This case, and this motion, present issues of first impression in this State with respect to the extra-territorial application of two New Jersey statutes, principally the Computer Related Offenses Act. All of the parties are New Yorkers; however, Plaintiff's office is in New Jersey. Plaintiff contends that the individual Defendants, its former employees, violated the New Jersey statutes by making copies of information stored on Plaintiff's computer system and using the information in a business, operated by the corporate Defendant, which competes with Plaintiff. Plaintiff seeks damages and injunctive relief, asserting claims under both the New Jersey statues and the New York common law.

The dispute is now before the Court in the context of motions for summary judgment. Defendants GC Metrics, Inc. ("GC Metrics"), James Guttormsen ("Guttormsen"), Paula Clarke ("Clarke") and Ann Williams ("Williams") move for an order [*2]pursuant to CPLR 3212 dismissing the claims set forth in the Amended Complaint (Seq. 3). Plaintiff A & G Research, Inc. ("A & G") opposes the motion and separately moves for an order awarding it partial summary judgment against Clarke on the issue of liability under the Computer-Related Offenses Act of New Jersey. (Seq. 2). Clarke opposes the motion. The Court hereby consolidates these applications for purposes of disposition.

Plaintiff's Complaint contains ten causes of action. The first three causes of action are brought pursuant to New Jersey statutes; the remainder of the claims sound in breach of fiduciary duty, unfair competition, constructive trust, conversion, unjust enrichment and an equitable accounting.

A & G is a New York corporation which has been in the custom market research business since approximately September, 1982, when it was formed by Richard Grinchunas ("Grinchunas"). Since in or around August 2004, A & G has maintained is principal place of business at 10 Paragon Drive, Montvale, New Jersey.

Every market research survey is different and geared to a unique set of circumstances. The development and execution of market surveys is a largely collaborative process between the client and the supplier, and generally is a three step process: a proposal, a questionnaire, and a report.

Proposals describe the objectives of the research project, the methodology that may be used, and the cost and the timing. Framing the proposal's contents is a joint effort between the client and the project designer. In many instances, clients award market research work based on discussions with the supplier - with the proposal following afterwards to memorialize the discussions.

Developing a questionnaire to obtain market-related information is also a collaborative process between the client and the market research supplier during which the questionnaire is developed and the questions refined. The supplier and client may each perform several rounds of drafting and editing to reach a finished questionnaire. Each questionnaire contains a "core" segment, which addresses the particular concept or product that is being tested in a market research project. "Core" questions may be developed in collaboration with the client, though in some instances, the client will provide some "core" questions. Aside from "core" questions, much of a questionnaire is "standard" and composed of common elements, including demographic questions (which determine age, gender, income, education level, purchase interests, etc.) and screening questions (which determine eligibility for the study). These common or "boilerplate" elements appear in all research studies and all market research suppliers utilize the same common elements.

Following the collection of data, reports are prepared to set forth the [*3]market research company's analysis and interpretation of the data collected. In many instances, clients have a dialogue with their market research vendors to frame the analysis and presentation of the data in the report.

In its Complaint, A & G alleges that it creates and maintains proposals, field instructions, questionnaires and reports, as well as word processing macros and templates for its clients. These documents collectively are referred to as "A & G Trade Documents." A & G avers its "Trade Documents" are only made available to its employees and its clients and are kept on a password protected computer network. Although some of the documents are made available to certain subcontractors for limited purposes, the subcontractors, says A & G, are required either to destroy or return these documents. In the case of field instructions, however, which are routinely given to interviewers, who are essentially strangers to A & G, A & G's Director of Field Operations admitted that A & G takes no measures to ascertain whether the interviewers read the field instructions. The Director of Field Operations also admitted that the field instructions contain no confidentiality provisions.

A & G contends that its Trade Documents are confidential and their content, in part, determines whether A & G is awarded a particular market research project, as well as the quality and accuracy of the market research data collected and the quality and content of the final analysis and interpretation of that data for the client. (Am. Ver. Complaint, ¶¶23-25). In response, the Defendants argue that the evidence shows that (a) the "Trade Documents" referred to are a collaborative process between A & G and its clients; (b) A & G does not affix confidentiality legends to its proposals, its questionnaires or its field instructions; (c) there is no confidentiality legend in A & G's computer system and all employees can access the documents contained thereon; (d) A & G routinely discloses its field instructions and questionnaires to interviewers who administer in-person mall studies, and to unknown respondents; (e) A & G's clients have the unfettered authority to distribute all of A & G's materials as they please; and (f) that A & G never has developed or distributed any handbooks or written policies concerning confidentiality to any of its employees.

A & G alleges that it created and maintained certain proprietary and confidential corporate documents including, inter alia, different client lists, e.g., Master Client Lists, current client lists, former client lists, and potential client lists. These are claimed to be unpublished and unavailable to the public. The lists were compiled over a number of years and kept on A & G's password protected computer network. In his deposition testimony, however, Grinchunas admitted that virtually any corporation listed in the telephone book that has a need for market research is a potential customer for A & G. Further, A & G disclosed the identities of its largest current and former customers to the public including Gerber, Pepsi, Dunkin' Donuts, Perdue and Hershey in an [*4]article, dated August 17, 2005 and attributed to the Newark Star Ledger.^[FN1] A & G's customer list has no confidentiality legend and any employee of A & G can access A & G's customer list on its computer system.

A & G does not own its market research studies. Such documents are owned by the customer. A & G's written agreements with at least two of its clients provide that all work delivered or developed by A & G are "works for hire" and owned exclusively by the client. Even where A & G was provided with the opportunity to identify certain materials as its own confidential information, it never has done so.

Defendant Guttormsen was employed at A & G for approximately 23 years and resigned from A & G as a Senior Vice President on the morning of Monday, April 24, 2006. He worked closely with Defendants Clarke and Williams. Clarke was employed at A & G for approximately four years and Williams was employed at A & G for approximately 5 years as senior research managers. They both resigned on April 24, 2006, but remained at A & G until Friday, April 28, 2006 to finish certain projects.

Guttormsen, assisted by Clarke and Williams, handled the marketing research work for Pepsi and Hershey, two of A & G's larger accounts. Grinchunas owns 100% of A & G, but allegedly had no involvement in any of the work that Guttormsen performed since the mid-1990s.

In its motion papers, A & G contends that it maintained a library of client documents and client lists on its computer system. All of its clients' documents, job files, and client lists were located in a directory called "Serv2". Serv2 was password protected. A & G asserts only its employees had access to the documents and files contained on Serv2. Grinchunas contends Serv2 contained approximately 5,778 documents and files, a majority of which are owned by A & G and not its clients.

A & G asserts that in January, 2006, the individual Defendants "secretly" planned to "go out on their own" and form a competing market research company, now known as GC Metrics.

Guttormsen testified, in his deposition, that he was in discussions with Grinchunas to re-negotiate his contract and that, in that context, was weighing the establishment of his own company in the event that he could not make a deal with Grinchunas. However, the possibility that Guttormsen might go out on his own was not mentioned to Grinchunas until the morning of April 24, 2006 when Guttormsen and Grinchunas could not reach a deal as to Guttormsen's continued employment and Guttormsen tendered his resignation. Grinchunas did not attempt to persuade Guttormsen re-consider his decision to leave and accepted the resignation. [*5]

Prior to April 24, 2006, in the evenings when Guttormsen and Clarke were working late, Guttormsen mentioned to Clarke his thoughts about leaving. Clarke expressed an interest in being Guttormsen's partner. Guttormsen initially said he had not thought about having a partner. Similarly, although Williams was not included in the earliest discussions, when she learned of the possibility of Guttormsen leaving, she stated an interest in being an employee of any new company formed by Guttormsen, which, Guttormsen testified, he did not take seriously at first.

Eventually, after Guttormsen and Clarke had several discussions and/or meetings about the possibility of Guttormsen going out on his own, it was decided they would be 75%/25% partners respectively, that each would put up money, and that Williams would be their employee.

Guttormsen resigned and was escorted from the premises of A & G on April 24, 2006. Clarke and Williams also tendered their resignations that day, but convinced Grinchunas to allow them to remain at A & G for a few more days so that they could assist Grinchunas in completing some projects for A & G clients before their departure.

Guttormsen began operating GC Metrics - a custom market research business with a principal place of business in Yorktown Heights, New York - on April 24, 2006, the very day of his resignation. According to other witnesses, Guttormsen commenced working on a project for Pepsi known as the Holiday Packaging Study that day. GC Metrics' clients include Pepsi, Hershey and Georgia-Pacific. Pepsi allegedly was A & G's largest client and generated the greatest amount of revenue for A & G until it left A & G to continue its relationship with the individual Defendants at GC Metrics.

On the afternoon of Guttormsen's resignation, Grinchunas sent virtually identical e-mails to Pepsi's and Hershey's market research employees. Grinchunas informed Pepsi and Hershey that Guttormsen no longer was with A & G and that Grinchunas would be taking "personal responsibility" for their projects and any future work at A & G. Grinchunas' e-mail to Pepsi was addressed to seven market research employees, six of whom he had never met in person. In a series of e-mails that occurred within hours of Grinchunas' message, Pepsi's market research personnel stated that their needs would better be served with Guttormsen.

