519
Chapter 32
Agency Formation and
Duties
Case 32.1
Ga.App.,2009.
Lopez v. El Palmar Taxi, Inc.
297 Ga.App. 121, 676 S.E.2d 460, 09 FCDR 1252
Court of Appeals of Georgia.
LOPEZ et al.
v.
EL PALMAR TAXI, INC.
No. A08A1624.
March 27, 2009.
520 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
summary judgment de novo.FN2
FN2. Id.
The evidence pertinent to this appeal showed that Julaju drove a taxi on a part-time basis, usually only on Sundays and sometimes
on Mondays. He worked an unrelated job on the remaining days of the week. When Julaju applied to work as a taxi driver, El
Palmar gave him an independent contractor agreement to sign. He read it and printed his name where he was instructed. Julaju
was also given certain rules to follow-dress neatly, do not allow smoking in the car, do not allow passengers in front unless
FN3. An El Palmar representative testified that it did not provide cars to drivers who did not have one; they were required
to borrow a car from a taxicab owner. The representative also testified that El Palmar received only a set daily fee and did
not split fares with the drivers.
On the morning of August 9, 2004, Julaju informed El Palmar that he was available to work. El Palmar provided his first fare–
picking up Lopez and her children. While Julaju was driving them to their destination, his taxi collided with a truck. Julaju was
FN4. 192 Ga.App. 601, 385 S.E.2d 677 (1989).
FN5. Id. at 603, 385 S.E.2d 677.
FN6. 256 Ga. 27, 343 S.E.2d 680 (1986) (where testimony of a party-witness is contradictory, testimony will not be
CHAPTER 32: AGENCY FORMATION AND DUTIES 521
FN7.
Strozier,
supra.
To the extent that El Palmar’s initial answer contained an admission that Julaju was its employee, such admission was “withdrawn
FN8.
Jennings v. Psychiatric Health Svcs.,
258 Ga.App. 111, 112, 573 S.E.2d 115 (2002).
FN9. Id. at 113, 573 S.E.2d 115 (citation omitted).
[2] 2. Lopez contends that even if El Palmar’s admission does not preclude summary judgment, genuine issues of material fact
remain regarding Julaju’s employment status.
FN10. OCGA § 51-2-4.
FN11.
American Assn. of Cab Cos. v. Parham,
291 Ga.App. 33, 35(1), 661 S.E.2d 161 (2008);
Cotton States Mut. Ins.
Co. v. Kinzalow,
280 Ga.App. 397, 399-400, 634 S.E.2d 172 (2006).
FN12.
Kinzalow,
supra at 400, 634 S.E.2d 172 (citation and punctuation omitted).
Here, Julaju executed an agreement with Rebollar Mateo, Inc. d/b/a El Palmar Taxi that he would work for El Palmar as an
FN13. Mateo Rebollar, Sr., was the owner of El Palmar Taxi.
The evidence does not show that El Palmar assumed control over the time, manner or method of Julaju’s work. He was free to
FN14. See
Metro Taxi v. Brackett,
273 Ga.App. 122, 614 S.E.2d 232 (2005) (no employer-employee relationship shown
FN15. See
Red Top Cab Co. v. Hyder,
130 Ga.App. 870, 871, 204 S.E.2d 814 (1974) (fact that company relayed
messages when someone called for a taxi was not sufficient to show driver was company’s agent);
Clark v. Atlanta
Veterans Transp.,
113 Ga.App. 531, 532, 148 S.E.2d 921 (1966) (proof that cab was lettered “Checker Cab” was not
FN16.
Parham,
supra (citation omitted).
FN17. See generally
Moss v. Central of Ga. R. Co.,
135 Ga.App. 904, 906, 219 S.E.2d 593 (1975) (one may be both a
FN18. See
Metro Taxi,
supra at 123, 614 S.E.2d 232.
[6] 3. Lopez contends that El Palmar should be held liable for any negligence by Julaju because it held its drivers out to the public
as employees by advertising in the local telephone book and by using business cards bearing the company name, not the driver’s
FN19.
