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Hogan v. Bergen Brunswig Corp.

Decided: June 27, 1977.


Yaccarino, J.s.c.


[151 NJSuper Page 344] The issue presented by the facts of this case is whether continued employment constitutes consideration sufficient to support an employee's restrictive covenant not to engage in post-employment solicitation of customers. Although the court concludes herein that a number of reported decisions require an answer in the negative, the law of this State has been stated to be the contrary by secondary authority, mandating judicial exposition of the issue.

The facts, as revealed by the pleadings and affidavits, may be summarized as follows. In his verified complaint and affidavit plaintiff Hogan states that prior to February 11, 1977 he had been employed by Allied Churgin and Sadkin Laboratories, a subsidiary of defendant corporation, for approximately 27 years. Plaintiff states, and has submitted in support thereof the affidavit of Martin J. Altman, a former partner of Allied Churgin, that sometime in 1968 he was offered and agreed to accept a contract of employment as sales representative for a term of life, barring conduct constituting gross malfeasance. Admittedly, the terms of the alleged contract were not reduced to writing.

Plaintiff alleges that on February 11, 1977, and in breach of the terms of the alleged contract, he was summarily dismissed from his employment without cause. Plaintiff further alleges that subsequent to his termination defendant corporation wrongfully undertook to enforce the terms of a restrictive covenant allegedly signed by him on May 9, 1974. The relevant portions of that agreement are as follows:

4. An Employee shall hold in confidence and not disclose to any third party, except to authorized persons in the course of his work for the Company and at any and all times thereafter, any and all information of a confidential nature not generally available to the public which is delivered to the Employee in the course of his work for the Company, or which he obtained in connection with his employment with the Company, relating to the business or operations of the Company, or its clients. Confidential information of this type includes but is not limited to customer lists, scientific or technical information, designs, data processes, procedures, formulas or improvements thereto.

7. For a period of twelve months following the termination of an Employee's employment with the Company, he shall not directly or indirectly solicit any customer of the Company for whom he performed services while employed by the Company or which he solicited on behalf of the Company.

In support of his contention that defendant corporation should be preliminarily enjoined from enforcing the foregoing provisions, plaintiff relies upon a number of arguments.

First, plaintiff states that he never signed the alleged agreement and that even if he did, his signature was the product of duress in that he was not permitted to review the agreement and to seek the advice of counsel. Second, plaintiff argues that the agreement is unenforceable for failure of consideration by virtue of the fact that he was already an employee for life and had nothing to gain by signing the agreement and, conversely, that defendant corporation suffered no legal detriment. Third, plaintiff contends that defendant corporation should be estopped from enforcing the agreement by reason of its unclean hands caused by the summary and wrongful discharge. Fourth, plaintiff argues that the agreement is unenforceable because it is unreasonable. In this regard, plaintiff points out that the agreement does not contain a territorial restriction on its face. In addition, plaintiff argues that enforcement of the agreement would work an undue hardship upon him since his only training for employment is in the field of dental products sales.

Defendant's opposition to the issuance of restraints is equally comprehensive. Through the affidavits of Adrian Benjamin and Walter Churgin, both managers of Allied Churgin, defendant expressly denies, and argues to be frivolous, plaintiff's allegation that he was offered a contract of employment for life. In his affidavit Benjamin relies largely upon various financial statements and reports issued during a corporate merger, all of which belie the existence of the alleged agreement. Churgin, one of the persons who was alleged to have authorized the lifetime contract, explicitly denies that any such contract was ever discussed.

Contrary to plaintiff's allegation that he was dismissed summarily and without cause, defendant relies upon the foregoing affidavits plus the affidavit of Edward Fisher, sales manager of Allied Churgin. In sum, those affiants state that the decision to terminate plaintiff's employment was made after much consideration and long after plaintiff was advised that his sales efforts were considered to be unsatisfactory; that plaintiff had been formally placed on probation for the

four months prior to termination; that plaintiff did not demonstrate sufficient initiative in securing new accounts, being content to collect the substantial commissions paid on his bread-and-butter accounts, and that he ...

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