Sybron Corp. v. Wetzel

385 N.E.2d 1055, 46 N.Y.2d 197, 413 N.Y.S.2d 127, 205 U.S.P.Q. (BNA) 673, 1978 N.Y. LEXIS 2397
New York Court of Appeals·Decided December 7, 1978·Published·Cited by 88 cases

Opinions

OPINION OF THE COURT

Chief Judge Breitel.

Plaintiff Sybron, among other things a manufacturer and reliner of glass-lined vessels used in processing corrosive chemicals, sues its former employee, Wetzel, and a competitor corporation, De Dietrich, to enjoin the employment of Wetzel by De Dietrich and to prevent Wetzel from divulging alleged trade secrets. Special Term after a hearing granted Sybron a preliminary injunction. The Appellate Division, in reversing, held De Dietrich not subject to personal jurisdiction, but reached the merits with respect to Wetzel, and dismissed the action as to both defendants. Plaintiff appeals.

The principal controversy involves application to De Dietrich of CPLR 302 (subd [a], par 3), providing long-arm jurisdiction over nondomiciliary defendants who commit tortious acts outside the State causing injury in New York. At issue is whether, for purposes of the statute, a nondomiciliary competitor causes injury in New York when it hires a former employee of a corporation engaged in manufacture in this State allegedly to obtain protected trade secrets. As to defendant Wetzel, dismissal of the complaint, which had not as yet been served, is challenged as premature.

The order of the Appellate Division insofar as it dis[201]*201missed the action should be reversed and the action reinstated as to both defendants. With respect to the Appellate Division’s reversal of the preliminary injunction this court is without power to review, and, therefore, to that extent the order of the Appellate Division should be affirmed.

Plaintiff, who had employed Wetzel at its New York plant for 34 years, would indeed be injured in New York should De Dietrich, by inducing a tortious breach of Wetzel’s obligations to his former employer and through use of trade secrets purloined through Wetzel, make valuable competitive sales to plaintiff’s New York customers. Plaintiff is thus entitled to invoke the jurisdictional statute to avert threatened harm. With respect to defendant Wetzel, dismissal of the complaint not yet served was premature, but denial of the preliminary injunction, as noted, is beyond the court’s scope of review. An issue not resolvable at this stage of the action, however, remains: the record, even on the limited evidence submitted or allowed upon the hearing for a preliminary injunction, raises the issue of fact whether Wetzel, applying his knowledge for the benefit of De Dietrich, would necessarily be divulging plaintiff’s trade secrets.

Wetzel had been employed in New York by the Pfaudler Company, a division of plaintiff Sybron, and one of three competitors in the United States engaged in the design, manufacture, and sale of glass-lined chemical processing vessels. Wetzel was involved in the preparation, coating, and firing of the glass used to line and reline the vessels. Despite his lack of formal education, he rose over the 34 years of his employment from helper in the coating department to general ceramics foreman. In 1974, however, at age 55, Wetzel took early retirement on reduced pension and moved to Florida.

In early 1977, defendant De Dietrich (USA), an American subsidiary of the French De Dietrich & Cie, advertised the installation in Union, New Jersey, of a new furnace for reglassing reactors and tanks. As a principal competitor of Sybron, De Dietrich has reglassed some 4,500 of Sybron’s "Pfaudler” vessels in its French plants, and intends for its New Jersey plant to reglass Sybron equipment.

This action was started after Sybron learned that De Dietrich’s American manager of manufacturing, a former chief ceramist at the Pfaudler division for whom Wetzel worked for many years, approached Wetzel in Florida and asked him to supervise the New Jersey facility. Evidently, only one other [202]*202person, also a former Pfaudler employee, was interviewed for the position.

Plaintiff, regarding the methods, processes, and techniques employed in its glassing operations as proprietary secrets, seeks to bar Wetzel from working for De Dietrich in its American plant and from divulging protected trade secrets. Also relied upon is a certain Patent and Trade Secret Agreement signed by Wetzel after he became a line foreman in 1961. According to plaintiff, each employee with access to proprietary secrets is required to agree that he "will preserve in confidence, and in accordance with established Company policy, all secret and confidential matters of the Company and others with whom the Company may have confidential relations both during [his] employment and thereafter.” Defendants deny that Wetzel possesses trade secrets or confidential information, and insist that his new position will entail only application of De Dietrich processes and techniques.

Following plaintiff’s motion for a preliminary injunction, a two-day hearing was conducted. Plaintiff conceded that Wetzel was not involved in laboratory development of new glass formulas. Emphasized, however, was his extensive experience and responsibility in the glassing and reglassing of "Pfaudler” vessels. Even after his retirement, Wetzel was sent by Sybron as a technical consultant to its Mexican division. There was testimony that De Dietrich, like Sybron, regards its glass lining techniques, and not only its glass formulas, as proprietary secrets. Wetzel, on the other hand, testified that he took no Sybron files with him, that he was not consulted with respect to the composition or preparation of the glass, and that his job at Sybron was merely to carry out procedures established by others. If he detected flaws, Wetzel would simply inform his superiors. In addition, defendants introduced testimony that Sybron had conducted tours of its plant for nonemployee engineers.

Special Term, denying defendants’ motion to dismiss for lack of jurisdiction, enjoined both De Dietrich’s employment of Wetzel and the disclosure of trade secrets pending the action. The Appellate Division reversed, unanimously holding that De Dietrich was not subject to the personal jurisdiction of the court and that Wetzel, although subject to the court’s jurisdiction, did not possess trade secrets. Dismissal of the complaint, even though it had not as yet been served, was directed.

There is no disagreement in the court with the Appellate [203]*203Division and Special Term that Wetzel was subject to personal jurisdiction and that service upon him was sufficient. The jurisdictional issue disputed in the court involves De Dietrich. A Delaware corporation based in New Jersey, De Dietrich is not qualified to do business in New York and has no New York office or employees. Of the 20 to 40 New York customers it has had, only Eastman Kodak and perhaps another are substantial. Kodak is also a major customer of Sybron.

CPLR 302, the "long-arm statute”, did not always expressly provide for personal jurisdiction over those whose tortious acts outside the State cause injury in New York (see L 1962, ch 308). It was only in response to Feathers v McLucas (15 NY2d 443) that in 1966 such a provision was added (L 1966, ch 590; Memorandum of the Judicial Conference, 2 McKinney’s 1966 Sess Laws of NY, p 2911; Twelfth Ann Report of NY Judicial Conference, 1967, pp 339-344). In the Feathers case, the court held that CPLR 302 (subd [a], par 2), which covers one who commits a tortious act within the State, did not apply to a nondomiciliary who improperly manufactured a tank in Kansas, even though the tank exploded in New York (supra, pp 458-464).

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Sybron Corp. v. Wetzel, 385 N.E.2d 1055, 46 N.Y.2d 197, 413 N.Y.S.2d 127, 205 U.S.P.Q. (BNA) 673, 1978 N.Y. LEXIS 2397 (N.Y. 1978).

385 N.E.2d 1055 (Sybron Corp. v. Wetzel) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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