Richmond County Hosp. Auth. v. Brown,
257 Ga. 507, 508, 361 S.E.2d 164 (1987) (citing Restatement of the Law,
Agency, § 267).
FN20. Supra.
Suppose a cab company holds itself out to the public as a safe, efficient supplier of transportation causing the public, including
FN21. Id. at 509, 361 S.E.2d 164.
FN22. See
Cooper v. Olivent,
271 Ga.App. 563, 565(2), 610 S.E.2d 106 (2005) (noting that, under
Richmond County,
taxicab passenger can pursue apparent agency claim against cab company where company represents that its driver is
an employee when the driver is actually an independent contractor);
Loudermilk Enterprises v. Hurtig,
214 Ga.App. 746,
FN23.
Bennett v. Miller,
188 Ga.App. 72, 74, 371 S.E.2d 903 (1988).
FN24.
Arrington & Blount Ford v. Jinks,
154 Ga.App. 785, 786-787(1), 270 S.E.2d 27 (1980) (citations and punctuation
omitted).
FN25. See
Loudermilk Enterprises,
supra at 752, 449 S.E.2d 141 (Johnson, J., concurring specially) (“In many instances,
passengers undoubtedly choose to ride in cabs apparently owned and operated by established companies because they
FN26. See generally
Watson v. Howard Johnson Franchise Systems,
216 Ga.App. 237, 453 S.E.2d 758 (1995).
Case 32.2
Ky.App.,2010.
Laurel Creek Health Care Center v. Bishop
Not Reported in S.W.3d, 2010 WL 985299 (Ky.App.)
Court of Appeals of Kentucky.
a Mini-Mental State Examination. During that examination, Gilbert communicated to Laurel Creek staff that he could not use his
hands well enough to write or hold a pencil. Gilbert was otherwise found to be mentally competent.
Gilbert’s sister, Rachel Combs, arrived after Gilbert had been placed in a room. In her deposition, Rachel testified that when she
arrived at the facility she offered to sign the admissions forms, but Laurel Creek employees told her that it was their policy to have
the patient’s spouse sign the admissions papers if the patient was unable to sign them. Rachel also testified that Gilbert asked her
1. Gilbert Bishop had the mental capacity to contract.
2. Gilbert Bishop did not sign the purported arbitration agreement.
3. Gilbert Bishop’s wife, Anna Bishop, signed the purported arbitration agreement.
5. Gilbert Bishop’s words or actions did not give Anna Bishop actual, apparent, or implied authority to sign the purported
arbitration agreement.
Laurel Creek now appeals, arguing that the trial court’s last finding of fact is not supported by substantial evidence and is incorrect
as a matter of law.
§ 2.01.
We agree with Laurel Creek that Gilbert created an actual agency relationship between him and his wife. According to his sister,
Rachel, Gilbert specifically asked that his wife be brought to the nursing home so that she could sign the admissions documents for
him, and Anna acted upon that delegation of authority and signed the admissions papers. This is consistent with the creation of
actual authority as described in the Restatement (Third) of Agency § 2.01, comment c (2006). The Restatement explains the
general delegation which Anna believed in good faith extended to the admissions agreement.
In the alternative, if this is not a case of actual agency, it is a case of apparent or implied agency. “Apparent authority is the power
held by an agent or other actor to affect a principal’s legal relations with third parties when a third party reasonably believes the
actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations.” Restatement
(Third) of Agency § 2.03 (2006).
See also Mt. Holly Nursing Center v. Crowdus,
281 S.W.3d 809, 813 (Ky.App.2008). Gilbert told
which Laurel Creek relied. The existence of an agency relationship is supported by substantial evidence, specifically the direct
testimony of Rachel Combs, and therefore the trial court’s ruling that no agency relationship existed is incorrect as a matter of law.
Having found that an agency relationship existed, Laurel Creek’s third argument, that Gilbert’s estate is estopped from denying the
existence of an agency relationship, is moot.
Accordingly, we reverse the May 27, 2009, order of the Clay Circuit Court and remand this matter for further proceedings
Case 32.3
Ariz.App. Div. 1,2010.
