Delta Educ., Inc. v. Langlois, C-89-088-L.

Citation719 F. Supp. 42
Decision Date08 August 1989
Docket NumberNo. C-89-088-L.,C-89-088-L.
PartiesDELTA EDUCATION, INC. v. Stephen M. LANGLOIS, et al.
CourtUnited States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of New Hampshire

COPYRIGHT MATERIAL OMITTED

Phillips, Gerstein & Holber by Robyn Frye Honig, Stuart M. Holber, Haverhill, Mass., for plaintiff.

Gray, Wendell & Clark by Grenville Clark, III, Manchester, N.H., Neuman & Cobb by Clifford L. Neuman, Boulder, Colo., for defendants.

ORDER ON MOTIONS

LOUGHLIN, Senior District Judge.

This is an action in which the plaintiff, Delta Education, Inc., alleges that John P. (Jack) Langlois (who is deceased and is represented in this action by Stephen M. Langlois), Barbara Macek and William Chaisson (collectively the "individual defendants"), while employed by the plaintiff, violated duties of care and loyalty owed to the plaintiff, committed various commercial torts against the plaintiff, and injured the plaintiff through acts of mail fraud in violation of 18 U.S.C. § 1341, and through a violation of the Racketeer Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C. §§ 1961-1968. The plaintiff further alleges that the three corporate defendantsScott Resources, Inc., Scott Capital Resources, Inc., and Summit Learning, Inc. — with the assistance of the individual defendants, committed various commercial torts against the plaintiff, and injured the plaintiff through acts of mail fraud and through RICO violations. Jurisdiction is premised on diversity of citizenship, 28 U.S.C. § 1332, and federal question jurisdiction, 28 U.S.C. § 1331. The corporate defendants moved to dismiss the complaint for lack of personal jurisdiction and improper venue, moved to dismiss the mail fraud claims for failure to state a claim upon which relief can be granted, and moved for a more definite statement. Defendant Macek has joined in the motion to dismiss the mail fraud claim, and moves for sanctions pursuant to Rule 11. All the defendants have moved to strike two affidavits submitted by the plaintiffs.

The facts as alleged in the complaint and documents submitted by the plaintiff are as follows. The plaintiff is a New Hampshire corporation whose president has been Thomas Richardson since December, 1987. The plaintiff sells educational materials to schools throughout the United States. Most of its business results from its kits and catalog sales.

Jack Langlois ("Langlois") was the plaintiff's Vice President of Marketing and Sales in 1987. In January, 1988, Langlois entered into a two year employment contract with the plaintiff, as Vice President and as a Director. Langlois convinced the plaintiff to hire defendant Macek as manager of the plaintiff's catalog and non-school sales, in January, 1988. Defendant Chaisson was a buyer in the plaintiff's purchasing department at this time.

In March, 1988, Langlois showed a copy of a business plan to Kenneth Luoni, in order to demonstrate to Luoni that catalog sales could be highly profitable. Luoni had been Operations Vice President of the plaintiff since February, 1988. The business plan Langlois gave to Luoni was dated November 20, 1987, and detailed the formation and operation of Scott Distribution, Inc. The plan was developed by Langlois and referred to Langlois, Macek and Chaisson as "Key Management" of Scott Distribution. It included confidential information and trade secrets of the plaintiff, which were divulged by Langlois and Chaisson. Luoni made a copy of the plan and returned the original to Langlois.

In 1988, the three individual defendants, while employed by the plaintiff, secretly were working for defendants Scott Resources and Scott Capital. Macek divulged to third parties knowledge of the plaintiff's finances, records, marketing, advertising, cataloging, pricing, and distribution strategies, trade secrets, and other confidential information. Together, the defendants misappropriated and converted confidential and proprietary information of the plaintiff for the benefit of the defendants. Scott Resources and Scott Capital compete with the plaintiff for sales of educational materials, and have the same registered agent, the same office, and the same principal place of business. Scott Distribution, the subject of the business plan, was formed as defendant Summit Learning by Scott Resources and Scott Capital to compete directly with the plaintiff.

In May, 1988, Macek resigned from the plaintiff and began open employment with Summit Learning. Luoni did not believe the proffered explanation for Macek's resignation and he became suspicious of Langlois' behavior in June and July, 1988, which he considered to be totally out of character for Langlois. In early July, 1988, Chaisson resigned from the plaintiff without revealing where he would be working. Luoni was told by another employee of the plaintiff that Chaisson was going to work for a new division of Scott Resources.