GC Metrics contends it did not conduct any business until after Guttormsen resigned and that it had no website, no e-mail addresses and no computer equipment until after Guttormsen left A & G. However, an e-mail annexed to A & G's papers (Ex. 11) suggests that Guttormsen had established a yahoo.com email account [*6]for GC Metrics as of 9:01 on April 24, 2006 (the day Guttormsen resigned)^[FN2]. Unfortunately, there is no way to tell from the e-mail whether the account was established as of 9:01 a.m. or 9:01 p.m.^[FN3] Additionally, it appears that Clarke's GC Metrics email account was established on Tuesday, April 25, 2006, after she had given notice of her resignation but before her physical departure from A & G.

Defendants aver that they did not solicit any of A & G's clients for business prior to Guttormsen's resignation, although Guttormsen testified his first day of work at GC Metrics was the date of his resignation from A & G, (i.e, April 24, 2006) but, as noted above, others have testified that Guttormsen worked on a matter for Pepsi on April 24, 2006, which may have been difficult to do if he had no ready clients and no ready work. Additionally, the evidence shows that Clarke worked on a Holiday Packaging Study for Pepsi, as an employee of GC Metrics, while she still physically was present at A & G and using A & G's computer documents. GC Metrics invoiced Pepsi for the Holiday Packaging Study on May 2, 2006. Eight witnesses from Pepsi, Hershey and Georgia-Pacific testified they learned of Guttormsen's resignation only after it occurred.

During the first two weeks of GC Metrics' operations, it received two new projects from Pepsi. Pepsi had never discussed these projects with nor offered these projects to A & G and the testimony suggests that the decision to award the projects to GC Metrics was based upon Pepsi's assessment of Guttormsen's market research skills. Similarly, the evidence shows that Hershey and Georgia-Pacific chose to conduct business with GC Metrics for the same reason. Each witness testified that without Guttormsen, A & G no longer was a candidate for their market research work.

On Clarke's last day of paid employment at A & G (i.e., April 24, 2006), Grinchunas sent her an e-mail requesting the return of A & G materials in her possession. Clarke and Williams met with Grinchunas immediately after the e-mail. Clarke offered to return all materials but informed Grinchunas that they would fill his e-mail inbox. This makes little sense because if the materials were located in Clarke's computer at A & G, there would have been no reason to e-mail them back to Grinchunas, who presumably had access to Clarke's computer and to the documents on Serv2. Nevertheless, Clarke asserts that, in the presence of both defendants, Grinchunas told her that she should just destroy the documents and not send them back to him. Grinchunas allegedly also told Clarke that she could not leave the office until she responded in writing to his e-mail seeking the return or destruction of A & G [*7]materials. Clarke sent a return e-mail to Grinchunas indicating that she would comply with his request. However, Clarke and Williams (who also had taken some documents from her computer) did not destroy the documents in their possession as promised and did not inform anyone at A & G that they had retained the contents of Serv2 as well as their corporate e-mails and contacts from A & G's computer system.

After physically leaving A & G on Friday, April 28, 2006, and over the ensuing weeks, Clarke and Williams spent between 80 and 100 hours completing A & G projects, as a courtesy to A & G, using A & G computer documents. Clarke and Williams allege they were not asked a second time for the return of A & G's materials upon the completion of these projects.

Prior to resigning from GC Metrics, Clarke, at some point in mid-April 2006, downloaded all of the contents of A & G's "Serv2" onto a portable hard drive without the knowledge or consent of any one else at A & G, including Grinchunas. Serv2 is a computer file at A & G which contained, among other things, virtually all of A & G's job files, documents, client information, contacts, and detailed time sheets kept and maintained by each individual employee at A & G. Serv2 held virtually all of A & G's proposals, field instructions, questionnaires, reports, power-point presentations, corporate logos and related documents as well as job files and data for the following A & G clients: Pepsi, Hershey, Del Monte, Combe, Foster Farms, Gerber, Mars, Inc., Dunkin' Donuts, Bayer, VISA, Visiting Nurse Association, and Purdue.

Clarke testified her objective was to copy some computer shortcuts that she had devised for formatting documents and for her own "protection" in case she was no longer employed by A & G. She denied that her intent was to provide the electronic material to GC Metrics, although, in point of fact, that is exactly what she did once GC Metrics was up and running. Clarke testified, "I simply plugged (the portable hard drive) into the USB port on my computer (at A & G) and a little screen popped up, said, what do you want to do. I pointed to Serve Two and just click on it, and that was it." ... "I downloaded a file on the server called Serve Two, along with some e-mails" a client list and contact information. (Clarke Tr. at 68-80, 97-99, 240). She further testified that her "intention was to cherry pick the stuff [she] wanted off of Serve Two at a later date." (Clarke Tr. at 116).

After downloading the contents of Serv2, and while Clarke, Guttormsen and Williams all were still employed at A & G, Clarke informed Guttormsen and Williams of her actions. Clarke told Guttormsen "I copied some old files." (Guttormsen Tr. at 182). Clarke also told Guttormsen "you know, it is going to be easier for us to type when we first start out [at GC Metrics]." (Id. at 189). Although he was still employed by A & G at the time, Guttormsen did not inform A & G about Clarke's actions. (Id. at 188).

According to Williams' testimony, Clarke's intent in downloading Serv2 was "to have copies of work that we had already done [at A & G], would have helped to [*8]make the transition a little smoother [to GC Metrics]. ..." (Williams Tr. at 69).

Within days of downloading the contents of Serv2 and while still employed by A & G, Guttormsen and Clarke officially incorporated GC Metrics on April 14, 2006. No one at A & G ever gave Clarke or any of the other Defendants permission to download or use A & G files or documents for non-A & G purposes. (Clarke Tr. 108-111; Grinchunas Aff. at ¶¶31, 33).

Between April 24, 2006 when Clarke resigned from A & G and April 28, 2006 when she physically vacated the premises for the final time, Clarke used some of the A & G materials that she had downloaded to do work on a GC Metrics project for Pepsi. (Guttormsen Tr. 130-131, 359-367). Additionally, subsequent to April 28, 2006, and while working for GC Metrics out of Clarke's home in Westchester County, Clarke and Williams accessed some of the A & G documents and files that Clarke had downloaded from Serv2. (Williams Tr. 78-82; Clarke Tr. 108-111, 177). Clarke also uploaded some of the A & G files and documents that she had downloaded from Serv2 onto Guttormsen's home computer. (Clarke Tr. 82-85); Guttormsen, 208, 619). Clarke had A & G questionnaires, proposals and specific project files organized by client. (Guttormsen Tr. 223, 227-228, 244). She also had Guttormsen's contacts and a list of clients that Guttormsen had sent Christmas cards to the previous year while at A & G. (Guttormsen Tr. 270-273; 279).

Clarke testified she showed Guttormsen where the A & G files were located on his home computer and where the specific A & G job files could be found. (Clarke Tr. 82-85). After moving into GC Metrics' corporate offices in the summer of 2006, Clarke uploaded, with the knowledge of GC Metrics, Guttormsen, and Williams, some of the A & G job files onto GC Metrics' server for all of GC Metrics' employees to access and use without the consent of A & G. (Clarke Tr. 77, 85-90, 117-121, 225; Williams Tr. 89, 173; Guttormsen 208-212). All of the Defendants then used, in part, these A & G documents and files while at GC Metrics.

Clarke and Williams "cut and pasted" from these documents while working on projects for former A & G clients including Pepsi and Hershey and then saved these documents as their own at GC Metrics. Neither Guttormsen, Clarke nor Williams informed Grinchunas or anyone else at A & G that they retained the contents of Serv2.

Defendants also removed a document from A & G called a "Type of Study Reference Sheet" which listed, by client, all of the projects that A & G conducted over the past 10 years. This document was owned by A & G and was created within weeks of Defendants' resignations. Specifically, Guttormsen asked an A & G employee to create this document for his reference, which, apparently he never had done before.

A & G has not received any further market research business since Guttormsen, Clarke and Williams resigned and formed GC Metrics. Further, it has not received additional market research business from either Pepsi or Hershey, as GC [*9]Metrics now receives that business. GC Metrics and A & G are in competition for the same clients and compete against the same market research firms including Turner Research, Market Tools, Cambridge & Associates, Ipsos Shifrin, Research International, and C & R Research.

Defendants contend that the use of the downloaded materials was minimal and that the download had no effect on A & G's business. Specifically, they submit that Guttormsen had no knowledge of the materials Clarke loaded on his computer until after they were there, and that, in any event, he did not access and/or use the materials. Further, Defendants argue that Clarke and Williams accessed some of the A & G questionnaires only to utilize standard or "boilerplate" elements, such as demographic questions that request information as to the respondent's age and gender. They contend they did not "need" the materials, but used them only to save themselves "typing time."^[FN4] The files also were accessed in or about October 2006, when Williams needed to copy boilerplate provisions from a set of A & G field instructions. This, too, is alleged to have happened only to save time.

