CRA, INC. v. OZITUS INTERNATIONAL, INC. et al

Filing 52

OPINION. Signed by Judge Jerome B. Simandle on 6/27/2017. (tf, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

CRA, INC.,
Plaintiff,
v.

HONORABLE JEROME B. SIMANDLE
Civil No. 16-5632 (JBS/AMD)

OZITUS INTERNATIONAL, INC.,
KERRY YERICO, MEREDITH GRIESE,
COLIN WALL, CASEY MCDONALD,
SCOTT HUDAK, SYDNIE GIACOMUCCI,
WAYNE WEBB, AMANDA GONZALEZ,
KENYATTA ISRAEL, JAMES BOULGER,
MICHAEL MOORE, and STEVEN
SETTLES,

OPINION

Defendants.

APPEARANCES:
Melanie H. Muhlstock, Esq.
GIBBONS PC
One Gateway Center
Newark, NJ 07102
Counsel for Plaintiff
Christine P. O’Hearn, Esq.
Michael Joseph Miles, Esq.
BROWN & CONNERY LLP
360 Haddon Avenue
P.O. Box 539
Westmont, NJ 08108
Counsel for Defendants Ozitus and Giacomucci
Alexander Nemiroff, Esq.
GORDON & REES LLP
One Commerce Square, 2005 Market Street
Suite 2900
Philadelphia, PA 19103
Counsel for Defendants Yerico, Wall, McDonald, Hudak,
Gonzalez, Israel, Boulger, Moore, and Settles

David K. Cuneo, Esq.
LAW OFFICES OF DAVID K. CUNEO
885 Haddon Avenue
Collingswood, NJ 08108
Counsel for Defendant Griese

SIMANDLE, District Judge:
I.

INTRODUCTION
This matter comes before the Court on the motion of

Defendants Ozitus International, Inc. (“Ozitus”), Kerry Yerico,
Meredith Griese, Colin Wall, Casey McDonald, Scott Hudak, Sydnie
Giacomucci, Amanda Gonzalez, Kenyatta Israel, James Boulger,
Michael Moore, and Steven Settles (collectively, “Individual
Defendants”1) to dismiss certain counts of Plaintiff CRA, Inc.’s
(“CRA”) Complaint for failure to state a claim. [Docket Item
26.] Plaintiff alleges that Ozitus tortiously interfered with
Plaintiff’s contracts with the County of Camden and with
contracts between Plaintiff and its employees (including the
Individual Defendants), induced Plaintiff’s employees to breach
their confidentiality and non-compete agreements with Plaintiff,
and wrongfully hired Plaintiff’s employees to provide the same
services to the County of Camden that Plaintiff had provided
before Ozitus allegedly tortiously interfered with that business

1

Wayne Webb was formerly a named defendant in this matter who
joined in the Motion to Dismiss but was terminated as a party on
May 24, 2017. [Docket Items 50 & 51.]
2

relationship. [Docket Item 1.]
Plaintiff asserts claims against Defendants as follows:
breach of contract against the Individual Defendants (Count 1);
tortious interference with contract against Ozitus (Count 2);
breach of covenant of good faith and fair dealing (Count 3) and
breach of duty of loyalty (Count 4) against the Individual
Defendants; aiding and abetting the breach of duty of loyalty
against Ozitus (Count 5); breach of fiduciary duty against the
Individual Defendants (Count 6); aiding and abetting the breach
of fiduciary duty against Ozitus (Count 7); tortious
interference with contract against Ozitus (Count 8); tortious
interference with prospective economic advantage against Ozitus
(Count 9); corporate raiding against Ozitus (Count 10); unfair
competition against Ozitus (Count 11); and unjust enrichment
against all Defendants (Count 12). [Docket Item 1.]
Defendants seek to dismiss Counts 1 through 7 and 10
through 12. [Docket Item 26 at 2.] Plaintiff has submitted a
Response in opposition [Docket Item 32] and Defendants have
submitted a Reply [Docket Item 35].
The Court will address the arguments as to each claim in
turn. For the reasons set forth below, the Court denies in part
and grants in part Defendants’ motion.

3

II.

BACKGROUND2
CRA is a corporation that provided certain services to the

Camden County Police Department (“CCPD”) from 2013 to 2016
pursuant to a series of contracts with Camden County. [Docket
Item 1 ¶¶ 18-22, 54-64, 67, 70.]
The Individual Defendants are all former employees of CRA,
who signed confidentiality and non-compete agreements with CRA
as part of their employment, and are now employed with Ozitus.
[Id. ¶¶ 29-53.] The relevant agreements are attached to the
Complaint as Exhibits B through F and H through L.3 [Docket Items
1-2 through 1-8 and 1-10 through 1-14.] The relevant portions of
the non-compete clause of the agreements provide as follows:
(11) AGREEMENT NOT TO COMPETE For a period of one year
following termination of employee’s agreement with
CRA, employee hereby agrees not to be employed by,
contract or subcontract with, directly or indirectly
own, manage, control, or operate, or have any direct
financial interest in, any entity which directly
competes with CRA in any business endeavor in which
2

