Opinion ID: 1986699
Heading Depth: 1
Heading Rank: 2

Heading: Solicitation of ORI Customers

Text: This Court has consistently held that during the term of employment, an employee's duty of fidelity and trust bars him from soliciting his employer's customers, although he may advise the customers with whom he has been in contact of the proposed termination of his employment. C-E-I-R, Inc. v. Computer Dynamics Corp., 229 Md. 357, 366, 183 A.2d 374 (1962); Ritterpusch v. Lithographic Plate Service, Inc., 208 Md. 592, 604-05, 119 A.2d 392 (1956) and authorities therein cited. Whether there was such an improper solicitation in this case is a question of fact. Judge Pugh found that ORI had not proved such solicitation as to any of the three organizations involved, the Combat Developments Command, Coca-Cola and Southern Railway. In making this factual finding, Judge Pugh stressed the denials of the appellees and the denials by representatives of two of the organizations. General Lipscomb testified that Davidson had made no solicitation prior to December 5, 1964. Fillmore E. Eisenberg, controller of the Coca-Cola Company, under whom Davidson worked while with ORI and before, stated in his deposition that when he first learned Davidson might resign from ORI, he, Eisenberg, made it clear he wanted no proposals from them until such time as this whole problem was completely resolved, and Davidson did not tell him that he, Davidson, was setting up a new organization until after his resignation. ORI contends that, while General Lipscomb denied any solicitation prior to December 5, 1964, the General also testified that before Davidson's resignation, he advised me that he might be fired or he might resign, and he wanted to assure me that whatever happened that I could count on him to give me whatever support I required. This statement, however, is to be taken in the context of the military services involved. The General testified that Davidson had been employed through ORI when Dr. Rumbaugh, the chief scientific advisor to the Combat Developments Command, had suddenly died; and that the most competent individual that I could find in the country for my needs was Dr. Davidson. Shortly after his resignation, Davidson entered into a consulting agreement with ORI to complete the work for the Government then in progress, and thereafter, continued to work for the Army though Duke University. Cook testified that he would have expected Davidson to have volunteered to complete his obligation with the United States Government. He said: Dr. Davidson has no choice but to complete that obligation. It is a terribly important National Defense job; he is senior scientist in it. He is critical to the completion of that project. It would be an utter act of irresponsibility not to complete that contract. An expression of willingness to continue vital defense work for the nation is not an improper solicitation of business. See Space Aero at 128 and 130. ORI's work for Coca-Cola, from 1962 through the end of its fiscal year in 1964, was on a year to year basis. Before the beginning of each year. Eisenberg decided what, if anything, he wanted done for the next year, ORI was working on proposals to Coca-Cola for the coming year when Davidson, Talbird and the other employees resigned. In attacking the lower court's finding that none of the individual appellees solicited Coca-Cola while employees of ORI, the attorneys for the appellant, in their able and comprehensive brief, list 27 items of what they designate as admitted or undisputed evidence, which, they submit, lead to a contrary conclusion and which, they suggest, the lower court did not consider in making its finding. It is true that, in his opinion, Judge Pugh did not attempt to set forth all the testimony adduced in the 17-day trial and the numerous exhibits which were offered. But that the Judge, in making his findings, was thoroughly familiar with all the evidence is demonstrated, if indeed demonstration were necessary, by the cogent questions he addressed to the witnesses on the vital issues. This Court has considered all the evidentiary matters to which ORI refers; to recapitulate and discuss them in detail would extend this opinion to an inordinate length. We shall confine our discussion to several of the matters which ORI stresses. Early in November, 1964, Roger C. Eyler (the project leader in charge of the governmental work assigned to Davidson's division in ORI) approached the president of the Union National Bank in Westminster as to a proposed loan for a contemplated research and engineering firm. A few days later, Eyler submitted to the bank financial statements of Davidson, Talbird and himself, and told the president of the bank that the proposed corporation hoped to obtain work from Coca-Cola. He applied for a loan of $62,000, asking that $22,000 be granted immediately to the three individuals and that the remaining $40,000 be granted around January. On November 10, 1964, the bank's board of directors approved a loan of $62,000 to the three men and their wives, provided they get a Coca-Cola contract. J. Pearre Wantz, Jr., the president of the bank, called as a witness by the appellant, when asked what representations, if any, were made by any of the three individuals as to what contracts would be available, answered, They said possibly a Coca-Cola contract,    And if they couldn't get a Coca-Cola contract, it would be some other national corporation. The $22,000 was lent to the individuals, but the $40,000 loan was not consummated because no contract was assigned. Stanley R. Parent, one of the appellees, testified that on December 2nd or 3rd, he had a conversation with Talbird, his supervisor on the Coca-Cola work, in which he, Parent, said I'm pretty tired. I don't know how tired I am, and Talbird said There are a lot of us getting tired. Talbird said there was the probability that he and Davidson were going to leave ORI and start a new corporation. Parent asked if he could help, and Talbird asked him to find out about the installation of telephones for the prospective new company. Parent made inquiries and made a deposit with the telephone company after he, Talbird and Davidson had resigned from ORI. Reviewing this testimony, and the other testimony marshalled by ORI, in the light most favorable to