## Facts

- Cameco, Inc. employed Donald Gedicke as a salaried traffic manager responsible for arranging transportation of Cameco’s food products and he had access to Cameco’s customer, supplier, carrier, route, and rate information.
- While still employed and without informing Cameco, Gedicke and his wife formed Newton Transport Service, a home-based business arranging transportation for various companies.
- Newton arranged transportation services for two distributors that competed with Cameco, though Newton itself did not distribute food and was not a direct competitor of Cameco.
- Gedicke admitted spending approximately 15–30 minutes of each workday handling Newton-related matters during Cameco’s paid time; most other Newton work was performed from home, primarily by his wife.
- Cameco terminated Gedicke for poor performance; afterward, he signed a post-employment noncompetition agreement to obtain pension funds.
- Cameco later learned of Newton and sued for conversion, unjust enrichment, tortious interference, and breach of the employee duty of loyalty.
- Cameco did not present proof of specific compensatory damages such as lost sales, customers, or profits.

## Issues

1. Whether an employer states a prima facie claim for breach of the employee duty of loyalty by showing the employee assisted the employer’s competitors (including on company time) even if the employee did not directly compete with the employer.
2. Whether the duty-of-loyalty claim may proceed absent proof of specific compensatory damages such as lost sales or profits.

## Decision

- The New Jersey Supreme Court affirmed the Appellate Division’s reinstatement of the duty-of-loyalty claim and the remand for further proceedings on that claim.
- The Court held that direct competition is not required; assisting a competitor can constitute disloyalty depending on the circumstances.
- The Court held that lack of proven compensatory damages does not defeat a duty-of-loyalty claim because equitable remedies may be available.
- All other claims remained dismissed.

## Legal Principles

- An employee must act for the employer’s benefit in matters within the scope of employment and may not serve conflicting interests in matters related to the employment.
- Breach of the duty of loyalty is assessed under a fact-specific approach; relevant factors include the employee’s position, the extent of employer time or resources used, whether competitors were assisted, and whether the conduct was disclosed.
- Assisting an employer’s competitors while employed, particularly using employer-paid time and position, can support liability even if the employee’s outside business is not a direct competitor.
- A duty-of-loyalty claim does not require proof of traditional compensatory damages; remedies may include disgorgement of profits, forfeiture of compensation attributable to disloyal periods, and restitutionary relief.
- On a motion to dismiss at the close of the plaintiff’s case in a bench trial, the court must view the plaintiff’s proofs and reasonable inferences favorably and provide adequate findings; dismissal is improper where the evidence could support a finding of disloyalty.

## Conclusion

The court held that an employee’s loyalty obligation extends beyond direct competition and may be breached by undisclosed assistance to competitors on the employer’s time, and that the employer may pursue equitable relief even without proving lost profits or other specific monetary damages.


Cameco, Inc. v. Gedicke, 724 A.2d 783 (N.J. 1999)