Use of inside information to transition customers to the competitor

Our client was a small business victimized by two of its former employees. After one of them was alerted she’d be laid off due to the closing of her office, she surreptitiously began to solicit customers after our client permitted her to remain at work until her formal termination date. She enlisted the help of another employee, her long-time friend, and the two solicited several customers. The second employee resigned about 6 weeks after the first was let go, and the two joined forces at a competitor. They used inside information from our client to transition several customers to the competitor.

Result: Though our client did not, unfortunately, have noncompetition agreements with its employees, we were able to collect enough information about their surreptitious activities to establish claims for misuse of confidential information and breach of the duty of loyalty that an employee owes to its employer. We filed suit and obtained an injunction that barred the employees from using our client’s information and from soliciting any of its customers.