It is clear that the work product downloaded from A & G was useful. According to witnesses from Pepsi, Hershey and Georgia Pacific, having the work product of another market research company would help a new company ask questions in the same exact fashion as in a prior study, would get a market research vendor "up to speed" quickly and provide a "shortcut" for them. Further, it would reduce "on boarding time" and result in better questions and field instructions.

Defendants allege they removed all A & G's materials from GC Metrics' computer system when this litigation commenced, except for a copy on the GC Metrics computer at Guttormsen's home to preserve them for eventual return to A & G. This, too, seems peculiar, as there would be no reason to return a copy of files to A & G which A & G already had on its computer system (after all, that is precisely from where the files were obtained). Indeed, it is more likely that a copy of all of the files were retained on Guttormsen's home computer in the event they might be useful in the future.

Defendants argue there is no evidence that Clarke's download was the cause of any damage to A & G's business because following the Defendants' resignations, Pepsi, Hershey and Georgia-Pacific no longer viewed A & G as a candidate for their market research work. The testimony of the witnesses from these companies is that they chose GC Metrics based on the dialogue that GC Metrics [*10]provides in designing market research studies and in analyzing market data.

If damage was caused to A & G's business, say Defendants, it was caused because A & G chose not to solicit work from those companies other than a single phone call to Pepsi's Director of Strategy and Insights with no follow-up phone calls or visits. It is contended that Grinchunas made no effort to visit Hershey but instead made several phone calls and sent several e-mails. It is argued that A & G made no marketing efforts whatsoever with respect to Georgia-Pacific. Defendants argue that A & G has never bid against GC Metrics for any business, despite the fact that Guttormsen allegedly offered to introduce Grinchunas to the market research personnel at Pepsi, Hershey and Georgia Pacific, and Grinchunas rejected the offer.

Finally, Defendants submit A & G lost no materials from its files, as the "Serv2" file was simply "copied" by Clarke onto her portable hard drive, and not deleted from A & G's computer system.

The court's function on a motion for summary judgment is issue finding rather than issue determination. Sillman v. Twentieth Century Fox Film Corp., 3 NY2d 395 (1957). Since summary judgment is a drastic remedy, it should not be granted where there is any doubt as to the existence of a triable issue. Rotuba Extruders v. Ceppos, 46 NY2d 223 (1978). Thus, when the existence of an issue of fact is even [*11]arguable or debatable, summary judgment should be denied. Stone v. Goodson, 8 NY2d 8 (1960); Sillman v. Twentieth Century Fox Film Corp., supra .

In reviewing a motion for summary judgment, the Court must accept as true the evidence presented by the nonmoving party and must deny the motion if there is "even arguably any doubt as to the existence of a triable issue." Fleming v. Graham, 34 AD3d 525, 526 (2d Dept. 2006), quoting Baker v. Briarcliff School District, 205 AD2d 652, 65 (2d Dept. 1994).

Defendants seek to dismiss all ten of Plaintiff's causes of action. Two of Defendants' arguments, i.e., ownership and damages, relate to all ten of the claims and, therefore, will be addressed first.

A.Ownership of the "Serv2" Documents

Defendants contend that A & G's claims should be dismissed because the evidence establishes that A & G does not own the market research materials it prepares for its clients. Defendants cite testimony from principals at Pepsi, Georgia-Pacific and Hershey, to the effect that these companies own the materials that their market research suppliers submit. Defendants say this fact is further confirmed by A & G agreements with at least two of its customers, i.e., Perdue and Novartis, which provide that all of A & G's work product is "work made for hire" and that title to all work product vests in the client. As to A & G's agreements with other customers such as Pepsi and Hershey, A & G opted not to designate certain of its materials as "confidential" although the agreements permit A & G to do so.

In response, Plaintiff submits that of the 5,778 documents and files copied by Clarke from A & G's Serv2 file, only a portion are "job files" owned by A & G's clients. Indeed, A & G asserts that Clarke took A & G's client lists, time sheets for all A & G employees, confidential pricing information for A & G's clients, photographs, logos and templates, attribute lists, private A & G employee information, power point presentations given by A & G and a document called a "Type of Study Reference Sheet." These materials were owned by A & G and taken without its authorization and consent.

Moreover, A & G states that its "job files" contain a myriad of different documents, some of which are provided to the client and some of which are not. Defendants took all of them, including templates, drafts, field instructions, questionnaires and reports. A & G submits it solely owns the drafts of all of these documents and that it owns the final versions of documents not given to the client. It is further argued that A & G and the client jointly own any document that is given to the client except that in cases of Perdue and Novartis where, based upon written work-for-hire agreements with A & G, those companies own the documents. [*12]

The Court does not agree with Defendants' theory that A & G lacks standing to complain about any of the documents because A & G does not own all the documents downloaded by Clarke and used by employees of GC Metrics. A & G has shown that it owns, or at least may own, some of the materials copied by Clarke. There are questions of fact as to ownership of some of the documents. Additionally, it remains clear that the documents were valuable to A & G and that Clarke had no authorization to copy them from A & G's computer network. If the documents were, in fact, owned by the clients, then there would have been no reason for Clarke to copy them, since the documents could have been readily obtained from or, upon request of, the clients. Further, while it may be that the substantive content of some of the electronically-stored information was owned by the clients, the clients permitted that information to reside in electronic format on A & G's computer system, owned by A & G. It would seem that A & G has standing to complain about the unauthorized access and use of its computer system. At least, Defendants have not demonstrated to this Court that, as a matter of law, there is no basis for A & G to maintain any claim based upon Defendants' conduct.

B.Damages

Defendants contend that A & G's complaint should be dismissed because there is no evidence that A & G was damaged by GC Metric's copying and use of the downloaded materials from A & G's computer network. Defendants argue that neither the downloaded materials, nor GC Metric's use of portions thereof, helped GC Metrics to obtain or retain any business from any client. Defendant asserts that the materials did not help GC Metrics in reducing any costs, or meeting any deadline for any project. Instead, the documents simply helped to save personal typing time. The Court finds this latter contention troublesome since, unless Defendants had hard copies of the documents they were typing, their efforts to re-create A & G's documents, or to create similar ones for themselves, would doubtless have involved the need for at least some creative (not typing) activity.

Defendants also argue that there is no causal relationship between the download of materials from A & G's "Serv2" file and any loss of business by A & G because the witnesses from Pepsi, Hershey and Georgia-Pacific testified that they awarded their work to GC Metrics based on Guttormsen's analysis and insight, as well as the companies' unfamiliarity with Grinchunas and the other personnel at A & G. It is averred that no client made its decision to award work based on any GC Metrics documents.

In response, Plaintiff claims that there is clear evidence that A & G was damaged as a result of Defendants' actions. First, A & G asserts it lost the exclusive use, possession and control of more than 5,000 of its documents. Second, A & G did not receive any additional work from Pepsi, Hershey and Georgia Pacific, and third, A & G's annual income decreased by $2,000,000 and its net loss tripled.

A & G states it is equally clear that the files taken by Defendants aided GC [*13]Metrics in performing market research studies for its clients. Witnesses from Pepsi, Hershey and Georgia Pacific testified that having the work product of another market research company would help researchers ask questions in the right way, would get a market research vendor "up to speed" quickly and provide a "shortcut" for them. It would also reduce "on boarding time" and result in better questions and field instructions. This is especially noteworthy in the case of Georgia Pacific which hires market research vendors, in part, on the quality of the questionnaires and field instructions produced by the market research company.

The evidence also suggests that Pepsi, Hershey and Georgia Pacific have ethical policies and considerations which prohibit them from doing business with companies that either unfairly compete or otherwise lack integrity. Pepsi would not conduct business with a company if it was unethical or lacked integrity. According to Pepsi's Worldwide Code of Conduct, all vendors including market research vendors must compete fairly. Julia Oswald, of the Strategy and Insights Department at Pepsi testified as follows:

Q:I am just saying, I am asking in terms of Pepsi policy as far as you're aware. Let me start with this, does Pepsi have an integrity policy?

A:Yes.

Q:Does that integrity policy deal with the integrity of its vendors?

A:Yes.

Q:If, now going back to my hypothetical, if you were to find out that whether or not GC Metrics or employees downloaded let's say the entire server, for instance, of A & G, including its proposals, its field instructions, its questionnaires, its reports, the toplines, I am talking the works, would that mean anything to you in terms of Pepsi policy?

MR. STAHL: Objection to the form. Objection to the foundation. Objection to the hypothetical and to the extent it calls for legal conclusion.

Q:Go ahead.

A:It would matter to me if things were downloaded and used to GC Metrics' gain.

(Oswald Tr., p. 89:12-25, 90:1-11).

Similarly, Sandra Mathis of Georgia Pacific testified as follows: [*14]

Q:That's fine. I'll give you an example. I think it might be a little easier.

