Legal Question in Business Law in California

Business conflict of interest

My father works for Company A whose owners used to also own Company B and the companies shared the same building. They also shared the same computer system and both companies could see the others customers and vendors. Now, the owners have sold company B but retained A (which my father works for). They still share the same building and same computer system.

The question: I have started a company that will be a competitor to the new owners of company B, but will not compete with company A (my father's company), but I am worried the we will be sued just because of the proximity and appearance of impropriety. My father has nothing to do with my business and I have been in this industry all my life. What can we do? My father has a lucrative employment agreement with Company A and I dont want to jeopardize it. Thanks!!


Asked on 4/03/09, 6:39 pm

3 Answers from Attorneys

Terry A. Nelson Nelson & Lawless

Re: Business conflict of interest

There is no way of getting a 'simple answer' to your problems. There is nothing anyone can do to prevent being sued. "anybody can sue anybody for anything" is the cliche. You may be able to work out some agreement among all the players that they can abide by. Consult with an attorney to discuss all the facts. Feel free to contact me if you're serious about getting legal help doing this.

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Answered on 4/03/09, 7:13 pm
Edward Hoffman Law Offices of Edward A. Hoffman

Re: Business conflict of interest

It is not a conflict for the adult children of an employee to compete with their father's employer. Thus, even if you directly competed with Company A, the mere fact that your father works for A would not result in a conflict. If you are not competing against A then there is even less reason to worry.

Is there more to the story? Would your father be involved with your new company? Have you ever been involved with Company A? Do you and he live together? Being your father's child won't create a conflict, but there may be other factors here that you didn't mention.

Of course, what matters is whether A will act against your father, not whether its actions would be justified. (He may even have a contract which says he can be fired if an immediate family member becomes a direct competitor.) I have no way to assess this risk. Have you discussed it with your father?

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Answered on 4/03/09, 8:15 pm
Adam Telanoff Telanoff & Telanoff

Re: Business conflict of interest

On the surface it appears not to be a problem. There is no way, however, to give any more specific answer on these limited facts.

If you are really concerned, you should consult with an attorney, and let them get into all the facts.

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Answered on 4/06/09, 10:25 am


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