covenants."  Durapin, Inc., 559 A.2d                                                    _____________          at 1058.   In order  to give  form to this  principle, the  trial          courts are charged  to examine and consider  all relevant circum-                                                       ___          stances,  and only  then to  determine whether,  in light  of all          those circumstances, it  would be equitable to  enforce the cove-          nant in modified form.  See Raimonde, 325 N.E.2d at 547.  The aim                                  ___ ________          in  each case must be to determine whether partial enforcement is          "the fair and reasonable course."  Solari Indus., 264 A.2d at 56.                                             _____________                    To be sure, the  timing of the initial presentation  of          the  restrictive covenant to the employee may bear on the employ-          er's  good faith.  The absence of notice may suggest overreaching          and bad  faith, insofar  as it  places the  employee in  a weaker          bargaining position with  respect to the  covenant than he  might          have enjoyed  had he known  of the proposed  restriction earlier;          for  example,  before he  left his  previous job.   Thus,  in the          Technical  Aid case,  the New  Hampshire Supreme  Court  found no          ______________          error  in the trial  court determination that  an employer lacked          good faith where the  employer had presented the covenant  to the          employee on his first  day on the job, and  the employer insisted          that the employee sign immediately.   591 A.2d at 271.   See also                                                                   ___ ____          American  Credit Bureau, Inc. v. Carter, 462 P.2d 838 (Ariz. App.          _____________________________    ______          1969) (no abuse of  discretion in trial court refusal  to enforce          restrictive covenant  where employer had not  told employee about          covenant until after employee quit former job).                                          18                    These cases say  that the  lack of  advance notice  may          justify  a finding  of bad faith,  but not  that the  trial court          cannot  find good  faith  absent advance  notice.   An  exclusive          preoccupation with the timing of the presentation of the restric-          tive covenant, and more precisely with its effect on the bargain-          ing-power balance  between  employer and  employee,  would  limit          unrealistically the broad equitable inquiry contemplated in these          matters.   The fact  is, of  course, that  restrictive covenants,          whenever and  however presented to  the employee, "often  are not          arrived  at by  bargaining  between equals  . . . [t]he  employer          normally presents  the terms on a  'take it or  leave it' basis."          Cheney v. Automatic  Sprinkler Corp., 385 N.E.2d  961, 965 (Mass.          ______    __________________________          1979).                    The object  of the appropriate  inquiry, therefore,  is          not so much  whether the employer has  upset the balance in  bar-          gaining power, as  whether the employer has exploited an inherent          imbalance  by placing "deliberately  unreasonable and oppressive"          restraints on the  employee.  Solari Indus., 264 A.2d  at 57.  In                                        _____________          their pursuit of that inquiry, the courts may, and in appropriate          circumstances should, examine and weigh other  relevant consider-          ations.   These other considerations include  whether the employ-          er's  general practice  with respect  to employee  restraints "is          fair and  designed only to protect  legitimate interests," Blake,          Employee Agreements Not  to Compete,  73 Harv. L.  Rev. 625,  683          ___________________________________          (1960);  whether  the employer  gave  the  particular employee  a                                          19          reasonable opportunity  to  read  and  understand  the  covenant;          whether the employer  allowed (or, if asked, would  have allowed)          the  employee to  obtain  modifications of  the  covenant, or  to          decline  to execute it altogether;  and whether the  terms of the          restrictive covenant are so  "savage . . . that their overbreadth          operates, by  in terrorem effect, to  subjugate employees unaware                        __ ________          of the tentative nature of such a covenant," Reddy, 298 S.E.2d at                                                       _____          916,  or, conversely,  whether  the terms  are merely  marginally          overbearing so as to  suggest that the employer simply  miscalcu-          lated the extent of the restrictions  required for its reasonable          protection.                    Intrinsic to any appellate assessment  of these factors          is  the standard of review.  As  a trial court decision to modify          and enforce a restrictive covenant  is undertaken in the exercise          of  its equitable powers, we review only for abuse of discretion.          Morgan  v. Kerrigan, 523  F.2d 917, 921  (1st Cir. 1975).   Under          ______     ________          this deferential  standard, we  conclude that the  district court          decision to modify Sickles's  restrictive covenant is sustainable          on  the following  grounds.   First, were we  to assume  that the          district court made a mistake when it found that explicit advance          notice  of the  covenant  not to  compete  was contained  in  the          November 18 letter, we nonetheless think it indisputable that the          letter alerted  Sickles that Ferro would  expect some restriction                                                           ____          upon  his  post-employment  freedom.    Second,  Ferro's  general          practice with  respect to restrictive covenants  does not display                                          20          the  kind  of "grasping  or  negligent" behavior  that  may cause          courts to decline partial enforcement.  