If market research company A said to you, I took field instructions, proposals, questionnaires, reports from market research company B, now I'd like to work for you, Georgia Pacific, would that make a difference for you in determining whether or not to hire them?

MR. STAHL: Objection.

A:No it's gosh. It's a yes-and-no answer.

Q:(By Mr. Stahl) Most questions are.

Tell me why it's yes and no.

A:So it's no from the standpoint that within market research, a lot of what you do is standard. My proposals pretty much always look the same whether I'm here at Georgia-Pacific, as well as where I was previously.

So that, to me, doesn't make a difference, because I've used templates to do my job here the same as I used in previous employment. So that would be - that doesn't really matter to me, especially if it's been my own body of work.

If you tell me that someone has taken something that they did not produce or use, utilize, and passed it off on their own, the yes, I - that would influence my decision because that goes to an integrity aspect.

(Mathis Tr., pp. 79:18-25, 80:1-25).

Finally, Hershey abides by a similar credo, if a market research vendor has access to Hershey's competitor's work (e.g., Mars, Inc.) Hershey "would not think highly" of the market research company. (Troutman Tr., pp. 57-58). Hershey did not know that Clarke downloaded at least five Mars job files from A & G before resigning. (Clarke Tr. at 126-142; Defendants' Ex. 1 at ¶85).

In view of the evidence cited, it is clear that questions of fact exist as to whether A & G was damaged by Defendants' conduct in secretly downloading and using files from A & G's computer network, including whether A & G would have lost several of its largest clients. Defendants clearly derived a benefit from their actions; assuming that Defendants are liable for their actions, it cannot be said that Defendants have shown that, as a matter of law, there is no evidentiary basis for the awarding of at least some damages and, possibly, injunctive relief. Accordingly, Defendants' invitation to dismiss Plaintiff's complaint on this ground must be declined.

The first two causes of action assert Defendants are liable to Plaintiff based on provisions of the New Jersey's Computer Related Offenses Act (NJSA 2A:38A-1 et seq.). These causes of action are the subject of both Plaintiff's and Defendants' motions for summary judgment and both motions will be treated together in this discussion.

The New Jersey statute provides, in relevant part, as follows:

A person or enterprise damaged in business or property as a result of any of the following actions may sue the actor therefor in the Superior Court and may recover compensatory and punitive damages and the cost of the suit, including a reasonable attorney's fee, costs of investigation and litigation:

a.The purposeful or knowing, and unauthorized altering, damaging, taking or destruction of any data, data base, computer program, computer software or computer equipment existing internally or externally to a computer, computer system or computer network;

b.The purposeful or knowing, and unauthorized altering, damaging, taking or destroying of a computer, computer system or computer network;

c.The purposeful or knowing, and unauthorized accessing or attempt to access any computer, computer system or computer network;

d.The purposeful or knowing and unauthorized altering, accessing, tampering with, obtaining, intercepting, damaging or destroying of a financial instrument; or

e.The purposeful or knowing accessing and reckless altering, damaging, destroying or obtaining of any data, data base, computer, computer program, computer software, computer equipment, computer system or computer network.

NJSA §2A:38A-3.

Under the New Jersey statute, "data" means information, facts, concepts, or instructions prepared for use in a computer, computer system, or computer network. "Data base" means a collection of data. "Access" means to instruct, communicate with, store data in, retrieve data from, or otherwise make use of any resources of a computer, computer system, or computer network. NJSA §2A:38A-1.

A.First Cause of Action - Injunctive Relief (Plaintiff's Motion)

The First Cause of action alleges that Defendants "purposely, knowingly and intentionally accessed plaintiff's computer system and network in excess of their [*16]authority to do so with the intent to take its computer files, data, emails and contacts and use all or some of these materials to obtain a competitive advantage over A & G" (Am. Com. ¶124). It is further alleged that Defendants took Plaintiff's files, data, data base, emails and contacts from its computer system and network for the same purpose and used all or some of these materials to obtain a competitive advantage and to the financial detriment of A & G. (Id. at ¶125). Such misappropriation of Plaintiff's work product and other valuable, confidential and/or proprietary information is alleged to have caused Plaintiff to suffer indeterminable damages and irreparable injury in the loss of revenue, property and good will. (Id. at ¶126).

Based on these allegations, A & G demands an injunction: (a) prohibiting Defendants from conducting market research business; (b) prohibiting Defendants from further use and access of A & G's computer files, data, emails, contacts, and valuable, confidential and proprietary information; (c) prohibiting Defendants from misappropriating A & G's computer files, data, emails, contacts, valuable, confidential and proprietary information including but not limited to further accessing or using plaintiff's computer and electronic data or the contents thereof; and (d) directing Defendants to return and delete the materials to A & G. A & G also seeks, pursuant to the statue, an award for the costs of this action, including reasonable attorneys' fees, costs of investigation and litigation, and punitive damages. Plaintiff now seeks summary judgment on this claim, both as to liability and as to remedy.

Although neither side references (or argues the implications of) the elements of a claim for injunctive relief in their papers, it is well settled that in order to obtain a permanent injunction in New York, there must be a showing (1) that irreparable injury will result if the injunction is not granted; (2) that other remedies are inadequate; and (3) that a balancing of the equities favors the applicant. Additionally, a permanent injunction should be awarded only where the right to such relief clear and where the plaintiff has made out a strong case for such relief; injunctive relief should be denied in doubtful cases. Carmody-Wait 2d, Injunctions, Ch. 78:186 (and cases cited).

Here, A & G's request for summary judgment on its claim for injunctive relief must fail because it has neither established that other remedies are inadequate nor shown that it has a clear right to relief under the New Jersey statute based upon the undisputed facts. While the evidence suggests that Clarke may have violated the statute at least to the extent that she admits downloading information from A & G's computer system without the knowledge or consent of A & G and uploading and using a portion of such information on a computer at GC Metrics, A & G has failed to establish that any harm it sustained cannot be remedied through the payment of money. Moreover, taking the facts in the light most favorable to the nonmoving party, questions of fact exist as to whether the clients A & G claims to have lost to Defendants as a result of Clarke's conduct were lost because of her unauthorized downloading and use of A & G's computer files or, rather, because of the loss of the individual Defendants as A & G's employees, with the clients preferring to retain their relationships with the persons with whom they had been accustomed to dealing. [*17]

Moreover, the scope of the injunctive relief, if any, to be awarded to A & G is itself a fact-intensive inquiry. It has not been established that the granting of an injunction will make A & G whole or what the terms of such an injunction should be . To illustrate, if Defendants copied Plaintiff's files onto their computers at GC Metrics and used them to create new files for GC Metrics or its clients, as appears to be the case, it scarcely matters if Defendants are now to be enjoined from using A & G's files or ordered to destroy A & G files as A & G's documents may well have been incorporated into GC Metrics' own documents. Whether, and how, any A & G material could be extracted from GC Metrics' documents seems to present difficult issues. This assumes that all of the A & G information was owned by A & G, as opposed to the client. Thus, there are questions of fact as to whether an injunction should issue against GC Metrics and, if so, what the proper scope of the injunction should be - i.e., the destruction and/or return of all A & G documents, the destruction and/or return of all documents containing anything incorporated from an A & G document, and so forth.

Accordingly, Plaintiff's motion for summary judgment on its First Cause of Action should be denied.

B.Extra-Territorial Effect of the New Jersey Statute (Defendants' Motion)

Defendants contend that the claims under the New Jersey Computer Related Offenses Act should be dismissed because the New Jersey legislature provided only three specific venues for claims under this statue: to wit: (1) the Superior Court of the county in which the computer which is accessed is located; or (2) where the terminal used in accessing it is situated; or (3) where the actual damages occur. Defendants argue that, no matter which of these three venues a plaintiff chooses, the proper venue for a claim under this statute is in a "Superior Court" in the State of New Jersey. Essentially, Defendants are arguing that New Jersey Courts have "exclusive jurisdiction" to hear claims arising out of this statute. This Court does not agree.

The statute provides that the offended party "may sue the actor therefor in the Superior Court ...." This language is permissive, not restrictive. On its face, it authorizes suit in the New Jersey Superior Court. It does not explicitly prohibit a suit from being brought elsewhere or condition the assertion of the claim upon the bringing of the action in the designated court. The parties have not submitted any cases, legislative history, or other materials which would suggest that the New Jersey Legislature, in creating this cause of action, intended to restrict the choice of forum to the New Jersey state courts. Prohibition against the assertion of a new cause of action in the courts of another state would be extraordinary and an intent to create such a prohibition should not lightly be inferred. In any event, such a prohibition, even if intended, is unenforceable.

It is well established that when a state creates a right, it cannot insist that the right be asserted only in its own courts; if a court elsewhere has jurisdiction and is willing to entertain the claim, it is free to ignore that portion of the creating-state's law [*18]which purports to limit jurisdiction or venue to local courts only. See Siegel, Conflicts in a Nutshell, §54 (West. 1982). As the United States Supreme Court stated in Tennessee Coal, Iron & Railroad Co. v. George, 233 U.S. 354, 360 (1914):

The courts of the sister state, trying the case, would be bound to give full faith and credit to all those substantial provisions of the statute which inhered in the cause of action, or which name conditions on which the right to sue depend. But venue is no part of the right; and a state cannot create a transitory cause of action and at the same time destroy the right to sue on that transitory cause of action in any court having jurisdiction. That jurisdiction is to be determined by the law of the court's creation, and cannot be defeated by the extraterritorial operation of a statute of another state, even though it created the right of action.

