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Sunday, February 18, 2018

Non compete restrictive covenant brief

Non compete restrictive covenant brief
The NJ Supreme Court ruled a non-compete covenant as enforceable and not against public policy in Maw v. Advanced Clinical Communications, Inc (ACCI) 179 N.J. 439, 846 A.2d 1222. (2004).
          In this case, Karol Maw began working for Advanced Clinical Communications, Inc. (ACCI) as a graphic designer on November 1, 1997. ACCI provides marketing and educational services for the pharmaceutical and healthcare industries. Maw had been hired to design written materials used by ACCI in its marketing and educational programs.  Maw was promoted to Senior Graphic Designer in January 2001. Thereafter, pursuant to a new company policy, ACCI required all of its employees at or above the level of “coordinator” to sign a non-compete agreement as a condition of continuing employment. The agreement precluded, among other things, Maw from becoming employed by any competitor or customer of ACCI for a period of two years following the termination of her employment. Maw was informed that she could seek legal advice concerning the employment agreement. Maw consulted her father, an attorney, who suggested changes. Maw presented those revisions to ACCI’s Human Resource Department but was told that no changes could be made. Maw did not sign the non-compete agreement, prompting her termination by ACCI in March 2001 for failing to comply with company policy.
         The court in Maw v. Advanced Clinical Communications, Inc. held her conscientious employee CEPA claim must fail because our State’s public policy respecting non compete agreements is not set forth in a “clear mandate,” and does not “concern[] the public health, safety or welfare or protection of the environment.” N.J.S.A. 34:19-3c(3). Over a generation ago, our Court sketched the broad parameters for determining whether a non compete agreement was unenforceable. Whitmyer Bros., Inc. v. Doyle, 58 N.J. 25 (1971); Solari Indus. Inc. v. Malady, 55 N.J. 571 (1970). In Solari, the Supreme Court canvassed, the historical treatment of non compete agreements, and acknowledged the previously held negative view of such agreements. 55 N.J. at 575-84. The Court cited academic writings on the topic that elaborated in greater detail on the relation of such agreements to Anglo-American commercial practices. See, e.g., Solari, supra, 55 N.J. at 574-77 (citing Harlan M. Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. 625 (1960)).
The Court in Maw v. Advanced Clinical Communications, Inc. held:
                  "But Solari was a turning point, for the Court held then “that the time is well due for the abandonment of New Jersey’s void per se rule in favor of the rule which permits the total or partial enforcement of noncompetitive agreements to the extent reasonable under the circumstances.” 55 N.J. at 585. In Whitmyer, supra, The Court expanded on Solari, establishing what is now known as the Solari/Whitmyer test for determining whether a non compete agreement is unreasonable and therefore unenforceable. Under the Solari/Whitmyer test, a non compete agreement is enforceable “if it ‘simply protects the legitimate interests of the employer, imposes no undue hardship on the employee and is not injurious to the public.’” Ingersoll-Rand Co. v. Ciavatta, 110 N.J. 609, 628 (1988) (quoting Whitmyer, supra, 58 N.J. at 32-33). The first two prongs of the test require a balancing of the employer’s interests in protecting proprietary and confidential information and the asserted hardship on the employee. Ingersoll-Rand, supra, 110 N.J. at 634-35. The third requires the reviewing court to analyze the public’s broad concern in fostering competition, creativity, and ingenuity. Id. at 639. Solari/Whitmyer has now become an accepted part of the common law, not only in New Jersey but also in other jurisdictions around the country. Id. at 630-34."
The Court in Maw v. Advanced Clinical Communications Inc. stated:
                  Although our dissenting colleagues may contend that do-not-compete provisions are, or should be, per se illegal, in point of fact, they are not illegal per se. It is not accurate to describe our current caselaw, which allows enforcement of reasonable non-compete agreements, as a “clear mandate” that disfavors such agreements. The Solari/Whitmyer test is a multi-part, fact-intensive inquiry. Not only must multiple interests of differing parties and entities be identified, but also, those interests must be gauged for reasonableness and legitimacy. The application of that test here, and as a general matter, simply does not evoke the type of a “clear mandate of public policy” that was contemplated by N.J.S.A. 34:19-3c(3).
The Court in Maw v. Advanced Clinical Communications Inc. was informed by the amici that non-compete agreements are a common part of commercial employment. The Court did not accept as a premise that employers, in large numbers, are engaging in a practice that is “indisputably dangerous to the public health, safety or welfare.” Dzwonar, supra, 177 N.J. at 464. It is more appropriate to characterize the business community as having adapted to the Solari/Whitmyer approach that recognizes that non compete agreements can serve a useful purpose so long as the agreement is not unreasonable.
The Court in Maw v. Advanced Clinical Communications Inc. concluded that plaintiff’s private dispute over the terms of the do-not-compete provision in her employment agreement does not implicate violation of a clear mandate of public policy as contemplated by Section 3c(3) of CEPA. As previously noted, plaintiff did have options available to her. If she could not negotiate terms that were to her liking, she was free to dispute the reasonableness of those terms if and when her employer attempted to enforce the agreement. The burden then would be on the employer to hire counsel and initiate enforcement litigation, Solari, supra, 55 N.J. at 574, and nothing would preclude an employee-defendant in such an action from asserting any and all affirmative defenses and counterclaims. Ingersoll- Rand, supra, 110 N.J. at 621-
