The plaintiffs sought approximately $1.8 million in damages and lost profits. This figure based on Millman's sales to 82 customers over a four-year period, as well as future lost profits. The plaintiffs contended that the information Millman used at Polymer Packaging was an invaluable asset Target Industrials (and hence, the plaintiffs' property). The plaintiffs also sought punitive damaages.
The jury returned a defense verdict. The jurors found that the defendant acted in good faith soliciting selling to Target Industrial's former customers and that Millman did not have a covenant not to complete with Target Industrials. The jury found that the defendants did not know and could not have known thatMillman breached a confidence by soliciting and selling to former Target Industries customers. Jurors found that the plaintiffs had unreasonably delayed asserting their claims and that the defendants were
prejudiced by the delay.
Plaintiff Target Holdings Inc., a Flanders-based manufacturer and retailer of plastic bags, was purchased Thomas F. Fox. by approval of the bankruptcy court in June 2001. Fox acquired the assets of the company formerly known as Target Industries Inc. On Sept. 7, 2000, Target Industries terminated salesperson Millman. Four days later, Millman went to work for Polymer Packaging Inc., an Ohio company that sells similar plastic bags.
Target Holdings Inc. and Fox sued Polymer Packaging Inc.; the company's president, Larry Lanham; and president William Lanham, alleging misappropriation of trade secrets, interference with business relations, unfair competition, unjust enrichment, breach of duty of loyalty, laches, conversion and conspiracy.
The plaintiffs alleged that when Fox purchased assets of Target Industrials Inc., the company's proprietary assets included trade secrets, such as customer and contact lists and other customer information. The plaintiffs claimed that when Polymer Packaging hired Millman, it wrongfully utilized alleged trade possessed by Millman and directed its business efforts to Target Industries' former clients.
The defendants moved for summary judgment, which the court granted in part and denied in part. Despite plaintiff's counsel's argument that there was a six-year statute of limitations involved. the court for the defendants on their laches argument, finding that the plaintiffs delayed bringing the case detriment of defendants. However, the court found that there were factual disputes regarding whetherdefendants acted in good faith.
The defendants contended that there was nothing improper about Millman's employment and her use of information she obtained while working at Target Industrials, noting that there was neither a covenant to compete nor a confidentiality agreement in her employment contract with Target Industries.
Plaintiffs' counsel contended that all salespersons did sign agreements stating that they would return documents to Target Industries when they left the company. On the stand, Millman denied having signed document. According to plaintiff's counsel, a handwriting expert opined that her signature was on such agreement. Millman admitted that the handwriting resembled her own. According to plaintiffs' counsel, Millman conceded that she did agree to return all of her financial documents to Target Industries upon termination and not to keep copies. Plaintiffs' counsel claimed that all other salespersons signed promising to return sales information to the employer.
The defendants also argued that the plaintiffs did not object to Millman's course of action, pointing letter sent to Millman in June 2001, which stated that
she had not been sued for going to work for Polymer Packaging. According to defense counsel, Fox spoke to Millman after working for Polymer and indicated that the trustee was aware that she was selling products to former Target Industries customers.
The defendants contended that the alleged damages could not have amounted to more than $100,000. The defendants contended that $1.5 million worth of sales by Millman while at Polymer Packaging were to customers Millman never made sales to while at Target Industries. Defendants further contended that approximately $1 million involved customers who have not made purchases over a two-year period (so-"dormant customers"). The defendants argued that those customers should not be included in plaintiffs' profit calculations and disputed the plaintiffs' 28% gross profit figure, contending that it should been valuated at 16%.
The defense also contended that the plaintiff never placed a great value on Target Industries' proprietary assets, noting that they were not mentioned on the bankruptcy documents and that only a nominal value assessed on tax returns.
Superior Court of New Jersey, Law Division, Morris County
Target Holdings Inc. and Thomas F. Fox v. Polymer Packaging, Inc., Larry Lanham
and William Lanham
No. L-190-04
jcavicchi - WestClip: TS JV 12/10/07 8:12 PM Page 4
DATE OF VERDICT/SETTLEMENT: July 31, 2007
