Opinion
DOCKET NO. A-4904-11T4
06-01-2013
FAMILY KARATE CENTER, INC. and FAMILY KARATE SUPER CENTER, Plaintiffs-Appellants, v. MASTER PETERS ACADEMY OF MARTIAL ARTS, LLC and PETER TRIKILAS, Defendants-Respondents.
Howard B. Felcher argued the cause for appellants (Law Offices of Howard B. Felcher, PLLC, attorneys; Mr. Felcher, on the brief). Brian W. Stanziano and Anthony T. Betta argued the cause for respondents (Garvey, Ballou & Rogalski and Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, P.C., attorneys; Robert Ballou and Mr. Betta, on the joint brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Messano and Lihotz.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-1064-11.
Howard B. Felcher argued the cause for appellants (Law Offices of Howard B. Felcher, PLLC, attorneys; Mr. Felcher, on the brief).
Brian W. Stanziano and Anthony T. Betta argued the cause for respondents (Garvey, Ballou & Rogalski and Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, P.C., attorneys; Robert Ballou and Mr. Betta, on the joint brief). PER CURIAM
Plaintiffs, Family Karate Center, Inc., and Family Karate Super Center (collectively, FKC), appeal from two Law Division orders that granted summary judgment to defendants Peter Trikilas and Master Peters Academy of Martial Arts, LLC (Master Peters).
One order granted summary judgment on counts one and two of the complaint, a second order granted summary judgment on the remaining counts.
"In an appeal of an order granting summary judgment, appellate courts 'employ the same standard [of review] that governs the trial court.'" Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010) (alteration in original) (quoting Busciglio v. DellaFave, 366 N.J. Super. 135, 139 (App. Div. 2004)). We first determine whether the moving party has demonstrated there were no genuine disputes as to material facts. Atl. Mut. Ins. Co. v. Hillside Bottling Co., Inc., 387 N.J. Super. 224, 230 (App. Div.), certif. denied, 189 N.J. 104 (2006).
[A] determination whether there exists a "genuine issue" of material fact that precludes summary judgment requires the motion judge to consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party.We then decide "whether the motion judge's application of the law was correct." Atl. Mut. Ins. Co., supra, 387 N.J. Super. at 231. In doing so, we owe no deference to the motion judge's conclusions on issues of law, and review those de novo. Ibid. (citing Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).
[Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).]
We have considered the arguments made in light of the record and applicable legal standards. We affirm.
I.
FKC's complaint alleged slander, product disparagement, misappropriation of trade secrets, tortious inducement to have students breach their contracts with FKC, and tortious inducement to have FKC's employees breach their contracts. We review the motion record according plaintiffs all favorable evidence and inferences. R. 4:46-2(c).
FKC's CEO and primary shareholder was Donnalynn Patakos. Trikilas began as an FKC student at the age of four, became a junior instructor in 1998 and earned the title of head instructor in 2005. Prior to 2010, FKC was owned by Patakos and her husband, Nick Patakos; both were close friends of the Trikilas family. Patakos thought of Trikilas as part of her family. In 2010, Patakos and her husband divorced, and, pursuant to the separation agreement, Patakos took sole ownership of FKC.
By December 2010, all instructors at FKC had been asked to sign an employment agreement that contained a restrictive covenant, and all but Trikilas had executed one. The agreement's stated purpose was "to protect the confidential information, customer and student list and material . . . of the Employer which Employee uses or receives during the Employee[']s employment with the employer[.]" The agreement permitted FKC to terminate the employee without cause and in FKC's sole discretion. The agreement contained a covenant not to compete "[i]n the event of [an employee's] termination . . . for any reason," for a period of five years, in a geographic radius of twenty miles from each of FKC's two centers.
Trikilas told Patakos that he objected to the twenty-mile radius restriction and indicated he would not sign the agreement. Patakos testified at her deposition that "[w]hen asked on December 6, 2010[,] to sign a non-compete agreement, . . . it was clear [Trikilas] took this as a personal affront to his role in the school." She told him to "think about it" but stated that Trikilas could not work for FKC unless he signed the agreement. Patakos asserted continuously at her deposition that it was up to Trikilas to decide.
Trikilas went to work at FKC as usual on December 7, 8, and 9, 2010. On December 9, Patakos approached Trikilas and "put [the agreement] in front of him." Trikilas told her he would not sign it. Patakos could not remember what happened next, except that Trikilas "left and . . . said, good luck."
Trikilas testified at his deposition that Patakos said, "I accept this as your formal resignation." Trikilas recounted the events as follows:
I[] told her I'm not resigning, if she wanted me to leave she would have to fire me. She then said you're fired. She asked me for my keys and cell phone, my work cell, which I handed to her. I wished her the best, I collected my things and left.FKC's former program director, Debora Sirkowski, testified at deposition that she learned from Patakos "[Trikilas] was asked to sign some[] agreement and he didn't . . . . [H]e didn't want to sign the agreement and she had to let him go."
Trikilas claimed that he filed an application for unemployment benefits with the Department of Labor and Workforce Development (the Department) on December 10, 2010. During his deposition, however, Trikilas was confronted with an "unemployment benefit schedule." The following exchange occurred between plaintiff's counsel and Trikilas:
Q. When did you first make a claim for unemployment?Plaintiff's counsel asked for the production of any documents relating to Trikilas's unemployment application. Defense counsel did not directly respond.
A. December 10[, 2010].
Q. This document indicates December 5, 2010. Is this inaccurate?
A. The work week starts for [the Department on] Sunday, so I'm assuming that's what it is but to my knowledge that's inaccurate. I claimed unemployment 12-10.
. . . .
Q. And do you have any document to demonstrate or indicate when you made such application?
A. I might. I have to check.
The exchange continued:
Q. And in connection with your application for unemployment benefits, did you indicate when you were discharged?
A. Yes.
Q. What date?
A. The 9th was my last day.
Q. Did you receive payment for the week of December 5th?
A. No, actually I didn't receive any payment for that week because they said my pay was too high, even though it was in between the week that I was fired, to claim my benefits for that week, so I didn't start receiving pay until the week after.
Trikilas testified that, prior to December 9, he had not thought about opening his own karate school "[b]ecause [he] felt . . . [FKC] was partly [his]. [He] had given everything to that school." However, "[a] few days after [he] was fired" Trikilas began contemplating the idea and researching potential locations.
Around the same time, Preetha Veettil, the mother of two FKC students, contacted Trikilas on Facebook to "see where he was." She obtained his phone number from a friend and called him to arrange a meeting at a Dunkin Donuts in North Brunswick, in part to give him a present. When they met, Trikilas told her he was fired "because he didn't sign a non-competition agreement[.]" He also told her he planned to open his own karate school "very soon" because he "ha[d] to survive."
Trikilas confirmed he "told [Veettil] what had happened. "[He] was fired for not signing a non-compete[,]" "was really upset and hurt[,]" and "was upset with the way [he] was let go after [he] help[ed] build the school and . . . was a major contributor to the school's success." Veettil said he confided to her as "a friend, someone that was concerned about [his] wellbeing[,]" and never asked her to relay his statements to anyone. Trikilas and Veettil testified that Trikilas had no "intent to harm . . . [FKC's] business," and Trikilas merely expressed his opinion that he was treated unfairly.
Shortly after this meeting, Veettil overheard parents debating Trikilas's departure in the school's waiting area. She interjected, telling them "[Trikilas] didn't leave. He was fired and . . . it's not his fault." Veettil conveyed the information to two parents in total, after which Patakos confronted her about the statements.
On December 29, Veettil sent Patakos an apology by email, explaining that "when [Trikilas] told me that you fired him just because of a non-competition agreement that he did not sign, I too thought it was unfair after 25 years." Veettil's children stopped attending FKC in January or February 2011, after Patakos terminated the family's contract.
On January 10, 2011, Trikilas incorporated Master Peters and subsequently leased property for its operation 1.9 miles from FKC's North Brunswick establishment. Master Peters opened for business in March 2011, with Trikilas serving as its sole shareholder.
Veettil's children began attending Master Peters shortly after it opened. Throughout the months of February and March 2011, Veettil acknowledged handing out flyers for Master Peters at her "[l]ocal Indian grocery store." According to Veettil, Trikilas never asked her to hand out flyers, did not reimburse her for the flyers, nor did he approve the flyers before she distributed them.
Plaintiffs suggest the flyers contained images of FKC students; however, the uniforms worn by the children in the flyer images did not have the FKC logo, Veettil did not know whether the children were FKC students and FKC could not demonstrate when or where the images were taken.
Former FKC receptionist, Lauren Kisch, testified in deposition Veettil had "confided in [her] that she had 'feelings' for . . . Trikilas" and "would regularly buy lavish and often expensive gifts for [him.]" She claimed "[Trikilas] would often joke . . . about the gifts he received from [Veettil] . . . [and] wondered aloud what gift he would receive next, what else he could 'get' from her, and . . . what he would 'have to do' for her to buy him a car."