The NJ Supreme Court granted greater protection to employers and businesses in Lamorte Burns & Co., Inc. v. Walters 167 N.J. 285 (2001)
The Court in Lamorte held: By secretly collecting confidential and proprietary client information while employed by Lamorte Burns & Co., Inc. and using the data to solicit and take away Lamortes clients immediately after resigning, Michael Walters and Nancy Nixon breached their duty of loyalty, tortiously interfered with Lamortes economic advantage, misappropriated confidential and proprietary information, and competed unfairly.
The Court in Lamorte determined that: The client information gathered from Lamortes files by Walters and Nixon was not generally available to the public, would not have been known to defendants but for their employment by Lamorte, went beyond mere client names, and gave defendants an advantage in soliciting clients after they resigned. Walters and Nixon knew Lamorte had an interest in protecting the information. The client information was confidential and proprietary.
The Supreme Court in Lamorte also held that: An employee may prepare to start a competing business while employed by the entity he will compete with, but may not breach the undivided duty of loyalty owed the employer while still employed by soliciting the employers customers or engaging in other acts of secret competition. Walters and Nixon breached the duty of loyalty by collecting protected information while employed by Lamorte for the sole purpose of gaining an advantage over Lamorte as soon as they resigned.
The Supreme Court in Lamorte held that: Walters and Nixon acted with malice and in a manner contrary to the notion of free and fair competition by using the secretly gathered confidential client data to effect a weekend coup, knowing that the delay in Lamortes discovery of their resignation and solicitation would work to their economic advantage Restrictive covenants are very useful for businesses to prevent an employee from taking your clients and your business.
        The NJ Model Jury charges recognize tortious interference with prospective economic advantage. The right of a person or company to pursue a lawful business and to enjoy the fruits and advantages of one’s industry or efforts are rights which the law protects against unjustified and wrongful interference by another person.
         Thus, the law protects a person’s interest in reasonable expectations of economic advantage.
         In order that the plaintiff may recover damages for a wrongful act, such wrongful act must be found to have interfered with a reasonable expectancy of economic advantage or benefit on the part of the plaintiff.
         Thus, plaintiff must prove the following elements:
         1.      The existence of a reasonable expectation of economic advantage or benefit belonging or accruing to the plaintiff;
         2.      That the defendant had knowledge of such expectancy of economic advantage;
         3.      That the defendant wrongfully and without justification interfered with plaintiff’s expectancy of economic advantage or benefit;
         4.      That in the absence of the wrongful act of the defendant it is reasonably probable that the plaintiff would have realized his/her economic advantage or benefit (i.e., effected the sale of the property and received a commission); and
         5.      That the plaintiff sustained damages as a result thereof.
Harris v. Perl, 41 N.J. 455 (1964); Middlesex Concrete, etc., Corp. v. Carteret Industrial Ass’n., 37 N.J. 507 (1962); Raymond v. Cregar, 38 N.J. 472 (1962); Rainier’s Dairies v. Raritan Val. Farms, 19 N.J. 552 (1955); Myers v. Arcadio, Inc., 73 N.J. Super. 493 (App. Div. 1962); Independent Dairy Workers Union of Hightstown v. Milk Drivers, etc., Local No. 680 30 N.J. 173 (1959); Restatement (Second) of Torts, Section 766 (1939).
       In determining whether the defendant committed a wrongful act, the ultimate inquiry is whether defendant unjustifiably interfered with plaintiff’s fair opportunity to conduct his/her legitimate business affairs.
       Everyone has a right to enjoy the fruits and advantages of his/her own enterprise, industry and skill, free from unjustified and wrongful interference. 
Thus, the law protects a person in the pursuit of his/her livelihood. 
       If the act complained of does not rest upon some legitimate interest, or if there is sharp dealing or over-reaching, or other conduct below the behavior of fair men similarly situated, the ensuing loss to the plaintiff should be redressed.
       Hence one who unjustifiably interferes with the contract (or reasonable expectation of economic advantage) of another has committed a wrongful act.
Cases: Harris v. Perl, 41 N.J. 455 (1964); Louis Schlesinger Co. v. Rice, 4 N.J. 169, 181 (1950), “a wrongful act is any act which in the ordinary course will infringe upon the rights of another to his/her damage, except it be done in the exercise of an equal or superior right”; Raymond v. Cregar, 38 N.J. 472, 480 (1962), “malicious interference is the intentional doing of a wrongful act without justification or excuse”; Sokolay v. Edlin, 65 N.J. Super. 112, 128 (App. Div. 1961), to sustain the allegations that defendant maliciously interfered with plaintiff’s employment there must be proof of (1) actual interference by defendant, and (2) the malicious nature of such interference. 

