Natural Organics, Inc. v Smith

[*1] Natural Organics, Inc. v Smith 2006 NY Slip Op 51445(U) [12 Misc 3d 1185(A)] Decided on May 24, 2006 Supreme Court, Nassau County Bucaria, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through August 15, 2006; it will not be published in the printed Official Reports.

Decided on May 24, 2006
Supreme Court, Nassau County

Natural Organics, Inc., Plaintiff,

against

Wilbert Smith and NATURE'S WAY PRODUCTS, INC., Defendants.



011571/05

Stephen A. Bucaria, J.

This motion, by plaintiff Natural Organics, Inc., for an order granting reargument of this courts order dated January 19, 2006 which dismissed certain causes of action as against defendant Smith and all causes of action against defendant Nature's Way Products, Inc. is granted and upon reargument the prior determination is adhered to.

This is an action against Wilbert Smith, a former employee of plaintiff Natural Organics, Inc. who was fired, and Nature's Way Products, Inc., a competitor of plaintiff who hired Smith six months after he was fired. Smith's services include checking

Nature's Way inventory and stocking shelves in health food stores and chains. There are no secret customer lists involved and only the broadest allegations that Smith was privy to alleged trade secrets.

On this motion plaintiff has not shown that the court "overlooked any significant facts or misapplied the law", necessary elements upon this application for reargument (Smith v. Town of Plattekill, 274 AD2d 900, 901 [3d Dept 2000]; see, also, Matter of Cisco v. Lavine, 72 Misc 2d 1087 [Sup Ct Nassau County 1973]; Flynn v. Town of No. Hempstead, 114 Misc 2d 125, affd 97 AD2d 430 [2d Dept 1983]).

Indeed, plaintiff raises contentions upon this motion which inaccurately reflect the pleadings. For example, with respect to the dismissed First Cause of Action for Breach of Contract against defendant Smith, plaintiff now contends that the cause of action for breach addressed both aspects of Smith' s at will employment agreement, i.e., breach of the covenant not to compete in his territory after separation from employment and breach of the covenant not to disclose trade secrets. However, contrary to plaintiff's contention the forty-one paragraphs of factual allegations preceding the First Cause of Action do not allege that Smith revealed trade secrets to Nature's Way. The following are the only facts alleged:

following his termination from Natural Organics, Smith became employed by defendant Nature's Way in direct competition with Natural Organics ( ¶ 30)

Smith in fact services and sells products that compete with Natural Organics' products to health food store customers of Natural Organics ( ¶ 31)

"within the territory" ( ¶ 32)

In paragraphs "33", "34", "35" and "36" plaintiff alleges that it wrote to both Smith and Nature's Way demanding that they "cease and desist" violating the "Non-Disclosure and Non-Competition" Agreement (the Agreement). As noted plaintiff did not allege that Smith violated the non-disclosure provision of the Agreement in the forty-one factual allegations preceding the First Cause of Action. Thus the only alleged violation concerns the non-compete provision, and only through artful pleading of the "cease and desist" demand does it appear to address both provisions of the Agreement. In the absence of a factual allegation of disclosure, the cease and desist demand cannot be addressed to such disclosure. The artful labeling of the contract does not provide the factual allegation of [*3]

breach required.

And, as noted by this court, an employee's covenant not to work for a competitor standing alone is unenforceable (Purchasing Associates v. Weitz, 13 NY2d 267, 272 [1963]["powerful considerations of public policy . . . militate against sanctioning the loss of a man's livelihood" and an employee restrictive covenant not to compete "is enforced only to the extent necessary to prevent the employee's use or disclosure of his former employer's trade secrets, processes or formulae" or secret customer lists]).

Insofar as the Third Cause of Action alleged breach of fiduciary duty by Smith, the cause of action was sustained as facially valid, as were the Third and Fifth Causes of Action.

With respect to defendant Nature's Way Products, Inc. this court dismissed all causes of action against it, as there were only conclusory legal allegations against it. For example, "upon information and belief , defendant Nature's Way has conspired with and acted in concert with defendant Smith to breach his fiduciary duties". Not only is this a bare legal conclusion, conspiracy is not an independent tort. "New York does not recognize civil conspiracy to commit a tort as an independent cause of action * * * Such a claim stands or falls with the underlying tort" (Ward v. City of New York, 15 AD3d 392, 393 [2d Dept 2005]). Clearly Nature's Way does not have a fiduciary duty to plaintiff and thus cannot commit conspiracy to breach same.

Turning to plaintiff's grounds for a reargument motion with respect to defendant Nature's Way, Natural Organics argues that if the court accepts the claim that Smith violated his fiduciary duty, it is illogical not to find that Nature 's Way unlawfully benefitted from the breach. Thus, the nature of plaintiff's argument is that there must always be a valid cause of action against a new employer at the pleading stage , even in the absence of factual or specific allegations of wrongdoing, by virtue of the former employer 's claim that its employee breached a fiduciary duty not to reveal trade secrets. Plaintiff has provided no authority to support such claim. Moreover, the factual predicate for this action, where the new employment did not take place until six months after Smith was fired, and where plaintiff has not alleged any loss of business or shelf space, and where Smith's duties are not managerial or discretionary, the allegations of breach of fiduciary duty withstand dismissal only because of liberal pleading rules. As this court noted on the previous application, "[t]he only facts pleaded are that plaintiff employed and then fired Smith, that Smith was exposed to and had knowledge of certain broadly categorized trade secrets while employed, that he was hired by Nature's Way six months [*4]

after he was fired, and that plaintiff advised Nature's Way of Smith's restrictive covenant." Plaintiff has pointed out no duty which required Nature's Way to fire Smith or be faced with liability. The facts alleged, as regards Nature's Way, give rise only to speculation, not inferences of wrongdoing. Furthermore, the complaint clearly does not state a cause of action for misappropriation of trade secrets which requires allegations that "(1) [plaintiff] possessed a trade secret, and (2) defendant is using that trade secret in breach of an agreement, confidence, or duty, or as a result of discovery by improper means (Integrated Cash Management Services, v. Digital Transactions, , 732 F. Supp. 370, [S.D.NY 1989], affd 920 F.2d 171 [2nd Cir 1990]).

Based upon the foregoing, the prior determination is adhered to.

Dated J.S.C.