Town and Country House & Home Service, Inc. v. Newbery
3 N.Y.2d 554, 170 N.Y.S.2d 328, 147 N.E.2d 724 (1958).
Former employees left Town and Country and started their own cleaning company. When they solicited Town and Country’s customers, suit was filed for an injunction and damages under the theory of unfair competition.
The trial court dismissed the claim:
- There were no covenants in place.
- Housekeeping and cleaning are not confidential trade secrets.
The Appellate Division reversed:
- The defendants conspired to terminate their employment and then solicit the plaintiff’s customers.
What relief is Town and Country entitled to, if any?
Town and Country is entitled to enjoin the defendants from further solicitation of its customers, or that some profits or damage be paid to plaintiff by reason of the customers whom they enticed away.
- However, Town and Country is NOT entitled to enjoin them from operating a competing business.
The court found that the plaintiff’s list of customers did constitute a trade secret:
- The customers were not and could not be obtained merely by looking up their names in the city directory – they were the result a screening process that required considerable effort and expense.
- The court noted that had the customers been equally available to both parties, it might be a different story.
“Even where a solicitor of business does not operate fraudulently under the banner of his former employer, he still may not solicit the latter’s customers who are not openly engaged in business in advertised locations or whose availability as patrons cannot readily be ascertained but ‘whose trade and patronage have been secured by years of business effort and advertising, and the expenditure of time and money, constituting a part of the good will of a business which enterprise and foresight have built up.”
Basically, in some respects, you can still owe a fiduciary duty to your former employer even though you are no longer working for him.