Platinum Management, Inc. v. Dahms

Decision Date11 April 1995
Citation285 N.J.Super. 274,666 A.2d 1028
PartiesPLATINUM MANAGEMENT, INC., d/b/a Embrace, Plaintiff, v. Brian DAHMS, Morton M. Rosenberg, Great American Fun Corp., and John Does # 1-5, Defendants.
CourtNew Jersey Superior Court
PMI's financial condition and ability to ship its products, to divert business from PMI's customers

PMI, with the trade name of Embrace, is a manufacturer, designer and seller of plush toys. Plush toys are three dimensional soft and squeezy products, which are cut, stuffed and sewn with or without accessories or with or without devices for music or sound. PMI's line includes musical toys which operate by way of an electronic pressure sensitive chip battery. PMI began its business through the introduction, in 1987, of its bear bag product. This became a very popular new product.

Jerry Auerbach (Auerbach) is the President of PMI and has been affiliated with it since he and his wife, Linda Auerbach, started the business out of their home in June 1986.

In its early years, the business of PMI focused on mass market direct import business. This business concentrated on selling to very large retailers on a letter of credit basis. In order to get the best and competitive price, these customers would take delivery in In 1991, PMI had almost 50 active mass market letter of credit customers. Most of PMI's customers have been purchasing from it for several years, in many cases since it began in 1986. Once a customer relationship is established, it is likely to continue for many years, provided, of course, the products sold by PMI are deemed to be saleable by the customer.

the Orient and assume the financial responsibility of bringing the merchandise over by ocean freight.

PMI utilizes both direct sales agents and independent sales agents to sell its products. It makes sales presentations to its customers by a telephone appointment or by arranging to meet with the customer at a trade show. The most important trade show is the Hong Kong Toy Fair, held in Hong Kong each January. On average, approximately fifty-five percent of PMI's annual sales revenue is derived from its presentations at the Hong Kong Toy Fair. An additional twenty to twenty-five percent is derived from presentations at the New York Toy Fair, held in February each year.

Dahms contacted PMI regarding a sales position after he had been dismissed from his prior employment at Spencer Gift.

In early 1988, Dahms was employed by PMI in the capacity of Vice President of Sales. He was the first full-time sales person hired by PMI. PMI considered this a significant move in the company's growth.

When Dahms joined PMI, he had no direct experience selling toys to retailers. From the beginning of his association with PMI, he was given a broader scope of responsibility for the running of PMI than any other employee. He was a key person, privy to the innermost secrets of the company.

For the first year of his employment with PMI as Vice President of Sales, Dahms lived in the Auerbachs' home. Auerbach undertook to train Dahms so that he could make effective sales presentations. Auerbach also introduced Dahms to PMI's customers and familiarized him with their buying habits and personal Dahms was advised by PMI of the need to keep all of the foregoing information in confidence.

attributes. This customer information was considered by PMI to be confidential.

When Dahms joined PMI, he executed an employment agreement (the Agreement), which included an unusual non-competition covenant to meet Dahms' suggested changes in the original draft. It provided that, during its term and, for one year after its termination for reasons other than its mere expiration, Dahms would not solicit or accept business from any PMI customers for anyone other than PMI; or disclose the names of any such customers to any other person. The Agreement commenced on April 18, 1988 and was to continue for three years. It would automatically be renewed for additional one-year periods unless either party elected not to renew by notifying the other in writing thereof at least sixty days prior to commencement of a renewal period. A resignation would trigger the applicability of the non-competition provision. The Agreement also required Dahms to devote his entire business time and attention to PMI's business and to serve PMI faithfully.

In September 1989, Auerbach and Dahms agreed to a written amendment to the Agreement by providing for the computation of a sales override bonus for Dahms on certain PMI sales. Dahms did not receive his 1991 override bonus.

On March 13, 1991, Auerbach received a memorandum dated March 1, 1991, from Dahms which stated:

Per section 9 of ... the [Agreement], I am notifying you that I do not wish to renew this specific agreement for an additional one-year period. However, ... do not interpret that this means I am self-terminating our employer-employee relationship on April 18, 1991.

I think we would both feel much better with an agreement, effective April 18, 1991, that just details compensation for the upcoming year and is renewable by both parties each year.... I will submit my proposal to you on or about April 1, 1991 for your review. Hopefully, we can agree on something by April 18, 1991.