The facts alleged are drawn from Plaintiff’s Complaint,
exhibits to the Complaint, matters of public record, and
undisputedly authentic documents Defendants have attached as
exhibits to their Motion upon which Plaintiff’s claims are
based. See City of Pittsburgh v. West Penn Power Co., 147 F.3d
256, 259 (3d Cir. 1998) (citing 5A Charles Alan Wright & Arthur
R. Miller, Federal Practice and Procedure § 1357 (2d ed. 1990)
and Pension Benefit Guar. Corp. v. White Consol. Indus., Inc.,
998 F.2d 1192, 1196 (3d Cir. 1993)). For purposes of this
motion, the Court accepts Plaintiff’s factual allegations as
true.
3 The Hudak Agreement is not attached as an exhibit to the
Complaint. [Docket Item 1 ¶¶ 38-39.] Former Defendant Wayne
Webb’s agreement is Exhibit G. [Docket Item 1-9.]
4

CRA is currently engaged or which is engaged in any
business endeavor in which CRA has expressed to
employee a significant interest in developing as CRA’s
business, or with whom employee has discussed or
entertained the prospect of a business relationship by
CRA or by employee personally if employee would be
providing services to the CRA customer or potential
customer similar to, or in competition with the
services CRA performs or seeks to perform or if
employee would be using the job knowledge or the
business contacts he gained as a result of his work
with CRA. Employee further acknowledges that potential
business opportunities encountered, investigated or
considered by employee or others employed by CRA are
the basis of CRA’s future success, and employee will
not, during the one year period following termination
of employment as aforesaid, usurp or develop such
opportunities for the benefit of employee or any other
person or entity. . . .
[Docket Item 1-4 at 7-8.] The agreements also provide that they
are “governed by the laws of the State of New York, without
reference to conflict of laws principles thereof[.]” [Id. at 9.]
CRA provided services to CCPD in the nature of criminal
analyst services pursuant to two separate contracts upon which
CRA successfully bid in 2013; those contracts were renewed
several times. [Docket Item 1 ¶ 54.] Under the first contract,
CRA provided strategic analysis services for the CCPD Strategic
Analysis Unit (“SAU”); that contract initially ran from June 1,
2013 to May 31, 2014 and was renewed twice, with its final term
running from June 1, 2015 to May 31, 2016. [Id. ¶¶ 20, 55.]
Under the second contract, CRA provided criminal analysts for
CCPD’s Real Time Tactical Operations and Intelligence Center
5

(“RTTIOC”); that contract initially ran from December 1, 2013,
was renewed in October 2015 and was due to run until November
30, 2016, when, on June 20, 2016, Camden County informed CRA
that it was terminating the second contract effective July 31,
2016. CRA alleges that such termination was premature. [Id.
¶¶ 21, 61-64, 70.]
CRA alleges that it is a nationally-recognized leader “in
the provision of criminal and intelligence analysts” and “staffs
qualified intelligence and criminal analysts at fusion centers
and real-time centers in multiple agencies throughout the
country.” [Id. ¶ 27.] In contrast, while Ozitus was a singleemployee I.T. services company, it hired numerous ex-CCPD
personnel and “now purports to offer strategic analysis,
criminal intelligence and crime scene investigation – all areas
of business in which CRA is engaged.” [Id. ¶ 28.] CRA states
that while it “faithfully and with diligence and expertise
performed the First Contract and all renewals of that
contract[,]” Ozitus’s machinations resulted in the fact that, in
May 2016, Ozitus “was the sole bidder on the contracts to
replace CRA” and in fact replaced CRA. [Id. ¶¶ 59, 69.]
In early 2016, Ozitus was a single-employee I.T. services
provider to Camden County and began to hire ex-CCPD personnel
including the retired deputy chief of the CCPD, Michael Lynch.
6

Lynch bad-mouthed CRA to CCPD and Camden County and “engaged in
a campaign of interference with CRA’s performance” of its
contracts with the CCPD “and its management of its personnel.”
[Id. ¶¶ 65-66.] On May 1, CRA’s contact within the CCPD, James
Bruno, told CRA’s vice president, Thomas Mauro, that CCPD would
not be renewing the first contract and would instead be
advertising a Request for Proposals (“RFP”) for that contract.
Bruno told Mauro that “CCPD would not allow CRA to submit a bid
in response to CCPD’s RFP.” [Id. ¶ 67.] CRA also states that it
was limited contractually from “submitting terms different” to
those already agreed to in the contract. [Id. ¶ 68.] When CCPD
advertised the RFP, Ozitus was the only bidder and was awarded
the contract. [Id. ¶ 69.]4
CRA alleges that Ozitus employees began trying to contact
CRA employees in May of 2016 and recruiting those employees
while they were still employed by and actively working for CRA.

4

CRA asserts that Camden County advertised the RFP on an
unfamiliar website, and not in its usual advertising spots for
RFPs – namely, the City of Camden website and the New Jersey
Courier Post’s classified ad section. [Docket Item 1 ¶ 69.] CRA
alleges this was done to hide the RFP from CRA and other
potential bidders. However, Defendants claim that the RFP was
advertised both on the City of Camden website and in the Courier
Post and that the Court may consider these advertisements as
matters of public record. [Docket Item 26 at 27 n.2, citing
Docket Items 26-9 and 26-10.] The Court need not resolve what
appears to be a factual dispute at this stage of the proceedings
for resolution of Defendants’ Motion.
7

[Id. ¶¶ 71-74.] It alleges that Lynch, prior to May 23, 2016,
gave the Individual Defendants application forms for jobs with
Ozitus, instructed them to fill out the applications during
their working hours with CRA, and conducted interviews with them
during their working hours with CRA. [Id. ¶¶ 75-76, 78.] CRA
also alleges that the Individual Defendants had already accepted
employment with Ozitus by the time the first contract expired on
May 31, 2016 and commenced employment with “Ozitus – a
competitor of CRA – within one year (and almost immediately)
after the termination of their employment with CRA.” [Id. ¶¶ 79,
83.]

