Cameco, Inc. v. Gedicke

• Decision Date: 18 February 1999
• Citation: 157 N.J. 504,724 A.2d 783
• Parties: CAMECO, INC., Plaintiff-Respondent, v. Donald GEDICKE, individually and d/b/a Newton Transport Service, Newton Transport Service and Priscilla Mueller, Defendants-Appellants.
• Court: New Jersey Supreme Court

724 A.2d 783

157 N.J. 504

CAMECO, INC., Plaintiff-Respondent, v. Donald GEDICKE, individually and d/b/a Newton Transport Service, Newton Transport Service and Priscilla Mueller, Defendants-Appellants.

Supreme Court of New Jersey.

Argued September 14, 1998.

Decided February 18, 1999.

James F. Keegan, West Orange, for defendants-appellants (Bendit Weinstock, attorney; Mr. Keegan and Sherri Davis Fowler, on the briefs).

Robert P. Donovan, Roseland, for plaintiff-respondent (Fox & Fox, Newark, attorneys). The opinion of the Court was delivered by POLLOCK, J.

This appeal concerns the liability of an employee for a breach of the duty of loyalty owed to his employer. The primary issue is whether the employer may prove a prima facie case for an employee's breach of that duty by proving, not that the employee directly competed with the employer, but that the employee merely assisted the employer's competitor.

At the close of plaintiff's case, the Law Division dismissed the complaint, which asserted various claims in addition to the one alleging the employee's breach of his duty of loyalty. The Appellate Division affirmed the dismissal, except for the claims relating to the breach of the duty of loyalty. Cameco v. Gedicke, 299 N.J.Super. 203, 690 A.2d 1051 (App.Div.1997). We granted Gedicke's petition for certification, 151 N.J. 471, 700 A.2d 883 (1997), and now affirm.

I.

This appeal arises from the dismissal of the complaint at the conclusion of plaintiff's case in a civil action tried by the court without a jury. In a non-jury action, the court, whether deciding the matter on a motion at the close of the plaintiff's case or the entire case, should support its decision with adequate findings of fact. R. 1:7-4; Pressler, Current N.J. Court Rules, comment 2 on R. 1:7-4 (1998). A dismissal at the close of a plaintiff's case invokes more searching appellate review than does one at the close of the entire case. When reviewing a dismissal at the close of a plaintiff's case, the appellate court accepts the truth of the plaintiff's evidence together with the legitimate inferences that the evidence supports. R. 4:37-2(b); Dolson v. Anastasia, 55 N.J. 2, 5-6, 258 A.2d 706 (1969). By comparison, when reviewing factual findings made at the close of the entire case, the appellate court accepts those findings whether they support a decision in favor of the plaintiff or the defendant, if the findings are supported by substantial credible evidence. R. 2:10-1; Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84, 323 A.2d 495 (1974); Pressler, supra, comment 2.3 on R. 2:10-1. Thus, a dismissal under Rule 4:37-2(b) requires a more generous view of a plaintiff's evidence than does one at the close of evidence under Rule 2:10-1.

In the present case, when dismissing the complaint, the trial court made only general factual findings. Because the dismissal occurred at the close of plaintiff's case, it invites a careful review of those findings. We reach this conclusion notwithstanding the fact that on plaintiff's case the trial court heard from the critical witnesses: Jerry Perl, president of plaintiff, Cameco, Inc. ("Cameco"); Scott Maier, a certified public accountant whom Cameco retained as an expert witness; and defendants Donald Gedicke and his wife, Priscilla Mueller. Accepting the truth of plaintiff's evidence and according it the benefit of all favorable inferences, the record supports the following factual findings.

Cameco employed Gedicke as a salaried traffic manager to arrange for the transportation of Cameco's food products, primarily tuna, ham, and poultry. Unknown to Cameco, Gedicke and Mueller formed Newton Transport Service ("Newton"), through which they arranged for the transportation of goods for various companies, including two of Cameco's competitors.

In 1993, Cameco fired Gedicke for poor performance. To obtain the money he had paid into Cameco's pension fund, Gedicke signed an agreement not to compete with Cameco. Thereafter, when Cameco learned of Gedicke's activities with Newton, Cameco charged Gedicke with conversion, unjust enrichment, tortious interference with contractual rights and economic advantage, and breach of Gedicke's duty of loyalty as an employee.