Patakos testified that in early November 2010, she noticed a business report containing student billing and contract information was missing from her "[u]nlocked" office. Patakos admitted that she did not know who took the document, however, she suspected Trikilas was responsible, explaining "[e]ighteen years I've been doing this, it has never gone missing, so I was curious." Patakos also claimed that, prior to leaving FKC, Trikilas "was observed utilizing [FKC's] computers while he was not working and prior to his appointed work hours." FKC's former Program Director, Debora Sirkowski, confirmed having seen Trikilas use FKC's office computer "often," and admitted it was not unusual for him to be using the computer.
Patakos testified Master Peters advertises "in the same community . . . and offer[s] the same uniforms, same curriculum and same instructors at a discounted rate." Both FKC and Master Peters advertise in the local "Clipper Magazine," and Patakos stated that Trikilas told Brenda Strauss, the magazine's representative, that Patakos fired him. However, Strauss was not deposed nor does the record contain any certification from her.
Veettil stated that the uniforms used at FKC and Master Peters are similar, but not the same in all respects. Veettil stated she was not qualified to give an opinion as to whether the curriculum was the same. Patakos's testimony suggests she too was unqualified to opine whether the curriculum was the same. She stated that she handled "[a]nything that needed to be done" at FKC "[e]xcept teach."
In a certification filed in opposition to defendants' summary judgment motions, Patakos claimed that Trikilas solicited ninety-one students and four employees, who later breached their contracts with FKC. However, in deposition, Patakos stated approximately fifteen students broke their contract with FKC. She acknowledged never suing any of the parents of the students for breach of contract, although she thought it was "interesting" that the parents who terminated their agreements often knew the contract number and expiration date. Patakos also acknowledged having "no evidence whatsoever to show that . . . Trikilas communicated with any" of the students who actually terminated their contracts with FKC or "gave them any information as to their contracts[.]"
In opposing summary judgment, FKC supplied the certification of Maritza Parreno, the mother of two FKC students. She stated that in spring 2011, her former husband told her Trikilas had contacted him "in an effort [to] solicit [their two] children's enrollment in his school notwithstanding their enrollment contracts with FKC."
With respect to employee contracts, Patakos testified that Matt Rispoli, a former FKC employee, called her inquiring as to whether his contract prevented him from working for Master Peters. Rispoli, however, never said that Trikilas had contacted him. Rispoli never worked for Master Peters because Patakos advised him he was still under contract with FKC.
FKC produced a Facebook page from Irvin Khan, a former instructor at FKC. Khan posted that Trikilas "got fired," but he did not know why. Khan said Trikilas offered him an "instructor job at his place."
II.
Because Trikilas was represented by separate counsel, two summary judgment motions were filed. On March 16, 2012, the trial court denied defendants' motions as untimely because a trial date of May 7, 2012, was already set. See R. 4:46-1 ("[a]ll motions for summary judgment shall be returnable no later than 30 days before the scheduled trial date, unless the court otherwise orders for good cause shown"). When the trial date was adjourned to June, the judge notified the parties that she would hear the motions and provided FKC with time to respond.
We gather from the transcript of the motion hearing that some of plaintiffs' claims were covered by Master Peters's insurance policy, others were not. Consequently, separate summary judgment motions were filed by separate defense counsel.
FKC filed opposition and cross-moved, seeking an adverse inference because Trikilas never produced "any records detailing his claims for unemployment insurance . . . ."
Before turning to the substance of the judge's decision on the individual counts of the complaint, we digress to provide some further background regarding FKC's cross-motion and consider FKC's argument in this regard.
After Trikilas's deposition, FKC's counsel served three letters requesting the documentation. On February 8, 2012, after discovery closed, Trikilas informed FKC he had "no documentation in connection with his unemployment application."
Trikilas was deposed on December 20, 2011.
On February 24, FKC served the Department with a subpoena; however, the Department advised a court order would be necessary. Consequently, on March 16, counsel for FKC drafted and sent a consent order to the court and defense counsel for approval. It was never executed. In its cross-motion, FKC argued that by refusing to turn over additional documentation and "refus[ing] to execute the consent order," Trikilas "knowingly prevent[ed] [p]laintiffs from obtaining" proof he filed for unemployment before December 9, 2010.