Auerbach understood this memorandum to mean that Dahms wanted more money. In the past, Dahms and Auerbach resolved Immediately after receiving the memorandum, Auerbach had a telephone call from Dahms in which Dahms indicated that he wanted to continue his employment under a new package and asked Auerbach not to consider the memorandum as a resignation.

questions concerning Dahms' compensation under the Agreement when they met in Hong Kong in January.

The Agreement does not provide for its termination unless Dahms' employment were also to be terminated. Auerbach reasonably did not understand the memorandum to be either a termination of Dahms' employment or of the Agreement.

The Agreement requires sixty days' advance notice of nonrenewal before April 18, 1991--the commencement of its renewal date. Dahms did not send the March 1 memorandum to Auerbach sixty days in advance of such renewal date.

After sending the notice purporting to terminate the Agreement, in memoranda to Auerbach Dahms nevertheless continued to rely on it for the payment of his override bonus.

Dahms contended that he later resigned by reason, among others, of the fact that the 1991 line of PMI was "weak" and bear bags were "tired." Notwithstanding this assertion, soon after he resigned from PMI, Dahms presented GAF's bear bags to the customers he saw at the 1992 Hong Kong Toy Fair.

By late 1991, Dahms had principal responsibility for overseeing the mass market division or trade at PMI. Part of his duties involved prodding PMI's sales representatives to make appointments with the buyers for the Toy Fair.

Prior to January 1992, Dahms attended the Hong Kong Toy Fair with Auerbach. Auerbach relied upon Dahms to make the appointments for the Fair and to handle the necessary paperwork to prepare quotes for the buyers. Dahms frequently also would make the presentations to the buyers on behalf of PMI.

In mid-1990, PMI employed defendant Rosenberg as Vice President of Marketing. His contract contained no covenant not to I find that Rosenberg was treated shabbily by PMI while he was employed there. He properly felt that PMI was not using his talents, did not appreciate his efforts for the company, and had treated him unfairly when it fired him in April 1991, (after a leg injury) and then rehired him part time at a...

To continue reading

Request your trial
48 cases
  • Laidlaw, Inc. v. Student Transp. of America, Inc., CIV. 98-2241(WGB).
    • United States
    • U.S. District Court — District of New Jersey
    • 14 September 1998
    ...312 N.J.Super. 195, 202, 711 A.2d 410 (Ch.Div.1998) (finding 9 month employee non-compete reasonable); Platinum Mgmt., Inc. v. Dahms, 285 N.J.Super. 274, 299, 666 A.2d 1028 (L.Div.1995) (holding that one year employee non-compete was reasonable); Hogan v. Bergen Brunswig Corp., 153 N.J.Supe......
  • Torsiello v. Strobeck
    • United States
    • U.S. District Court — District of New Jersey
    • 27 June 2013
    ...information is the relationship of the parties at the time of disclosure, and its intended use.” Platinum Mgmt., Inc. v. Dahms, 285 N.J.Super. 274, 295, 666 A.2d 1028, 1038 (Law Div.1995) (citing Zippertubing Co. v. Teleflex, Inc., 757 F.2d 1401, 1407–10 (3rd Cir.1985) (citing Kamm v. Flink......
  • Avaya Inc. v. Telecom Labs, Inc.
    • United States
    • U.S. Court of Appeals — Third Circuit
    • 30 September 2016
    ...level of the usual trade secret, and indeed, may otherwise be publicly available.” (quoting Platinum Mgmt., Inc. v. Dahms , 285 N.J.Super. 274, 666 A.2d 1028, 1038 (N.J. Sup. Ct. Law Div. 1995) )). For example, in the Lamorte case, the Supreme Court of New Jersey reinstated summary judgment......
  • Blueprint Capital Advisors, LLC v. Murphy
    • United States
    • U.S. District Court — District of New Jersey
    • 23 December 2022
    ...rise to the level of the usual trade secret, and indeed, may otherwise be publicly available.” (quoting Platinum Mgmt., Inc. v. Dahms, 285 N.J.Super. 274 (N.J.Super. Ct. Law Div. 1995))). “[A]n agent must not take ‘unfair advantage of his position in the use of information or things acquire......
  • Request a trial to view additional results
1 books & journal articles

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT