Goss v. E.S.I. Cases & Accessories, Inc.

Background

Eric Goss, identified in the opinion as a former vice president of E.S.I. Cases & Accessories, Inc., sued E.S.I. for breach of an employment agreement. He sought declaratory, injunctive, equitable, and monetary relief. E.S.I. asserted counterclaims against Goss for breach of contract, breach of the implied duty of good faith and fair dealing, breach of fiduciary duty, and misappropriation of confidential information and trade secrets. E.S.I. also asserted a claim against Intercon Development, LLC, for aiding and abetting Goss’s alleged breach of fiduciary duty.

The parties executed a five-year employment agreement on June 19, 2017. The agreement prohibited Goss from engaging in outside employment or other business, while allowing him to retain ownership of Intercon. It also permitted E.S.I. to terminate Goss for cause, including violation of the agreement’s covenants. If E.S.I. terminated him without cause, the agreement required severance and other payments.

E.S.I. terminated Goss on January 15, 2018, stating that the termination was for cause. E.S.I. relied on evidence that Goss continued handling pricing, ordering, supply, payment, and logistical matters for non-E.S.I. customers connected with Intercon and SGA. Goss argued that these activities were transitional work intended to transfer the businesses to his brother and that the termination was not for cause.

Summary-judgment analysis

The court applied the summary-judgment standard, under which judgment is appropriate when no genuine dispute over an important fact exists and the moving party is entitled to judgment as a matter of law. The court stated that it could not weigh evidence or decide witness credibility at that stage.

The court concluded that Goss breached the employment agreement by continuing to conduct business outside his work for E.S.I. It rejected his arguments that the work was merely transitional or too minimal to violate the agreement. The court also concluded that E.S.I. had cause to terminate him because the evidence showed that he was providing work for other companies and that E.S.I. knew about that activity.

The court determined that the employment agreement supplied the appropriate remedy. Although it found that Goss breached the agreement, it stated that E.S.I. had not shown an entitlement to damages or other relief beyond dismissal of Goss’s contract claim. The opinion explains that this meant Goss was not entitled to severance or other payments available for a termination without cause.

Counterclaims

For E.S.I.’s contract counterclaim, the court stated that Goss breached the agreement but also stated that E.S.I. had not shown damages. The opinion explains that damages are an element of a breach-of-contract claim and that E.S.I. could not support that counterclaim without showing actual damages. The court therefore described dismissal of Goss’s claim as the remedy E.S.I. was entitled to receive.

The court dismissed E.S.I.’s counterclaim for breach of the implied duty of good faith and fair dealing because it was covered by, and duplicated, the express employment agreement. It also dismissed the fiduciary-duty or “faithless servant” counterclaim because E.S.I.’s theory relied only on Goss’s alleged violation of the contract and sought a different route to obtain relief for the same conduct. The court distinguished a case involving more serious conduct, including insider trading, false statements, reputational harm, and financial losses.

The court dismissed the trade-secret counterclaim because E.S.I. offered no evidence that the information was actually obtained or misused. The court stated that concern that someone might misuse information in the future was not enough.

The court also dismissed the aiding-and-abetting claim against Intercon because E.S.I. did not provide facts or evidence showing that Goss owed a fiduciary duty beyond the obligations expressly addressed by the employment agreement. Without an underlying breach of fiduciary duty, the aiding-and-abetting claim could not succeed.

Disposition

The conclusion states that Goss’s motion for summary judgment dismissing E.S.I.’s counterclaims was granted. It states that E.S.I.’s motion for summary judgment dismissing Goss’s breach-of-contract claim was also granted. It further states that E.S.I.’s motion for summary judgment in its favor on the fiduciary-duty and aiding-and-abetting counterclaims was denied.

The opinion therefore contains an apparent tension: its earlier discussion says the counterclaims were dismissed, while its conclusion says E.S.I.’s motion for judgment in its favor on two counterclaims was denied. This summary reports both statements rather than resolving the inconsistency.