Davison v. Caleidoscope Communication Co., No. S0436-04 CnC (Norton, J., Nov. 8,
2004)


[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the
original. The accuracy of the text and the accompanying data included in the Vermont trial court
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STATE OF VERMONT                                                          SUPERIOR COURT
Chittenden County, ss.:                                            Docket No. S0436-04 CnC




ROBERT DAVISON


v.


CALEIDOSCOPE COMMUNICATION
COMPANY




                                            ENTRY
       This matter concerns the plaintiff Robert Davison’s motion for summary judgment
regarding counterclaims by the defendant, Caleidoscope Communication Company.
Caleidoscope provides a number of material facts that are in dispute and argues that
summary judgment is premature at this stage of discovery. The court agrees.
Accordingly, Mr. Davison’s motion is denied.
       Caleidoscope provides telecommunications consulting services throughout
northern New England and New York. Mr. Davison has sued Caleidoscope, his former
employer, for payment of commissions he allegedly earned as an account manager.
Caleidoscope counterclaimed that Mr. Davison has violated several provisions of his
employment agreement by soliciting Caleidoscope clients for his new employer,
disclosing proprietary information, and retaining proprietary Caleidoscope documents.
Caleidoscope also counterclaimed that Mr. Davison breached the covenant of good faith
and fair dealing and that his new employment places him in a position where he will
inevitably disclose proprietary Caleidoscope information in violation of the Vermont
Trade Secrets Act and his employment agreement with Caleidoscope.
      Mr. Davison fails to provide a statement of undisputed facts, as required by
V.R.C.P. 56(c)(2). Rather, Mr. Davison fashions his motion as a challenge that
Caleidoscope, as the party with the burden of proof, must provide adequate evidence to
demonstrate that material issues of fact exist with respect to its counterclaims. Rule
56(c)(2) of the Vermont Rules of Civil Procedure states that a party moving for summary
judgment shall “annex[] to the motion a separate, short, and concise statement of material
facts as to which the moving party contends there is no genuine issue to be tried.” The
Reporter’s Notes explain that moving parties “must include in their Rule 56(c)(2)
statements all of the facts that they have relied on in support of or in opposition to
summary judgment, and that facts that are omitted from their statements will not be
considered by the court in ruling on the motion.” Reporter’s Notes—2003 Amendment,
V.R.C.P. 56. By omitting this statement, Mr. Davison essentially brings this motion in the
form of a motion to dismiss under V.R.C.P. 12(b)(6) or a motion for judgment on the
pleadings under V.R.C.P. 12(c). See Reporter’s Notes, V.R.C.P. 56 (stating that summary
motions solely regarding legal sufficiency of claims are the equivalent of Rule 12(b)(6)
or Rule 12(c) motions).
       Under the posture of either a Rule 12(b)(6) or a Rule 12(c) motion, the court must
accept all of Caleidoscope’s claims in its pleadings as true. See Richards v. Town of
Norwich, 169 Vt. 44, 48–49 (1999). Under this standard, Caleidoscope overwhelmingly
meets its burden to demonstrate valid counterclaims. First, by providing the employment
agreement—which spells out restrictions on solicitation, disclosure of confidential
information, and misuse of company documentation—and by providing allegations that
Mr. Davison has violated the agreement’s terms, Caleidoscope has made a prima facie
case for breach of contract.
        Second, every contract contains an implied covenant of good faith and fair dealing
that ensures the “parties act with ‘faithfulness to an agreed common purpose and
consistency with the justified expectations of the other party.’” Southface Condo. Owners
Ass’n v. Southface Condo. Ass’n, 169 Vt. 243, 246 (1999) (quoting Carmichael v.
Adirondack Bottled Gas Corp. of Vt., 161 Vt. 200, 208 (1993)). Caleidoscope’s
allegations that Mr. Davison breached his agreement in a willful, knowing, and malicious
manner suffice to demonstrate a prima facie case for a breach of the implied covenant of
good faith and fair dealing, because a breach in this manner shows Mr. Davison’s failure
to act according to Caleidoscope’s justified expectations.
      Finally, Caleidoscope’s “inevitable disclosure” claim is a novel theory under
Vermont law. In essence, Caleidoscope argues that Mr. Davison’s current job more-or-
less requires him to rely upon confidential information that is protected by his former
employment agreement and the Vermont Trade Secrets Act. See PepsiCo, Inc. v.
Redmond, 54 F.3d 1262, 1269–70 (7th Cir. 1995) (holding that former employee’s near
certain reliance on trade secrets in new job supports injunctive relief). Not all states have
accepted the inevitable disclosure doctrine. See, e.g., Whyte v. Schlage Lock Co., 125
Cal. App. 4th 1443, 1458–64, 125 Cal. Rptr. 2d 277, 290–94 (Cal. Ct. App. 2002)
(holding that doctrine unjustly converts a confidentiality agreement into noncompete
agreement); LeJeune v. Coin Acceptors, Inc., 849 A.2d 451, 469–71 (Md. 2004) (holding
that doctrine would compromise state policy in favor of employee mobility). The
Vermont Supreme Court has expressed reservations about implicit proscriptions on
individuals to freely engage in commercial activity, see, e.g., Roy’s Orthopedic, Inc. v.
Lavigne, 142 Vt. 347, 350 (1982), but the Court has not explicitly ruled on whether the
inevitable disclosure doctrine is available in Vermont. The Court has cautioned against
dismissing a cause of action on pleadings where the theory of liability is novel. In re
A.G., 151 Vt. 167, 169 (1989). Hence, Caleidoscope has a valid counterclaim on this
theory, and the court shall permit Caleidoscope to bring its counterclaim with further
development of the evidence.
       Even if the court were to make a more searching inquiry into Caleidoscope’s
counterclaims akin to a summary judgment ruling, Caleidoscope still meets its burden to
defeat Mr. Davison’s motion. On a summary judgment motion, the court must provide
the nonmoving party all benefit of doubt, resolving all factual disputes in the nonmoving
party’s favor as long as the party has provided admissible evidence, on personal
knowledge, in support of its factual disputes. Gendreau v. Gorczyk, 161 Vt. 595, 596
(1993) (mem).
       Caleidoscope has met its burden here by providing an affidavit from Zoltan Keve,
a company representative. Mr. Keve not only detailed aspects of Mr. Davison’s
employment with Caleidoscope, but he also provided personal knowledge of Mr.
Davison’s recent activities in breach of his agreement with Caleidoscope. Mr. Keve
included specific clients that Mr. Davison has solicited, and he stated that he knew of
these activities because he had seen Mr. Davison’s proposals to these clients. Although
Mr. Keve’s affidavit was not as specific as it could have been with regard to what he
actually knows about Mr. Davison’s activities, it satisfies Caleidoscope’s burden at this
stage. Specific details are not essential at this point because one can expect them to
emerge only after more complete discovery, including depositions that the parties have
not yet started. See Doe v. Doe, 172 Vt. 533, 534 (2002) (“A party opposing summary
judgment must be afforded ‘an adequate opportunity to engage in discovery before being
required to respond to the motion.’” (quoting Al Baraka Bancorp (Chicago), Inc. v.
Hilweh, 163 Vt. 148, 156 (1994))).



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                               ORDER
For the foregoing reasons, Mr. Davison’s motion is DENIED.


Dated at Burlington, Vermont, November 8, 2004.



                                                  _____________/s/___________
                                                     Richard W. Norton   Judge




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