III.

STANDARD OF REVIEW5
When considering a motion to dismiss a complaint for

failure to state a claim upon which relief can be granted under
Fed. R. Civ. P. 12(b)(6), a court must accept all well-pleaded
allegations in the complaint as true and view them in the light
most favorable to the nonmoving party. A motion to dismiss may
be granted only if a court concludes that the plaintiff has
failed to set forth fair notice of what the claim is and the
grounds upon which it rests that make such a claim plausible on

5

The Court exercises jurisdiction over Plaintiff’s claims
pursuant to 28 U.S.C. § 1332(a).
8

its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007).
Although the court must accept as true all well-pleaded
factual allegations, it may disregard any legal conclusions in
the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009);
Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009).
Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice. Iqbal,
556 U.S. at 678.
In addition, the complaint must contain enough well-pleaded
facts to show that the claim is facially plausible. This “allows
the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id. “If the well-pleaded
facts do not permit the court to infer more than the mere
possibility of misconduct, the complaint has alleged – but it
has not shown – that the pleader is entitled to relief.” Id. at
679 (internal quotation marks and citation omitted).

IV. DISCUSSION
A. Breach of Contract (Count 1)
Defendants claim that Plaintiff fails to state a claim
against the Individual Defendants for breach of contract
pursuant to the non-compete agreement because Plaintiff has not
9

plausibly pled that CRA and Ozitus were competitors within the
meaning of the non-compete agreement. [Docket Item 26-1 at 2225.]
In the alternative, Defendants argue that the Court should
dismiss Count 1 because enforcing the non-compete agreement
would be against public policy as it would harm the public. [Id.
at 25-27.]
The Court will address these arguments in turn.
1. CRA has plausibly pled that CRA and Ozitus were competitors
within the meaning of the non-compete agreement
Defendant argues, in essence, that CRA and Ozitus cannot be
construed as having been competitors within the meaning of the
non-compete agreement because “CRA did not directly compete with
Ozitus at the time the Individual Defendants became employed by
Ozitus.” [Id. at 25.]
Defendant argues when Bruno informed CRA on May 1, 2016
that Camden County was terminating the first contract and
instead advertising a RFP and CRA did not submit a bid in
response to the RFP, it cannot plausibly plead that it was a
direct competitor to Ozitus, the sole bidder on the RFP:
Since it admittedly failed to submit a bid in response
to the County’s RFP – regardless of the reason –
Plaintiff could not possibly have obtained the
contract awarded pursuant thereto or performed the
services Ozitus is now performing for the County. It
logically follows that Plaintiff and Ozitus were not
direct competitors for the work to be performed under
10

County’s contract. Further, there are no allegations
that Ozitus directly competes with Plaintiff for any
other contracts or business. Thus, because Ozitus did
not directly compete with Plaintiff, the Individual
Defendants did not breach the Non-Compete Agreement by
becoming employed by Ozitus.
[Docket Item 26-1 at 25.]
The Court agrees that the relevant, operative clauses of
the non-compete agreement appear to be those which state: “For a
period of one year following termination of employee’s
employment with CRA, employee hereby agrees not to be employed
by . . . any entity which directly competes with CRA in any
business endeavor in which CRA is currently engaged[.]” [Docket
Item 1-4 at 7-8.]
While the Court agrees that a “covenant against competition
must be construed strictly and should not be extended beyond the
literal meaning of its terms[,]” Elite Promotional Mktg., Inc.
v. Stumacher, 8 A.D.3d 525, 526 (N.Y. App. Div. 2004), the Court
is also mindful of the fact that, when considering a motion to
dismiss pursuant to Fed. R. Civ. P. 12(b)(6) it must consider
all allegations and reasonable inferences that may be drawn
therefrom in the light most favorable to the plaintiff.
The Court finds the reading of the Complaint urged by
Defendants to be overly constrained and notes that Defendants
cite no authority holding or suggesting that two businesses
cannot be found to “directly compete” where one does not, for
11

instance, submit a bid for the same project as the other. A
natural reading of the phrase “directly compete” encompasses
broader meaning than that.
Plaintiff has alleged that CRA and Ozitus are engaged in
the same type of work, namely, providing criminal analysts and
intelligence personnel to law enforcement agencies. Plaintiff
has also alleged that it was engaged in that business at the
time that Ozitus began, by a reasonable inference from the facts
alleged in the Complaint, preparing to go after CRA’s contract
with CCPD and replace CRA in the provision of such services to
the County. Such preparations included taking steps to identify
and hire CRA’s employees while CRA was still working pursuant to
the contract. CRA also alleges that the Individual Defendants in
fact began working with Ozitus within one year, and almost
immediately, after their employment with CRA ended.
Given these factual allegations, the Court finds that CRA
has adequately pled a claim that Ozitus was, at the relevant
times, an entity which directly competed with CRA in a business
endeavor in which CRA was then engaged. Accordingly, Plaintiff
has adequately pled a claim for breach of the non-compete
agreements by the Individual Defendants for joining Ozitus as
employees within one year of the termination of their employment
from CRA.
12

2. The Court will not dismiss a claim based on breach of the
non-compete agreement as against public policy at this
stage of the proceedings
Defendants argue, in the alternative, that the Court should
“‘strictly construe[]’” the non-compete agreements “because of
the ‘powerful considerations of public policy which militate
against sanctioning the loss of a [person’s] livelihood.’”
[Docket Item 26-1 at 25, citing Gramercy Park Animal Ctr v.
Novick, 362 N.E.2d 608, 608 (N.Y. 1977) (further internal
citations omitted).]
New York law states that a “restraint is only reasonable if
it: (1) is no greater than is required for the protection of the
legitimate interest of the employer, (2) does not impose undue
hardship on the employee, and (3) is not injurious to the
public. A violation of any prong renders the covenant invalid.”
BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 388-89 (N.Y. 1999)
(internal citations omitted).
Defendants urge that the Court find the non-compete
agreements at issue here invalid because “it would be
particularly harmful to the public to enforce that agreement”
since the Individual Defendants “provide critical services” for
the CCPD, per the allegations in the Complaint. [Docket Item 261 at 26 citing Docket Item 1 ¶ 19.] Defendants argue that, as
the work of the Individual Defendants at CRA “‘assisted in the
13

deployment of police resources throughout the city in a hugely
successful program to enhance public safety and crimefighting,’” [Docket Item 26-1 citing Docket Item 1 ¶ 20]
“[d]epriving the Department of the institutional memory and
continuity provided by the employment of the Individual
Defendants would have a substantial impact on the Department’s
ability to operate the SAU and the RTTIOC” which would in turn
“have a profoundly negative impact on public safety in the City
of Camden.” [Docket Item 26-1 at 26-27.]
Plaintiff responds, and the Court is inclined to agree,
that the question of whether it would be harmful to the public
to enforce the non-compete agreements is a “detailed factintensive inquiry that is . . . inappropriate on a motion to
dismiss.” [Docket Item 32 at 14.] Plaintiff correctly notes that
Defendants do not cite any case law to support the general
proposition “that a court cannot enforce a restrictive covenant
contained in a contract between an employee and a private
employer that is performing work for a municipal police
authority” [id. at 13]; neither did Defendants cite any support
for the more general proposition that such covenants would harm
the public or contravene public policy in more general lawenforcement-related contexts. Plaintiff has also asserted its
intent to prove false in discovery the assertion that “it would
14

be harmful to the public to enforce” the non-compete agreements.
[Id.]
Under these circumstances, the Court is unwilling to
dismiss the claims for breach of the non-compete agreements on
the grounds that enforcing them would be harmful to the public.
See Installed Bldg. Prod., LLC v. Cottrell, No. 13-CV-1112, 2014
WL 3729369, at *7-*8 (W.D.N.Y. July 25, 2014) (“ . . . the
enforceability of a non-compete agreement turns largely on the
facts of the particular case . . . there are a number of factbound issues that will feed into the non-compete agreement’s
reasonableness . . . As should be obvious, these are all
questions that can only be answered based on a more fullydeveloped record. Accordingly, the Court cannot conclude that
the non-compete agreement is unenforceable as a matter of
law.”); AAMCO Transmissions, Inc. v. Romano, 42 F. Supp. 3d 700,
711 (E.D.Pa. 2014) (“[B]ecause reasonableness is a factintensive inquiry, it should not be determined on the pleadings
unless the unreasonableness is clear from the face of the
complaint”).
Defendants are free to raise these or any other appropriate
arguments at later stages of these proceedings, when a greater
factual record has been developed.
***
For the foregoing reasons, the Court will deny Defendants’
15

motion to dismiss as to Count 1.
B. Tortious Interference (Count 2)
Defendants and Plaintiff agree that the Court’s decision of
whether to dismiss Count 2 should be based on its disposition of
Defendants’ motion as to Count 1. [Docket Items 26-1 at 28-29
and 32 at 15-16.]
Defendants claim that Plaintiff’s claim for tortious
interference against Ozitus fails because “[a]s set forth above,
the Individual Defendants were not prevented by the Non-Compete
Agreement from accepting employment with Ozitus, because it was
not competing with Plaintiff at the time they accepted
employment.” [Docket Item 26-1 at 28.] They continue: “As a
result, Plaintiff is without a protected interest [as required
under New Jersey law, see Baxter Healthcare Corp. v. HQ
Speciality Pharma Corp., 157 F. Supp. 3d 407, 420 (D.N.J.
2016),] in preventing the Individual Defendants from becoming
employed by Ozitus.” [Docket Item 26-1 at 28-29.]
For the reasons stated above, the Court disagrees.
Accordingly, the Court will deny Defendants’ motion as to Count
2.
C. Breach of Covenant of Good Faith and Fair Dealing (Count
3)
Defendants argue that Count 3 must be dismissed because a
breach of the implied covenant of good faith and fair dealing
16