Taser Intern., Inc. v. Ward
224 Ariz. 389, 231 P.3d 921, 159 Lab.Cas. P 60,999, 581 Ariz. Adv. Rep. 23
Court of Appeals of Arizona,
Division 1, Department A.
TASER INTERNATIONAL, INC., a Delaware corporation, Plaintiff/Appellee,
v.
Steve WARD, an individual, Defendant/Appellant.
No. 1 CA-CV 09-0468.
May 13, 2010.
FN1. He also served as Taser’s vice-president of international sales.
4 During his employment, Ward was privy to some of Taser’s confidential information, trade secrets, and other intellectual property.
As a member of Taser’s Vital Factors Team he participated with company executives and other vice-presidents in considering new
product ideas and concepts, product failure rates, product strategies, operational issues, and marketing programs.
FN2. During oral argument before the trial court, Taser argued that Ward had acquired intellectual property related to his
FN3. In his initial business plan, released after his resignation, Ward indicated that his new enterprise, Vievu, was
“utilizing JAM–Proactive … to design the camera.” Taser argued that this indicates that “[w]hile still a senior executive at
FN4. In the reply in support of its motion for summary judgment, Taser stated that Ward “pre-registered to launch [his]
product at [a] [2008] Consumer Electronics Show, a process that necessarily would have been accomplished before Ward
resigned.” Taser cites only to the report of expert Dan Dalton, in which Mr. Dalton stated that Ward would have had to
FN5. Taser described the AXON as a “tactical networkable computer” and as a “state of the art audio-video earpiece with
imager, speaker, and microphone [that] integrates into the communication loop between existing radios and the [officer’s]
communications headset.”
FN6. During oral argument in the trial court, Taser conceded that the duty of loyalty and fiduciary duty claims “overlap.”
Each claim is predicated on nearly identical allegations, and Taser makes no attempt to differentiate the claims or explain
whether its legal theories fall under one or both claims.
(2003).
DISCUSSION
11 Ward argues that the trial court erred by granting Taser summary judgment on the liability aspect of the breach of the duty of
loyalty and fiduciary duty claims. He contends that summary judgment should have been entered in his favor.
FN7. In addition to its motion for partial summary judgment and statement of facts, Taser subsequently filed a
supplemental memorandum supporting its motion and a supplemental appendix of evidence. Ward moved to strike certain
of Taser’s supplemental evidentiary submissions and lodged numerous objections to Taser’s original statement of facts.
CHAPTER 32: AGENCY FORMATION AND DUTIES 527
On appeal, Ward argues that the trial court erred when it failed to rule on his motion and evidentiary objections.
Because reversal is warranted on other grounds, however, we will not address his argument.
13 In its motion, Taser raised the following theories to support its claims: (1) Ward engaged in direct competition with Taser prior to
his resignation; (2) he improperly used Taser’s materials and confidential information; (3) he usurped Taser’s corporate opportunity
in a “second generation on-officer audio and video recording device building from the TASER CAM”; and (4) he failed to inform
FN9. While employed as the vice-president of marketing and vice-president of international sales, Ward’s responsibilities
included management of marketing campaigns and strategies, developing marketing plans, developing and implementing
sales channel strategies in international markets, management of Taser personnel, developing operating budgets,
managing financial performance and budgets, hiring and training of sales employees, and coordinating export and import
§ 8.04. Preparation cannot take the form of “acts in direct competition with the employer’s business.”
McCallister,
170 Ariz. at 457-
58, 825 P.2d at 982-83.
FN10. We independently review whether Ward’s actions were “otherwise wrongful.”
See infra
Parts B and C.
528 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
FN11. Although Ward participated in high-level executive meetings at Taser, he was not responsible for product
conception, design, or development at the company. In support of its motion, Taser cites to
Daniel Orifice Fitting Co. v.
