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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND SOUTHERN DIVISION PLANMATICS, INC., Plaintiff/ Counter-Defendant, vs. ROBERT SHOWERS, Defendant/ Counter-Claimant.

Civil Action No. AW-97-4065

MEMORANDUM OPINION This action stems from a non-competition agreement allegedly formed between Planmatics, Inc. ("Planmatics") and its former employee, Defendant Robert Showers. Plaintiff alleges that Showers breached the non-competition agreement and engaged in conduct during his employment that amounted to a breach of his fiduciary duties. Currently pending before the Court is Defendant's Motion for Summary Judgment [64-1]. Defendant's motion for summary judgment does not attack the validity of the non-competition agreement or the alleged breach. Rather, Defendant primarily confines his argument to the absence of proof of damages caused by the alleged breaches. The motion has been fully briefed by both parties.1 No hearing is deemed necessary. See Local Rule 105.6. Upon consideration of the arguments made in support of, and opposition to, the motion, the Court makes the following determinations. I. FACTUAL BACKGROUND Planmatics is a consulting business that offers its services to customers throughout the United States. Anura deSilva is its President and Chief Executive Officer. In 1993, Planmatics procured a contract with Ryder Integrated Logistics, Inc., a subsidiary of Ryder Systems, Inc. (collectively

The Court notes that Plaintiff's opposition is untimely and was filed without leave of court in contravention to the local rules. See Local Rule 105.2. Nonetheless, the Court shall sua sponte grant Plaintiff leave to file its opposition nunc pro tunc.

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"Ryder"). This was the only written contract between Planmatics and Ryder. Any additional work beyond the contract was based upon subsequent oral agreements and confirmatory memoranda. In July 1994, Planmatics hired Robert Showers to provide marketing and consulting services to its customers. According to Plaintiff, as a condition of Showers' employment, he was required to sign a non-competition agreement. The non-competition agreement restricted Showers from engaging in market or consulting services with certain customers, including Ryder, for a period of two years after the termination of his employment with Planmatics. During his tenure, Showers was primarily assigned to work on Planmatics' contract with Ryder. Along with other contractors assigned to the project, Showers worked under the direction of Glen Riser, the senior project manager from Ryder. The compensation of Planmatics and the other vendors assigned to the project was directed through Riser. Over the course of the project, Planmatics submitted invoices to Ryder through Riser for payment. In 1995, Gay Ann Miller, one of Riser's subordinates, questioned the appropriateness of some of the invoices submitted on Planmatics' behalf. Such invoices included bills for entertainment, strip clubs, restaurants, bars, first class airline tickets, duplicates, and a personal phone for Riser. After her inquiries received a hostile response from Riser, Miller reported the questionable billing practices to Ryder's management. Thereafter, Ryder dispensed a team led by Miller to perform an audit of the invoices submitted by Planmatics. In a letter dated October 5, 1995, Henry Fiallo, Ryder's Vice President of Information Systems, informed Mr. deSilva that a credit of $48,941.01 would be taken against Planmatics' outstanding invoices. The 1995 audit resulted in the termination of Riser with Ms. Miller taking his place. In June 1996, Showers terminated his employment with Planmatics. In tendering his resignation, Showers indicated that he intended to start his own business. From July 1996 through March 1997, Showers ran his own consulting business. Soon after his termination, Showers was contracted by Ryder to perform warehouse management and consulting work on several projects. In December 1997, Plaintiff instituted the present action.

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II.

DISCUSSION A. Legal Standard

Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment will be granted when no genuine dispute of material fact exists and the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). "Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex, 477 U.S. at 327 (quoting Fed. R. Civ. P. 1). The court must "draw all justifiable inferences in favor of the nonmoving party, including questions of credibility and of the weight to be accorded particular evidence." Masson v. New Yorker Magazine, 501 U.S. 496, 520, 111 S.Ct. 2419 (1991) (citations omitted). While the evidence of the nonmovant is to be believed and all justifiable inferences drawn in his or her favor, a party cannot create a genuine dispute of material fact through mere speculation or compilation of inferences. See Deans v. CSX Transportation, Inc., 152 F.3d 326, 330-31 (4th Cir. 1998). In responding to a proper motion for summary judgment, the opposing party must present evidence of specific facts from which the finder of fact could reasonably find for him or her. See Anderson, 477 U.S. at 252; Celotex Corp., 477 U.S. at 322-23. As a result, the burden of production shifts to the nonmovant to show a genuine factual dispute exists as to the issues in controversy. See Celotex Corp., 477 U.S. at 317. In the absence of contradictory evidence showing a genuine dispute as to a material fact, the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317 (1986). For the purposes of summary judgment, a genuine dispute exists if a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 248. B. Evidence Considered on Motion for Summary Judgment 1. Deposition Testimony