must arise from conduct distinct from conduct alleged to
constitute a breach of contract. [Docket Item 26-1 at 29.]
Defendants also argue that this Count must be dismissed because
“New Jersey courts have applied the covenant of good faith and
fair dealing in three general ways[,]” none of which are
applicable here. [Id. at 31.]
In response, Plaintiff argues that the Court should not
dismiss Count 3 because, while Plaintiff may not be able to
recover on both a breach of contract claim and a claim for
breach of the covenant of good faith and fair dealing, it should
nevertheless be permitted to plead both claims as alternative
causes of action, and cites Wade v. Kessler Inst., 172 N.J. 327,
346 (2002) and Fed. R. Civ. P. 8(d) in support; furthermore,
Plaintiff argues, Defendants’ proposed limited application of
the covenant to the three general scenarios they describe is
unnecessarily and incorrectly narrow. [Docket Item 32 at 16-19.]
Under New Jersey law, “a breach of the covenant of good
faith and fair dealing must not arise out of the same conduct
underlying an alleged breach of contract action.” TBI Unlimited,
LLC v. Clear Cut Lawn Decisions, LLC, No. 12-3355, 2013 WL
6048720, at *3 (D.N.J. Nov. 14, 2013). See also Kurnik v. Cooper
Health Sys., No. A-4686-06T1, 2008 WL 2829963, at *24 (N.J. App.
Div. July 24, 2008) (finding error where court instructed jury
17

on both breach of express contractual provision and breach of
implied covenant of good faith and fair dealing where two
alleged breaches arose from the identical conduct).
In Wade, the plaintiff claimed her employer wrongfully
discharged her by disregarding the procedures described in the
employer’s manual. 172 N.J. at 344-45. The jury was instructed
on both the breach of contract claim and plaintiff’s claim for
breach of the implied covenant of good faith and fair dealing.
In finding error, the New Jersey Supreme Court stated:
[D]efendant’s obligation to discharge plaintiff in
accordance with the manual . . . [was] not implied;
[it was] expressly set forth in the manual itself.
From that perspective, there can be no separate breach
of an implied covenant of good faith and fair dealing.
In a more straightforward case, the breach of the
implied covenant arises when the other party has acted
consistent with the contract’s literal terms, but has
done so in a manner so as to have the effect of
destroying or injuring the right of the other party to
receive the fruits of the contract.
Id. at 344-45 (internal citations omitted).
While Wade states that “a [party] in an appropriate case”
may plead “alternative claims” because “[w]hen supported by the
facts, a jury may determine whether an employer has breached the
express terms of a . . . contract, and if not, whether the
employer nonetheless has breached the implied covenant of good
faith and fair dealing,” id. at 346, it does not necessarily
follow that this case is such an appropriate case.
18

The factual predicate alleged here for breach of the
implied covenant of good faith and fair dealing is set out at
¶¶ 96 and 97 of the Complaint, alleging that the Individual
Defendants “breached their respective employment contract with
CRA by: (a) Commencing employment with Ozitus . . . within one
year . . . and (b) . . . disclosing CRA’s confidential
information . . . . As such, each Employee Defendant engaged in
conduct, separate and apart from the performance of their
obligations under the contract, without good faith, and for the
purpose of depriving CRA of its rights and benefits under the
contract[.]” [Docket Item 1 ¶¶ 96-97.] This is identical to the
factual predicate for Count 1, breach of the non-compete and
confidentiality agreements. [Id. ¶ 83.]
The Court does not discern in the pleading a distinct
factual predicate for a breach of the implied covenant of good
faith and fair dealing; the only factual allegations contained
in Count 3 with regard to the Individual Defendants’ allegedly
wrongful conduct is that they violated their non-compete and
confidentiality agreements. Plaintiff thus asserts only a claim
for breach of the expressed provisions of the contract, and not
breach of some implied covenant. Accordingly, the Court will
grant Defendants’ motion to dismiss Count 3 as duplicative of
Count 1. See Oravsky v. Encompass Ins. Co., 804 F. Supp. 2d 228,
19

239 (D.N.J. 2011) (finding that, upon a motion to dismiss
pursuant to Fed. R. Civ. P. 12(b)(6), plaintiff’s claim of
breach of the implied covenant of good faith and fair dealing
“fails” where “the remaining allegations supporting
[p]laintiff’s claim are identical to the breach of contract
claim” because “it is duplicative of the breach of contract
claim”). Such dismissal will be without prejudice.
D. Breach of Duty of Loyalty (Count 4) and Breach of
Fiduciary Duty (Count 6)
Defendants argue that Counts 4 and 6 must be dismissed
because they represent attempts by Plaintiff to “repackage” the
breach of contract claim against the Individual Defendants “as
separate torts,” but that the economic loss doctrine “prohibits
such efforts.” [Docket Item 26-1 at 30.] Defendants allege that
“the same conduct that allegedly gives rise to the breach of
contract” is the basis for the alleged breaches of the duty of
loyalty and fiduciary duty: namely, obtaining employment with
Ozitus and disclosing confidential information. Defendant notes
that Plaintiff also claim that the Individual Defendants
completed job applications for and interviewed with Ozitus, but
that “[s]uch acts are simply part of obtaining the allegedly
prohibited employment” and are not distinct from it, thereby
qualifying as intrinsic to the conduct alleged to constitute a
breach of contract. [Id. at 32.] However, New Jersey law states
20

