Jet Courier Service v. Mulei

Jet Courier Service, Inc. (Jet) (defendant) was primarily engaged in transporting canceled checks for its client banks to facilitate the checks’ rapid processing through the banking system. Jet was based in Cincinnati, Ohio, and hired Anthony Mulei (plaintiff) to open an office in Denver, Colorado. Jet gave Mulei the title of vice president and general manager of its western zone, and the parties entered into a written employment agreement that included a two-year covenant not to compete and that provided Mulei with a salary plus a bonus based on the western zone’s profitability. Despite Mulei’s repeated demands, Jet did not pay the required percentage of net profits. Dissatisfied with the unresolved bonus situation and with what he perceived to be intrusions on his managerial authority, Mulei began to form a new courier service that would compete with Jet. While continuing to profitably operate Jet’s western division, Mulei spoke with current Jet employees and customers about joining the new venture and formed a corporation of which he was elected president. Jet terminated Mulei’s employment upon learning that Mulei had formed a competing venture, at which point Mulei caused the new business to begin operations. Five of Jet’s client banks then became customers of Mulei’s new business, and numerous Jet employees and contractors joined Mulei as well. Mulei filed suit against Jet, seeking to invalidate the covenant not to compete. Jet counterclaimed, arguing that Mulei’s activities in furtherance of the new business while employed by Jet breached his duty of loyalty. The trial and appellate courts found that Mulei did not breach the duty of loyalty because he did not actually begin competing with Jet until after his employment was terminated. Jet appealed.