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CRA, Inc. v. Ozitus International, Inc.

United States District Court, D. New Jersey

June 27, 2017

CRA, INC., Plaintiff,
v.
OZITUS INTERNATIONAL, INC., KERRY YERICO, MEREDITH GRIESE, COLIN WALL, Y MCDONALD, SCOTT HUDAK, SYDNIE GIACOMUCCI, WAYNE WEBB, AMANDA GONZALEZ, KENYATTA ISRAEL, JAMES BOULGER, MICHAEL MOORE, and STEVEN SETTLES, Defendants.

          Melanie H. Muhlstock, Esq., GIBBONS PC, Counsel for Plaintiff.

          Christine P. O'Hearn, Esq., Michael Joseph Miles, Esq., BROWN & CONNERY LLP, Counsel for Defendants Ozitus and Giacomucci.

          Alexander Nemiroff, Esq., GORDON & REES LLP, Counsel for Defendants Yerico, Wall, McDonald, Hudak, Gonzalez, Israel, Boulger, Moore, and Settles.

          David K. Cuneo, Esq., LAW OFFICES OF DAVID K. CUNEO, Counsel for Defendant Griese.

          OPINION

          HONORABLE JEROME B. SIMANDLE, District Judge:

         I. INTRODUCTION

         This matter comes before the Court on the motion of Defendants Ozitus International, Inc. (“Ozitus”), Kerry Yerico, Meredith Griese, Colin Wall, Casey McDonald, Scott Hudak, Sydnie Giacomucci, Amanda Gonzalez, Kenyatta Israel, James Boulger, Michael Moore, and Steven Settles (collectively, “Individual Defendants”[1]) to dismiss certain counts of Plaintiff CRA, Inc.'s (“CRA”) Complaint for failure to state a claim. [Docket Item 26.] Plaintiff alleges that Ozitus tortiously interfered with Plaintiff's contracts with the County of Camden and with contracts between Plaintiff and its employees (including the Individual Defendants), induced Plaintiff's employees to breach their confidentiality and non-compete agreements with Plaintiff, and wrongfully hired Plaintiff's employees to provide the same services to the County of Camden that Plaintiff had provided before Ozitus allegedly tortiously interfered with that business relationship. [Docket Item 1.]

         Plaintiff asserts claims against Defendants as follows: breach of contract against the Individual Defendants (Count 1); tortious interference with contract against Ozitus (Count 2); breach of covenant of good faith and fair dealing (Count 3) and breach of duty of loyalty (Count 4) against the Individual Defendants; aiding and abetting the breach of duty of loyalty against Ozitus (Count 5); breach of fiduciary duty against the Individual Defendants (Count 6); aiding and abetting the breach of fiduciary duty against Ozitus (Count 7); tortious interference with contract against Ozitus (Count 8); tortious interference with prospective economic advantage against Ozitus (Count 9); corporate raiding against Ozitus (Count 10); unfair competition against Ozitus (Count 11); and unjust enrichment against all Defendants (Count 12). [Docket Item 1.]

         Defendants seek to dismiss Counts 1 through 7 and 10 through 12. [Docket Item 26 at 2.] Plaintiff has submitted a Response in opposition [Docket Item 32] and Defendants have submitted a Reply [Docket Item 35].

         The Court will address the arguments as to each claim in turn. For the reasons set forth below, the Court denies in part and grants in part Defendants' motion.

         II. BACKGROUND[2]

         CRA is a corporation that provided certain services to the Camden County Police Department (“CCPD”) from 2013 to 2016 pursuant to a series of contracts with Camden County. [Docket Item 1 ¶¶ 18-22, 54-64, 67, 70.]

         The Individual Defendants are all former employees of CRA, who signed confidentiality and non-compete agreements with CRA as part of their employment, and are now employed with Ozitus. [Id. ¶¶ 29-53.] The relevant agreements are attached to the Complaint as Exhibits B through F and H through L.[3] [Docket Items 1-2 through 1-8 and 1-10 through 1-14.] The relevant portions of the non-compete clause of the agreements provide as follows:

(11) AGREEMENT NOT TO COMPETE For a period of one year following termination of employee's agreement with CRA, employee hereby agrees not to be employed by, contract or subcontract with, directly or indirectly own, manage, control, or operate, or have any direct financial interest in, any entity which directly competes with CRA in any business endeavor in which CRA is currently engaged or which is engaged in any business endeavor in which CRA has expressed to employee a significant interest in developing as CRA's business, or with whom employee has discussed or entertained the prospect of a business relationship by CRA or by employee personally if employee would be providing services to the CRA customer or potential customer similar to, or in competition with the services CRA performs or seeks to perform or if employee would be using the job knowledge or the business contacts he gained as a result of his work with CRA. Employee further acknowledges that potential business opportunities encountered, investigated or considered by employee or others employed by CRA are the basis of CRA's future success, and employee will not, during the one year period following termination of employment as aforesaid, usurp or develop such opportunities for the benefit of employee or any other person or entity. . . .

[Docket Item 1-4 at 7-8.] The agreements also provide that they are “governed by the laws of the State of New York, without reference to conflict of laws principles thereof[.]” [Id. at 9.]

