Published in North of Boston Business Magazine (Fall 2019)
It appears it may be more difficult for former employees to utilize certain “remembered information” obtained through previous employment for the benefit of their new employer. This is particularly so where that information may be defined as “Confidential Information” subject to a written employment agreement.
In a recent court case the ex-employee’s clients came to him almost exclusively through the internal operations of his employer, and not “cold calls” made by the employee himself. When the employee resigned and went to work for a direct competitor, he created a written list of clients from his old firm which he claimed to have prepared entirely from memory. He gave the list to his new employer who then filled it out using publicly available sources. Subsequently, the former employee used the list to contact the clients.
Not surprisingly, the former employer sued for violation of an fairly typical employment agreement containing a proscription against client solicitation. The Court found that the identities of the clients constituted “Confidential Information” even where the information resided solely in the former employee’s memory. The Court expressly rejected arguments which denied any liability based upon only “remembered information,” a defense which has been well recognized and utilized successfully in the past.
The former employee also claimed that all he did was call his former clients and tell them he had gone to another firm, unless the client requested additional information. The Court found that these client contacts were effectively solicitations. The calls were designed to persuade the clients to transfer their accounts, not just to inform them of the employee’s new position. Such verbal departure announcements are clearly problematic.
The bottom line: Massachusetts employees who are planning to depart for a competing business should have any written agreement carefully scrutinized, and should discuss with counsel the viability of using “remembered information” to avoid winding up in court.