TECHNOLOGY DYNAMICS, INC., ETC. VS. ANWAR MASTER (L-4328-16, BERGEN COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0952-17T3
TECHNOLOGY DYNAMICS, INC.,
d/b/a NOVA BATTERY SYSTEMS,
Plaintiff-Appellant,
v.
ANWAR MASTER, WALTER
BERINGER, EMERGING POWER,
INC., and TARADAN, INC.,
Defendants-Respondents,
and
LORRAINE HARA and PNC, INC.,
Defendants.
________________________________
Argued February 4, 2019 – Decided February 26, 2019
Before Judges Sabatino and Mitterhoff.
On appeal from Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-4328-16.
Evan L. Goldman argued the cause for appellant
(Goldman, Davis & Gutfleish, PC, attorneys; Evan L.
Goldman, on the briefs).
Jed L. Marcus argued the cause for respondents Anwar
Master and Walter Beringer (Bressler, Amery & Ross,
PC, attorneys; Jed L. Marcus, of counsel and on the
brief; Ann Marie Effingham, on the brief).
John M. Bradham argued the cause for respondents
Emerging Power, Inc. and Taradan, Inc. (Morea
Schwartz Bradham Friedman & Brown, LLP, attorneys;
Thomas A. Brown, II, on the brief).
PER CURIAM
Plaintiff Technology Dynamics, Inc. ("TDI") 1 appeals a series of Law
Division orders that culminated in the dismissal of its lawsuit against two of its
former key employees and a competitor that hired them. Among other things,
plaintiff mainly contests: (1) the trial court's denial of its unopposed request for
a first discovery extension in this complex business litigation; and (2) the court's
subsequent grant of summary judgment in favor of defendants on all counts of
plaintiff's complaint, which was entered at a time when plaintiff was an
unrepresented corporation.
1
TDI does business under the name Nova Battery Systems ("NBS"), a
subsidiary. Because the briefs and the record materials at times refer to plaintiff
as NBS, we shall do likewise.
A-0952-17T3
2
For the reasons that follow, we reverse in part, reinstate two counts of
plaintiff's amended complaint, and remand to reopen discovery on fair terms and
conditions to be specified by the trial court after a case management conference.
I.
Because we are remanding for further discovery and proceedings, we need
not present here the record definitively, or thoroughly. Instead, we will describe
succinctly the facts and procedural history most salient to our disposition. We
do so mindful that the parties dispute numerous events within the chronology,
and the intentions of various actors.
NBS is a New Jersey company with its principal office in Bergenfield.
NBS is in the business of developing and selling battery assemblies and battery
chargers in the medical and portable equipment fields. The president and owner
of NBS's affiliated company TDI is Aron Levy.
In January 2013, TDI bought the battery assembly business of Ansmann
USA Corporation ("Ansmann") and began operating that business as NBS. At
the time of the acquisition, defendant Anwar Master was Ansmann's general
manager and defendant Walter Beringer worked there as a sales manager.
Master and Beringer then became employees of NBS, until their departures that
precipitated this lawsuit.
A-0952-17T3
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Master and Beringer were at-will employees of NBS. The terms of their
service were not embodied in any signed employment contracts. As NBS
concedes, Master and Beringer did not have any written or oral agreements not
to compete with NBS. Nor did they have any written non-disclosure agreements
with NBS, although they did sign such agreements with certain NBS customers.
Both Master and Beringer left NBS in the latter part of 2015. Master
resigned in October 2015. Beringer resigned in August 2015, although he
continued, at the request of NBS, to service certain customers briefly through
mid-September 2015 until his replacement took over.
After leaving NBS, both Master and Beringer promptly began working for
defendant Emerging Power, Inc. ("EPI"), a competitor of NBS.2 As plaintiff
alleges, EPI, through the efforts of the individual codefendants, started or
expanded its sales to customers of NBS. In essence, plaintiff's theory of this
case is that Master and Beringer breached their fiduciary duties to NBS while
they were still employed with NBS by allegedly plotting to divert NBS's
customers and misuse confidential information, and take that business with them
2
EPI has an affiliated company, Taradan, Inc. ("Taradan"), which is also a
codefendant in this case.