that whether “a tort claim can be asserted alongside a breach of
contract claim depends on whether the tortious conduct is
extrinsic to the contract between the parties.” Arcand v.
Brother Int’l Corp., 673 F. Supp. 2d 282, 308 (D.N.J. 2009)
(emphasis added).
In response, Plaintiff asserts that Defendants argue both
that Counts 4 and 6 fail because they allege only conduct that
constituted a violation of a contract and that Counts 4 and 6
allege conduct extrinsic to the alleged contractual violation
but that extrinsic conduct did not violate the Individual
Defendants’ fiduciary duties or duties of loyalty. [Docket Item
32 at 19.] Plaintiff states that its allegations that the
Individual Defendants prepared applications for employment by
Ozitus and interviewed with Ozitus during their working hours
for CRA [Docket Item 1 ¶¶ 102, 112] constituted conduct that was
extrinsic to the non-compete and confidentiality agreements, and
thereby provide a basis for the tort claims in Counts 4 and 6.
[Docket Item 32 at 20.]
In the alternative, Plaintiff urges that it would be unfair
and prejudicial to dismiss these Counts while Defendants dispute
the enforceability of the contracts, citing IDT Corp v.
Unlimited Recharge, Inc., No. 11-4992, 2012 WL 4050298, at *6
(D.N.J. Sept. 13, 2012) (finding that while “[p]laintiffs may
21

not recover on both their contract claims and tort claims, both
claims may be included in the complaint and can survive a motion
to dismiss” when defendants “dispute the validity of the
contracts” rendering it prejudicial to the plaintiffs if the
court were to dismiss the tort claims). [Docket Item 32 at 2122.]
Plaintiff cites United Aircraft Corp. v. Boreen for the
proposition that while employees are “free to prepare to enter a
rival business while still in the employ of the plaintiff[,
t]his does not mean . . . that they [are] free to do so during
working hours. [The plaintiff] has a property right in the
services of its employees during working hours. Its employe[e]s
have a duty to serve only [plaintiff] while performing the
duties for which they are being paid.” 284 F. Supp. 428, 447
(E.D.Pa. 1968). However, the court there, applying Pennsylvania
law, found that although the “instances of derogations from this
duty by the defendants” were “too numerous to elaborate upon
here,” they constituted “so far on this record an injury to
[plaintiff] of de minimis proportions.” Id.
Under New Jersey law, an “employee is entitled to make
‘arrangements’ for some new employment by a competitor and
should be given some latitude in this regard” without such
conduct “amount[ing] to a breach of his fiduciary duty.” Auxton
22

Computer Enterprise v. Parker, 416 A.2d 952, 956 (N.J. App. Div.
1980). The court in Auxton ruled that the defendant did not
breach his fiduciary duty by attending an interview “at a time
when he should have been fulfilling his employment
responsibilities to Auxton” because his behavior “in that regard
does not reach that level of impropriety which has heretofore
been required when imposing liability for violating the duty of
loyalty owed to an employer. . . . Therefore, absent a covenant
not to compete or breach of a confidential relationship,
liability may not be founded upon these facts for breach of duty
of loyalty.” Id.
The Court finds, however, that Plaintiff has adequately
pled claims for breach of the duty of loyalty and of fiduciary
duty, given the inference one can reasonably make from the
Auxton court’s statement that attending an interview during
working hours does not constitute a breach of fiduciary duty or
the duty of loyalty “absent a covenant not to compete or breach
of a confidential relationship.” Those factual circumstances are
precisely what are alleged here, and the Court is unwilling to
state as a matter of law that New Jersey law precludes defining
similar conduct under such circumstances as a breach of
fiduciary duty or the duty of loyalty. The factual record has
not yet been developed, and such a dismissal strikes the Court
23

