Legal Question in Business Law in California

Re: stealing business

What's wrong with this picture? First, you own a mortgage company and your best resource for legal advice is some internet bulletin board? Second, did you have your employee sign a noncompete agreement at the time of hire? You might still be able to take legal action against your ex-employee, but now that the horse has been stolen maybe it's time to start thinking about locking the barn door. Having a lawyer draft a noncompete agreement -- not a canned form from some web site -- would be a good idea.

Re: stealing business

You would be entitled under those facts to bring legal action against the employee and the new company for 'unfair competition' and related causes of action. If you promptly don't do something to stop it once you learn of it, you will not only lose money and customers, but could arguably waive your right to complain. Feel free to contact me for the legal help you need in doing this.

Re: stealing business

I agree with both of these responses. Our CA attorney can assist you with both of these issues.

Re: stealing business

To the extent that your ex-employee is using your leads and contact info that he gained while he was an employee, he is stealing confidential information, and can be stopped from doing so. To the extent that he is calling your present employees and telling them to send him their leads, he is inducing your employees to breach their contracts with you, which is a tort and can subject him to damages and punitive damages. However, a stern letter to him with a copy to his employer would probably put a stop to the practice without litigation.

Re: stealing business

OK, here's a third and differing view. I disagree with Mr. Stone because California does not permit non-compete agreements of this sort, see Business and Professions Code section 16600. A non-compete agreement would not be worth the paper it's written on.

You could, as Mr. Nelson suggests, bring a legal action under California's very broad unfair competition statute, B&P Code sections 17200 et seq. In at least one case, the Court of Appeal has stated that this law authorizes a trial court to grant an injunction against current or former employees funneling customer information to a competitor [see Courtest Temporary Service, Inc. v. Camacho (1990) 222 Cal.App.3d 1278 at pages 1291 and 1292].

However, this also and perhaps more specifically falls under the Uniform Trade Secrets Act, Civil Code sections 3426 through 3426.11. Your customer information is probably trade secret; the Act authorizes both injunction and money damages, and if the misappropriation of your trade secrets was wilful and malicious, you may get an award of attorney fees and exemplary (punitive) damages.

You should also include a tort claim for intentional interference with prospective economic advantage in your suit. A careful review of the facts may suggest other claims and causes of action.