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to EPI. Plaintiff further maintains EPI conspired with Master and Beringer to
accomplish the illicit diversion of business.
Defendants acknowledge that EPI did make sales to certain customers who
had previously done business with NBS after Master and Beringer joined EPI.
However, they deny that any legal duties were breached or that any wrongful
conduct occurred.
In December 2015, NBS filed a multi-count complaint in the Chancery
Division against Master, Beringer, EPI, and Taradan. The complaint sets forth
the following causes of action: (1) violation of the New Jersey Trade Secrets
Act, N.J.S.A. 56:15-1; (2) civil conspiracy; (3) breach of duty of loyalty; (4)
breach of contract; (5) breach of implied covenant of good faith and fair dealing;
(6) intentional misrepresentation; (7) negligent misrepresentation; (8) tortious
interference with contract; (9) tortious interference with prospective business;
(10) conversion; and (11) unjust enrichment. By way of an order to show cause,
NBS sought, among other things, an order enjoining Master and Beringer from
disclosing any propriety and/or confidential information and an order restraining
Master and Beringer from providing services of any kind to EPI.
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The defense opposed the order to show cause in the General Equity Part
of the Chancery Division. The parties engaged in limited documentary
discovery to address the injunctive issues.
On February 25, 2016, the General Equity judge entered a case
management order specifying a return date on the order to show cause, various
interim discovery deadlines, a discovery end date ("DED") in the General Equity
case of October 14, 2016, and a trial date in General Equity of December 20,
2016.
On April 11, 2016, the General Equity judge denied NBS's requests for
injunctive relief. At that point, NBS elected to discontinue pursuing restraints,
and the case was transferred to the Law Division. The Law Division case was
designed as a "Track IV" complex commercial litigation matter.
The sole case management conference in the Law Division took place on
September 29, 2016. On that date, the Law Division judge issued a Case
Management Order ("CMO") specifying that all interrogatories were to be
propounded by October 27, 2016 and answered by November 17, 2016; the
deposition of plaintiff's president Levy to be completed by November 1, 2016;
and the deposition of defendant's non-party witness in Boston to be completed
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by December 1, 2016. The CMO specified a DED of April 15, 2017, which is
450 days from the date that EPI had filed its answer in the Chancery Division.
On February 4, 2017, the Law Division issued a reminder notice to the
parties reiterating that discovery would end on April 15, 2017. A few weeks
later, on March 6, 2017, the court sent the parties a notice informing them that
a trial in the Law Division had been scheduled for September 5, 2017. Notably,
this trial notice was issued about a month before the DED.
Meanwhile, the parties encountered difficulties in completing the
documentary phase of discovery. Defendants allege that those obstacles were
wholly or largely due to the lack of cooperation of NBS and its president, Levy.
In any event, no depositions, except for the March 16, 2017 deposition of the
third party witness in Boston, occurred until April 21, 2017. On that date,
defendants began – but did not complete – the deposition of Levy. No
depositions of defendants occurred, and no expert reports were yet exchanged.
On March 28, 2017, NBS moved to extend the DED, asserting that the
case had involved extensive paper discovery and complex discovery-related
motions, which had hindered the completion of that discovery phase. Plaintiff
set forth a proposed plan for extending certain discovery, providing dates for the
depositions of the individual defendants and other persons, which counsel had
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mutually scheduled in April 2017. NBS further represented that the parties
should be able to conclude fact depositions by the end of May 2017, and
proposed an extension of the DED, with a corresponding postponement of the
September trial date.
Notably, defendants did not file opposition to plaintiff's motion for this
first discovery extension. Nonetheless, the trial court denied the requested
extension in an order issued on April 13, 2017. Among other things, the order
and the court's attached reasons determined that plaintiff had not shown
"exceptional circumstances" to warrant the unopposed discovery extension, and
that the September 5, 2017 trial date would not be adjourned. The order did
indicate that the parties could continue to pursue discovery on a consensual
basis, so long as the September trial date was not disturbed. 3
As we have noted, the deposition of Levy was then partially conducted,
with an expectation it would continue at later date. Thereafter, defense counsel
advised plaintiff's counsel that, in light of the court's rejection of a discovery
extension, defendants would no longer continue engaging voluntarily in the
discovery process.