         CRA provided services to CCPD in the nature of criminal analyst services pursuant to two separate contracts upon which CRA successfully bid in 2013; those contracts were renewed several times. [Docket Item 1 ¶ 54.] Under the first contract, CRA provided strategic analysis services for the CCPD Strategic Analysis Unit (“SAU”); that contract initially ran from June 1, 2013 to May 31, 2014 and was renewed twice, with its final term running from June 1, 2015 to May 31, 2016. [Id. ¶¶ 20, 55.] Under the second contract, CRA provided criminal analysts for CCPD's Real Time Tactical Operations and Intelligence Center (“RTTIOC”); that contract initially ran from December 1, 2013, was renewed in October 2015 and was due to run until November 30, 2016, when, on June 20, 2016, Camden County informed CRA that it was terminating the second contract effective July 31, 2016. CRA alleges that such termination was premature. [Id. ¶¶ 21, 61-64, 70.]

         CRA alleges that it is a nationally-recognized leader “in the provision of criminal and intelligence analysts” and “staffs qualified intelligence and criminal analysts at fusion centers and real-time centers in multiple agencies throughout the country.” [Id. ¶ 27.] In contrast, while Ozitus was a single-employee I.T. services company, it hired numerous ex-CCPD personnel and “now purports to offer strategic analysis, criminal intelligence and crime scene investigation - all areas of business in which CRA is engaged.” [Id. ¶ 28.] CRA states that while it “faithfully and with diligence and expertise performed the First Contract and all renewals of that contract[, ]” Ozitus's machinations resulted in the fact that, in May 2016, Ozitus “was the sole bidder on the contracts to replace CRA” and in fact replaced CRA. [Id. ¶¶ 59, 69.]

         In early 2016, Ozitus was a single-employee I.T. services provider to Camden County and began to hire ex-CCPD personnel including the retired deputy chief of the CCPD, Michael Lynch.

         Lynch bad-mouthed CRA to CCPD and Camden County and “engaged in a campaign of interference with CRA's performance” of its contracts with the CCPD “and its management of its personnel.” [Id. ¶¶ 65-66.] On May 1, CRA's contact within the CCPD, James Bruno, told CRA's vice president, Thomas Mauro, that CCPD would not be renewing the first contract and would instead be advertising a Request for Proposals (“RFP”) for that contract. Bruno told Mauro that “CCPD would not allow CRA to submit a bid in response to CCPD's RFP.” [Id. ¶ 67.] CRA also states that it was limited contractually from “submitting terms different” to those already agreed to in the contract. [Id. ¶ 68.] When CCPD advertised the RFP, Ozitus was the only bidder and was awarded the contract. [Id. ¶ 69.][4]

         CRA alleges that Ozitus employees began trying to contact CRA employees in May of 2016 and recruiting those employees while they were still employed by and actively working for CRA. [Id. ¶¶ 71-74.] It alleges that Lynch, prior to May 23, 2016, gave the Individual Defendants application forms for jobs with Ozitus, instructed them to fill out the applications during their working hours with CRA, and conducted interviews with them during their working hours with CRA. [Id. ¶¶ 75-76, 78.] CRA also alleges that the Individual Defendants had already accepted employment with Ozitus by the time the first contract expired on May 31, 2016 and commenced employment with “Ozitus - a competitor of CRA - within one year (and almost immediately) after the termination of their employment with CRA.” [Id. ¶¶ 79, 83.]

         III. STANDARD OF REVIEW[5]

         When considering a motion to dismiss a complaint for failure to state a claim upon which relief can be granted under Fed.R.Civ.P. 12(b)(6), a court must accept all well-pleaded allegations in the complaint as true and view them in the light most favorable to the nonmoving party. A motion to dismiss may be granted only if a court concludes that the plaintiff has failed to set forth fair notice of what the claim is and the grounds upon which it rests that make such a claim plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         Although the court must accept as true all well-pleaded factual allegations, it may disregard any legal conclusions in the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Iqbal, 556 U.S. at 678.

         In addition, the complaint must contain enough well-pleaded facts to show that the claim is facially plausible. This “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “If the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not shown - that the pleader is entitled to relief.” Id. at 679 (internal quotation marks and citation omitted).

         IV. DISCUSSION

         A. Breach of Contract (Count 1)

         Defendants claim that Plaintiff fails to state a claim against the Individual Defendants for breach of contract pursuant to the non-compete agreement because Plaintiff has not plausibly pled that CRA and Ozitus were competitors within the meaning of the non-compete agreement. [Docket Item 26-1 at 22-25.]

         In the alternative, Defendants argue that the Court should dismiss Count 1 because enforcing the non-compete agreement would be against public policy as it would harm the public. [Id. at 25-27.]

         The Court will address these arguments in turn.

         1. CRA has plausibly pled that CRA and Ozitus were competitors within the meaning of the non-compete agreement

         Defendant argues, in essence, that CRA and Ozitus cannot be construed as having been competitors within the meaning of the non-compete agreement because “CRA did not directly compete with Ozitus at the time the ...


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