The motion judge began by noting "I don't follow [plaintiffs' argument], because . . . I've looked it up" and "the Web site confirms . . . that New Jersey unemployment claims are dated for the Sunday of the week in which the claim is filed." She observed "there's no dispute that something . . . happened on . . . the 9th. . . . So, one could assume from that, that it was filed that week because it was dated the 5th." She further noted that an individual cannot obtain unemployment benefits without having been fired. The following colloquy ensued:
[PLAINTIFFS' COUNSEL]: But . . . if he filed before the 9th, then the statement that he was fired would be false. If it's false, it supports slander. If he filed before the 9th, his statement is false.
. . . .
THE COURT: There's no dispute that your client asked him for his keys and his phone on the 9th, correct?
[PLAINTIFFS' COUNSEL]: That's correct.
THE COURT: Right. . . . [T]here is no dispute that it was his choice whether he signed the agreement or not. However, [there]'s also no dispute that, if he did not sign it, he [could] no longer work there, correct?
[PLAINTIFFS' COUNSEL]: Correct.
. . . .
THE COURT: . . . [I]t's a play on words, whether you want to say fired, terminated or the like, he no longer could work at [FKC] if he didn't sign the non-compete.
. . . .
[PLAINTIFFS' COUNSEL]: But if he filed as of December 7th, then he wasn't fired and he told Ms. Veettil he[ was] fired.
The judge further found that FKC never moved to compel production of unemployment documents prior to the close of discovery. She reasoned that the burden should not be shifted to defendants based on FKC's failure to do so. Finding defendants had committed no discovery violation, and further, that FKC's "theory" that Trikilas filed for unemployment benefits prior to December 9, 2010 "[did]n't make sense" given the deposition testimony and other record evidence, the judge denied FKC's cross-motion.
Before us, as part of its general argument that summary judgment was improperly granted, FKC renews its claim that an adverse inference should be drawn by Trikilas's failure to produce any unemployment documents. The argument lacks sufficient merit to warrant extensive discussion. R. 2:11-3(e)(1)(E). We add only the following.
Trial courts may certainly use an adverse inference instruction as a means to remedy discovery infractions. Tartaglia v. UBS PaineWebber Inc., 197 N.J. 81, 118-19 (2008). But, the necessary predicate is the finding of a discovery violation. Ibid. The judge was correct in reasoning that, having never moved to compel the production of documents while discovery was ongoing, FKC could not claim a discovery violation. See R. 4:24-2 (motion to compel discovery must be made before expiration of the discovery period, except for good cause shown).
Furthermore, we questioned plaintiffs' counsel whether the production of such records could be compelled in light of N.J.S.A. 43:21-11(g), which provides:
All records, reports and other information obtained from employers and employees under this chapter, except to the extent necessary for the proper administration of this chapter, shall be confidential and shall not be published or open to public inspection . . . , and shall not be subject to subpena [sic] or admissible in evidence in any civil action or proceeding other than one arising under this chapter . . . .
We need not address the merits of FKC's argument in light of this statute, particularly since neither side has briefed the issue. Nevertheless, in light of the failure to move to compel production before discovery ended, the judge correctly denied FKC's cross-motion.
III.
We consider the grant of summary judgment on the substantive counts of FKC's complaint.
A.
In granting summary judgment on the slander claim, the judge concluded "Trikilas's use of the term 'fired' does not rise to the level of falsity of fact . . . ." FKC argues that the judge "[i]mproperly [r]esolved the [f]actual [i]ssue of [w]hether [Trikilas's] leaving FKC was a '[f]iring' in [f]avor of the [n]onmoving [p]arty." We disagree.
"[A] statement is defamatory if it is false, communicated to a third person, and tends to lower the subject's reputation in the estimation of the community or to deter third persons from associating with him." W.J.A. v. D.A., 210 N.J. 229, 238 (2012) (quotation marks and citation omitted). Truth is an absolute defense to a defamation claim, Ward v. Zelikovsky, 136 N.J. 516, 530 (1994), and "may be asserted as a defense even when a statement is not perfectly accurate." G.D. v. Kenny, 205 N.J. 275, 293 (2011). We have said that "[p]ublic policy considerations favor the use of summary judgment motions to eliminate baseless defamation claims." Feggans v. Billington, 291 N.J. Super. 382, 395 (App. Div. 1996); see also Costello v. Ocean Cnty. Observer, 136 N.J. 594, 605 (1994) (calling summary judgment an "important tool for disposing of non-meritorious [defamation] lawsuits").