the appellees, it can be taken as meaning no more than that Davidson and Talbird, prior to their resignations, had formed an intent to resign from ORI and to form a competing company. Because of their close professional associations with Coca-Cola and Southern Railway, and the personal nature of operations research, they had strong hopes, which later materialized, of getting work from these concerns after the resignations. Application for a bank loan based on such hopes or inquiries looking to the establishment of an office do not necessarily mean that any assurance had been received from any ORI customers that this work would be forthcoming or that any solicitation whatever had been made. The judge believed the express denials of the appellees involved. He had ample opportunity to judge the credibility of these witnesses, and he also had before him the deposition of Eisenberg, the representative of Coca-Cola in charge of the work, who expressly denied there had been any solicitation before the resignations. The reliance of the lower court on this testimony is not to be deemed erroneous because other testimony is susceptible of a contrary inference. ORI suggests that the deposition of Laurence Rambo Cowart, another employee of Coca-Cola, does not negative a solicitation. Cowart had been an employee of ORI, working under Davidson and Talbird, until in October, 1963 he left ORI to take a position with Coca-Cola with ORI's knowledge and consent. Cowart's deposition was taken by ORI. He testified that in July or August of 1964 he was present in the Coca-Cola offices in Atlanta at a conference with Eisenberg, Davidson and Talbird. Talbird and Davidson said that they were generally dissatisfied with ORI. Cowart did not remember if they said they intended to resign. He first learned that Davidson and Talbird were setting up their own firm after they resigned from ORI. The effect of the deposition is, as Judge Pugh stated, that Cowart, like Eisenberg, was not solicited prior to the resignations of both Davidson and Talbird. During the fall of 1964, ORI was completing its current work for Southern Railway, as it was for Coca-Cola. All ORI work for Southern had been under Talbird's supervision in his capacity as program director for ORI's commercial work. Southern had wanted Talbird to take personal employment with it. Talbird denied any solicitation of Southern Railway while he was working for ORI and Judge Pugh found that ORI had not proved any such solicitation. ORI attacks this finding as inconsistent with the admitted circumstances, as it does in respect of the finding that there was no solicitation of Coca-Cola, and relies on some of the same items of evidence, as well as others. Among other matters, ORI stresses the timing of Davidson's and Talbird's resignations just as ORI's 1964 work for Southern had been completed. Viewed in the aspect most favorable to the appellees, this testimony may be interpreted as an endeavor by Davidson and Talbird not to interfere with ORI's existing contracts. ORI points to Talbird's written proposal to Southern and to Talbird's telephone call to Southern's Assistant Vice-President Thorpe immediately after Talbird's resignation, and Thorpe's request for a proposal, which was promptly delivered by Talbird on behalf of the new enterprise. ORI argues the probability of some pre-arrangement because of Thorpe's availability in person late on a Saturday afternoon and his failure to ask any questions about the non-existent corporation. This is inference, not proof. Southern knew, previously, that Talbird and Davidson were dissatisfied with their employment and might resign; under the law, the communication of this information of itself was not improper. On December 7, Thorpe accepted the proposal insofar as it applied to Talbird and Albert Jankowitz, another appellee and former ORI employee, who had been engaged on the Southern Railway work, and, on the same day, Talbird went to Southern's Atlanta office where Jankowitz joined him. Business energy and initiative by former employees in securing work after their employment has been terminated are not synonymous with treachery during the employment. It is clear, from the record, that Southern Railway, like Coca-Cola, worked closely with the particular individuals whom they felt most capable of dealing with their problems and that, in a sense, ORI had only been a conduit through which those services were rendered. Prompt acceptance of the services in a more direct relationship after the former arrangement had been terminated falls short of proof that the acceptance was pre-arranged. ORI contends that instead of considering these and other circumstances on the issue of prior solicitation by Talbird of Southern's business, the court below relied on a letter from Southern's president, D.W. Brosnan, written to Cook on July 26, 1965, which ORI argues was improperly admitted over timely objection. The letter is a polite refusal, on advice of counsel, voluntarily to make available either testimony or documentary material to either side in the litigation and a statement of intent to work with either or both groups, as may appear to be in Southern's interest. The letter refers to Southern's decision in the fall of 1964 to take a different approach to the car distribution problem on which ORI had been working for it, and to Southern's interest in the service of particular individuals; there is ample testimony, apart from the letter, to the same effect. Assuming, arguendo, that the letter was improperly admitted as a part of ORI's business records, it is apparent to us, from Judge Pugh's opinion, that it was not the letter (which he did not include in his consideration of the sworn testimony) but the lack of affirmative proof of prior solicitation and the denials by the appellees upon which he basically relied in making his factual finding. Our review of the record fails to convince us that the lower court, in finding that none of the appellees, prior to their resignations, solicited any customers of ORI, was clearly erroneous. ORI argues that the findings of the lower court on both the issues of solicitation of customers and other key employees are in conflict with the decisions in C-E-I-R and other cases. This argument will be considered in a subsequent portion of this opinion.