This principle was recently re-stated with approval by the Supreme Court in Marshall v. Marshall, 547 U.S. 293, 314 (2006); see also Crider v. Zurich Insurance Co., 380 U.S. 39 (1965); Galveston, Harrisburg & San Antonio Railway Co. v. Wallace, 223 U.S. 481, 490 (1912), and has repeatedly been cited in state and federal courts. Indeed, it has been held that "a statute or rule of another state granting the courts of that state exclusive jurisdiction over certain controversies [as Defendants appear to be arguing here], does not divest the New York courts of jurisdiction over such controversies. Sachs v. Adeli, 26 AD3d 52 (1st Dept. 2005) (internal citations omitted).

Stated differently, "[w]ithin a single jurisdiction, the specification of a particular court as having exclusive jurisdiction over some class of disputes is conclusive. But a state ... cannot, by designating its own courts as the exclusive fora for the resolution of the class, prevent another state ... from allowing its own courts to resolve these disputes if the other state ... has an interest in them ..." Allendale Mut. Ins. Co. v. Bull Data Systems, Inc., 10 F.3d 425, 432 (7th Cir. 1993) (Posner, J.). See also, Levitan v. Sanson, 67 NYS2d 298, 299 (Sup. Ct. NY County 1946) ([g]enerally ... any civil right or obligation given or imposed by a foreign statute will be enforced here unless enforcement would be contrary to our public policy."]. Thus, the specification of the Superior Court as a court empowered to hear claims under the statute is controlling within New Jersey, but not outside.

Thus, even if the New Jersey statute did purport to limit the assertion of the cause of action created to the New Jersey courts, that is no bar to the maintenance of the claims in this Court. Defendants have not contended that enforcement of the New Jersey statute would be contrary to any public policy of New York. Nor do they assert any other obstacle to the Court's jurisdiction to entertain the claims. Defendants do not raise a forum non conveniens objection either. [*19]

Defendants do assert, in a footnote to their memorandum of law in opposition to Plaintiff's motion, that under a conflict of laws analysis, New York law should apply in this case and that, therefore, A & G should not be permitted to rely on the New Jersey statute. The Court does not agree.

It is well settled law in New York that the law of the jurisdiction having the greatest interest in the litigation will be applied and the facts or contacts which obtain significance in defining State interests are those which relate to the purpose of the particular law in conflict. See, e.g., Indosuez Intenational Finance B.V. v. National Reserve Bank, 98 NY2d 238, 245 (2002); Miller v. Miller, 22 NY2d 12, 14 (1968). For that reason, Defendants point to the fact that all of the parties, including A & G, are New York corporations or New York domiciliaries. Conversely, A & G argues that the act of improperly downloading A & G's computer files occurred in New Jersey, the computer from which it was downloaded was in New Jersey, and the company which owned the computer had its principal place of business in New Jersey.

A & G cites Kamfar v. New World Restaurant Group, Inc., 374 F.Supp.2d 38 (S.D.NY 2004) for the proposition that a court sitting in New York has adjudicated a claim under this New Jersey statute. However, the statute was mentioned only in a footnote which listed a series of counter-claims that had been dismissed. Plaintiff has not provided this Court, and the Court has not found, a case where a court in sitting in New York has actually applied this particular statute.

While it is certainly true that New York's conflict principles, as applicable in tort cases, are predicated upon the grouping-of-contacts approach, the analysis neither begins nor ends there. The first inquiry in any case presenting a potential choice of law issue is to determine whether there is an actual conflict between the laws of the jurisdictions involved. Matter of All-State Insurance Co. v. Stolarz, 81 NY2d 219, 223 (1993); K.T. v. Dash, 37 AD2d 107, 111 (1st Dept. 2006). If there is no substantive conflict between the applicable laws of the competing jurisdictions, there is no choice of law issue. Uygur v. Superior Walls of Hudson Valley, Inc., 35 AD2d 447, 448 (2d Dept. 2006).

Here, Defendants have not pointed to any substantive conflict between New Jersey's statute and any provision of New York law. While the New Jersey statute specifically creates a right of action where an actor takes computer data or knowingly accesses a computer without authorization, New York, as will be discussed further, provides common law bases for liability on the allegations made here the unauthorized use of proprietary information, stored on a computer, by former employees who used the information to compete with the owner of the computer equipment. While New Jersey may provide at least one remedy not ordinarily available in New York, the awarding of attorneys fees, it remains that the conduct complained of may be found to violate both the New Jersey statute and New York common law duties. As a result, the New Jersey statute is compatible, not in conflict with, New York common law and there simply is no actual choice of law issue. [*20]

Moreover, even if it is assumed that a conflict exists, which state has the greater interest in the law to be applied, is dependent upon the facts or contacts which relate to the purpose of the particular law in conflict. Padula v. Lilarn Properties Corp., 84 NY2d 519, 521 (1994); Schultz v. Boy Scouts of America, Inc., 65 NY2d 189, 197 (1985). In order to evaluate which jurisdiction has the greater interest, it must be determined what are the significant contacts and in which jurisdiction are they located and whether the purpose of the law is to regulate conduct or to allocate loss. Padula v. Lilarn Properties Corp, supra , 84 NY2d at 521; Schultz v. Boy Scouts of America, Inc., supra , 65 NY2d at 198. Where the law in question regulates standards of conduct, rather than allocates losses, the law of the place of the tort governs. Padula v. Lilam Properties Corp., supra , 84 NY2d at 521-522; see Huston v. Hayden Building Maintenance Corp., 205 AD2d 68 (2d Dept. 1994). This is because, where the rules in conflict regulate standards of conduct, "the law of the place of the tort will usually have a predominant, if not exclusive, concern' ... because the locus jurisdiction's interests in protecting the reasonable expectations of the parties who relied on it to govern their primary conduct and in the admonitory effect in applying its law will have on similar conduct in the future assume the critical importance and outweigh any interests of the common-domicile jurisdiction". Id. at 522, quoting Schultz v. Boy Scouts of America, Inc., 65 NY2d at 198. "Conduct-regulating rules have the prophylactic effect of governing conduct to prevent injuries from occurring." Padula v. Lilam Properties Corp., supra , 84 NY2d at 522. In contrast, where the rules allocate losses, such as by prohibiting, assigning or limiting liability after the tort occurs, and the parties share a common domicile, then the loss allocation rule of their domicile applies. Id. at 522.

It is evident that the New Jersey statute regulates conduct and does not allocate losses. The New Jersey statute seeks to prohibit unauthorized use and the misuse of computer information and computer equipment by imposing liability on actors who violate the standards of conduct set forth in the statute. There is nothing in the New Jersey statute which prohibits, assigns, or limits liability after the tort has occurred.

Most important, A & G's office and its computers are located in New Jersey. A & G had, or should have had, the reasonable expectation that its computer information or systems, located in New Jersey, were protected by New Jersey law from unauthorized use or from misuse. The individual Defendants were, at the time, A & G employees who worked in New Jersey. They had, or should have had, the reasonable expectation that, in using or accessing their employer's computer equipment in New Jersey, their conduct was subject to the regulations provided by New Jersey law. In addition, because it is hardly unheard of for New York residents and domiciliaries to work in New Jersey, and use or access their employer's computers in New Jersey, it would significantly undermine New Jersey's efforts to regulate computer access and use in New Jersey if the New York courts refuse to apply the New Jersey rules simply because the employees who worked in New Jersey live in New York. On the other hand, New York's willingness to apply the New Jersey rules to conduct occurring in New Jersey will have the prophylactic effect of encouraging those New Yorkers who access computers while at work in New Jersey to conform their conduct to the rules and [*21]prevent injuries from occurring.

The determination of applicable law is a question for the court, though the cluster of significant contacts required to establish the applicable law must be developed factually. Wheeler v. Stevensville Hotel and Country Club, 103 AD2d 945 (3d Dept. 1984); Petrobras Comercio Internacional S.A., 77 AD2d 542 (1st Dept. 1980). Here, Clarke's testimony makes it plain that the computer information which was taken from A & G's computer system and copied was taken from New Jersey. Though the computer data was then transported across the Hudson to New York, the fact remains that the taking occurred in New Jersey. Had it not been taken from the computers in New Jersey, the harm that the New Jersey statute seeks to prevent would not have occurred. While the propagation of the information occurred in New York, it would eviscerate the New Jersey statute if the actor could simply copy the computer data and spirit it out of New Jersey. Accordingly, because of New Jersey's strong interest in regulating computer piracy in New Jersey, the Court concludes that, at least under the circumstances present here, A & G may maintain, in New York, its causes of action based on the New Jersey Computer Related Offenses Act.

