Opinion ID: 1986699
Heading Depth: 1
Heading Rank: 5

Heading: Cases Cited by Appellant

Text: ORI urges that, taken as a whole, the conduct of the individual appellees while in its employ shows a pattern of conduct incompatible with the duty of loyalty which they owed. It contends that, under the decisions of this Court and decisions in other jurisdictions, on the record as a whole, the court below was in error in denying ORI the equitable relief it prayed. In this contention, the appellant relies heavily upon C-E-I-R. That case has some factual elements similar to this. The appellant company there, like the appellant company here, was a service corporation providing expert consultants to business, industry and government to assist in the analysis, design and programming of data processing systems. The individual appellees in that case, as in the case at bar, were key men. In C-E-I-R, there was testimony that the individual appellees planned to resign and form a competing concern with other key employees, that the new company, after the resignations, submitted a bid to one of C-E-I-R's important customers, the United States Bureau of Old Age and Survivors Insurance, with which the individual appellees had been working for C-E-I-R, and that these appellees, in bidding on the contract for their new company, used experience and information obtained while they were employed by C-E-I-R. However, in other vital respects, the factual situation presented in C-E-I-R differs from the one now before us. In C-E-I-R, the individual appellees, during the employment, not only told the United States Bureau with which they had been working for their employer of their intent to resign and form a competing company, but actively solicited the business for the company they planned to form. The two principal individual appellees in C-E-I-R, during their employment, recruited other key employees of the company for their proposed company without C-E-I-R's knowledge. There was a written contract between C-E-I-R and the principal individual appellees which provided that, during and after their employment, they would not disclose any data or information relating to their work with C-E-I-R. In C-E-I-R we reversed the decision of the lower court dismissing the bill of complaint because we found the court below had entirely relied on an erroneous legal theory. In delivering the Court's opinion, Judge Sybert said, 229 Md. at 367: There would appear to be no precise line between acts by an employee which constitute mere preparation and those which amount to solicitation. However indefinite that line may be, we feel that the appellees crossed over the line into the area of solicitation forbidden to the loyal employee. The court found that there had been wrongful solicitation during employment. It also found there had been wrongful use by the corporate appellee of information obtained by the former employees, in violation of their written agreement not to disclose information of this nature, and that the principal individual appellees had, while in C-E-I-R's employment, secretly recruited other key employees. In the present case, we have sustained the factual findings of the lower court that there was no solicitation or recruitment. There were no restrictive covenants. Taken out of the context of these factual distinctions, some of Judge Sybert's language seems appropriate to the present case, but, because of the factual differences, we do not regard C-E-I-R as controlling. In Ritterpusch we held that there was evidence to permit the case to go to the jury on the question of whether the appellant had violated his obligation as an employee by soliciting the business of customers of his employer while still employed by the appellee. Here, we have found there was evidence to support the finding of the lower court that there was no such solicitation. In Ritterpusch as in C-E-I-R, we referred to the right of the employee, before the termination of the employment, to make arrangements to compete thereafter. In Ritterpusch, 208 Md. at 600, we approved a charge to the jury that an employee, while still an employee, has the right to advise the customers with whom he has been in contact of the proposed termination of his employment. We have referred, in other sections of this opinion, to the distinguishing factors between this case and Space Aero. We note, in the present case, that while ORI originally believed, mistakenly (although in good faith), that the individual appellees had wrongfully taken a number of important documents relating to the Coca-Cola and Southern Railway work, it was subsequently found that these documents had always remained in the possession of ORI or its agents. In Space Aero, the wrongful taking by some of the former employees of drawings and other material was one of the elements which strengthened the conclusion that, in availing themselves of their employer's trade secret, the former employees knew they were acting in violation of their duty of loyalty, 238 Md. at 116-17. A.S. Rampell, Inc. v. Hyster Co., 3 N.Y.2d 369, 377, 144 N.E.2d 371, 165 N.Y.S.2d 475 (1957), involved the sufficiency of causes of actions as set forth in the plaintiff's amended bill of complaint. The plaintiff was a dealer-distributor; the defendants were a manufacturer of industrial and other trucks and a salesman of the plaintiff. The second cause of action, referred to by ORI, was summarized by the court as follows: These actions on his [the salesman defendant's] part were not, as