                                    Respectfully submitted,


Tuesday, February 13, 2018

unreported case -overcrowding not automatic grounds for eviction

unreported case -overcrowding not automatic grounds for eviction
DOCKET NO. A-4889-11T4

CO., INC.,





February 28, 2013
Argued January 30, 2013 - Decided
Before Judges Grall and Simonelli.
On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Camden County, Docket No. LT-3752-12.
Sonia Bell argued the cause for appellant (South Jersey Legal Services, Inc., attorneys; Ms. Bell, on the briefs).
Dale W. Keith argued the cause for respondent (Grimes & Grimes, LLC, attorneys; Mr. Keith, on the brief).

In this summary dispossess matter, defendant Tacy Albertson appeals from the May 24, 2012 judgment of possession entered in favor of plaintiff Peachtree Management Co., Inc. Because we conclude the court lacked jurisdiction to enter the judgment, we reverse.
In June 2001, defendant executed a lease with plaintiff's predecessor for a one-bedroom apartment. The apartment is subject to rent stabilization, with a fixed monthly rent and pet fees. The lease only permitted two occupants; defendant and her child resided in the apartment. Defendant's tenancy continued after plaintiff purchased the property in December 2007.
At some point, defendant permitted her husband to reside in the apartment. In May 2009, the Department of Community Affairs (DCA) cited plaintiff for various violations relating to the apartment, including overcrowding. A June 25, 2009 Report and Orders of the Commission indicated that nearly all of the violations, including overcrowding, were abated on June 17, 2010 (the 2009 DCA order). There is no evidence that plaintiff received any other local or State agency citation for violations relating to the apartment, including overcrowding violations.
Plaintiff believed that defendant's husband was still residing in the apartment. In an April 25, 2012 letter, plaintiff advised defendant as follows:
This is your three (3) day Notice to Quit and Landlord's Demand for Possession of the above premises based upon [N.J.S.A.] 2A:18-61.1(c), [willful] or grossly negligent damage to the premises. You have moved additional people into your one (1) bedroom apartment which [is] in violation of the NJ Administrative Code.
Based on the size of the bedroom in your apartment your one (1) bedroom unit is limited to only two (2) occupants. The New Jersey housing code limits the number of occupants who can reside in your apartment.
You are hereby notified that your lease IS HEREBY TERMINATED and that you have three (3) days from the receipt of this letter to vacate the property.
The landlord DEMANDS POSSESSION. You must vacate the property within three (3) days and deliver possession to the landlord or eviction proceedings will be instituted.
On May 3, 2012, plaintiff filed a complaint for possession based on two causes of action: non-payment of rent; and "[d]estruction of property." At trial, plaintiff proceeded solely under the latter cause of action, arguing there was overcrowding, which violated the New Jersey Administrative Code (Code), specifically N.J.A.C. 5:10-22.3. As evidence of overcrowding, plaintiff presented the 2009 DCA order and the landlord's testimony that he saw defendant's husband in the apartment on a regular basis. Plaintiff presented no evidence of actual damage to the property, but argued that overcrowding constituted damage. The court rejected that argument and determined there was no evidence of any damage to the property to warrant eviction under N.J.S.A. 2A:18-61.1c. Nonetheless, the court found there was overcrowding, which constituted a lease and Code violation, and granted a judgment of possession on those grounds. This appeal followed.
On appeal, defendant contends that the court erred in entering a judgment of possession based on grounds not listed in the complaint and because plaintiff failed to prove there was destruction of property. Defendant also contends the court lacked jurisdiction to consider the matter because plaintiff never served a notice to cease or a notice to quit based on a lease or Code violation.
