Augat, Inc. v. Aegis, Inc.

565 N.E.2d 415 (1991)

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Augat, Inc. v. Aegis, Inc.

Massachusetts Supreme Judicial Court
565 N.E.2d 415 (1991)

Facts

Jeremy Shearer (defendant) was a former vice president of Augat, Inc. (plaintiff) and previously worked for its subsidiary, Isotronics, Inc. (plaintiff). Shearer quit his job with Augat to develop a rival company called Aegis, Inc. (defendant). When Shearer’s noncompetition agreement with Augat expired, he formed Aegis and recruited Isotronics vice president Jay Greenspan to work for his company. At Isotronics, Greenspan also served as general manager, and his duties included hiring and ensuring that Isotronics had adequate staffing in all areas. Isotronics dominated two-thirds of its industry, a fact known to people in the industry. While Greenspan was still working for Isotronics, Greenspan and Shearer solicited key managers to work for Aegis. After Aegis was established, Isotronics lost its vice president for marketing and sales, the manager responsible for designing new products, the manufacturing manager, and the engineering manager in only two months. Augat and Isotronics filed suit, claiming various theories of liability. A trial judge found that the defendants were liable (1) for Greenspan’s breach of his duty of loyalty through his disclosure of Augat’s confidential annual sales data; (2) for Greenspan’s breach of his duty by recruiting key employees while employed, (3) for the alleged breach of other employees who left as well, although they had not signed noncompetition agreements; (3) for misrepresentation because Shearer and Greenspan did not disclose their plans to work for Aegis; and (4) for their intention to cripple Isotronics. An appellate court permitted Aegis and Shearer to file an interlocutory appeal, which was transferred to the Massachusetts Supreme Judicial Court on its own motion.

Rule of Law

Issue

Holding and Reasoning (Wilkins, J.)

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