Blake, supra, 73 Harv. L.                                                         _____          Rev.  at 684.  Ferro  regularly requests new  employees to accept          restrictive covenants similar  to the one  Sickles executed.   It          invariably gives the employee, as  in Sickles's case, an opportu-          nity  to read and to  understand the document  before signing it.          Furthermore, Ferro  has, on  request, proven willing  to consider          and  accept modifications.    At least  once     in  the  case of          defendant Perry Barker     Ferro hired and continued to  employ a          worker who  pocketed the document  and never  signed it.   In  at          least one other  instance, Ferro  waived its rights  under a  re-          strictive  covenant  and allowed  a  former  employee to  join  a          competitor where the employee    in marked contrast to Sickles             was forthright in  his dealings  and made no  attempt to  deceive          Ferro about his intentions.  Finally, and perhaps most important-          ly, the covenant was  flawed only as concerned the  remoteness of          its termination date, and the restrictions as a whole were not so          harsh as to warrant an  inference that Ferro meant to enserf  its          employee.                    Considerations   of   "reasonableness"  and   "balance"          pervade the caselaw in "partial enforcement" jurisdictions.  See,                                                                       ___          e.g., Reddy, 298 S.E.2d at 911 (discussing "rule of reason"); see          ____  _____                                                   ___          also Arthur A. Corbin, Contracts,   1394 at 89 (1962) ("It is the          ____                   _________          function of the law  to maintain a reasonable balance").   Courts          in  these jurisdictions  must  be vigilant  to protect  employees                                          21          against overbroad and oppressive restrictions on their ability to          work and  earn a living, but must  temper their vigilance with an          awareness that employers, too, work for a living and are entitled          to reasonable  protection against the predations  of unscrupulous          former  employees.   See id.  at   1394;  see also  Raimonde, 325                               ___ ___              ___ ____  ________          N.E.2d at 547 ("Most  employers who enter contracts do so in good          faith, and seek only to protect legitimate interests").  Notwith-          standing the serious question defendants raise concerning advance          notice, and regardless whether Massachusetts or New Hampshire law          governs,  we conclude, in the  circumstances of this  case and in          light of  its considerable  discretion to mold  equitable relief,          that the district court decision must stand.          3.  Joinder          3.  Joinder              _______                    We need  not linger  over the defendants'  final claim.          Defendants  contend  that the  present  action  should have  been          dismissed  because NFC  was a  necessary and  indispensable party          under Fed. R. Civ. P. 19.  First, defendants argue that NFC was a          "necessary party"  under Rule  19(A)(2)(i)     that is,  that NFC          "claims an interest  relating to the subject of the action and is          so situated that the  disposition of the action in  [its] absence          may . . . as a practical matter impair or impede [its] ability to          protect  that interest. . . ."   They  insist that  an injunction          against AVC would  deprive NFC  of the ability  to sell  magnetic          fluid  rotary seals to its American protege:  "NFC claims a right                                          22          to market seals [in  the United States] under the  license agree-          ment  [with  Ferro], which  has  been  'impaired  or impeded'  by          Ferro's  lawsuit .  . .  NFC's ability  to market seals  would be          greatly curtailed by enjoining AVC."                    Whatever abstract appeal  it may  have, their  argument          breeds an incongruity in the present case.  If NFC actually was a          "necessary  party"  under Rule  19(a)(2)(i)     that  is,  if its          practical ability to  protect an  interest was at  stake, and  it          could  not be adequately represented  by AVC     then there would          have been  no need to resort  to joinder, as NFC  would also have          been  entitled to  intervene as a  matter of right  under Fed. R.          Civ. P. 24(a).  See Pujol v. Shearson/American Express, Inc., 877                          ___ _____    _______________________________          F.2d  132, 135  (1st Cir.  1989), and  cases cited  therein (Rule          24(a)(2) is a "counterpart"  to Rule 19(a)(2)(i)).  Yet  NFC made          no attempt to intervene.  See Boston  Car Co. v. Acura Automobile                                    ___ _______________    ________________          Division, American Honda Motor Co., 127 F.R.D. 434, 435 (D. Mass.          __________________________________          1989)  (party is  not "necessary"  where it  "has not  claimed an          interest" in outcome of action).                    In any event, NFC's potential economic exposure did not          qualify it as an  "indispensable party" under Rule 19(b).   "[I]t          is generally recognized that a  person does not become indispens-          able to an  action to  determine rights under  a contract  simply          because  that person's  rights or  obligations under  an entirely          separate  contract will be affected by the result of the action."          Helzberg's Diamond Shops, Inc. v. Valley West Des Moines Shopping          ______________________________    _______________________________                                          23          Center, Inc., 564 F.2d 816, 820 (8th Cir. 1977).  See also Boston          ____________                                      ___ ____ ______          Car Co., 127 F.R.D. at 435.          _______                    Affirmed.                    ________                                          24
