Cameco, Inc. v. Gedicke

299 N.J. Super. 203, 690 A.2d 1051 (App. Div. 1997)
  • Opinion Date: March 31, 1997

EMPLOYER-EMPLOYEE; NON-COMPETITION—It is a breach of the duty of loyalty to do work for your current employer’s competitors, but that breach does not necessarily give rise to a cause of action either for unjust enrichment or for conversion of that employer’s proprietary information, even though the proprietary information may have been misused.

A warehouse manager for a food wholesaler started his own wholesale trucking brokerage company, arranging for common carriers to distribute food and related supplies, the same work he did for the wholesaler. He used some of the same truckers for both his own company and the wholesaler, made phone calls for his own business while working for the wholesaler, and even had informal meetings relating to his own business with the truckers who arrived at the wholesaler. He was fully aware of the wholesaler’s delivery rates, routes, the identity of its customers, and the common carriers it used. Many of the manager’s customers were other wholesalers, and therefore direct competitors of his employer. The wholesaler was not aware of the manager’s own trucking business, but eventually fired the manager because of dissatisfaction with his performance. The wholesaler had a policy that those who are fired or quit must sign a covenant not to compete in order to have their pension and profit sharing funds turned over to them. Shortly after the manager signed the agreement, the wholesaler learned of the manager’s business and brought suit. The trial court found for the manager. On appeal, the wholesaler claimed it established a prima facie case of breach of loyalty, conversion and unjust enrichment.

The Appellate Division first stated that solicitation of an employer’s customers and other acts in direct competition with an employer’s business was a breach of the duty of loyalty. It was undisputed that the manager acted for his employer’s competitors by arranging for delivery of their merchandise through his own business. Although not directly competing with his employer, the Court held that a prima facie breach of the duty of loyalty was established through the nature and character of the manager’s actions since they were contrary to his employer’s interests.

The Court then found that the wholesaler failed to establish a prima facie case of conversion or unjust enrichment. Even if the information of the wholesaler used by the manager was proprietary, the wholesaler was not deprived of its use simply because the manager also used it. As to the unjust enrichment claim, the Court determined that the wholesaler conferred no benefit on the manger or his company for which the wholesaler reasonably could have expected compensation. Specifically, the wholesaler should not have expected remuneration from exposing its warehouse manager to its shipping information. The Court held that it would not be unjust for the manager to retain the benefits he received as a result of his knowledge of the shipping information, since the shipping information by itself only indirectly enriched the manager. [Note: Certification was granted on September 30, 1997.]