3
For reasons unclear from the record, plaintiff's counsel did not inform defense
counsel until after Levy's partial deposition that the court had denied the
discovery extension.
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Plaintiff moved for reconsideration of the court's rejection of the
discovery extension. The court denied that motion as well, again finding no
exceptional circumstances.
Thereafter, plaintiff's counsel moved to withdraw from the case, citing an
unspecified "potential conflict of interest." The motion requested the court to
reschedule the September 2017 trial date in light of counsel's proposed
withdrawal.
The court issued an order on July 21, 2017, granting counsel's motion to
withdraw, but declined to reschedule the trial date. Notably, the withdrawal
order signed by the judge – a marked-up version of the form of order supplied
by plaintiff's counsel – contained no provision with a deadline for plaintiff (a
corporation prohibited from representing itself under Rule 1:21-1(c)), to secure
new counsel to enter an appearance in the litigation.
Defendants, meanwhile, moved for summary judgment dismissing all of
plaintiff's claims. They particularly stressed Levy's admission at his deposition
that neither Master nor Beringer had entered into any written or oral non-
compete agreement or confidentiality agreement with NBS while they worked
there.
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The pendency of the summary judgment motions caused plaintiff's then-
former counsel to move to be reinstated into the case. In support of th is
reinstatement motion, the law firm submitted a certification from Levy,
asserting that he had waived the conflict of interest and expressing his desire to
have the law firm file opposition to the summary judgment motions. The law
firm tendered that opposition, which included certain materials obtained in
discovery that were said to reflect the existence of genuine materials of fact.
The trial court denied counsel's motion for reinstatement, noting that the
request did not substantiate why the asserted conflict had been eliminated or
why it was waivable. The trial court then proceeded to address the summary
judgment motions in successive orders dealing, first, with the individual
defendants and then, second, EPI. The court treated plaintiff's summary
judgment opposition as a "courtesy copy," indicating in its rulings that it had
considered the papers nonetheless. Even so, both summary judgment orders
issued by the court were stamped "UNOPPOSED."
In written riders to its summary judgment orders, the trial court ruled there
were no genuine issues of material fact that could support NBS's assorted causes
of action. Among other things, the court underscored there was no evidence of
an enforceable agreement among Master, Beringer, and NBS regarding
A-0952-17T3
10
confidentiality, and no agreement preventing the individual defendants from
competing with NBS or soliciting its customers. The court specifically noted
that certain circuit board designs that Master and Beringer shared with EPI are
the property of the customers, and are available on the Internet and are thus not
confidential. Additionally, the court found that NBS had produced no evidence
substantiating its claims of monetary damages. Accordingly, the court
dismissed NBS's complaint with prejudice.
NBS retained new counsel and moved for reconsideration of the summary
judgment orders. That attempt to revive the lawsuit failed, and this appeal
ensued.
II.
On appeal, NBS presents a litany of arguments criticizing the trial court's
various determinations that culminated in the lawsuit's dismissal with prejudice.
These arguments can be divided into two categories: (A) the denial of the
unopposed discovery extension; and (B) the grant of summary judgment to all
defendants. We address these issues in turn.
A.
We first consider the discovery issue. A civil case, such as this one,
designated as a Track IV complex litigation is to be afforded a minimum
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11
discovery period of 450 days. R. 4:24-1(a). In this instance, the DED of April
15, 2017 fixed by the trial court counted the time the parties initially spent
litigating injunctive issues in General Equity towards the 450-day allotment. No
party objected to that calculation when the CMO in the Law Division was
entered.4
The Rules of Court provide mechanisms for discovery to be extended
beyond the standard allotments. One such mechanism is the so-called
"automatic initial extension" of Rule 4:24-1(c), which allows an initial discovery
period extension of up to sixty days as of right, provided that all parties consent
and the request is made by letter to the court before the discovery period has
expired. Here, plaintiff's request to extend discovery was made before the DED.
