Davison v. Caleidoscope Communication Co., No. S043 6-04 CnC (Norton, J., Nov. 8,

2004)

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STATE OF VERMONT SUPERIOR COURT

Chittenden County, ss.: Docket No. S0436-04 CnC

ROBERT DAVISON

v.

CALEIDOSCOPE COMMUNICATION

COMPANY

ENTRY

This matter concerns the plaintiff Robert Davison’ s motion for summary judgment regarding counterclaims by the defendant, Caleidosc ope Communication Company. Caleidoscope provides a number of material facts th at are in dispute and argues that summary judgment is premature at this stage of disc overy. The court agrees. Accordingly, Mr. Davison’s motion is denied.

Caleidoscope provides telecommunications consultin g services throughout northern New England and New York. Mr. Davison has sued Caleidoscope, his former employer, for payment of commissions he allegedly e arned as an account manager. Caleidoscope counterclaimed that Mr. Davison has vi olated several provisions of his employment agreement by soliciting Caleidoscope cli ents for his new employer, disclosing proprietary information, and retaining p roprietary Caleidoscope documents.Caleidoscope also counterclaimed that Mr. Davison b reached the covenant of good faith

and fair dealing and that his new employment places him in a position where he will inevitably disclose proprietary Caleidoscope inform ation in violation of the Vermont Trade Secrets Act and his employment agreement with Caleidoscope.

Mr. Davison fails to provide a statement of undisp uted facts, as required by

V.R.C.P. 56(c)(2). Rather, Mr. Davison fashions his motion as a challenge that Caleidoscope, as the party with the burden of proof , must provide adequate evidence to

demonstrate that material issues of fact exist with respect to its counterclaims. Rule 56(c)(2) of the Vermont Rules of Civil Procedure st ates that a party moving for summary judgment shall “annex[] to the motion a separate, s hort, and concise statement of material facts as to which the moving party contends there i s no genuine issue to be tried.” The Reporter’s Notes explain that moving parties “must include in their Rule 56(c)(2) statements all of the facts that they have relied o n in support of or in opposition to summary judgment, and that facts that are omitted f rom their statements will not be considered by the court in ruling on the motion.” R eporter’s Notes—2003 Amendment, V.R.C.P. 56. By omitting this statement, Mr. Daviso n essentially brings this motion in the form of a motion to dismiss under V.R.C.P. 12(b)(6) or a motion for judgment on the pleadings under V.R.C.P. 12(c). See Reporter’s Note s, V.R.C.P. 56 (stating that summary motions solely regarding legal sufficiency of claim s are the equivalent of Rule 12(b)(6) or Rule 12(c) motions).

Under the posture of either a Rule 12(b)(6) or a R ule 12(c) motion, the court must accept all of Caleidoscope’s claims in its pleading s as true. See Richards v. Town of

Norwich , 169 Vt. 44, 48–49 (1999). Under this standard, Ca leidoscope overwhelmingly

meets its burden to demonstrate valid counterclaims . First, by providing the employment agreement—which spells out restrictions on solicita tion, disclosure of confidential information, and misuse of company documentation—an d by providing allegations that Mr. Davison has violated the agreement’s terms, Cal eidoscope has made a prima facie

case for breach of contract.

Second, every contract contains an implied covenan t of good faith and fair dealing that ensures the “parties act with ‘faithfulness to an agreed common purpose and consistency with the justified expectations of the other party.’” Southface Condo. Owners

Ass’n v. Southface Condo. Ass’n , 169 Vt. 243, 246 (1999) (quoting Carmichael v. Adirondack Bottled Gas Corp. of Vt. , 161 Vt. 200, 208 (1993)). Caleidoscope’s allegations that Mr. Davison breached his agreement in a willful, knowing, and malicious manner suffice to demonstrate a prima facie case fo r a breach of the implied covenant of good faith and fair dealing, because a breach in th is manner shows Mr. Davison’s failure to act according to Caleidoscope’s justified expect ations.

Finally, Caleidoscope’s “inevitable disclosure” cl aim is a novel theory under3

Vermont law. In essence, Caleidoscope argues that M r. Davison’s current job more-orless requires him to rely upon confidential informa tion that is protected by his former employment agreement and the Vermont Trade Secrets Act. See PepsiCo, Inc. v.

Redmond , 54 F.3d 1262, 1269–70 (7th Cir. 1995) (holding th at former employee’s near certain reliance on trade secrets in new job suppor ts injunctive relief). Not all states have accepted the inevitable disclosure doctrine. See, e .g., Whyte v. Schlage Lock Co. , 125 Cal. App. 4th 1443, 1458–64, 125 Cal. Rptr. 2d 277, 290–94 (Cal. Ct. App. 2002) (holding that doctrine unjustly converts a confiden tiality agreement into noncompete agreement); LeJeune v. Coin Acceptors, Inc. , 849 A.2d 451, 469–71 (Md. 2004) (holding that doctrine would compromise state policy in favo r of employee mobility). The Vermont Supreme Court has expressed reservations ab out implicit proscriptions on individuals to freely engage in commercial activity , see, e.g., Roy’s Orthopedic, Inc. v. Lavigne , 142 Vt. 347, 350 (1982), but the Court has not ex plicitly ruled on whether the

inevitable disclosure doctrine is available in Verm ont. The Court has cautioned against dismissing a cause of action on pleadings where the theory of liability is novel. In re

A.G. , 151 Vt. 167, 169 (1989). Hence, Caleidoscope has a valid counterclaim on this theory, and the court shall permit Caleidoscope to bring its counterclaim with further development of the evidence.

Even if the court were to make a more searching in quiry into Caleidoscope’s counterclaims akin to a summary judgment ruling, Ca leidoscope still meets its burden to defeat Mr. Davison’s motion. On a summary judgment motion, the court must provide the nonmoving party all benefit of doubt, resolving all factual disputes in the nonmoving party’s favor as long as the party has provided adm issible evidence, on personal knowledge, in support of its factual disputes. Gend reau v. Gorczyk , 161 Vt. 595, 596 (1993) (mem).

Caleidoscope has met its burden here by providing an affidavit from Zoltan Keve, a company representative. Mr. Keve not only detaile d aspects of Mr. Davison’s employment with Caleidoscope, but he also provided personal knowledge of Mr. Davison’s recent activities in breach of his agreem ent with Caleidoscope. Mr. Keve included specific clients that Mr. Davison has soli cited, and he stated that he knew of

these activities because he had seen Mr. Davison’s proposals to these clients. Although Mr. Keve’s affidavit was not as specific as it coul d have been with regard to what he actually knows about Mr. Davison’s activities, it s atisfies Caleidoscope’s burden at this stage. Specific details are not essential at this p oint because one can expect them to emerge only after more complete discovery, includin g depositions that the parties have not yet started. See Doe v. Doe , 172 Vt. 533, 534 (2002) (“A party opposing summar y judgment must be afforded ‘an adequate opportunity to engage in discovery before being required to respond to the motion.’” (quoting Al Ba raka Bancorp (Chicago), Inc. v.

Hilweh , 163 Vt. 148, 156 (1994))).4 ORDER

For the foregoing reasons, Mr. Davison’s motion is DENIED.

Dated at Burlington, Vermont, November 8, 2004.

_____________/s/___________

Richard W. Norton Judge