FKC continues to argue that there was a factual dispute as to whether Trikilas was "fired" or had quit, and, if the latter, that telling others he was fired was defamatory. But, there is no reasonable conclusion other than Patakos had terminated Trikilas for refusing to sign the employment agreement. She admitted he could not continue to work for FKC unless he did. FKC's attorney acknowledged in oral argument that Trikilas's testimony -- Patakos told him to turn in his keys and his cell phone -- was "correct."
Even if we overlook counsel's statement as improvidently made in the heat of argument, summary judgment cannot be denied when the proofs are so "one-sided," Brill, supra, 142 N.J. at 540 (quotation and citation omitted), and a contrary position is unsupported by the motion record. See Alfano v. Schaud, 429 N.J. Super. 469, 474-75 (App. Div. 2013) ("'Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial."'" (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538, 552 (1986))). Summary judgment was properly granted on the slander count of the complaint.
In light of our discussion, we need not address FKC's contention that the judge erred when she found that, even if defamatory, Trikilas's statements were privileged.
B.
Product disparagement, also known as trade libel, is the "publication of a matter derogatory to the plaintiff's property or business, of a kind designed to prevent others from dealing with him or otherwise to interfere with plaintiff's relations with others." Patel v. Soriano, 369 N.J. Super. 192, 246-47 (App. Div.) (citation omitted), certif. denied, 182 N.J. 141 (2004). To sustain a cause of action, a plaintiff must demonstrate (1) "publication of material derogatory to the quality of a plaintiff's business, or to his business in general," (2) which was "of a kind calculated to prevent others from dealing with him, or otherwise to interfere adversely with his relations with others." Id. at 248 (citing Prosser & Keeton on Torts § 128 at 967 (5th ed. 1984)). The falsehood conveyed to a third person must be made "knowingly or recklessly" and must "play[] a material and substantial part in leading others not to deal with plaintiff." Ibid. (citations omitted). Product disparagement requires proof of special damages in the form of pecuniary loss. Id. at 248-49 (citation omitted).
As already noted, there was no evidence that Trikilas made a false statement, nor was there any evidence that he otherwise made statements disparaging FKC's "quality of . . . business, or [its] business in general." Patel, supra, 369 N.J. Super. at 248. For this reason alone, summary judgment dismissing FKC's product disparagement claim was proper.
C.
To maintain a cause of action for misappropriation of trade secrets, a plaintiff must establish:
(1) a trade secret exists;
(2) the information comprising the trade secret was communicated in confidence by plaintiff to the employee;
(3) the secret information was disclosed by that employee and in breach of that confidence;
(4) the secret information was acquired by a competitor with knowledge of the employee's breach of confidence;
(5) the secret information was used by the competitor to the detriment of plaintiff; and
(6) the plaintiff took precautions to maintain the secrecy of the trade secret.
[Rycoline Prods., Inc. v. Walsh, 334 N.J. Super. 62, 71 (App. Div.) (citation omitted), certif. denied sub nom. Rycoline Prods. v. C&W Unlimited, 165 N.J. 678 (2000).]
The Court has held "specific information provided to defendants by their employer, in the course of employment, and for the sole purpose of servicing plaintiff's customers, is legally protectable as confidential and proprietary information." Lamorte Burns & Co. v. Walters, 167 N.J. 285, 301 (2001). Such proprietary information may include customer lists. Fox v. Millman, 210 N.J. 401, 426 (2012). Here, the only proprietary information Trikilas allegedly misappropriated was one "monthly report from [FKC's] billing company."
To the extent FKC claims Trikilas misappropriated its curriculum and uniform styles, we reject the claim. Even if these were "trade secrets," and we doubt they could be characterized as such, the evidence was insufficient to demonstrate that defendants' uniforms or curriculum were the same as those used by FKC.
--------
The motion judge properly recognized that whether something is a trade secret depends on several factors, including:
(1) the extent to which the information is known outside of the owner's business;Patakos acknowledged Trikilas knew many of the students personally. The motion judge noted "Trikilas was employed by plaintiffs for almost 20 years, during which time[] he gained information on plaintiffs' clients, as well as their curriculum, forms, teaching styles, etcetera." The motion judge concluded "plaintiffs have not offered any proof that Trikilas utilized the client list."
(2) the extent to which it is known by employees and others involved in the owner's business;
(3) the extent of measures taken by the owner to guard the secrecy of the information;
(4) the value of the information to the owner and to his competitors;
(5) the amount of effort or money expended by the owner in developing the information; and
(6) the ease or difficulty with which the information could be properly acquired or duplicated by others.
