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Wire Cloth Manufacturers, Inc. v. Rodimer

A-6639-03T5 (N.J. Super. App. Div. 2005) (Unpublished)

EMPLOYER-EMPLOYEE; NON-COMPETITION; DAMAGES—The proper measure of damages for a misappropriation of confidential information claim against an employee is lost profits, not lost sales.

After an employee resigned, his company sued him for misappropriation of confidential information, tortious interference with prospective economic advantage, and breach of the duty of loyalty. The company claimed that the employee formed two corporations that directly competed with it and that, while employed by the company, the employee worked as a sales representative for a competing company. To support its case, the company had its chief financial officer (CFO) prepare a spreadsheet about which she planned to testify. The employee sought to bar the CFO’s testimony, claiming it was based on speculation and assumptions and that her spreadsheet incorrectly displayed the effect on the company’s gross sales instead of its net income.

The Appellate Division agreed with the employee, barring the CFOs testimony since it was based upon statements supposedly made by customers to people working for the company, and this constituted inadmissible hearsay. The testimony was also barred because the spreadsheet did not reflect the proper measure of damages, which was lost profits, not lost sales. Additionally, any last minute attempt to recast the spreadsheet as a report of lost profits was impermissible since the company refused to provide discovery information. Finally, the Court barred the CFO’s testimony since the total loss reported in her spreadsheet did not exhibit the losses the company probably sustained during the time in which the employee’s alleged misconduct took place.

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