Whalen,
198 Cal.App.2d 791, 18 Cal.Rptr. 659 (1962), for the proposition that it is a breach of an employee’s fiduciary
FN12. In its motion for summary judgment, Taser argues that Ward actively competed during his employment. However,
Taser also takes the contrary position at times that Ward only “planned a competing business” and “laid the groundwork
to compete” while at Taser.
[8][9] 22 Upon review, we agree with Ward that certain of his pre-termination activities are qualitatively different than “direct
competition” and cannot form the basis for liability. Ward’s partial development of a business plan did not compete with any of
Taser’s business activities, no matter the level of included detail. A business plan, by its very nature, is only a plan, and without
[10] 23 Similarly, under the circumstances of this case, any preliminary research and development efforts aimed at assessing the
possibility of developing a camera device did not constitute direct competition with Taser. There is no evidence that Ward’s
activities with the eyeglass-mounted camera concept went beyond preliminary investigation. Consequently, Ward’s preliminary
research into the eyeglass-mounted camera concept, which he later abandoned, cannot constitute a breach of his duty of loyalty.
Additionally, any preliminary research conducted by Ward into the development of the clip-on camera device, including seeking a
CHAPTER 32: AGENCY FORMATION AND DUTIES 529
research, design, development, manufacture, and marketing of products, we cannot limit “competition” to just actual sales of
competing products.
FN13. The parties vigorously dispute whether Taser planned to or was engaged in the research and development of a
competing device while Ward was employed, and, if so, whether Ward was aware of any such plans or efforts.
Additionally, in its filings with the trial court and on appeal, Taser makes no attempt to compare TASER CAM or TASER
AXON with Ward’s device. Rather, Taser merely concludes that Ward’s device would compete with Taser’s products
based on statements in Ward’s initial business plan. Because other questions of fact dictate reversal, however, we need
not decide whether there are genuine issues of material fact in these respects.
25 Summary judgment on this theory is nevertheless improper because a genuine issue of material fact exists as to the extent of
Ward’s pre-termination design and development efforts. In support of the conclusion that Ward actively competed prior to his
resignation, Taser submitted evidence which indicated that he engaged in pre-termination communications with staff at JAM-
B. Use of Taser Resources and Confidential Information
27 Although an employee may, absent a non-compete covenant, compete with a former employer or prepare to compete with a
current employer, “the tactics that an agent may use … are subject to legal limits.” Restatement (Third) of Agency § 8.04 cmt. b.
Specifically, “[a]n agent has a duty (1) not to use property of the principal for the agent’s own purposes …; and (2) not to use or
communicate confidential information of the principal for the agent’s own purposes or those of a third party.” Restatement (Third) of
Agency § 8.05.
28 Taser argues that Ward both performed his pretermination camera-development efforts on company time and with company
resources, and used proprietary information in developing his clip-on camera device and business.
1. Improper Use of Taser Resources
[12] 29 We find no evidence in the record demonstrating that Ward used Taser’s time, facilities, or resources in his pre-termination
camera-development efforts. In its statements of fact, Taser stated that “Ward used his laptop in developing [his] company.” To
support its statement, Taser cited to a portion of the deposition of Amy Pich, Ward’s girlfriend. That portion, however, was not
FN14. Although the actual privilege log does not contain evidence of what specific times correspondence was sent, Taser
FN15. In his declaration, Ward states that: (1) “[a]t no time during [his] employment … did [he] use TASER’s time,
530 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
2. Improper Use of Confidential Information
[13] 31 “An agent’s relationship with a principal may result in the agent learning information … that the agent should reasonably
understand the principal expects the agent to keep confidential.” Restatement (Third) of Agency § 8.05 cmt. c. The duty of
(1971)).