However, because defendants had not affirmatively given their consent to the
extension – but also had not opposed it – plaintiff filed a formal motion to obtain
that extension pursuant to Rule 4:24-1(c).
A critical facet of a requested discovery extension is the pertinent legal
standard to evaluate such requests. The Rules prescribe that if an arbitration or
4
We do note in passing, however, that it generally should not be presumed that
time spent litigating a case in a different Division automatically should be fully
counted towards discovery periods in the Law Division. Cf. Rule 4:24-1(d)
(which analogously excludes all days during a temporary removal to federal
court towards the discovery time on remand back to the Superior Court.)
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trial date has not yet been fixed, a request made before the DED to extend
discovery for an additional period should be granted if the movant presents
"good cause" to do so. R. 4:24-1(c). By contrast, once an arbitration date or
trial date has been fixed, the court may not extend the discovery period unless
"exceptional circumstances" are shown. Ibid.
The Rules are designed to make a discovery extension substantially more
difficult to obtain under the "exceptional circumstances" test, as opposed to the
less-rigorous "good cause" test. See, e.g., Bldg. Materials Corp. of Am. v.
Allstate Ins. Co., 424 N.J. Super. 448, 479-80 (App. Div. 2012) (discussing the
important difference between exceptional circumstances and good cause). The
provisions were adopted nearly two decades ago as part of a comprehensive set
of rule changes "designed to improve the efficiency and expedition of the civil
litigation process and to restore state-wide uniformity in implementing and
enforcing discovery and trial practices." Vargas v. Camilo, 354 N.J. Super. 422,
425 n.1 (App. Div. 2002).
The logical distinction between the "good cause" standard and the
"exceptional circumstances" standard is to discourage counsel and litigants from
seeking to extend discovery at a late post-DED stage, unless there are truly
exceptional reasons presented to prolong the pretrial process. If such late
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discovery requests are granted, arbitrations and trials will accordingly be
delayed as well, thereby impeding the general goals of efficiency and expedition
in civil cases. The pursuit of those time-oriented goals always must be
tempered, however, with an appropriate concern for the goals of fairness and
resolving cases on their merits with a sufficiently developed factual record. See
Leitner v. Toms River Reg'l Sch., 392 N.J. Super. 80, 90-92 (App. Div. 2007)
(recognizing the importance of both controlling dilatory litigation tactics while
at the same time advancing the interests of justice and fairness); see also Santos
v. Estate of Santos, 217 N.J. Super. 411, 416 (App. Div. 1986) (underscoring
that litigants should receive "the full measure of justice due [to] them," quoting
the admonition of Judge Wilfred Jayne that "expedition must supplant languor
but never at the expense of justice.").
Plaintiff draws our attention to A Practitioner's Guide to New Jersey's
Civil Court Procedure ("Guide"), which was issued by the State Judiciary in
2011. New Jersey Courts, A Practitioner's Guide to New Jersey's Civil Court
Procedure (2011). The Guide provides "procedural guidance to practitioners in
the New Jersey Superior Court, Law Division, Civil Part" and is intended to
"promote uniform practices and procedures statewide." The Guide is non-
binding. If there is a "conflict between [the Guide's] contents and any Rule or
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statement of policy issued by the Supreme Court, the Judicial Council, or the
Administrative Director of the Courts, that Rule or statement of policy, rather
than [the Guide] will be controlling."
Section 16-2(c) of the Guide, which is titled "Notice of Trials," provides
that: "At least 10 weeks’ notice of trial must be provided by the court. The ten-
week period is counted from the date of the receipt of the trial notice. The notice
may not be sent prior to the discovery end date. See R. 4:36-3." Guide, §16-
2(c) (emphasis added). Although the Guide references Rule 4:36-3, neither that
Rule nor the published Comments to it codify these guidelines. We are mindful
the guidelines are only suggestive, and are not mandatory. Nonetheless, they
provide useful principles for our analysis here.
