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Simulation Systems Technologies Inc. v. Oldham

Decided: November 3, 1993.


On appeal from the Superior Court of New Jersey, Chancery Division, Camden County

Pressler, Brochin and Kleiner. The opinion of the court was delivered by Brochin, J.A.D.


Following a bench trial in this unfair competition suit, the court found that defendants David Oldham and East Coast Technologies, Inc., his wholly owned corporation, had garnered gross receipts of $1711 as the result of his unfair competition with his former employer, plaintiff Simulation Systems Technologies, Inc. On the basis of that finding, the court entered judgment against defendants for $1711 plus costs of suit. After denial of its motion for reconsideration of the amount of the judgment, plaintiff appealed, contending that it was entitled to an award of damages measured by the salary, bonus, and fringe benefits that it had paid to defendant Oldham during the period of his disloyalty. Defendants have not cross-appealed.

The plaintiff corporation performs systems analysis and computer programming for business clients. Defendant David Oldham is a computer engineer who worked for plaintiff from April 1988 until March 5, 1991, at a salary of approximately $40,000 a year plus fringe benefits.

On April 6, 1990, while still employed by plaintiff, defendant formed defendant East Coast Technologies, Inc. to offer computer-related services in competition with his employer. In the summer of 1990, he arranged to have an advertisement for East

Coast Technologies, Inc. published in the local telephone yellow pages, and the advertisement appeared in November 1990. Between August 1, 1990 and March 5, 1991, his corporation sold services competitive with plaintiff's to four customers, at least one of which was or had been plaintiff's customer, for total billings which the court determined amounted to $787.50; following the termination of his employment, he billed $924 for work which he performed for a client to whom he had been introduced while he was employed by plaintiff. In addition, between approximately April 1990 and March 5, 1991, he unsuccessfully solicited business from three other potential customers and received inquiries from at least one more.

On February 27, 1991, a fax directed to Mr. Oldham arrived at the offices of Simulation Systems Technologies, Inc. while Mr. Oldham was out of the building. The fax inquired about computer programming services for a customer about whom plaintiff's management knew nothing. The next day, one of plaintiff's owners asked Mr. Oldham about the message. His answers were evasive and obviously dissembling. By a telephone call to the author of the fax, plaintiff's president learned that he had seen East Coast Technologies, Inc.'s advertisement and had received a proposal for its computer programming services. Mr. Oldham was asked to explain, and he resigned a few days later.

When these facts had been established by the evidence presented at trial, the court concluded that although Oldham's preparations to compete with his employer were legal, his actual competition while still employed was actionable. Injunctive relief, however, was denied as unnecessary and inappropriate. Plaintiff does not dispute that Conclusion. The court also ruled that plaintiff was not entitled to punitive damages. Although a point heading of plaintiff's appellate brief refers to that holding, no argument has been presented directed to the punitive damage issue. In any event, the record in this case amply supports the trial court's discretionary determination that punitive damages were not warranted. The trial court's Conclusion that plaintiff was not entitled

to recover compensation that it had paid to Oldham is the only ruling challenged on appeal.

According to the Judge's oral opinion delivered at the Conclusion of the trial, he was of the view that, in an appropriate case, consequential damages can include the salary that has been paid to a faithless employee who has "used all of his boss's time for his [own] business." However, in the present case, the court found that the

proofs as to how many specific hours [Oldham] was away from his job and at the same time doing something for his own personal benefit . . . are not existent . . . [and] the proofs are clear that the defendant worked for the plaintiff during this ...

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