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Maw v. Advanced Clinical Communications

April 16, 2003


On appeal from the Superior Court of New Jersey, Law Division, Mercer County, MER-L- 2778-01.

Before Judges Cuff, Lefelt and Winkelstein.

The opinion of the court was delivered by: Winkelstein, J.A.D.


Argued February 25, 2003

Plaintiff Karol Maw was employed by defendant Advanced Clinical Communications, Inc. (ACCI) as a graphic designer from November 1, 1997, until she was fired in March 2001 for refusing to sign an employment agreement (Agreement) containing a covenant not to compete. The Agreement precluded, among other things, plaintiff from becoming employed by any competitor or customer of ACCI for a period of two years following the termination of her employment. Maw brought her claim under both the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8, and the common law for wrongful discharge in violation of public policy. She appeals the Law Division's February 14, 2002, order dismissing her complaint pursuant to Rule 4:6-2(e). Because the judge found that a non-compete agreement does not per se violate public policy, she dismissed plaintiff's CEPA and common-law claims against both the corporate and individual defendants.

Plaintiff argues that the restrictive covenant violates public policy because her employer had no legitimate business reason to require her to sign it; consequently, she asserts that her refusal to sign it is protected by both CEPA and common law. We agree that a non-compete agreement, such as the one plaintiff was required to sign, may, depending on the surrounding circumstances, violate the public policy necessary to support a cause of action under CEPA and at common law. Therefore, dismissal of plaintiff's claims before she had an opportunity to develop her case through discovery was premature. Accordingly, we reverse.


Because this case comes before the court on defendants' motion to dismiss, the test is whether the alleged facts "suggest" a cause of action. Craig v. Suburban Cablevision, Inc., 140 N.J. 623, 625-26 (1995). Plaintiff is entitled to all reasonable inferences in her favor and we must "'search[] the complaint in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim.'" Printing Mart -Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) (quoting Di Cristofaro v. Laurel Grove Mem'l Park, 43 N.J. Super. 244, 252 (App. Div. 1957)). Given this standard, we take the facts directly from plaintiff's complaint.

ACCI provides marketing and educational services for the pharmaceutical and healthcare industries. It employs medical educators and clinical researchers to conduct educational programs for healthcare professionals. ACCI hired plaintiff on November 1, 1997, as a graphic designer, to design written materials used by ACCI in its marketing and educational programs. She provided creative design concepts for written and graphic materials; prepared the design and layout of technical charts, graphs, and reports; and worked with vendors on design issues.

Plaintiff's job required knowledge and experience in graphic design and its related technologies. Knowledge of, or experience in, the pharmaceutical or healthcare industries was also viewed as beneficial, providing familiarity with the scientific and medical terminology used in the literature being produced. However, such knowledge and experience were not job requirements for ACCI's graphic designers. In plaintiff's final performance appraisal, only one of the seventeen rated "major business objectives" and "performance factors" involved knowledge of the pharmaceutical industry, and that aspect of the appraisal focused on plaintiff's knowledge of scientific and medical terminology. Plaintiff had no training or education in any medical or pharmaceutical science, and understood little about the substantive content of the materials she produced.

In January 2001, ACCI decided to require all employees, at the level of "Coordinator" and above, to sign an employee agreement. Defendants made no distinction between the employees in this category based on their job duties. Nor did defendants identify the nature of the legitimate business interests they were seeking to protect through execution of the Agreement.

The Agreement states that:

B. Company wishes to expand Employee's responsibilities, expand Employee's opportunities for client contact and enhance Employee's compensation opportunities but only upon the terms and conditions, including, but not limited to, the restrictions as to use of confidential and proprietary information by Employee and Employee's undertaking not to compete with Company, all as set forth in this Agreement. Section 7, captioned CONFIDENTIAL AND PROPRIETARY INFORMATION, prohibited the employee from disclosing any confidential information, either during or after employment. It says:

7.1 The Employee understands that in the performance of her duties hereunder she shall observe and may obtain knowledge of, . . . certain information relating to the business of the Company, that is confidential and proprietary (the 'Confidential Information'). As used herein, 'Confidential Information' includes, but is not limited to any information, trade 'know-how', trade secrets, pricing policies, operational methods, methods of doing business, technical processes, formulae, designs and design projects, inventions, research projects, or other information that relates to the business affairs of the Company, . . . .

The Agreement contains a restrictive covenant, which states, in pertinent part:

SECTION 8. NON-COMPETE COVENANT 8.1 During the Term and for a period of two (2) years after: . . . termination of the Term . . . without first obtaining the prior written consent of the Company which consent shall not be unreasonably withheld or delayed, the Employee shall not directly or indirectly: (i) enter the employment of or render any services to, or make any financial contribution whatsoever to any person, . . . or any other entity (a 'Competitor') that solicits or otherwise engages in business with any 'Customer', as defined in Section 8.2, below; or (ii) solicit or encourage any employee to leave the employment of the Company . . . or hire any employee who has left the employment of the Employer within one (1) year of the termination or expiration of such employee's employment; or (iii) become employed by a Customer of Company which employment relates directly or indirectly to any products, services or projects regarding which the Company has performed any service at any time during the period of two (2) years prior to the expiration or termination of Employee's employment under this Agreement.

8.2 For purposes of this Section 8, a Customer shall mean any client or customer of Company for which Company or such affiliates has (i) performed services, (ii) performed research and proposal development under an agreement of confidentiality, or (iii) generated income for Company, within two (2) years of the date of the termination or expiration of the Employee's employment under this Agreement.

The Agreement also informed the employee to "obtain independent counsel" to review the Agreement, and plaintiff did so, consulting with an attorney. Based on those discussions, plaintiff proposed certain changes to the Agreement. Plaintiff did not object to Section 7, but she did object to the non-compete covenant. She suggested certain changes, including, among others, limiting the duration of the non-compete period. She was told, however, by a company representative, that "it is the President's [c]ompany and that he is not going to make any exceptions." In other words, defendants would not consider any of plaintiff's proposed changes.

When plaintiff refused to sign, by letter of March 15, 2001, ACCI terminated her employment. The letter said, in part, "it is necessary that all employees, (Coordinator level and beyond) sign an Employee Agreement. We have not received your signed contract as of the March 15, 2001 deadline. Therefore, you are terminated based on noncompliance with company policy."

Plaintiff alleges the non-compete clause violated public policy because it had no legitimate business justification ) it would not have protected any of defendants' legitimate business interests. Instead, she claims it was intended solely to stifle competition, and would have been unduly burdensome on her, by substantially limiting her employment opportunities if she left ACCI, hindering her ability to earn a living and support her family.

While plaintiff admits she "may have had access to certain confidential material in the course of performing her designing duties," she claims her access to such material was no different from that of ACCI's administrative and clerical staff, who were not asked to sign the Agreement. Moreover, plaintiff asserts that much of the ...

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