as premature. Plaintiff has pled facts extrinsic to those which
would constitute breach of contract; the Court will therefore
decline to dismiss the tort claims in Counts 4 and 6 at this
time.
Aiding and Abetting (Counts 5 and 7]
Defendants and Plaintiff agree that the Court’s decision of
whether to dismiss Counts 5 and 7 should be based on its
disposition of Defendants’ motion as to Counts 4 and 6. [Docket
Items 26-1 at 34-35 and 32 at 22.]
Defendants claim that Plaintiff’s claims against Ozitus for
aiding and abetting violations of fiduciary duty and the duty of
loyalty fail because “Plaintiff’s claims against the Individual
Defendants for both breach of the duty of loyalty and breach of
fiduciary duty fail as a matter of law” and therefore,
“Plaintiff cannot satisfy the . . . required element” of showing
that “an independent wrong exist,” pursuant to New Jersey law.
[Docket Item 26-1 at 34-35, citing Landy v. Fed. Deposit Ins.
Corp., 486 F.2d 139, 162-63 (3d Cir. 1973); Failla v. City of
Passaic, 146 F.3d 149, 158 (3d Cir. 1998); and Restatement
(Second) of Torts § 876(b).]
For the reasons stated above, the Court disagrees, since
Counts 4 and 6 will proceed. Accordingly, the Court will deny
Defendants’ motion as to Counts 5 and 7.
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E. Corporate Raiding (Count 10)
Defendants argue that Count 10, corporate raiding, should
be dismissed as duplicative of Count 2, tortious interference,
and because it is not a recognized independent cause of action
in New Jersey. [Docket Item 26-1 at 23-24.] Plaintiff argues in
response that it is not duplicative of its claim of tortious
interference because stating a claim for corporate raiding
requires pleading an allegation of malice that Plaintiff did not
plead in its tortious interference claim. [Docket Item 32 at
23.] It also argues that corporate raiding is a recognized cause
of action in New Jersey under Howmedica Osteonics Corp v.
Zimmer, Inc., No. 11-1857, 2012 WL 5554543, at *12-*13 (D.N.J.
Nov. 14, 2012). [Id.] Defendants argue, in reply, first, that
Plaintiff’s reading of Howmedica is incorrect, and second, that
tortious interference requires an allegation of malice,
rendering a corporate raiding claim duplicative and subject to
dismissal as a matter of judicial economy. [Docket Item 35 at
18-20.]
The Court reads Howmedica as Defendant does. It states that
the plaintiff there correctly argued that if a “soliciting
employer” induces “an employee to move to a competitor” when
“such an inducement has an unlawful or improper purpose, or uses
unlawful or improper means[,]” “the law may impose liability[,]”
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speaking more generally, “if the soliciting employer is doing so
with malice.” 2012 WL 5554543, at *12. “However,” the court
continued, “each decision cited [by the plaintiff in support of
this proposition, including Wear-Ever Aluminum, Inc. v.
Townecraft Indus., Inc., 182 A.2d 387 (N.J. Sup. Ct. 1962) and
Avtec Indus., Inc. v. Sony Corp. of America, 500 A.2d 712 (N.J.
App. Div. 1985),] refers to solicitation in the context of
tortious interference claims, claims addressed in Counts IV, VIVII of Plaintiff[’]s Complaint.” Howmedica, 2012 WL 5554543, at
*12. The court then granted summary judgment as to the corporate
raiding claim as “facially duplicative” in order to “foster
judicial economy and the comprehensive disposition of
litigation.” Id. at *13 (internal citations omitted).
Defendants also correctly cite Baxter v. Healthcare Corp.
v. HQ Specialty Pharma Corp. for the proposition that a tortious
interference claim must plead malice, “i.e., intentional
interference without justification.” 157 F. Supp. 3d 407, 420
(D.N.J. 2016). Given this, Plaintiff’s argument that corporate
raiding requires an allegation of malice while tortious
interference does not lacks merit.
Accordingly, the Court will grant Defendants’ motion to
dismiss Count 10.
F. Unfair Competition (Count 11)
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Defendants argue that Count II must be dismissed because,
under New Jersey law, there is no distinct cause of action for
unfair competition” and it represents a “subspecies of the class
of torts known as tortious interference with business or
contractual relations.” [Docket Item 26-1 at 36, citing C.R.
Bard, Inc. v. Wordtronics Corp., 561 A.2d 694, 696 (N.J. Super.
Ct. Ch. Div. 1989) and Sussex Common Outlets, LLC v. Chelsea
Prop. Grp., Inc., A3714-07T1, 2010 WL 3772543, at *9 (App. Div.
N.J. Sept. 23, 2010).] Because Plaintiff’s claim for unfair
competition against Ozitus “is based on the same allegations
underlying its tortious interference claims” in Counts 8 and 9
in identical language and in similar language in Count 2, it
should be dismissed as a matter of law. [Docket Item 26-1 at
38.]
In response, Plaintiff argues, first, that Defendants
misstate the law: citing Sussex Common Outlets, it quotes the
court as having stated that “unfair competition is a business
tort, generally consisting of the misappropriation of a
business’s property by another business,” 2010 WL 3772543, at
*3. [Docket Item 32 at 24.] Plaintiff alleges that the tort of
unfair competition is “much broader” than the tort of tortious
interference with contractual relations, in part because the
tort of unfair competition does not require interference with,
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or even the existence of, a contract, and could be established
“by acts of misappropriation and defamation.” [Id. at 25, citing
Coast Cities Truck Sales, Inc. v. Navistar Int’l Transp. Co.,
912 F. Supp. 747, 786 (D.N.J. 1995).] Finally, Plaintiff argues
that its claim of unfair competition is not duplicative of its
claim for tortious interference in Count 2 because it need not
plead any facts related to the Individual Defendants’ contracts
in order to plead that Ozitus committed wrongful
misappropriation, thereby properly pleading the claim of unfair
competition; Plaintiff argues that it did so in ¶¶ 143 through
146 of the Complaint. [Docket Item 32 at 26.]
Defendants argue in reply that the weight of the case law
supports a finding that unfair competition is merely a
subspecies of tortious interference; that although both claims
survived to summary judgment in Coast Cities, the court then
granted summary judgment against the plaintiff on those claims
without discussing why or how both claims had reached that stage
of the proceedings; and that Plaintiff does not contest that
“the underlying factual predicates” for the unfair competition
claim are identical to those for the tortious interference
claims in Counts 8 and 9. [Docket Item 35 at 21-23.]
In Sussex, the Appellate Division affirmed the dismissal of
a unfair competition claim for failure to state a claim where
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the tortious interference claim was also dismissed and plaintiff
conceded “that its unfair competition claim [wa]s only a
subspecies of its tortious interference claim and that both
claims [we]re grounded on the same facts.” 2010 WL 3772543, at
*10. In Coast Cities, the court stated that:
The amorphous nature of unfair competition makes for
an unevenly developed and difficult area of
jurisprudence. . . . By incorporating other causes of
action, including tortious interference, breach of
duties of good faith and fair dealing,
misappropriation and defamation, it applies a flexible
and elastic standard of conduct in the commercial
context. However, these same characteristics, when
condensed in one general rubric, defy concrete
standards by which to gauge an alleged instance of
unfair competition. . . .
In this case, plaintiff predicates its unfair
competition claims on the same factual allegations
forming the gravamen of its tortious interference and
breach of contract claims[.] . . . While the elements
for competition are not entirely clear, it seems
likely that New Jersey law would find unfair
competition where there has been tortious interference
. . . or upon a finding of breach of good faith and
fair dealing. . . .
In this case, however, the Court has already
determined that plaintiff’s claims for tortious
interference and breach of good faith and fair dealing
do not withstand defendants’ motions for summary
judgment. It follows that they also fail to support
Coast Cities’ claim for unfair competition.
912 F. Supp. at 786.
However, where the “factual basis for the unfair
competition claim is the same as for the tortious interference
Count,” as Plaintiff does not contest that it is (at least as to
29

