## Facts

- Jet Courier Service, Inc. provided air and incidental ground courier services, primarily transporting canceled checks between banks for rapid processing.
- Anthony Mulei was hired to open and manage Jet’s Denver office and served as vice president and general manager for Jet’s western zone under a written employment agreement that included a two-year covenant not to compete and compensation of salary plus a profitability-based bonus.
- Mulei became dissatisfied with Jet’s alleged failure to pay an agreed bonus and with perceived interference in his managerial autonomy.
- While still employed by Jet, Mulei organized a competing corporation, American Check Transport, Inc. (ACT), and became its president.
- Before Mulei’s termination, he communicated with Jet employees and Jet customer banks about ACT and discussed potential future movement of employees and business to ACT once it began operations.
- After Jet discovered Mulei’s activities, it terminated him on March 10, 1983.
- Mulei immediately launched ACT after termination, and several Jet employees and client banks shifted to ACT.
- Mulei sued Jet for unpaid compensation and sought to invalidate the noncompetition covenant; Jet counterclaimed for breach of the duty of loyalty and civil conspiracy by Mulei and ACT.
- The trial court found no breach of loyalty and no civil conspiracy, and awarded Mulei unpaid compensation plus a statutory 50% penalty under the Colorado Wage Claim Act.
- The court of appeals affirmed; the Colorado Supreme Court granted certiorari to review the duty-of-loyalty and civil-conspiracy rulings.

## Issues

1. Whether the lower courts applied an unduly narrow standard in determining that Mulei did not breach his duty of loyalty by organizing a competitor and engaging in pre-termination communications with Jet’s customers and employees.
2. Whether the civil conspiracy claim was improperly rejected as a matter of law where the existence of an underlying wrongful act depended on the duty-of-loyalty analysis.
3. Whether remand required a new trial rather than additional findings based on the existing record.

## Decision

- The Colorado Supreme Court reversed the court of appeals on the duty-of-loyalty issue, holding the lower courts used unduly narrow legal standards.
- The Court held that the findings were insufficient to determine whether Mulei’s conduct constituted impermissible solicitation (as opposed to permissible preparation) while still employed.
- The Court reversed as to the related civil conspiracy issue because the conspiracy analysis depended on whether an underlying wrongful act occurred under the correct duty-of-loyalty standard.
- The Court remanded for retrial, reasoning that new findings on the existing record were not feasible because the original trial judge was no longer on the bench.
- The court of appeals’ judgment remained in effect on issues outside certiorari review, including Mulei’s unpaid compensation award and the statutory penalty.

## Legal Principles

- An employee owes a duty of loyalty to act for the employer’s benefit in matters connected with the employment, including a general duty not to compete concerning the subject matter of the agency.
- An employee may make certain preparations to compete after employment ends, but the permissibility of preparation depends on the nature of the pre-termination conduct, not solely on when the competing business begins operating.
- Pre-termination solicitation of an employer’s customers or employees for a competing venture may constitute a breach of the duty of loyalty, particularly when undertaken by a managerial employee with significant responsibility.
- The duty-of-loyalty inquiry requires attention to conduct that may divert business opportunities, employees, or customers while the employment relationship continues.
- Civil conspiracy requires an underlying unlawful act (or a lawful act by unlawful means); if a breach of the duty of loyalty (or other independent wrong) is established, coordinated conduct with a competing entity may support conspiracy liability.

## Conclusion

The Colorado Supreme Court rejected a timing-focused approach that treated all pre-termination competitive activity as permissible if the new business began after termination, and required a retrial to determine—under a broader duty-of-loyalty standard—whether Mulei’s pre-termination conduct amounted to improper solicitation supporting liability for breach of loyalty and civil conspiracy, while leaving the wage award and statutory penalty undisturbed.


Jet Courier Serv., Inc. v. Mulei, 771 P.2d 486 (Colo. 1989)