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Baseline Services, Inc v. Darren J. Kutz

August 25, 2011

BASELINE SERVICES, INC., PLAINTIFF-RESPONDENT,
v.
DARREN J. KUTZ, CHROMATOGRAPHY SOLUTIONS, INC., AND JAMES NICOLUDIS, DEFENDANTS-APPELLANTS.



On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-004285-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 15, 2011

Before Judges Espinosa and Skillman.

Plaintiff Baseline Services, Inc. filed a complaint against two former employees, defendants Darren Kutz and James Nicoludis, and a company started by Nicoludis, defendant Chromatography Solutions, Inc., (CSI), alleging breach of the duty of loyalty, tortious interference with prospective economic advantage and tortious interference with a business relationship. Defendants Kutz and CSI presented no evidence at trial and now appeal from a judgment entered against them. For the reasons that follow, we affirm the judgment against Kutz and reverse the judgment entered against CSI.

Baseline provides customers with metrology services that include repair, maintenance and calibration of laboratory instrumentation by service engineers and technicians at the customer sites. Baseline had a series of annual service contracts with Global Pharmaceutical Sourcing Group (GPSG), a division of Johnson & Johnson, Inc., providing repair and calibration services for GPSG's high performance liquid chromatography equipment. From 2002 through 2006, Kutz and Nicoludis were the primary Baseline employees performing those services for GPSG. Nicoludis left Baseline in early 2006 and formed CSI, a company that would compete with Baseline, providing similar equipment support services.

In 2006, Baseline's contract with GPSG for such services was $269,000.

Although satisfied with Baseline's services, GPSG solicited bids for the 2007 annual contract for calibration and repair services as a cost-saving measure in the fall of 2006. Vincent Gelsomino, president of Baseline, acknowledged that the contract was put out to bid and that Baseline had no guarantee it would receive the 2007 contract.

Gelsomino prepared and calculated Baseline's bid of $272,000 for the 2007 contract. In October 2006, he emailed the bid to Vincent Dilley, GPSG's lab specialist, and also gave a hard copy of the bid to Kutz for delivery to Dilley. The bid included a profit margin, which Gelsomino calculated to range from thirty-five to forty-five percent in GPSG contracts. Also in October 2006, CSI submitted a bid of $241,000 for the 2007 contract.

Although cost was a primary consideration, GPSG was also concerned about the bidders' ability to provide adequate staffing, including on-site five-day coverage for the contract. Of the five bids received, Baseline and CSI were the only bidders to offer five-day coverage. Dilley prepared a summary of the information in the bids and provided it to lab managers and others involved in the evaluation process. In the summary, Dilley identified CSI as "a newly formed company by ex[-]Baseline employee . . . [that] hopes to hire 2 more staffs from Baseline to have a total of 3 at the start of our contract if selected." Although he testified he did not recall which technicians he was referring to or the source of this information, he agreed that Kutz and Nicoludis were two of the "primary" people from Baseline who had serviced GPSG's account for Baseline. Even though he did not believe CSI had any employees at the time other than Nicoludis, Dilley recommended that the contract be awarded to CSI.

Emails among GPSG employees reflected a concern regarding CSI's ability to provide adequate staffing. Dave Thomas, a GPSG lab manager, questioned the accuracy of the information obtained from each vendor, stating, "CSI is cheapest with the most experience and covers all areas. However, if there are only 3 people in the company they might be stretched pretty thin, so we would need some assurance that they can respond and cover us adequately." An email from Maria Markovich, another lab manager, dated December 7, 2006, stated:

My understanding is that, with the two additional people drawn from Baseline, CSI will provide us with the same three service people that we've had all along -- and been satisfied with . . . . So with the least cost and considerable experience, CSI appears to be a very attractive option.

However -- I have some discomfort with engaging a company that doesn't have its employees in place yet. And I agree with Dave's comment regarding CSI's limited 3-person total staffing (and right now, it's a company of one!) Are we sure we can go back to Baseline if we first agree to engage CSI, but it isn't successful in staffing? No one else is offering a definitive 5 day coverage.

In an email dated December 8, 2006, Kerrie Heck, Director of Quality Stability Operations for GPSG, also questioned Dilley's data collection process, stating that the information "looked eerily tailored to CSI and hit the ...


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