Counts 8 and 9) and as it appears to be to the Court, the Court
is persuaded that the better course is to dismiss the unfair
competition claim as duplicative. See Diversified Indus., Inc.
v. Vinyl Trends, Inc., No. 13-6194, 2014 WL 1767471, at *6-*7
(D.N.J. May 1, 2014); Juice Entm’t, LLC v. Live Nation Entm’t,
Inc., No. 11-7318, 2012 WL 2576284, at *5 (D.N.J. July 3, 2012).
Accordingly, Defendants’ motion to dismiss Count 11 is
granted.
G. Unjust Enrichment (Count 12)
Defendants argue that Plaintiff’s claim of unjust
enrichment must be dismissed because recovery under that claim
is not available “‘when a valid, unrescinded contract governs
the rights of the parties’” and “Plaintiff’s unjust enrichment
claim against the Individual Defendants is predicated on the
terms of the Non-Compete Agreement[.]” [Docket Item 26-1 at 38,
quoting Van Orman v. Am. Ins. Co., 680 F. 2d 301, 310 (3d Cir.
1982)(internal citations omitted).] Furthermore, Defendants
urge, Plaintiff has failed to state a claim for unjust
enrichment against either the Individual Defendants or Ozitus
because Plaintiff does not adequately allege that Plaintiff
“‘expected remuneration from the defendant at the time it
performed or conferred a benefit on defendant and that the
failure of remuneration enriched defendant beyond its
30

contractual rights.’” [Docket Item 26-1 at 39, quoting VRG Corp.
v. GKN Realty Corp., 135 N.J. 539, 554 (1994).]
Plaintiff responds that its claim of unjust enrichment
sounds in equity, and that New Jersey courts do not limit unjust
enrichment claims to either quasi-contractual settings, but may
find such a claim properly pled in “‘other circumstances . . .
[e.g.,] when corrupt means have been employed to obtain a
governmental contract,’” and it is thereby “‘used to deny the
wrongdoer any profit from the transaction and to thereby deter
such conduct.’” [Docket Item 32 at 27, quoting Cty. of Essex v.
First Union Nat. Bank, 862 A.2d 1168, 1172 (N.J. App. Div.
2004).]
However, on the facts alleged here, the Court agrees that
the claim of unjust enrichment is not properly pled. “New Jersey
does not recognize unjust enrichment as an independent tort
cause of action,” Cardionet, Inc. v. Medi-Lynz Cardiac
Monitoring, LLC, No. 15-8592, 2016 WL 4445749, at *3 (D.N.J.
Aug. 22, 2016); Plaintiff does not allege a quasi-contract-based
claim where “a plaintiff has not been paid despite having had a
reasonable expectation of payment for services performed or a
benefit conferred,” Essex, 862 A.2d at 1172, and this is not the
situation contemplated by the public corruption cases where
“disgorgement” of wrongful gains is required. See id. at 117231

74; Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433
(1952); S.T. Grand, Inc. v. City of New York, 32 N.Y.2d 300
(1973); and Manning Eng’g, Inc. v. Hudson Cty. Park Comm’n, 74
N.J. 113 (1977).
For the foregoing reasons, the Court will dismiss Count 12.
Such dismissal will be without prejudice.
IV. CONCLUSION
For the foregoing reasons, the Court will grant Defendant’s
motion with respect to Count 3 (breach of implied covenant of
good faith and fair dealing), Count 10 (corporate raiding),
Count 11 (unfair competition), and Count 12 (unjust enrichment)
and will deny Defendants’ motion with respect to the remaining
claims. Counts 3 and 12 will be dismissed without prejudice to
Plaintiff’s right to seek a curative amendment to the Complaint
consistent with this Opinion within the deadline for motions to
amend to be set in the forthcoming initial conference under Fed.
R. Civ. P. 16(a). Counts 10 and 11 will be dismissed with
prejudice. The accompanying Order will be entered.

June 27, 2017
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
U.S. District Judge

32