In his motion for summary judgment, Defendant relies heavily on the deposition testimony of Ryder employees to establish that, as a result of the billing irregularities, Ryder would not do any future business with Planmatics. Rather than produce contradictory evidence showing a reasonable 3

likelihood that Planmatics could have received Ryder's business in the future despite the 1995 audit, Plaintiff asserts that the main portions of the employees' testimony are inadmissible hearsay that cannot be considered on a motion for summary judgment. Specifically, Plaintiff asserts that the deposition testimony of Robert Gibler and Gay Ann Miller relating that they and the other managers at Ryder were instructed by their supervisor, Henry Fiallo, not to divert any future work to Planmatics is hearsay. Showers counters that the statements are not hearsay because they are not offered for the truth of the matter asserted therein. Rather, Showers maintains that the instructions constitute verbal acts evidencing the fact of a imperative command by Henry Fiallo not to use Planmatics' services. On a motion for summary judgment, a district court may only consider evidence that would be admissible at trial. See Rohrbough v. Wyeth Laboratories, Inc., 916 F.2d 970, 973 (4th Cir. 1990); Keziah v. W.M. Brown & Son, Inc., 888 F.2d 322, 326 (4th Cir. 1989). "Hearsay is `a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." United States v. Lis, 120 F.2d 28, 30 (4th Cir. 1997) (alterations in original) (quoting Fed. R. Evid. 801(c)). Therefore, statements offered to prove the making of the declarations are not inadmissible hearsay. See United States v. Samuel, 431 F.2d 610, 6413 (4th Cir. 1970). In her deposition, Ms. Miller stated, in pertinent part, As a result of that meeting, Henry did go on to explain to me that because of the audit, because of the unethical business practices, if you will, and because of things that were being charged through within his division, Planmatics was considered - should never do business again within the RIL/MIS division. So I was instructed as a manager that they could never come back in and do business within our division. And Henry, you know, informed all his managers, that are my peers, of that. (Def. Mot. Summ. J., Ex. 4 Miller Depo. at 23-24) Ms. Miller's testimony relates Mr. Fiallo's instructions to her to divert new business away from Planmatics and explains her subsequent efforts to withhold new business from Planmatics. Along these same lines, Mr. Gibler testified in his deposition as follows: After the meeting it was very clear to me that Henry Fiallo had no intention of allowing Anura to do additional work. Shar did not specifically say that we would not 4

do additional work with Planmatics, however, he was not at all encouraging. And the feeling that I went away with was that it would not be a good idea to bring up Planmatics again. . . . . I had a very definite feeling from Shar that I was not to use Planmatics. (Def. Mot. Summ. J., Ex. 5 Gibler Depo. at 22-23) Mr. Gibler's testimony recounts his own personal impression of the events and actions he witnessed following the discovery of the improper billings and explains his reasons for not directing any more new business to Planmatics. The testimony of both witness is not being offered for the truth of the matter asserted therein. Rather, their significance lies in the actual making of the statement by high-ranking officials instructing the managers of Ryder not to do business with Planmatics. Although the Fourth Circuit has not directly spoken on the matter, other courts of appeals have agreed that out-of-court declarations to a witness offered for the purposes of proving the fact of the instruction or command are not hearsay as defined by Fed. R. Evid. 801(c). See United States v. Murphy, 193 F.3d 1, 5-6 (5th Cir. 1999); United States v. Bellomo, 176 F.3d 580, 586 (2d Cir. 1999), cert. denied, 528 U.S. 987, 120 S.Ct. 447 (1999) ("Statements offered as evidence of commands or threats or rules directed to the witness, rather than for the truth of the matter asserted therein, are not hearsay."); United States v. Reilly, 33 F.3d 1396, 1410 (3d Cir. 1994) (quoting Graham, Federal Practice and Procedure: Evidence

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