In any event; whether or not the statute at issue should be applied here seems dependent upon issues of fact to be resolved at trial.

In light of the foregoing, each party's request for summary judgment on the First Cause of Action should be denied.

C.Second Cause of Action - Damages

In A & G's Second Cause of Action, also brought pursuant to New Jersey's Computer Related Offenses Act, it is alleged that Defendants' "... misappropriation of plaintiff's work product, valuable, confidential and/or proprietary information has caused A & G to suffer damages and [to] continue[ ] to suffer damages in the loss of revenue, property and good will in the sum of $2,000,000 per year".

In support of its assertion that Clarke is liable to Plaintiff under this statute, Plaintiff relies on Fairway Dodge, LLC v. Decker Dodge, Inc., 191 N.J. 460 (N.J. 2007), a New Jersey case applying the New Jersey statute. In Fairway, an automobile dealership brought an action against two former employees, its competitor, and the competitor's owner and manager, alleging a conspiracy to interfere with prospective economic relations, breach of the duty of loyalty, misappropriation of property, and violation of the Computer Related Offenses Act.

In Fairway, the New Jersey Supreme Court upheld the granting of partial summary judgment against Decker Dodge and two former employees because the employees admitted to accessing Decker's competitor's computer and that such conduct constituted a "taking" under the Act without authorization. [*22]

A & G argues that the facts of Fairway are analogous to the case at bar, and that the acts of Clarke, who admitted to the unauthorized downloading of information from A & G's computer and uploading the information onto GC Metric's computer, constitutes a taking under the Act subjecting her to liability.

Defendants raise a number of arguments in opposition, including, inter alia, that in Fairway a jury concluded that the copied files resulted in damage to Decker's business and that expert testimony was used to establish the link. Here, they argue, there is no evidence of damage to A & G's business, because, Defendants' submit, the clients who chose to leave A & G and take their business to GC Metrics did so because they liked A & G's former employees, and not because of any advantage GC Metrics would have as a result of the copied files.

Defendants also contend that, because the New Jersey statute imposes liability only against the specific "actor" whose "purposeful or knowing" conduct is proscribed by the statute, the statute cannot be applied to Guttormsen, Williams or GC Metrics. Defendants assert that Clarke downloaded the information without the knowledge of her colleagues before the formation of GC Metrics, and that, under the statute, she would be the only "actor" potentially subject to liability. On the contrary, however, it is clear that Clarke told Williams and Guttormsen about the downloaded files and placed them on GC Metrics' computers for all employees to use. Plaintiff submits that, since the term "actor" is not defined by the statute, it is not clear that the statute would not apply to all the Defendants, and not just Clarke.

Summary judgment on this cause of action must be denied. As indicated in the discussion under the First Cause of Action, here too there are questions of fact as to the applicability of the New Jersey statute to these facts, as well as whether A & G sustained ascertainable damages as a result of the downloaded files.

THE NEW JERSEY THEFT AND RELATED OFFENSES STATUTE

Plaintiff's Third Cause of Action alleges that Defendants are in violation of a New Jersey penal statute, i.e., NJSA 2C:20-20 and 2C:20-7, directed against theft. While ordinarily, New York would not apply a penal statute of another state, see 18 N.Y.Jur.2d, Conflicts of Law, §19, the New Jersey penal statute creates a civil right of action where the conduct in question violates the penal statute.

Specifically, NJSA 2C:20-20 provides for a private cause of action where there has been a violation under NJSA 2C:20-7, a criminal statute that prohibits "receiv[ing] or bring[ing] into New Jersey movable property of another knowing that it has been stolen ..." NJSA 2C:20-20 provides, in relevant part:

Any person damaged in his business or property by reason of a violation of section 7 of this ... act may sue therefor in any appropriate court and shall recover threefold any damages he sustains and the cost of the suit, including a reasonable attorney's fee, costs of investigation and litigation ... [*23]

In turn, NJSA 2C:20-7, entitled "Receiving Stolen Property", provides, in relevant part:

A person is guilty of theft if he knowingly receives or brings into this State movable property of another knowing that it has been stolen, or believing that it is probably stolen. It is an affirmative defense that the property was received with the purpose to restore it to the owner. "Receiving" means acquiring possession, control or title, or lending on the security of the property.

"Movable property" is defined as:

[P]roperty the location of which can be changed, including things growing on, affixed to, or found on land, although the rights represented thereby have no physical location. "Immovable property" is all other property.

Defendants argue the language of this statute precludes A & G's attempt at recovery thereunder, contending that the statute does not contemplate or address the copying of data, which is the thrust of the Amended Complaint. Indeed, Defendants assert that when the New Jersey Legislature wanted to enact a criminal statute to address the copying of computer data, it knew how to do so - but those provisions are not found in either Section 20-20 or 20-7. Instead, NJSA 2C:20-25 expressly defines "computer criminal activity"; it specifically addresses computer data, and it establishes four different degrees of the offense. The New Jersey Legislature chose, however, not to establish a private cause of action in NJSA 2C:20-25 and, therefore, the penal statute expressly covering computer data is unenforceable in New York.

A & G submits that Defendants can be held liable under the New Jersey statute for their removal of the document known as the "Type of Study Reference Sheet" from A & G's offices and that removal of that document alone precludes the Defendants' application for summary judgment on the Third Cause of Action.

As to the issue of whether Defendants' removal of data from A & G's computer network constitutes a violation of the statute, A & G argues that, although this appears to be an issue of first impression under New Jersey law, computer data should be considered to be within the definition of "movable property" as the location of the computer data "can be changed ... [and] the rights represented thereby have no physical location." NJSA 2C:20-1(e).

Defendants retort that NJSA 2C:20-20 applies only to the physical stealing of computer equipment, and not to the copying of data. Citing Weinberg v. Sprint Corp. (173 N.J. 233, 250-251 [2002]) Defendants assert that the New Jersey courts narrowly construe statutory private causes of action to those specific claims designated by the Legislature and that the case law construing this particular statute is consistent with this principle, citing Bobal v. Cackowski, 2007 WL 2089195 at *1 (N.J. Super. Ct. 2007) and [*24]State of N.J. v. Portuondo, 277 N.J. Super. 337 (N.J. Super. Ct. 1994). To the extent that any New Jersey court has applied Sections 20-20 and 20-7 to computers, it is only with respect to the physical stealing of computer equipment. See State v. Jackson, 2007 WL 4139318 (N.J. Super. 11/23/07) (discussing 2C:20-7 and theft of a computer), State v. Fennell, 2006 WL 2033988 (N.J. Super. 7/21/06) (discussing 2C:20-7 and physical theft of several computers). Defendants submit that the Third Cause of Action should be dismissed as New Jersey courts have not applied the private right of action under NJSA 2C:20-20 to the copying of computer data.

Defendants further argue that Section 2C:20-20(c) prohibits A & G from pursuing this claim in New York, as that section provides that "any action for damages under [chapter 20] shall be maintained in the Superior Court without a jury". This argument, however, is without merit, for the reasons previously discussed in connection with the claims under the Computer Related Offenses Act. Moreover, it appears Section 2C:20-20(c) is merely a venue provision added to the statute in order to remove the New Jersey County Court as the forum for maintaining civil actions under the statute. See 1991 N.J. Sess. Law Serv. Ch. 91 (Senate 1348) (West).

Upon review of the tendered submissions, it is apparent that questions of fact exist as to whether the New Jersey Theft and Related Offenses statute applies on these facts and, further, as to whether Defendants are liable under the statute either for removing the Type of Study Reference Sheet document from A & G's offices or for their conduct in downloading and using computer data from A & G's computers. Thus, the motion for summary judgment as to the Third Cause of Action should be denied.

In support of this claim, Plaintiff alleges that Defendants breached their fiduciary duties to Plaintiff by the following conduct: [*25]

Guttormsen (allegedly) solicited Clarke and Williams to join him in a competing market research business;

While employed by A & G, Guttormsen and Clarke worked out the details involved in starting a competing business including an office location, an employee, financing, and a client;

Guttormsen then scheduled a dinner with Livanos (of Pepsi) (a rare event) and, at dinner, informed Livanos that he was thinking about leaving or that he was leaving A & G and inquired generally whether Pepsi had a policy regarding start-up companies or new vendors;

The morning after the dinner meeting Livanos sent an e-mail to another Pepsi employee and Guttormsen stating he has some credits with A & G he "would like to unload" and that he wanted to "spend down [his] credit A & G ..."

Clarke, while at A & G's office and using its computers, drafted logos for GC Metrics and showed them to Williams in the office;

After his dinner with Livanos and while he was still employed at A & G, Guttormsen called Julia Oswald, who manages consumer research for the Carbonated Beverage Division at Pepsi and told he that he may be leaving A & G and going out on his own;

Clarke downloaded A & G's Serv2 file onto a portable drive and uploaded them on a computer at GC Metrics;

Williams downloaded A & G's materials without permission including A & G job files, corporate contacts and emails from A & G's computer system;

Guttormsen knew about the downloads before leaving A & G and didn't report it to A & G because "... to me it was inconsequential. Just wasn't important to me at the time."