When a trial court, as here, sets a trial date before the DED has run, one
major effect of doing so is to change the discovery extension standard for the
duration of the case from the "good cause" standard to the "exceptional
circumstances" standard. One advantage of that change is to provide trial date
certainty and efficiency. However, one disadvantage is that the technique may
pose too rigid an obstacle to extending discovery where pretrial activities have
taken longer than may have been originally anticipated.
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For instance, document turnover can get bogged down with privilege
issues and compliance disputes. Deposition scheduling may be complicated by
availability problems of witnesses and counsel. Expert reports may be delayed
because the experts are awaiting the discovery materials and deposition
testimony they need to formulate their opinions and generate reports for the
litigation. The parties and counsel may be immersed in motion practice,
mediation sessions, and settlement discussions. These are all natural and
understandable difficulties that may arise during the pretrial period. When the
court fixes a trial date before the DED, the litigants lose the opportunity to have
the "good cause" standard available to them when reasonable needs to prolong
discovery arise thereafter.
We do not intend here to treat Section 16-2(c) of the Guide as a mandate,
or to impose it by this opinion as a matter of policy. There may well be situations
where it is appropriate to establish a trial date early in the process and before
the DED has run. For instance, the parties may mutually desire to have a case
tried and decided before a certain date due to external business, tax, or
regulatory concerns, or client preferences. Even so, the general approach
recommended by the Guide appears to be sensible and fair.
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Having duly considered the record and the procedural history of this
matter, we conclude the Law Division misapplied its discretion in declining to
grant the unopposed first discovery extension requested by NBS. Huszar v.
Greate Bay Hotel & Casino, Inc., 375 N.J. Super. 463, 471-72 (App. Div. 2005)
(applying the abuse of discretion standard to discovery extension rulings). We
realize the DED was announced several times by the court in various notices.
Even so, given the complexity of various issues in this case, and the many
disputes that arose over document production and other pretrial matters, there
was a legitimate need for the discovery period to be extended, in accordance
with the agreed-upon deposition completion schedule that had been presented
with NBS's unopposed motion to extend discovery.
The trial court should have been more receptive in entertaining that
motion for a first extension. We recognize that NBS may have been largely
responsible for pretrial delays by its own lack of full cooperation on certain
discovery issues. Even so, the court might have addressed those problems with
intermittent case management conferences, or with discovery sanctions such as
cost-shifting. The unconditional denial of the first extension request was
unreasonable.
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Accordingly, we reverse the trial court's refusal to extend discovery under
the particular circumstances presented in this case. We remand to reinstate this
matter for a case management conference. That conference shall be held within
thirty days, at which time the court will fashion with the input of counsel a fair
and expeditious plan for the completion of discovery.
B.
We turn to the court's summary judgment rulings. In doing so, we apply
the standards of Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995),
and Rule 4:46-2, and assess whether genuine issues of material fact exist,
viewing the record as we must in a light most favorable to NBS. W.J.A. v. D.A.,
210 N.J. 229, 237-38 (2012).
As a threshold consideration, we note that it was improvident for the trial
court to entertain the summary judgment motions at a point in time when
plaintiff NBS, a corporation (or a division of a corporation), was without the
representation of counsel as required by Rule 1:21-1(c). Counsel for plaintiff
had withdrawn with the court's approval, and no substitute counsel had yet
entered an appearance.
The form of order provided by withdrawing counsel was faulty because it
did not specify a deadline for new counsel to enter an appearance. The omission
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was unfortunate and ultimately prejudicial. Regardless of whether counsel had
a true conflict of interest, or whether the client thereafter had supplied a bona
fide waiver of the disqualifying conflict, the court should have afforded NBS a
reasonable opportunity to secure new counsel to enter the case and appear at an
oral argument on these dispositive motions. The motions were not actually
"unopposed," despite the court's stamps that said so. It was insufficient to treat
former counsel's submissions as mere "courtesy copies."
