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Engine Distributors Incorporated v. John J. Mcdonnell

December 30, 2010


On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-16-07.

Per curiam.


Submitted October 26, 2010 -- Decided Before Judges Skillman, Yannotti and Espinosa.

Plaintiff Engine Distributors, Incorporated (EDI) appeals from an order entered by the Law Division on October 16, 2009, dismissing its amended complaint with prejudice, and an order entered by the court on December 4, 2009, which denied its motion for reconsideration. Defendant John J. McDonnell (McDonnell) cross-appeals from the October 16, 2009 order, which also dismissed his counterclaim with prejudice. For the reasons that follow, we affirm on the appeal and dismiss the cross-appeal.


EDI is a corporation that is in the business of selling and distributing gasoline and diesel engine products. McDonnell worked at EDI for more than thirty years. In February 1987, McDonnell signed a Confidentiality and Non-Disclosure Agreement, which stated that during and after his employment at EDI, he would not disclose EDI's confidential information to any third party or make use of such information in a manner that would be detrimental to EDI. The agreement defined "confidential information" to mean [t]he names and addresses and purchasing history of EDI's customers; the name and other pertinent data concerning the persons responsible for purchasing for such customers; the particular needs and applications of such customers for EDI products; information relating to EDI products, whether presently marketed or in the process of development; research developments, marketing practices, and other business data.

In 1996, EDI began to develop certain products for the purpose of entering the market for wood chipper engines that are suitable for use by tree-trimming companies throughout the United States. According to EDI, McDonnell was involved in the development and sale of this product and engaged in the solicitation of sales to Woodchuck, Inc. (Woodchuck), which ultimately became EDI's largest purchaser of the wood chipper engines.

In August 2002, EDI terminated McDonnell's employment and he went to work for defendant Engine Power Source (EPS). At that time, EPS was not in competition with EDI in the wood chipper engine market. However, EDI claims that soon after McDonnell joined EPS, he began to contact customers who purchased EDI's wood chipper engines.

In May 2003, McDonnell commenced an action against EDI in the United States District Court for the District of New Jersey, in which he alleged that EDI had discriminated against him on the basis of his age in violation of the Age Discrimination in Employment Act, 29 U.S.C.A. § 621 to 634, and the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -49 (NJLAD). In June 2006, EDI and McDonnell settled the case. Thereafter, McDonnell filed a motion to enforce the settlement, which EDI opposed.

In December 2006, EDI filed this action against McDonnell, in which it asserted claims for breach of contract and tortious interference with its business relationships. EDI alleged that McDonnell had taken its confidential information and used that information to "lure" Woodchuck away from EDI. McDonnell filed a counterclaim, in which he alleged that EDI violated the NJLAD by commencing this action in retaliation for his federal court age-discrimination lawsuit. EDI subsequently filed an amended complaint naming EPS as a defendant.

In the federal action, the district court conducted an evidentiary hearing on McDonnell's motion to enforce the settlement. On January 16, 2007, the district court filed an opinion concluding that EDI had authorized its attorney to enter into the settlement, and the settlement agreement did not lack any essential terms. The district court entered an order dated January 16, 2007, enforcing the settlement.

EDI filed a motion for reconsideration of the district court's January 16, 2007 order, and McDonnell filed a cross- motion for entry of judgment and for civil contempt. On September 24, 2007, the district court filed an opinion in which it found that there was no basis for reconsideration of its earlier order enforcing the settlement.

The district court entered an order denying EDI's motion and granting in part McDonnell's cross-motion for entry of a judgment and for civil contempt. EDI appealed to the United States Court of Appeals for the Third Circuit, which filed an opinion dated March 18, 2009, affirming the district court's orders.

After the completion of discovery in this case, EDI filed a motion for summary judgment on McDonnell's counterclaim. The motion judge entered an order on December 19, 2008, denying the motion. Later, defendants filed a motion for summary judgment seeking dismissal of EDI's claims. The motion judge entered an order dated March 6, 2009, denying the motion. Defendants filed a motion for reconsideration, which the motion judge denied by order entered on April 3, 2009.

The case was initially scheduled for trial on May 4, 2009. Prior to the scheduled trial date, the parties filed with the court their respective pre-trial information exchanges pursuant to Rule 4:25-7(b). EDI's submission included motions in limine to: bar defendants from re-litigating the federal case; preclude defendants from making any reference to the district court's decisions in the federal action; and bar defendants from referring to a January 19, 2007, letter from EDI's counsel concerning the settlement of the federal case. EDI also sought a determination by the court that McDonnell's NJLAD counterclaim was barred as a matter of law.

In addition, defendants submitted a motion in limine to preclude EDI from presenting testimony from its expert on damages because his report was a net opinion. In its response to defendants' motion to bar testimony of its expert, EDI argued that its allegations support the fact that McDonnell used his confidential information, in breach of his confidentiality agreement, to secure the Woodchuck account and deprive EDI of its profits for the foreseeable future.

Defendants['] efforts to discount [p]laintiff's expert report does not take into account that EDI [did not] lose Woodchuck by [its] own act in stopping shipment of product. It was due to EPS' premature entry into the market giving Woodchuck an alternative to buy from [it] and not pay EDI . . . .

The parties appeared for trial on May 4, 2009. The court adjourned the trial date to August 24, 2009, and set the matter down for a hearing to resolve the many pre-trial issues that had been identified by the parties. Prior to the trial date, defendants filed on July 28, 2009, a motion seeking reconsideration of the court's earlier determination that there were disputed issues of fact as to whether a confidentiality agreement ...

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