Legal Question in Employment Law in California
non compete or client list
I am an employee of a corporation. I work as a sales rep and also do training for them. Their service is to provide training to others. They purchased a company from another person. They agreed to make payments for this purchase, including that client list. They have failed to make payments, and must cease doing business at the end of this month. I am a certified trainer in my field. I can go into business for myself. My question is: can I use their client list for sales on my own? I would NOT be in competition with the company, as the compnay is going out of business. From my research, a non-compete applies here. However.... 1) I never signed one, 2) unenforceable in CA 3) non-compete is a non-issue if they GO OUT OF BUSINESS!! Can I use their client list? Is there a law that would prevent me from doing so? Either way, what law states what my legal action can be? Thanks.
2 Answers from Attorneys
Re: non compete or client list
You ask many questions about a very complicated area of law that could lead to expensive litigation if mishandled.
Cases have treated customer lists as a trade secret, if certain conditions are met. Trade secrets are akin to a property right of the entity that owns the trade secret. One simply cannot assume the entity no longer needs it and appropriate that information for their own economic gain. If you believe you could do this, why haven't you just asked the company's permission to use the customer list?
You are correct that California does not enforce non-compete agreements, but one specific exemption to this rule is where the employer must protect a trade secret.
There are ways to lawfully set up your business and, possibly, conduct business with customers on the list but you really should sit down with an attorney to examine the entire situation to help determine what you can or cannot do so you don't find yourself on the receiving end of a nasty lawsuit.
Re: non compete or client list
Using customer lists like that would be a sure-fire way to get sued. IF the company goes out of business, then maybe you wouldn't be sued, but don't bet on it. Better to get consent, even if it requires some royalty or other payment. Contact me if interested in doing this right.
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