399 F.Supp.3d 226
D.N.J.2019Background
- loanDepot (California) alleges CrossCountry (Ohio) recruited and induced multiple loanDepot employees (including Reid, Manara, Lieberman and several loan officers) to resign and bring loan business and confidential client files to CrossCountry.
- loanDepot alleges pre-transition planning by CrossCountry (emails, business cards, referral desk, onboarding while employees still at loanDepot), large sign-on bonuses, and indemnity offers to recruits.
- Reid allegedly emailed confidential customer files to personal accounts, instructed Manara to remove/ship/scan/ shred files, kept his work laptop, and began working for CrossCountry while some state licenses lapsed. Many loans allegedly disappeared from loanDepot’s portfolio after resignations.
- loanDepot sent cease-and-desist letters; CrossCountry denied allegations and declined inspection of Reid’s laptop. loanDepot later filed suit asserting 19 counts; certain claims against Lieberman were referred to arbitration.
- The Amended Complaint specifically challenged tortious interference with employee contracts, “employee piracy,” unfair competition, fraudulent concealment (spoliation), and conspiracy to conceal evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Tortious interference (with specific employee contracts) | CrossCountry and Lieberman induced breaches of non-solicitation/confidentiality agreements (Reid, Lucia, Albanese, Tempelman, Mellet, Costakos, others) causing injury | Allegations about some employees (Albanese, Tempelman, unnamed others) lack particularity and do not plausibly plead breach or damages | Denied in part: claims survive as to Reid, Lucia, Mellet, Costakos; dismissed as to Albanese, Tempelman, and unnamed "others" (without prejudice) |
| 2. Employee piracy (raid/poach employees) | CrossCountry, Reid, Lieberman combined to raid loanDepot, injuring loanDepot’s workforce and revenue | Duplicative of other tort claims; should be dismissed | Denied: claim allowed to proceed at pleading stage (permitted alternative theories) |
| 3. Unfair competition | CrossCountry used misappropriation, interference, and deceptive practices to unfairly capitalize on loanDepot’s goodwill and relationships | Claim duplicates tortious interference and trade-secret claims and thus should be dismissed | Denied at pleading stage: may subsume other torts but not dismissed now |
| 4. Fraudulent concealment / conspiracy to conceal (spoliation) | Defendants had obligation to preserve evidence, shredded or hid documents/ESI (e.g., shredding, laptop withheld), intentionally disrupting litigation | Allegations of deletion/ESI lack Rule 9(b) particularity and may be premature before discovery | Denied: claim survives (court acknowledges some Rule 9(b) limits and potential prematurity but finds sufficiently specific allegations about shredding and laptop withholding); conspiracy claim likewise survives |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim, not mere labels and conclusions)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for federal pleadings)
- Rosenblit v. Zimmerman, 766 A.2d 749 (N.J. 2001) (recognizing separate tort claim for spoliation/fraudulent concealment and its elements)
- MacDougall v. Weichert, 677 A.2d 162 (N.J. 1996) (elements of tortious interference with prospective economic advantage)
- Avaya Inc. v. Telecom Labs, 838 F.3d 354 (3d Cir. 2016) (unfair competition claims may be supported by other business torts)