MEMORANDUM-OPINION
Pending before the Court is the Defendant Johnson & Johnson’s Motion to Dismiss Counts I, III, and IV of the Complaint (Doe. No. 11), to which the Plaintiff has responded
This is a diversity action pursuant to 28 U.S.C. § 1332. Dade International (“Dade”) is in the clinical diagnostics products business. Its client base consists primarily of hospital and medical laboratories. Tracy Iv-erson was employed by Dade as the Director of Healthcare Systems from 1996 through 1997. Prior to his employment at Dade, Iverson was employed for almost twenty years with DuPont as the Implementation Manager, and was responsible for the implementation and ongoing strategy development between DuPont and Columbia/HCA, one of its largest customers. Iverson was hired by Dade after the company acquired DuPont through an asset аnd sales purchase. At Dade, he was named the Contract Compliance manager for its sole source contract with Columbia/HCA. In that capacity, he was allegedly privy to highly confidential information concerning Dade’s relationship with Columbia/HCA, including рricing and cost structure for certain products, information concerning new products, and marketing and customer information. On June 9, 1997, Iverson submitted his letter of resignation at Dade and informed the company that he had accepted a position with Johnson & Johnson (“J & J”), one of Dade’s strongest competitors.
Dade alleges that immediately prior to Iv-erson’s resignation announcement, he pressed to obtain sensitive information ahead of schedule in order to use this information in the course of his employment with J & J. It claims that Iverson’s conduct constituted a breach of contract, and a misappropriation of trade secrets. Furthermore, it asserts that J & J’s act of hiring Iverson and giving him a position where he would be able to use Dade’s confidential information constituted unlawful procurement of breach of contract, and unfair competition.
The breach of contract allegation against Iverson is based on a handbook that was distributed to employees by Dade. Employees, including Iverson, were required to sign a form confirming that they had read the handbоok and understood it. The manual is entitled “Standards for Ethics and Business Conduct,” and contains guidelines relating to such issues as workplace harassment, political activities, acceptance of gifts, securities trading, and, most notably for the purposes of this action, confidential information and competitive information. (Compl. Ex. B.) Specifically, it provides that: “As part of their employment with Dade, employees agree not to disclose or use for their own benefit the confidential information and tradе secrets of the company.” (Id. at 3.)
The parties do not dispute that Tennessee law should govern the above claims. In Tennessee, an employee handbook may become an employment contract if it states on its face the employer’s agreement to be bound by the terms of the contract.
Rose v. Tipton County Public Works Dept.,
A thorough reading of the “Standards for Ethics and Business Conduct” manual however, reveals no language indicating an intent by Dade to be bound by its terms either in its text, its introduction, or in the acknowledgment form which the employees were required to sign. The manual generally sets forth the company policy with respect to ethical issues that arise in the workplace. Nowhere in the text of the manual does the company indicate any intent.to be contractually bound by the manual. Furthermore, the introduction to the manual, which consists of a letter signed by Scott T. Garrett, the President and CEO of Dade, similarly fails to express a binding commitment on behalf of Dade. While the introduction does state that the company “share[s] a commitment with ... employees to work honestly, ethically and legally,” this is not sufficient to connote an intent to be bound by the handbook’s terms.
Compare Williams v. Maremont Corp.,
Consequently, the Court finds that as a matter of law, the “Standards for Ethics and Business Conduct” manual was not an employment contract. As the Plaintiff has faded to prove the existenсe of a valid contract, Counts I and III of the Complaint, which allege breach of contract and unlawful procurement of a breach of contract, are dismissed.'
See Winfree v. Educators Credit Union,
The Court also concludes that the unfair competition claim against J & J should be dismissed. In its most common form, the tort of unfair competition requires a showing that:
(1) the defendant engaged in conduct which ‘passed off its organization or services as that of the plaintiff; (2) in engaging in such conduct, the defendant acted with an intent to deceive the public as to the source of services offered or authority of its organization; and (3) the public was actually confused or deceived ás to the source of the services offered or the authority of its organization.
Sovereign Order of St. John v. Grady,
The Plaintiff has not asserted any fаcts which fit within the elements of the tort of unfair competition as enumerated above. However, in its opposition papers, the Plaintiff asserts that in
AmeriGas Propane v. Crook,
The Tennessee Court of Appeals has considered it appropriate to extend the tort of unfair competition beyond the context of trademark infringement in certain circumstances. In
B & L Corp. v. Thomas & Thomgren, Inc.,
Aside from this general statement of the naturе of an unfair competition claim, however, the Court has been unable to find any case law which has specifically extended the tort of unfair competition to a case similar to the one at bar—where a company hired a competitor’s employee and used the employee’s knowledge of its competitor’s trade secrets. 2 While the B & L court did state that “all unfair competition does not stem from a breach of a fiduciary relationship,” it did not elaborate on what other kinds of aсtions can constitute unfair competition. 3 Because the B & L court relied in part on Prosser and Keeton in its opinion, this Court will also refer to that treatise in determining whether a cause of action for unfair competition can be asserted under the present faсts.
Prosser and Keeton describes the tort of unfair competition as arising “when the defendant engages in any conduct that amounts to a recognized tort and when that tort deprives the plaintiff of customers or other prospects.” Prosser and Keetоn, § 130 at 1014. It further emphasizes that “[u]nfair competition thus does not describe a single course of conduct or a tort with a specific number of elements; it instead describes a general category into which a number of new torts may be placed when recognized by the courts.” Id. at 1015. Thus, it appears that the tort of unfair competition is simply a remedy for economic loss that is incurred from an underlying violation of a tort or a breach of contract.
In the present case, the Plaintiff has not alleged a cognizable cause of action against J & J for a violation of any tort independent of the tort of unfair competition. Nor does it appear that the Plaintiff could have alleged a cognizable tort against J & J, as Tennessee does not reсognize the tort of interference with prospective economic advantage.
Nelson v. Martin,
Finally, with respect to the cause of action against Iverson for misappropriation of trade secrets, the Court concludes that Dade has asserted enough faсts in its Complaint to survive a motion to dismiss. A cause of action for misappropriation of trade secrets involves the following elements: (1) the existence of a trade secret; (2) acquisition of the trade secret as a result of a confidential rеlationship; and (3) unautho
In conclusion, the Court DISMISSES Counts I, III, and IV of the Complaint with prejudice, DENIES Defendant Iverson’s Motion tо Dismiss Count II, and RESERVES JUDGMENT on Defendant Iverson’s Motion for Summary Judgment on Count III of the Complaint.
It is so ORDERED.
Notes
. The Court notes that Defendant Johnson & Johnson has no interest in the Court's dismissal of Count I of the Complaint, as it is being asserted only against Defendant Iverson. However, since the Court has granted Defendant Iverson’s motion to dismiss this Count of the Complaint, the Court will also consider Defendant Johnson & Johnson’s request to dismiss this Count as granted.
. Notably, the Plaintiff does not allege that J & J’s hiring of Iverson was done with an intent to deceive. It only asserts that J & J “hired Iverson and placed him in a position where he would inevitably use Dade's confidential information in the performance of his job and where this confidential information would be best utilized to Dade's detriment and [J & J's] benefit.” (Compl. V 68 .)
. The Plaintiff cannot assert a cause of action against J & J based on a breach of a fiduciary relationship because J & J is its competitor, not its employee. Furthermore, since the Plaintiff has not asserted a cause of action for unfair competition against Iverson, the Court need not decide whether Iverson himself breached a fiduciary relationship and thus committed unfair competition against Dade.