Although Langlois told Luoni that he did not contemplate leaving the plaintiff, Luoni observed Langlois' actions over the next few days. Luoni discovered some catalog designs with the name Summit Education written cross them on Langlois' desk and then re-read the business plan he had received from Langlois. He considered the events of the last few months to bear a close resemblance to the business plan and he took the plan and the catalog designs to Richardson.

The catalog designs had been done by Forgit and Wight, designers the plaintiff did not use. Summit Learning used Forgit and Wight as its designers for its 1988 catalog.

After receiving the business plan and designs from Luoni, Richardson began observing Langlois. He discovered notes and memos that did not relate to the business of the plaintiff and a call back slip from the president of the corporate defendants; he heard Langlois identify himself as working for Scott Resources during a telephone conversation. Richardson confronted Langlois, who admitted that he and Macek had assisted the corporate defendants with their catalogs. Richardson then terminated Langlois' employment with the plaintiff.

The plaintiff claims that the individual defendants conspired with the corporate defendants to improperly compete with the plaintiffs, with all six defendants committing torts as part of this conspiracy. Also, that the individual defendants committed various torts while employed by the plaintiff and secretly working for the corporate defendants, and that the six defendants committed acts of mail fraud and RICO violations.

The defendants, in response, submitted an affidavit by Paul D. Whittle, who is the President and Director of Scott Capital, Scott Resources, and Summit Learning. Whittle stated that Langlois first became employed by Summit Learning on September 1, 1988, and that before then Langlois had no contract of employment with the corporate defendants, had no agreement to receive compensation from the corporate defendants, and received no compensation from any of the corporate defendants. Similarly, Whittle stated that Macek first became employed by Scott Resources on June 1, 1988, and that before then Macek had no contract of employment with the corporate defendants, had no agreement to receive compensation from the corporate defendants, and received no compensation from any of the corporate defendants.

Motion to Strike Affidavits

As an initial matter, the defendants move to strike the affidavits of Luoni and Richardson, which were submitted by the plaintiff. First, the defendants contend that because the affidavits contain averments of statements by Langlois, who has died, the alleged declarations by Langlois must be excluded under New Hampshire Rev.Stat.Ann. ("RSA") 516:25. That section provides in pertinent part

In actions ... by or against the representatives of deceased persons, ... any statement of the deceased, whether oral or written, shall not be excluded as hearsay provided that the trial judge shall first find as a fact that the statement was made by decedent, and that it was made in good faith and on decedent's personal knowledge.

RSA 516:25; see also N.H. R.Evid. 804(b)(5) (containing identical language). As an evidentiary provision, regarding the use of hearsay, see, e.g., Piper v. Fickett, 113 N.H. 631, 632, 312 A.2d 698 (1973), RSA 516:25 is inapplicable to this proceeding; instead, the Federal Rules of Evidence govern the exclusion or admission of the affidavits. Forrestal v. Magendantz, 848 F.2d 303, 305 (1st Cir.1988); Ricciardi v. Children's Hosp. Medical Center, 811 F.2d 18, 21 (1st Cir.1987).

The defendants contend that the alleged statements by Langlois must be excluded as hearsay pursuant to Fed.R.Evid. 802. The declarations in Luoni's affidavit, however, are not used for their truth in establishing the court's jurisdiction over the corporate defendants. Langlois' statements about remaining with the plaintiff in March, 1988 (para. 4), about errors in Luoni's profit analysis, in March, 1988 (para. 5), about why Macek resigned, in May, 1988 (para. 7), and about not leaving the plaintiff, in July, 1988 (para. 11) all are used to explain the conduct of Luoni and the truth of these statements are not relevant to the issue of personal jurisdiction over the corporate defendants.

The declarations in Richardson's affidavit also are not inadmissible. Langlois' alleged identification of himself as working for Scott Resources (para. 23) appears to be admissible as a statement by an agent of the corporate defendants concerning a matter within the scope of the agency, Fed.R.Evid. 801(d)(2)(D), or possibly as a statement by a co-conspirator. Fed.R. Evid. 801(d)(2)(E). Langlois' alleged "confession" to Richardson (para. 24) could be admissible as a statement against Langlois' pecuniary interest. Fed.R.Evid. 804(b)(3). An "unequivocal conclusion that the evidence will be admissible at trial as a condition precedent to its consideration" is not necessary in order to consider the affidavit. Reed v. Ford Motor Co., 679 F.Supp. 873, 874 (S.D.Ind.1988); ...

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