As Cameco's traffic manager from March 1984 to January 1993, Gedicke was an employee at-will with a salary of approximately $38,000 per year. Gedicke's primary duty was arranging transportation of Cameco's food products to retail stores by common carrier. His duties included coordinating Cameco's shipping schedules, negotiating the lowest possible shipping rates, and supervising the warehouse employees who loaded the trucks. Cameco's shipping costs comprised fifteen to twenty percent of its operating expenses. Gedicke's duties also included inspecting Cameco's off-site warehouses for cleanliness and temperature maintenance. Because of his position, Gedicke became familiar with the identity of Cameco's suppliers, customers, and common carriers, as well as its delivery routes and rates, all of which Cameco considers to be confidential information.

In 1990, without telling Cameco, Gedicke and Mueller formed Newton, which they operated primarily from their home. Acting on behalf of distributors or truckers, Gedicke arranged for the transportation of food products to retailers. Typically, the shipper would pay Newton, which, after deducting its commission, would pay the trucker. Newton's net profits increased from $2536 in 1990 to $11,733 in 1992. In 1993, the year in which Cameco fired Gedicke, Newton earned $62,090 in net profits.

Sometimes, Newton acted for a particular trucker when communicating with distributors. On some of these occasions, the distributors paid the truckers directly. The truckers then paid Newton's commissions. Two of the distributors for which Newton arranged transportation, Atalanta Corporation ("Atalanta") and Kohler Delicatessen Meats, Inc. ("Kohler"), sold the same products as Cameco. The record is unclear, and the trial court did not make any findings, regarding the extent to which Gedicke, through Newton, assisted Atalanta or Kohler.

On over six hundred occasions, Gedicke arranged for a trucker transporting Cameco's goods also to transport goods for Newton's customers. Sometimes, the trucker would deliver goods to the same destination for both Cameco and the other distributors. Gedicke explained that "commingled" shipping is routine and that, even after the termination of his employment, goods brokered by Newton continued to be commingled with Cameco's goods. According to Gedicke, the addition of Newton's freight enabled him to negotiate lower rates for Cameco. In such situations, Cameco did not pay the per-pound, less-than-truckload rate or the full-truckload rate. By sharing space and costs with Newton's customers, Cameco paid a rate even lower than that for a full truckload. Thus, Cameco benefited from the commingling of goods.

Cameco claimed that occasionally when the same trucker was transporting both shipments, Gedicke would arrange for goods brokered by Newton to be delivered before Cameco's goods. Gedicke explained that because of the truck routes and the destination of the deliveries, this arrangement was practical and did not prejudice Cameco. Cameco also claimed that sometimes truckers would pick up Cameco's goods before picking up Newton's, thereby creating the risk that Newton's customers, some of whom competed with Cameco, would discover Cameco's product information. When acting for Newton, Gedicke used the general knowledge he had acquired while working for Cameco and for prior employers. Although Mueller was primarily responsible for conducting Newton's business, she relied on Gedicke's superior knowledge. The trial court found that Mueller conducted most of Newton's business from home, and that Gedicke participated primarily during evenings and on weekends.

Gedicke acknowledged that he engaged in telephone conversations relating to Newton's business during his scheduled hours with Cameco. Because Gedicke used his personal credit card in making telephone calls for Newton, Cameco did not pay the toll charges. From day to day, the time that Gedicke spent on placing calls varied. An analysis produced by Gedicke, however, showed that he spent an average of 13.8 minutes per workday on these calls. Although Gedicke acknowledged receiving incoming calls, no record of the incoming calls was available. Occasionally, while truckers were on Cameco's premises, Gedicke would discuss Newton's business with them. The trial court concluded that Gedicke diverted no more than fifteen minutes per day to Newton's affairs.

In January 1993, Cameco became dissatisfied with Gedicke's job performance. Previously, Perl had reprimanded Gedicke for his failure regularly to inspect Cameco's off-site warehouses. According to Perl, he fired Gedicke for failing to conduct such inspections, failing to negotiate lower freight rates, and permitting excessive overtime in his department. Gedicke rejoined that the time he spent on Newton's business did not interfere with the discharge of his duties to Cameco. Additionally, Gedicke testified that he often worked overtime during evenings and weekends for no additional compensation.

The parties' testimony conflicted on several other issues, such as the significance of a rate reduction offered by truckers after Gedicke's termination. Perl claimed that the reduction showed generally that Gedicke had not negotiated the lowest possible rates for Cameco. According to Perl, the rate reduction demonstrated that Gedicke had not been securing the discount that Perl wanted whenever Cameco paid a full-truckload rate for a commingled shipment. Perl also claimed that the reduction demonstrated that Cameco had been paying for excess shipping capacity that Gedicke used for Newton's customers. Gedicke countered that the rate changes stemmed not from his involvement with Newton,...