Our review of a trial court's fact-finding in a non-jury case is limited. Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011). "'The general rule is that findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence. Deference is especially appropriate when the evidence is largely testimonial and involves questions of credibility.'" Ibid. (quoting Cesare v. Cesare, 154 N.J. 394, 411-12 (1998)). We "should not disturb the factual findings and legal conclusions of the trial judge unless [we are] convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Ibid. (internal quotation marks omitted). "However, '[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference[,]'" and is subject to de novo review. Mountain Hill, L.L.C. v. Twp. Comm. of Middletown, 403 N.J. Super. 146, 193 (App. Div. 2008) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)), certif. denied, 199 N.J. 129 (2009). Because this matter involves the court's interpretation of the New Jersey Anti-Eviction Act (Act), N.J.S.A. 2A:18-61.1 to -61.12, our review is de novo.
The Act protects residential tenants from eviction absent a showing of good cause. Morristown Mem'l Hosp. v. Wokem Mortg. & Realty Co., 192 N.J. Super. 182, 186 (App. Div. 1983). The Act specifically enumerates permissible grounds for eviction and the associated notice requirements. N.J.S.A. 2A:18-61.1 and -61.2. Absent proof of one of the enumerated grounds for eviction, the court lacks jurisdiction to enter a judgment of possession. Housing Auth. of Morristown v. Little, 135 N.J. 274, 281 (1994). In addition, the public policies underlying the Act require strict compliance with the notice and procedural requirements before a landlord may evict a tenant. 224 Jefferson St. Condo. Ass'n v. Paige, 346 N.J. Super. 379, 383 (App. Div.), cert. denied, 172 N.J. 179 (2002). "In any instance in which a notice to quit is required as a prerequisite to the entry of a judgment of possession, the notice must be facially accurate in every substantial respect." Bayside Condos., Inc. v. Mahoney, 254 N.J. Super. 323, 326 (App. Div. 1992). A notice must be specific and detailed in order to provide the defendant with adequate opportunity to prepare a defense. Ivy Hill Park Apts. v. GNB Parking Corp., 236 N.J. Super. 565, 570 (Law Div.), aff'd, 237 N.J. Super. 1 (App. Div. 1989). A mere legal conclusion is insufficient to satisfy the specificity requirement. Carteret Props. v. Variety Donuts, Inc., 49 N.J. 116, 124 (1967). Failure to provide a notice to quit that is factually and formally sufficient deprives the court of jurisdiction to enter a judgment of possession. Bayside Condos., supra, 254 N.J. Super. at 326.
Here, plaintiff sought to evict defendant pursuant to N.J.S.A. 2A:18-61.1c, which permits eviction of a "person [who] has willfully or by reason of gross negligence caused or allowed destruction, damage or injury to the premises." This provision requires proof of actual physical damage to the property. Les Gertrude Assocs. v. Walko, 262 N.J. Super. 544, 549 (App. Div. 1993). There is no evidence of actual physical damage in this case. Accordingly, the court correctly denied a judgment of possession based on N.J.S.A. 2A:18-61.1c.
However, the court erred in granting a judgment of possession based on a lease or Code violation. A landlord can evict a tenant for breach of a lease provision. N.J.S.A. 2A:18-61.1e(1). However, the landlord must give the tenant "one month's [written] notice prior to the institution of the action for possession." N.J.S.A. 2A:18-61.2b; see also N.J.S.A. 2A:16-61.1e(1). Plaintiff's April 25, 2012 notice to quit does not state a lease violation as a ground for eviction, and plaintiff never gave defendant a one-month written notice of a lease violation. Accordingly, the court lacked jurisdiction to grant a judgment of possession based on a lease violation. Bayside Condos., supra, 254 N.J. Super. at 326.
Because overcrowding or a Code violation are not among the enumerated grounds for eviction under N.J.S.A. 2A:18-61.1, the court lacked jurisdiction to grant a judgment of possession on those grounds. See Housing Auth. of Morristown, supra, 135 N.J. at 281. Even assuming that N.J.S.A. 2A:18-61.1g(2) or (3) permit an eviction for a Code violation based on overcrowding, the landlord must give the tenant "three months' [written] notice prior to the institution of the action for possession" based on a Code violation. N.J.S.A. 2A:18-61.2c. Plaintiff gave defendant no such written notice.