claimed, merely planning for new employment after leaving plaintiff's employ; they were acts committed on the time of his employer, and intended to interfere with then existing agreements between his employer and other employees, and between his employer and Hyster, and participation in a plan deliberately designed to destroy his employer's business. The case is not apposite on the facts here presented. Byrne v. Barrett, 268 N.Y. 199, 197 N.E. 217 (1935), held that the plaintiffs, a firm of real estate brokers, were entitled to recover commissions earned by the defendant, a salesman employed by them on a contract terminable at will. The defendant, while with the plaintiffs, found a prospective client, resigned from the firm, and later recovered commissions for services rendered to the client after his resignation. In that case, however, the defendant had given the plaintiffs only limited casual information as to the status of the negotiations, and the plaintiffs were given to understand, incorrectly, that nothing had been accomplished and consummation of the transaction seemed impossible. Unlike the present case, the plaintiffs, because of a breach of the defendant's duty, were put in a position of not realizing that the transaction could be consummated. In Robinson Electronic Supervisory Co. v. Johnson, 397 Pa. 268, 154 A.2d 494 (1959), the court affirmed the chancellor's finding that the defendants, former employees of the plaintiff, after the severance of their employment, used data of the defendants. The court regarded the data as being in the nature of a trade secret. Harry R. Defler Corp. v. Kleeman, 19 App. Div.2d 396, 400, 243 N.Y.S.2d 930 (1963), appeal dismissed, 13 N.Y.2d 1174, 248 N.Y.S.2d 53 (1964), involved defendants who had had no previous experience in their employer's business and who, while still in the employ of the plaintiff, improperly used their employer's confidential compilation of information as to the particular needs of a large number of customers. The court said further: Their audacity probably reached its peak when they paid, with plaintiff's funds, the legal fees incurred in connection with the incorporation of Carchem [their competing firm]. Again, the facts were dissimilar to those in the present case. Community Counselling Service, Inc. v. Reilly, 317 F.2d 239 (4th Cir.1963) held, as did Ritterpusch, that an employee has no right to solicit business from his employer's customers before termination of his employment. Other Federal and New York cases cited by ORI present different factual situations from those here involved. In E.I. DuPont de Nemours and Co. v. American Potash and Chemical Corp., 41 Del. Ch. 533, 200 A.2d 428 (1964), cited in the appellant's reply brief, trade secrets were involved. The chancellor had granted a preliminary injunction and the defendants (the former employee and a competing corporation he had joined) moved for summary judgment. The chancellor denied the motion and set the case for trial. Unlike the present case, there were no findings of fact after a full hearing. The language of eminent judges quoted in ORI's brief well states the principles of loyalty owed by an employee to his employer; the quotations are pertinent to the facts with which the courts were dealing. ORI contends that, once the fiduciary relationship between the individual appellees as employees and their employer had been established, the burden of proof shifted to the appellees to show they did not breach their fiduciary duties. The burden of proof rests on the party who has the affirmative of the issue. Brosius Dev. Corp. v. City of Hagerstown, 237 Md. 374, 383, 206 A.2d 571 (1965); Burgess v. Lloyd, 7 Md. 178, 196-97 (1854). In some circumstances, the duty of going forward with the evidence may shift to the other side. Rolling Inn, Inc. v. Iula, 212 Md. 596, 600, 130 A.2d 578 (1957); District Hghts. Apts. v. Noland Co., 202 Md. 43, 50-51, 95 A.2d 90 (1953); Ross Transport, Inc. v. Crothers, 185 Md. 573, 584, 45 A.2d 267 (1946); Cumberland Coal & Iron Co. v. Parish, 42 Md. 598, 606 (1875). See also Cummings v. United Artists Theater Circuit, Inc., 237 Md. 1, 24, 204 A.2d 795 (1964). But the burden of proof remains. See Thomsen, Presumptions and Burden of Proof in Res Ipsa Loquitur Cases in Maryland, 3 Md.L.Rev. 285 (1939), and 9 Wigmore, Evidence § 2485 (3d ed. 1940). Assuming, arguendo, that, in this case, the burden of going forward with the evidence shifted to the appellees, they met the burden. Judge Pugh, in his opinion, concluded that the appellees, by their own testimony, had left little doubt of the issues herein. There are interests of public policy as well as of private rights to be balanced in the category of cases in which this litigation falls. It is important to our economic system as well as to employers that proprietary interests of businesses be properly protected; it is important to the free competition basic to our national development as well as to the individual rights of employees who want to go into business for themselves that their spirit of enterprise be not unduly hampered. It is the facts in the particular case which weight the scales. In this case, we have examined the record in the light of all the contentions the appellant has made, and have found the basic facts determined by the lower court to be supported by substantial evidence. We hold that no breach of trust or fidelity owed by any of the appellees, conspiracy, or other act entitling the appellant to equitable relief has been proved.