After resigning from A & G:

Guttormsen admitted working for GC Metrics the day he resigned;

While still employed at A & G and after Guttormsen resigned, Clarke worked on the Holiday Packaging Study for GC Metrics using A & G forms;

While still working at A & G Grinchunas requested orally and in writing that Williams and Clarke return all of A & G's materials or that they be destroyed. They told [*26]Grinchunas that they will (or had) complied with his request, but did not.

According to Clarke, during her last week of employment at A & G, her "loyalties changed", and were with GC Metrics because she was "moving on"; and

While at GC Metrics all of the Defendants accessed and used A & G's job files and then saved them as their own.

Based on these allegations, A & G contends that Defendants used A & G's time, facilities and files (including emails, client lists, contacts, job files and "Study Reference Sheet") to assist them at GC Metrics. Plaintiff further submits that unbeknownst to the clients, Defendants replicated their excellent work product at GC Metrics by copying A & G's files.

In response, Defendants assert that Guttormsen and Clarke had an unfettered right to incorporate GC Metrics and Plaintiff has no evidence that any of A & G's time or resources were used in forming GC Metrics. Defendants further submit Plaintiff cannot show any solicitation of clients before the individual defendants left A & G's employ. Further, Defendants argue that Plaintiff could have had no tangible expectation of conducting business with Pepsi after the individual Defendants resigned, because Pepsi's loyalty was to the Defendants, and not to Grinchunas whom they rarely, if ever, spoke with. Defendants assert that their use of "boilerplate" materials from A & G resulted in no damage to A & G or business for GC Metrics and cannot be the basis of a claim for breach of fiduciary duty.

It is well settled law in New York that an employee is "prohibited from acting in any manner inconsistent with his agency or trust and is at all times bound to exercise the utmost good faith and loyalty in the performance of his duties." CBS Corp. v. Dumsday, 268 AD2d 350 (1st Dept. 2000) (internal citations omitted). It is also the case that an employee may create a competing business prior to leaving his employer without breaching any fiduciary duty unless he makes improper use of the employer's time, facilities or proprietary secrets in doing so. Schneider Leasing Plus, Inc. v. Stallone, 172 AD2d 739, 741 (2d Dept. 1991), citing Headquarters Buick-Nissan v. Michael Oldsmobile, 149 AD2d 302 (1st Dept. 1989); Mayo Lynch & Assoc. v. Fine, 148 AD2d 425 (2d Dept. 1989); Walter Karl, Inc. v. Wood, 137 AD2d 22 (2d Dept. 1988); Metal & Salvage Assn. v. Siegel, 121 AD2d 200 (1st Dept. 1986). Where such a breach of fiduciary duty has been established, third parties who have knowingly participated in the breach may be held accountable. Schneider Leasing Plus, Inc. v. Stallone, supra , 172 AD2d at 741.

Here, Plaintiff has come forward with sufficient evidence to create a triable issue of fact as to whether Defendants violated a fiduciary duty to A & G. Indeed, Plaintiff has shown that Guttormsen had discussions with two principals of A & G's largest client before he left A & G notifying them of his intent to leave. Further, Clarke used A & G's time and materials to work on a project for GC Metrics while still in the [*27]employ of A & G. Accordingly, Defendants' motion for summary judgment as to the Fourth Cause of Action for breach of fiduciary duty should be denied.

In Plaintiff's Seventh Cause of Action, Plaintiff asserts that as a result of Defendants' breach of their fiduciary duties to A & G, Plaintiff is entitled to a complete and accurate accounting from Guttormsen, Clarke, Williams and GC Metrics concerning their access and use of A & G documents, client lists, computer files, contacts and confidential information as well as any money, assets or property that Defendants received directly or indirectly from Pepsi, Hershey, Del Monte or Combe or any other past or present A & G client.

Because of the questions of fact above related,this claim too shall have to abide the trial of the action and summary judgment must be denied.

The Amended Complaint contains two claims for unfair competition - one for damages, and another for an injunction, permanently barring defendants from working in the field of market research. Defendants submit the evidence shows these claims should be dismissed because (a) there was no wrongful diversion of customers or business; (b) A & G does not have proprietary information or trade secrets; and (c) GC Metrics' limited use of "boilerplate" elements from A & G's old files did not result in any business for GC Metrics, and it was not the cause of any losses that A & G allegedly sustained.

It is well settled that "the gravamen of a claim of unfair competition is the bad faith misappropriation of a commercial advantage belonging to another ... by exploitation of proprietary information or trade secrets." Eagle Comtronics, Inc., Respondent v. Pico Products, Inc. (4th Dept., 1998)(internal citations omitted); see Beverage Marketing USA, Inc. v. South Beach Beverage Co., Inc., 20 AD3d 439 (2d Dept. 2005). Information that is ascertainable from outside sources or generally known in the trade cannot be misappropriated because it is not a proprietary trade secret. IVI Environmental, Inc. v. Matthew A. McGovern, 269 AD2d 497, 498 (2d Dept. 2000); Atmospherics, Ltd. v. Robert E. Hansen, 269 AD2d 343, 343 (2d Dept. 2000). A trade secret is generally understood to be "any formula, pattern, device or compilation of information utilized in one's business, and which provides an advantage over competitors who do not know or use it." Ashland Management Inc. v. Janien, 82 NY2d 395, 407 (1993). An essential prerequisite to legal protection against the misappropriation of a trade secret is the element of secrecy. Atmospherics, Ltc. v. Robert E. Hansen, supra , 269 AD2d at 343.

It has been held that "[s]olicitation of an entity's customers by a former employee ... is not actionable unless the customer list could be considered a trade secret, or there was wrongful conduct by the employee ... such as physically taking or [*28]copying files or using confidential information". Starlight Limousine Serv. v. Cucinella, 275 AD2d 704 (2d Dept. 2000).

Section 757 of the Restatement of Torts, comment b, has been cited with approval by the Court of Appeals. Ashland Mgt. v. Janien, 82 NY2d 395, 407 (1993). It defines a trade secret as "any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it." Id. The Restatement suggests that in deciding a trade secret claim several factors should be considered:

(1)The extent to which the information is known outside of [the] business;

(2)the extent to which it is known by employees and others involved in [the] business;

(3)the extent of measures taken by [the business] to guard the secrecy of the information;

(4)the value of the information to [the business] and [its] competitors;

(5)the amount of effort or money expended by [the business] in developing the information;

(6)the ease or difficulty with which the information could be properly acquired or duplicated by others.

Restatement of Torts §747, comment b.

Whether or not information constitutes a trade secret is generally a question of fact. Ashland Mgt. v. Janien, supra , 82 NY2d at 407, citing Kaumagraph Co. v. Stampagraph Co., 235 NY 1, 8-9 (1923); Union Kol-Flo Corp. v. Basil, 64 AD2d 861, 862 (4th Dept. 1978).

Defendants argue that the evidence requires dismissal of these claims. First, they argue that A & G had no trade secrets or proprietary information and that it does not own the work product that it submits to clients and, in the conduct of conducting market research study, its questionnaires and field instructions are forwarded to numerous unknown recipients. Defendants further assert that Plaintiff's final reports are released to its clients without restriction, that it employs no formula to generate its pricing, that it issued no employee handbooks with any mention of confidentiality, and that with the exception of one agreement, issued to one employee in November 2006, it never has used any confidentiality or non-solicitation agreements.

Defendants further submit that the testimony of witnesses from all three clients of GC Metrics, i.e., Pepsi, Hershey and Georgia Pacific, confirm that none of the Defendants solicited any business prior to Guttormsen's resignation from A & G. Defendants attempt to excuse Guttormsen's discussions with two Pepsi employees on the ground that such conversations were not solicitation and that Guttormsen apparently did not ask for business during those discussions and none was offered to him. It [*29]remains undisputed, however, that GC Metrics began working on a project for Pepsi the day Guttormsen resigned, that GC Metrics employee Clarke worked on the project using A & G files and information while still at A & G, and that the project was completed and billed to Pepsi just days after Guttormsen's resignation.

Moreover, as Plaintiff points out, it is clear that Clarke downloaded A & G's client lists, proposals containing confidential pricing information and the "Type of Study Reference Sheet" which listed, by client, all of the projects that A & G conducted over the past 10 years. Plaintiff asserts these were trade secrets as they were not readily ascertainable by others in the trade or by the public at large.

Additionally, Plaintiff alleges Defendants misappropriated A & G's business from Pepsi, as Guttormsen, prior to leaving A & G, solicited two of the major decision-makers at Pepsi in order to generate business for GC Metrics. As a result, Plaintiff claims to have sustained damages in the sum of $2,000,000 per year. Plaintiff submits Defendants' wrongful conduct permitted GC Metrics to seamlessly service A & G's clients literally overnight.