There is no evidence that plaintiff tried to manipulate the court schedule
by having its original counsel withdraw from the case based upon a contrived
disqualification, a tactic we of course would repudiate. That said, we do not
fault the trial court for declining to accept at face value Levy’s subsequent
assertion that the unexplained disqualifying conflict somehow had been
suddenly resolved and seeking to reinstate plaintiff's original counsel into the
case. Indeed, some attorney conflicts cannot be waived. The problem is that
the court pushed ahead to adjudicate the summary judgment motions, without
first assuring the corporate plaintiff was duly represented in opposing the
dispositive motions, including the right to oral argument.
That aside, we have performed our own de novo review of the summary
judgment issues. Having done so, we conclude that the only counts in plaintiff's
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complaint that have any potential legal viability are counts three (alleged breach
of a duty of loyalty by Master and Beringer) and nine (tortious interference by
EPI with NBS's prospective business). The remaining counts are unsupportable,
even accepting as true the factual assertions in plaintiff's submissions and Levy's
deposition testimony. Plaintiff has not made a sufficient proffer under Rule
4:46-5 as to how additional discovery would reasonably uncover evidence to
support those claims. See Hurwitz v. AHS Hosp. Corp., 438 N.J. Super. 269-
307-08 (App. Div. 2014); Mohamed v. Iglesia Evangelica Oasis De Salvacion,
424 N.J. Super. 489-99 (App. Div. 2012).
That said, plaintiff's claim of an employee's breach of duty of loyalty does
not require an oral or written agreement to be viable. The Supreme Court
recognized in Lamorte Burns & Co., Inc., v. Walters, 167 N.J. 285, 302 (2001),
that "[l]oyalty from an employee to an employer consists of certain very basic
and common sense obligations. An employee must not while employed act
contrary to the employer's interest." An employer may "prove a prima facie case
of an employee's breach of the duty of loyalty not only by showing that the
employee directly competed with the employer while employed, but also by
showing that the employee while employed assisted the employer's competitor."
Id. at 303 (citing Cameco, Inc. v. Gedicke, 157 N.J. 504, 517 (1999)). "Although
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an employee has the right to make preparations to start a competing business,
the employee may not breach the undivided duty of loyalty he or she owes to his
or her employer while still employed by soliciting the employer's customers or
engaging in other acts of secret competition." Ibid. (emphasis added) (citing
Platinum Mgmt., Inc. v. Dahms, 285 N.J. Super. 274, 303 (Law. Div. 1995)).
In Cameco, 157 N.J. at 516, the Supreme Court recognized that a breach
of loyalty claim generally requires a fact-specific analysis, explaining "[t]he
scope of the duty of loyalty that an employee owes to an employer may vary
with the nature of their relationship. Employees occupying a position of trust
and confidence, for example, owe a higher duty than those performing low-level
tasks." In general "the adjudication of such claims summons rules of reason and
fairness." Ibid. To guide trial courts, the Court identified four factors relevant
to the determination of whether an employee-agent breached his or
her duty of loyalty:
(1) The existence of contractual provisions relevant to
the employee's actions; (2) the employer's knowledge
of, or agreement to, the employee's actions; (3) the
status of the employee and his or her relationship to the
employer, e.g., corporate officer or director versus
production line worker; and (4) the nature of the
employee's [conduct] and its effect on the employer.
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[Kaye v. Rosefielde, 223 N.J. 218, 230 (2015)
(alteration in original) (citing Cameco, 157 N.J. at 521-
22).]
The non-existence of a written agreement is pertinent, but not necessarily a legal
bar to a breach of loyalty claim. Indeed, the Court in Cameco and Kaye
explained that the existence of "contractual provisions" is a relevant factor to be
considered. This court has also observed:
An employee who is not bound by a covenant not to
compete after the termination of employment, and in
the absence of any breach of trust, may anticipate the
future termination of his employment and, while still
employed, make arrangements for some new
employment by a competitor or the establishment of his
own business in competition with his employer. The
only restriction to such action is that he may not solicit
his employer's customers for his own benefit before he
has terminated his employment. Nor may he do other
similar acts in direct competition with the employer's
business. This would constitute a breach of the
undivided loyalty which the employee owes to his
employer while he is still employed.