[14] 32 Although it is undisputed that Ward was exposed to certain trade secrets and other confidential information, and retained
notes taken during Taser strategy sessions,FN16 there is a genuine issue of material fact whether he used any such information in
the development of his product or operation of his business.FN17 In his declaration, Ward states that, “[he is] unaware of any
FN16. Taser argues that Ward violated his duty of loyalty when he “secret[ed] away notes and other items marked
confidential relating to product concepts and discussions.” Although Taser presents evidence that Ward retained certain
FN17. Taser presented evidence that Ward retained a copy of its non disclosure agreement, substituted Vievu’s name for
Taser’s in the document, and is using it. Taser contends that Vievu’s use of the document constitutes an actionable
FN18. To the extent that Taser points to specific information that Ward was exposed to at Taser, there is nevertheless a
FN19. The trial court similarly denied a motion for summary judgment on Taser’s misappropriation of trade secrets claim
and concluded that “there [was] a genuine issue of material fact as to whether or not a relevant and legally recognizable
trade secret existed and whether or not Defendant misappropriated or converted such a trade secret for Defendant’s own
use.”
C. Corporate Opportunity
CHAPTER 32: AGENCY FORMATION AND DUTIES 531
34 Taser argues that Ward usurped its corporate opportunity in a second-generation personal video and audio recording product.
During oral argument before the trial court, Taser argued that, because it was the market leader in “recording the truth,” both an
eyeglass-mounted recording device and any other on-officer recording device are its corporate opportunities. Taser reasserted its
position during oral argument on appeal. Ward argues, however, that “the publicly available idea of a wearable camera … is … not
a ‘corporate opportunity’ capable of being ‘usurped,’ ” and that this “is not a situation in which Ward was presented with an
opportunity to purchase some asset or to enter into some deal, contract, or other transaction that he stole from TASER.” He
contends that Taser “cannot claim the universe of all cameras used by law enforcement as Taser’s own personal corporate
opportunity, thereby precluding any former employee from competing in any way in that space.”
35 The record does not support Taser’s charge that Ward “wrongfully deprived” it of any business opportunities. Taser does not
argue that Ward usurped any concrete opportunity to purchase goods, services, or property, or to enter into some contract or other
business transaction. Rather, Taser argues only that Ward took its opportunity to develop a second-generation recording device.
Taser’s success in developing, marketing, and selling its newly-released TASER AXON, the product it contends resulted from its
early interest in developing a second-generation recording device, belies its argument. Taser presented no evidence that Ward
divested it of any concrete opportunity that Ward learned of while a Taser employee. Had Ward learned of a potential partnership
with a sunglasses manufacturer, for example, to develop an eyeglass-mounted camera, or learned of a specific prospective client’s
interest in purchasing a clip-on camera, and taken those opportunities for himself without proper disclosure, the corporate
opportunity doctrine would be implicated. Taser, however, argued only that Ward usurped its opportunity in a second-generation
personal video and audio recording product without any explanation of what precise opportunity Ward usurped.FN21
FN21. At oral argument on appeal, Taser argued that Ward usurped its opportunity to take advantage of 2007 end-of-year
law enforcement purchasing. Taser, however, did not present any evidence that it lost the opportunity to sell one of its
products to law enforcement or that Ward sold his clip-on camera to law enforcement.
36 If the corporate opportunity doctrine is extended to all possible business ideas discussed, or learned about in the course of
FN22. Ward testified and presented evidence that “[s]cores of cameras that can be mounted on people and apparel have
been widely available on the market for years.”
FN23. In an August 2006 strategic meeting involving Ward, the concepts of “cameras mount[ed] on anything,” “adventure
gear,” “IED prevention,” “perimeter border fencing,” and “streaming video” were discussed. Taser’s conception of the
corporate opportunity doctrine would have the effect of precluding Ward from developing a product pertaining to any of
the discussed concepts because Ward heard discussions of them while employed by Taser, and therefore they are
exclusively Taser’s corporate opportunities to explore and develop.
73 S.W.3d 193, 201 (Tex.2002) (“An at–will employee may properly plan to go into competition with his employer” and “[the]
employee has no general duty to disclose his plans to his employer….”). To require employees to divulge such information to their
employers “would create an undesirable impediment to free competition in the commercial and industrial sectors of our economy.”
Maryland Metals,
382 A.2d at 573. Therefore, to the extent that Taser contends that Ward had a duty to disclose his plans to form
a competing business, we reverse summary judgment and direct entry of judgment in this respect to Ward.
See Roosevelt Sav.