Defendants have failed to establish that there are no questions of fact with regard to Plaintiff's claims of unfair competition. Indeed, questions exist as to whether the information taken by Clarke and used by all of the employees at GC Metrics constituted trade secrets, whether Guttormsen improperly solicited clients of A & G before leaving A & G, whether A & G was damaged as a result of Defendants' conduct, and the nature and scope of any injunction A & G to which A & G might be entitled. Accordingly, the motion as to the Fifth and Sixth Causes of Action should be denied.

In its Eighth Cause of Action, Plaintiff asserts that Guttormsen, Clarke and Williams currently have unlawful possession, control, use of and access to A & G's files, data, documents, proprietary and confidential information and, upon information and belief, use said information to solicit, engage and/or conduct business activities with A & G's clients. A & G contends that Defendants have been unjustly enriched and that A & G is entitled to a constructive trust over any money, assets or property that Defendants have received directly or indirectly from Pepsi, Hershey, Del Monte and Combe or any other past or present A & G client, as well as any of A & G's documents, files, data, proprietary and confidential information in the possession, custody or control of Defendants.

It is well settled that the elements needed to impose a constructive trust are (1) a confidential or fiduciary relationship; (2) a promise; (3) a transfer in reliance thereon, and (4) unjust enrichment. Iwanow v. Iwanow, 39 AD3d 476, 477 (2d Dept. 2007). "The constructive trust doctrine is given broad scope to respond to all human implications of a transaction in order to give expression to the conscience of equity and to satisfy the demands of justice" (internal citations omitted). "Performance of a [*30]wrongful act by the party unjustly enriched is not required. Rather, what is required, generally, is that a party hold property under such circumstances that in equity and good conscience he [or she] ought not to retain it'" (internal citations omitted). Id. at 477.

This claim should be dismissed because Plaintiff has failed to establish a prima facie case as to the making of any promise or agreement between A & G and any of the individual Defendants with respect to access to files, and a transfer in reliance upon any such promise or agreement. Further, the record demonstrates that A & G had few, if any rules, governing access or downloading of its files. Additionally, A & G regularly disclosed questionnaires, field instructions and other materials to unknown interviewers to unknown respondents and to clients, all without enforced restrictions. Further, A & G has not shown that it made any transfer in release upon any promise by the individual Defendants. The computer files, to the extent that A & G allowed its employees to use them, were maintained on A & G's equipment and, therefore, even if there was an implied agreement that employees could access the computer data only for work purposes, the access occurred on A & G's equipment, without the files being transferred to equipment owned by others. Accordingly, this cause of action should be dismissed.

Here, it is clear that Plaintiff cannot establish the elements of a claim of conversion and that this claim must be dismissed. Although Defendants copied Plaintiff's computer data and uploaded such data on their own computer system, an essential element of conversion is that the owner of the property is excluded from use thereof. See state v. Seventh Regiment Fund, Inc., 98 NY2d 249, 259-60 (2002), citing Bradley v. Roe, 282 NY 525, 531-32 (1940); see also Vigilant Ins. Co. of Am. v. Housing Auth. of El Paso Tex., 87 NY2d 36, 43 (1995). Since the information was not deleted from A & G's computers, A & G was not excluded from the use of the information.

Plaintiff's reliance on Thyroff v. Nationwide Mutual Insur. Co., 8 NY3d 283, 284 (2007) is misplaced. Although. in Thyroff, the Court of Appeals recognized the need to update the common law of conversion to modern times and held that a plaintiff may maintain a conversion action based upon intangible electronic computer records and data, the Plaintiff in Thyroff, unlike here, no longer had access to his computer files. [*31]Accordingly, while the plaintiff in Thyroff could establish the element of deprivation of his property, A & G cannot.

In light of the foregoing, the Ninth Cause of Action should be dismissed.

Plaintiff's Tenth Cause of Action, sounding in unjust enrichment, alleges, inter alia, that Defendants utilized A & G's files to solicit Plaintiff's customers and to compete with A & G. Plaintiff further alleges that Defendants took items that Plaintiff would have, or could have, sold in the marketplace.

To prevail on a claim of unjust enrichment, a party must show that (1) the defendant was enriched (2) at the plaintiff's expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered. Citibank, N.A. v. Walker, 12 AD3d 480 (2d Dept. 2004).

In support of summary judgment, Defendants submit the following: (1) that A & G is not the owner of its files; and (2) that because every market research project is unique, A & G does not sell studies to other buyers, and clients do not purchase market research studies by the piece. Defendants assert the evidence further establishes that none of the materials in the download were utilized to solicit any client and that no downloaded materials were utilized in competition with A & G. Defendants also point out that A & G has not been deprived of any of its files.

Here, there are clearly questions of fact as to whether Defendants were unjustly enriched by downloading and using files created and maintained while working at A & G for the benefit of A & G. Indeed, it is undisputed that the files were valuable, and, at a minimum, permitted GC Metrics, a brand new company, to be up and running on the very day its principal resigned from A & G. Additionally, it is clear that Clarke used A & G's files and computer data to assist on a project for a former client of A & G while still employed by A & G to the benefit of GC Metrics. Finally, it is clear that if the files downloaded by Clarke were really so readily obtainable elsewhere, and not valuable to GC Metrics as a new business, they would have been returned to A & G or destroyed, as Clarke and Williams promised Grinchunas they would do in writing upon their resignation from A & G.

Accordingly, the Court finds that the Defendants' motion with respect to the Tenth Cause of Action should be denied.

The Court has considered the following papers in connection with this motion:

1)Plaintiff's Statement of Material Facts;

2)Defendants' Counter-Statement Pursuant to Rule 19-a;

3)Plaintiff's Response to Defendants' Statement of Undisputed Material Facts;

Sequence 2:

1)Notice of Motion dated February 20, 2008; Affirmation of Richard Grinchunas sworn to February 20, 2008; Affidavit of Alan E. Sash, Esq. dated January 4, 2008; and the exhibits annexed thereto;

2)Plaintiff's Memorandum of Law dated February 21, 2008;

3)Affirmation of Gary A. Stahl, Esq., dated March 14, 2008 and the exhibits annexed thereto;

4)Defendant's Memorandum of Law dated March 14, 2008

5)Reply Affirmation of Alan E. Sash, Esq., dated March 19, 2008;

6)Plaintiff's Reply Memorandum of Law dated March 19, 2008.

Sequence 3:

1)Notice of Motion for Summary Judgment dated February 22, 2008 and Defendants' Statement of Undisputed Material Facts annexed thereto;

2)Affirmation of Gary A. Stahl, Esq. in Support dated February 22, 2008 and the exhibits annexed thereto;

3)Memorandum of Law in Support of Defendants' Motion for Summary Judgment dated February 22, 2008;

4)Affidavit of Richard Grinchunas sworn to March 12, 2008; Affirmation of Alan E. Sash, Esq. dated March 12, 2008 and the exhibits annexed thereto;

5)Plaintiff's Memorandum of Law in Opposition to Defendants' Motion for Summary Judgment dated March 13, 2008;

6)Reply Affirmation of Gary A. Stahl, Esq. dated March 20, 2008 and the exhibits annexed thereto;

7)Reply Memorandum of Law dated March 20, 2008.

Based upon the foregoing papers, and for the reasons set forth above, it is hereby

ORDERED that the motion by Defendants GC Metrics, Inc., James Guttormsen, Paula Clarke and Ann Williams for summary judgment dismissing the Amended Complaint of Plaintiff A & G Research, Inc. (Seq. 3) is granted in part and denied in part as hereinafter set forth; and it is further

ORDERED that the motion by Defendants GC Metrics, Inc., James [*33]Guttormsen, Paula Clarke and Ann Williams for summary judgment is granted to the extent that the Eighth and Ninth Causes of Action set forth in the Amended Complaint of Plaintiff A & G Research, Inc. shall be dismissed; and is further

ORDERED that the motion by Defendants GC Metrics, Inc., James Guttormsen, Paula Clarke and Ann Williams for summary judgment dismissing the First, Second, Third, Fourth, Fifth, Sixth, Seventh and Tenth Causes of Action in the Amended Complaint of Plaintiff A & G Research, Inc. is denied; and it is further

ORDERED that the motion by Plaintiff A & G Research, Inc. for summary judgment on its First and Second Causes of Action in its Amended Complaint (Seq. 2) is denied; and it is further

ORDERED that counsel for the parties shall appear before this Court for a status conference on June 6, 2008 at 9:30 a.m. for the purposes of scheduling further proceedings in this action and establishing a date for trial; and it is further

ORDERED that the status conference hereinabove provided for may not be adjourned without the prior written approval of the Court.

The foregoing constitutes the Decision and Order of this Court.

Dated:White Plains, New York

May 21, 2008

E N T E R :

________________________________

Alan D. Scheinkman

Justice of the Supreme Court

APPEARANCES:

McLaughlin & Stern, LLP

By: Alan A. Sash, Esq.

Attorneys for Plaintiff

260 Madison Avenue

New York, New York 10016

Crowell & Moring LLP

By: Gary A. Stahl, Esq.

Attorneys for Defendants

153 East 53rd Street [*34]

New York, New York 10022