[Hammock ex rel. Hammock v. Hoffmann-LaRoche, Inc., 142 N.J. 356, 384 (1995) (citation omitted).]
It is undisputed that Trikilas had an extended relationship with FKC's pupils during which he, and others, came to know the names and contact information for them. Furthermore, Patakos acknowledged the billing report was kept in her unlocked office to which all employees had access. She testified that she did not know who took the list, and there was no other evidence that Trikilas pilfered the billing information. Patakos found it "interesting" that clients knew the contract numbers and expiration dates of their contracts, but there was no evidence that Trikilas had provided that information to the customers. Moreover, we discern nothing unusual about clients knowing this basic information regarding the services for which they were paying. Lastly, Patakos noticed the billing report was missing in early November 2010, at least a month before Trikilas ever was asked to sign the employment agreement.
Under these circumstances, the judge properly granted summary judgment and dismissed the misappropriation of trade secrets count of the complaint.
D.
The complaint alleged that Trikilas tortiously interfered both with FKC's contracts with its customers and its employees. To substantiate a claim for tortious interference with contractual relations, a plaintiff must show: "(1) the existence of the contract . . .; (2) interference which was intentional and with malice; (3) the loss of the contract or prospective gain as a result of the interference; and (4) damages." Velop, Inc. v. Kaplan, 301 N.J. Super. 32, 49 (App. Div.) (citing Printing Mart, supra, 116 N.J. 739, 751-52 (1989)), certif. granted, 152 N.J. 9 (1997), and appeal dismissed, 153 N.J. 45 (1998). The Court has defined "malice" as "harm . . . inflicted intentionally and without justification or excuse." Printing Mart, supra, 116 N.J. at 751 (citing Rainier's Dairies v. Raritan Valley Farms, Inc., 19 N.J. 552, 563 (1955)).
With respect to FKC's contracts with its employees, Patakos testified that Rispoli asked whether his contract prevented him from working for Master Peters. She told him it did, and Rispoli never worked for Master Peters. Patakos acknowledged that Rispoli never said that Trikilas had spoken to him, and, indeed, the other evidence in the record demonstrated that Trikilas never did speak to Rispoli about working for Master Peters. The evidence was insufficient to prove tortious interference with FKC's contracts with its employees.
With respect to the customers of FKC, Patakos testified that, while it was "interesting" her clients knew basic contract information when they cancelled, she had no evidence to suggest that Trikilas had contacted them. She did not assert that Veettil was responsible for clients leaving, stating, "if she ever [came] to know that [Veettil was] the reason some kids le[ft] Family Karate that she [would] take legal action[.]" Similarly, Patakos did not believe that Strauss caused FKC to lose students.
The only evidence of interference with student contracts was the certification of Parreno, who stated "her former husband said . . . Trikilas had contacted him in an attempt to enroll the couple's children" at Master Peters. The motion judge found Parreno's hearsay account of her husband's statement "[could ]not be considered by the [c]ourt in opposition to defendants' motion for summary judgment."
We need not decide whether Parreno's certification was properly rejected by the motion judge. It is clear from the certification that Trikilas's alleged contact with Parreno's husband occurred in the spring of 2011, after Trikilas left FKC and formed Master Peters. The motion judge noted that because there was no contractual obligation to avoid competing with FKC, that "type of harm . . . is non-actionable."
Even while in the employ of his former employer, an employee not bound by a restrictive covenant "may anticipate the future termination of his employment and, while still employed, make arrangements for some new employment by a competitor or by the establishment of his own business in competition with his employer." Subcarrier Commc'ns, Inc. v. Day, 299 N.J. Super. 634, 645 (App. Div. 1997) (quoting Auxton Computer Enters., Inc. v. Parker, 174 N.J. Super. 418, 423 (App. Div. 1980)). "The only restriction to such action is that he may not solicit his employer's customers for his own benefit before he has terminated his employment." Ibid. (quoting Auxton, supra, 174 N.J. Super. at 423) (emphasis added).
Here, there was no evidence that Trikilas tortiously interfered with FKC's business relationship with it customers. Once he formed Master Peters, he was free to compete with FKC. As we noted in Subcarrier Commc'ns, ibid. (quoting Auxton, supra, 174 N.J. at 424), "later competition with a current employer 'may eventually prove harmful to the former employer[,]'" but "[t]hat sort of harm is not actionable; it is called free enterprise."
Affirmed
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION