Legal Question in Business Law in California

Re: trade secret and confidentiality agreement

I agree with much of what the other posts have said. However, I will add that trade secrets can go beyond just the identity of the customers and include buying habits, purchase rates, etc. Therefore, if one were to solicit a former customer of a prior job by saying, "Hey Fred, I know you need 8 crates per week and were paying $8 over at XYZ Company. Would you follow me to my new place if I can get it to you for $7.50?"

The fact of the matter is that trade secrets are very much enforceable and if the former employer sues it will cost a great deal just to defend the case even if you are ultimately right.

Given that the company has already contacted you, you should use caution in how you proceed and should consult with an attorney to get appropriate guidelines to follow. Every situation is unique and you should not rely on any general guidance.

Contact me if you have questions.

Re: trade secret and confidentiality agreement

Most likely not. They might bring an action against you, but such contracts are notoriously difficult to enforce in California, very difficult to prove a breech and generally limited to the amount they can recover (if I understand what you are doing correctly). If you legitimate not braking your confidentiality agreement/non-compete/trade secret law, and you can provide evidence to this fact, the likelihood of them recovering against you is very small. Most likely they are trying to scare you to stop competing with them. However, if this continues, talk to an attorney.

Re: trade secret and confidentiality agreement

I generally agree with the previous answer, but I'm a little more cautious on the possible complaint for misappropriation of trade secrets.

A customer list can be a trade secret if it meets two criteria: (1) it must have independent commercial value, i.e., it was developed by the owner at some expense and contains information not readily available to others from the Yellow Pages or standard industry directories; and (2) the owner made at least some attempt to protect its secrecy or limit its use, which might be as slight as telling employees with access that it was secret and to use it with due regard for that fact.

A trade secret (such as a customer list) can be misappropriated by taking it away "in your head" as well as by snitching the boss's Rolodex on your last day. Obviously, you can't do a mental core dump and forget everything you've learned when you go to a competitor (which, by the way, is always legal despite anything you signed). Judges would expect you to remember what you used to do at the old job. However, if you embarked on a deliberate and obvious pattern of calling on former customers and using information about them that the old employer had developed, you might step over the boundary between innocently pursuing your occupation as a salesperson and being a misappropriator of trade secrets.

I agree that cases like this are hard to prove and win for the plaintiff, due to the strong public policy favoring an employee's right to change jobs, but I also think that overly blatant piracy of trade secrets including valuable customer information is likely to be sufficiently troublesome to a judge that the employer might prevail.

Threats outnumber filed lawsuits in this area by a large margin, but be a bit cautious.