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Camp Sunshine and Camp Snowflake, Inc. v. Carisi

A-5855-02T3 (N.J. Super. App. Div. 2004) (Unpublished)

EMPLOYER-EMPLOYEE; RESTRICTIVE COVENANTS—Absent a restrictive covenant or evidence of misappropriation or disclosure of confidential information, a former employee may compete with his or her former employer and in anticipation of resigning may make preparations to compete so long as no competition takes place while the employee is still employed.

Two employees resigned from a non-profit organization that provided services for severely disabled children. After resigning, they started a similar organization. Shortly after it opened, twenty-nine members and thirty volunteers of the original organization signed up for the new one. The original organization sued, seeking damages as well as restraints against the ex-employees. The ex-employees contended that they solicited members only from the original organization’s waiting lists, and that they didn’t solicit volunteers from the organization until after they resigned.

The lower court granted the ex-employee’s motion for summary judgment. It held that the original organization did not establish that the ex-employee’s did anything to harm it. It found no evidence that the ex-employees had used the organization’s records for any wrongful purpose. It also found no evidence of a breach of fiduciary duty.

The Appellate Division affirmed, holding that the original organization’s claims were speculative and were based on suspicion rather than on evidence. Furthermore, it found no issues of material fact in the record. The Court held that, absent a restrictive covenant or evidence of misappropriation or disclosure of confidential information, a former employee may compete with his or her former employer. Further, such an employee, in anticipation of resigning, may make preparations to compete with his or her current employer if no actual competition occurs while the employee still works for the current employer. Here, the organization failed to demonstrate a protected contractual right or any malicious intent on the part of its ex-employees, nor did it establish any loss of prospective gain. Therefore, the Appellate Division affirmed the lower court’s decision and granted the employee’s motion for summary judgment.


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