[Auxton Comput. Enter., Inc. v. Parker, 174 N.J. Super.
418, 423-24 (App. Div. 1980) (emphasis added).]
Viewed in a light most favorable to NBS, Levy's certification and the
accompanying email exhibits establish a genuine dispute of fact as to whether
defendants Master and Beringer breached a duty of loyalty while still employed
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at NBS, and whether defendant EPI aided and abetted that breach in a tortious
manner. The following portions of the record illustrate that genuine dispute.
In an April 13, 2016 email to EPI staff discussing business strategy, Tom
Corbett, president of EPI, requested Master and Beringer explain how "we got
away from the 'ideal transition company plan' and to revisit this proposal and a
plan to get back to these numbers which was the foundation of hiring the both
of you." Attached to this email was a Power Point presentation titled "Ideal
Transition Company & Plan" ("Transition Plan"). Apparently, the Power Point
was created by Master and Beringer as a way of expressing interest in joining
EPI.
The Transition Plan included the proposed salaries of Master and
Beringer, as well as transition conditions, which included employing Master and
Beringer and accepting "all transition business." Moreover, the Transition Plan
had a slide titled "To Offer" which included in bullet points: "Shipping $3.2 MM
in 2014 (15 customers); Budget to ship $3.6MM in 2015 and new additional
projects worth $1.5MM in schedule; Personnel – engineering, sales, operations;
Battery industry experienced people; Vendor relationships." Significantly, on a
slide titled "Transition Timeline and Plan" it reads in bullet points: "[first quarter
of 2015] – to consult with customers first; provide them with some additional
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product as reserve during transition; provide new companies information for
document change to customer; get the customer's old [purchase order's]
cancelled and new [purchase orders] placed with the new company." (Emphasis
added).
Although the Transition Plan was discovered because of a later April 2016
email exchange, it is clear from Corbett's email that the Transition Plan was
created before defendants left NBS to go to EPI. Other email exhibits indicate
that defendants had been discussing leaving NBS and going to EPI since May
2015.
The emails 5 suggest that while Master and Beringer were negotiating their
future employment agreement with EPI, they also intended to solicit some of the
customers they were working with at NBS. This is consistent with the Transition
Plan, which discusses what Master and Beringer would "offer" to EPI in terms
of clients and business. According to the Supreme Court in Lamorte, 167 N.J.
at 303, "although an employee has the right to make preparations to start a
competing business, the employee may not breach the undivided duty of loyalty
5
We reject the suggestion that these emails lack sufficient authentication to be
considered on summary judgment. The materials were produced by EPI in
discovery, and their distinctive contents reasonably support their authenticity.
See N.J.R.E. 901; State v. Hannah, 448 N.J. Super. 78, 89-90 (App. Div. 2016).
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he or she owes to his or her employer while still employed by soliciting the
employer's customers or engaging in other acts of secret competition."
(Emphasis added).
We also discern genuine issues of fact concerning whether NBS sustained
damages from these alleged wrongful acts in diverting NBS's customers. The
quantification of those losses is deferred to the course of discovery. Plaintiff
claims it lost about $1 million in revenues the year after Master and Beringer
left NBS. In addition, Corbett's email states those individual defendants had
promised – apparently while they were at NBS – to bring fifteen customers to
EPI. Viewed in a light most favorable to plaintiff, these alleged losses could
represent compensable damages. For the present, there are sufficient indicia of
lost business to warrant the reversal of summary judgment.
Accordingly, counts three and nine of the amended complaint are restored.
Summary judgment as to the remaining counts is affirmed.
In sum, the trial court's rulings are reversed in part and affirmed in part.
The case is remanded to the trial court to complete discovery and resume the
litigation as to the discrete claims we have reinstated. Jurisdiction is not
retained.
A-0952-17T3
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