On April 23, 2024, the First Department issued a decision in At Last Sportswear, Inc. v. Byron, 2024 NY Slip Op. 02135, holding that breach of loyalty and breach of an employment contract claims were not duplicative, explaining:
The dismissed tort claims are not duplicative of plaintiff’s breach of contract cause of action. In addition to contractual duties, the law recognizes independent common-law duties that are incidental to the relationship between parties. Where the same conduct constitutes a breach of a contractual obligation and the breach of a duty independent and distinct from the contract, a party may be subject to both breach of contract and tort claims.
As relevant here, such a distinct common-law duty has been recognized in the form of a duty of loyalty of an employee to an employer, precluding an employee from, among other things, misusing an employers’ confidential or proprietary information, such as by sharing that information with a competitor while still employed. The breach of such a duty permits recovery of faithless servant damages, requiring the forfeiting of compensation and disgorging of ill-gotten profits.
Here, the breach of contract claim is based on the allegation that the employee violated a confidentiality provision by taking and distributing proprietary information, and the tort-based claims are based on allegations that the employee engaged in conduct against the employer’s interest by taking and distributing confidential information while employed, to assist in the creation of a competing company. Under such circumstances, the employer may assert both tort-based claims rooted in the violation of the duty of loyalty and breach of contract. While the court correctly rejected defendant’s contention that the breach of fiduciary claim should be dismissed as duplicative of the contract claim, for the same reasons, it should have rejected the contention that the tort-based claims were duplicative of the contract claim.
(Internal citations omitted).