Opinion ID: 1986699
Heading Depth: 1
Heading Rank: 4

Heading: Other Alleged Acts in Violation of Duties

Text: ORI contends that the individual appellees breached the duty of loyalty which they owed ORI and violated the trust which the employment relationship imposed in other ways, including the secrecy in which the appellees kept their plans to compete, their alleged usurpation of experience gained during their employment and of studies made therein, and the alleged improper removal by several of the appellees of copies of reports made to customers. Judge Pugh found that nothing that the defendants, Davidson and Talbird, did amounted to larceny or piracy, and concluded from the evidence, that no conspiracy between the appellees, or breach of trust or fidelity had been established. As to the secrecy in which Davidson and Talbird kept their plans to establish a competing company after their resignations, we find no duty which they had, under the circumstances, to disclose their intentions. Their dissatisfaction with their employment was not concealed. They had no fixed term of employment; ORI had the right to discharge them at any time and they had the right to resign without notice. It is true that at the ORI management meeting on December 4, Davidson, although intending to resign at the end of the meeting, said that there were no problems as to the prospective Coca-Cola and Southern Railway business for 1965. Davidson's explanation of these statements is that he wished to tender his resignation to Cook personally and could not do so until the end of the meeting. Davidson might well have asked that the meeting be adjourned, so that he could tender his resignation before he made the statements, but he revealed the true situation before the end of the afternoon and ORI was not prejudiced. The extent to which an employee may properly use experience and data which he has acquired during his employment to compete with his former employer when his connection has terminated is, like many judicial determinations, a matter of balancing of interests. Restatement (Second), Agency § 396 (1958), states the general rule as follows: Unless otherwise agreed, after the termination of the agency, the agent    (b)    is entitled to use general information concerning the method of business of the principal and the names of the customers retained in his memory, if not acquired in violation of his duty as agent;    The Comment on Clause (b) reads, in part, as follows: b. The duty of an agent not to compete with the principal by using for his own purposes unique assets of the business such as trade secrets, which are frequently of great value as long as they remain secret, does not terminate with the employment. Such assets a former agent cannot properly use for his own purposes. On the other hand, during his agency, an agent frequently acquires information concerning the methods of his employer in doing business and becomes acquainted with his employer's customers and their desires. Information of this sort is barred from use in competition with his employer only to the extent that, considering all the circumstances, it would be unfair to his former employer for the agent to use it. In determining this, the desirability of permitting employees to be free to terminate the relation and the fact that often their chief assets after such termination consist of the special skill and knowledge acquired during the relation are factors to be considered    Davidson and Talbird each brought to ORI their professional abilities and skills. Undeniably, they contributed to ORI's success and also benefited from their experiences with it. When they resigned, they could not reasonably be expected to blot out what they had learnt during their period of employment, any more than a lawyer who leaves a firm can be required not to avail himself of what he has learnt during the association, including the needs of particular clients by whom he may be subsequently retained without violation of any ethical standards, if there had been no solicitation during the lawyer's previous association. Dr. Kimball, vice-president of Arthur D. Little, Inc., a large operations research organization, who was called by ORI, testified, in answer to a question of the court, that he knew of no reason why he could not resign from his company that day and go to work for one of the company's customers, taking with him the knowledge of the customers he had gained while with his company. There would be nothing improper or unethical, in his opinion, in using all the information his company had gained about the company and he could properly continue with the project as an employee of the customer. Cook, momentarily at least, recognized the large part his key employees had played in the development of the business with particular customers. He testified that when told by Talbird, upon the latter's resignation, that he and Davidson intended to take Coca-Cola and Southern business, he said Joe, you have done a real good job on both of those contracts and I suppose you are entitled to take them with you. (Talbird testified he only told Cook there would be no problem about ORI's pending work and denied any statement to the effect that he and Davidson had already obtained the Coca-Cola and Southern business). A few minutes later, Cook said he did a doubletake and decided to fight to retain the business, but his first reaction evidences the important contributions that Davidson and Talbird, through their professional skills and efforts, had made. The situation here presented, where there was no trade secret and the work, in essence, was a combination of professional skills focused upon specific customer needs, is essentially different from that in Space Aero, where, 238 Md. at 114-15, we quoted with approval the findings of the trial judge (who, as here, was Judge Pugh) that the defendants had learned all there was to know from the plaintiff and that the knowledge how to set up a business and manufacture the hose involved came to their knowledge while they were employed by the plaintiff. The use of forms of proposals, with which the appellees were in any case familiar, and the retention by the appellees Sheehan and Carswell of copies of reports they had written or in which they had participated in connection with the Coca-Cola work were not proved to be violations of ORI instructions. Some of the testimony indicates that extra copies of such reports were prepared by ORI to be retained by the employees who had worked on them as their individual property. While contrary testimony was offered by ORI, the question was one of fact. ORI contends that Davidson and Talbird violated their duties to their employer in failing to submit proposals to Coca-Cola on behalf of ORI for the 1965 work. Davidson testified that Eisenberg called for proposals only when he wanted them, generally in December or January. Cook called Eisenberg on December 8, after the resignations, and assured him that ORI wished to have the 1965 work as it had been planned and suggested coming down with a new team. Eisenberg told Cook he would be happy to have Cook do this and to submit a proposal. Cook did not go to Atlanta and no proposal by ORI was submitted. Coca-Cola, a week or so later, entered into a contract with the new company. More significant then these matters, in our opinion, on the general issue of the recognition by the individual employees of their obligations to ORI, even during the few months preceding their resignations, is the undisputed testimony of Davidson as to what he did to secure work for ORI for the ensuing year, even though he then intended to resign and to help form a company to compete with it. During that period, projects on which he worked, he testified, resulted in contracts for ORI totaling about $600,000 with three concerns alone. ORI, he said, is now carrying on this work; he did not solicit any of it for his new company. The conclusions of the lower court on all these matters were mixed determinations of fact and law. Our study of the evidence leads us to an affirmance of its conclusions.