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Gross v. Searle

June 29, 1984

GROSS, CHARLES E.
v.
SEARLE, G.D., & CO., A DELAWARE-CORPORATION, AND SEARLE OPTICAL, INC., A TEXAS CORPORATION EYELAB, INC., APPELLANT



On Appeal from the United States District Court for the District of New Jersey.

Garth and Sloviter, Circuit Judges and Neaher, District Judge*fn*

Author: Garth

Opinion OF THE COURT

GARTH, Circuit Judge.

The question presented here is whether Eyelab, a non-party witness which refused to comply with a subpoena, may nevertheless maintain this appeal where it is yet to be held in contempt.

Charles E. Gross filed this action against his former employer, Searle Optical, Inc., ["Searle"] to recover financial benefits after his employment with Searle was terminated. Searle refused to pay Gross certain claimed benefits, relying upon the terms of an agreement which provided that all benefits would be forfeit if an ex-employee entered into competition with his former employer within five years of leaving his job at Searle. Searle claimed that Gross's new job with Eyelab, Inc. placed him in competition with Searle, thus violating the terms of the benefits agreement. To prove this contention, Searle sought certain discovery materials from Eyelab by way of a subpoena duces tecum. Eyelab refused to comply with this subpoena, and Searle sought a court order directing Eyelab to comply.

At Eyelab's insistence, the district court entered a protective order. The district court then affirmed the magistrate's determination that Eyelab, although not in contempt, had to comply with the subpoena. Eyelab then filed an appeal to this court, challenging the scope of review*fn1 afforded the magistrate's determination by the district court and the protective order itself. Because we conclude that the order appealed from is not an appealable order, Eyelab's appeal will be dismissed.

I.

Plaintiff Gross is a former vice president of defendant, Searle Optical, Inc. ["Searle"], the eyecare products division of G.D. Searle & Co.*fn2 In that position, Gross was in charge of eyeglass frame buying and marketing. As a high-level employee, Gross participated in an incentive program known as the Reward Retention Program which was funded by Searle. Under the terms of the incentive-program agreement, the employee promised not to engage in competition against Searle for a period of five years should he leave the company. The agreement did not seek to preven competitive employment, but rather conditioned payment of benefits on the employee's agreement not to compete.

In October 1981, Gross ceased working for Searle and in April 1982, he applied for payment of benefits under the Reward Retention Program. However, Searle declined to pay Gross, claiming that Gross had started to work for Eyelab, Inc., one of Searle's competitiors, and that he was in fact engaged in competition with his former employer. Gross claimed that his position at Eyelab was merely as an optician and as such, he did not violate the non-competition agreement. Searle continued in its refusal to pay and, on September 14, 1982, this action was instituted.*fn3

II.

During the course of discovery, Searle took the deposition of Mr. Hillman, the president of Eyelab. Mr. Hillman was willing to, and did answer all of the questions posed to him concerning Gross' employment, but refused to respond to questions about other employees or to produce Eyelab's personnel files and records concerning the compensation and job responsibilities of other Eyelab employees. Two months later, Searle served a subpoena duces tecum on Eyelab,*fn4 stating that in order to maintain its defense, it must have some access to records and information known only to Eyelab, a non-party witness. Eyelab did not comply with the subpoena, and Searle brought a motion to compel compliance, for sanctions, and to find Eyelab in contempt.

This motion was heard by a magistrate, who denied the contempt motion but issued a protective order requiring compliance with the subpoena and the assessment of costs against Eyelab. That order was affirmed by the district court judge, who reviewed the magistrate's decision and order under 28 U.S.C. ยง 636(b)(1)(A) and found it neither clearly erroneous nor contrary to law. Eyelab then filed this ...


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