I recently learned of a case out of Eastern Virginia – Depuy Synthes Sales Inc. v. Jones – where employees of one medical device manufacturer (Depuy), left to join a competing company (Sky Surgical) and were quickly sued by their former employers.
In the lawsuit, it was alleged the employees violated their contracts, (non-compete and non-solicitation clauses) and that Sky Surgical, the new employer, was also liable to Depuy for tortuously interfering with Depuy’s contract with the employees.
While it is neither surprising to me that the old employer would file suit naming the new employer, it was surprising to me that the basis of the tortious interference claim was based on the interference of the employment contract — not some kind of third party contract with a customer.
Allow me to explain myself better.
Typically if Company B uses trade secrets or confidential information from Company A to go after Company A’s clients, Company A could allege tortious interference of business expectancy or contract, conspiracy and violation of Va. Trade Secret act. Meaning, you intended to harm us by using this information against us to get our clients.
It is a novel approach however, to allege the hiring of an employee with an existing contract is itself tortious interference of contract. The contract at issue is no longer the contract with the client – but the one with the former employee.
The federal court held however, that the lawsuit sufficiently plead allegations such that at least for now, Depuy could pursue this claim against Sky Surgical. The Court writes in relevant part,
Here…the contracts that Sky Surgical is alleged to have interfered with, the employment contracts between Plaintiff and Jones, and Plaintiff and Schools, include obligations (non-disclosure, non-solicitation, and non-competition) that apply for a period of eighteen months after the end of the employment relationship. Therefore, Jones and Schools could not terminate such contractual obligations “at will.” Stated differently, the complaint alleges that Sky Surgical owed a duty to Plaintiff not to interfere with Plaintiff’s non-terminable contracts with its employees/former employees, and that Sky Surgical’s violation of such duty constituted a tort under Virginia law. In light of the duty alleged, and the non-terminable nature of the contract clauses, by hiring them to compete and essentially asking they violate their contracts with their former employer.
I will admit this approach surprises me. I’ve never seen it. I am not sure I agree with the Court that Virginia law supports such a right of action. I am not sure that simply hiring an employee and inferring they should breach their contract and compete, is tortious interference with that contract.
Either way, it makes me nervous for future clients. Before, when someone left a company with a non-compete in hand, I would advise them their new employer could be named in a suit for conspiring, using trade secrets of their old employer, etc. I would encourage them to disclose the existence of the contract so the new company would know how to act appropriately.
Now, I have to advise them that hiring my client, and asking them to compete (and arguably breach their existing contract, valid or not) is actionable!
This is a huge shift for employees and frankly, for companies who hire individuals with restrictive covenants. One I will continue to monitor, and one that frankly just surprises me.
I attended a most informative class last week, given by a computer forensic expert.
This man is hired (often by attorneys) to examine phones, computers, and other devices, to search for electronic evidence in civil and criminal lawsuits.
In one suit he may be looking for evidence of child porn to convict a suspected criminal.
In one suit he may be looking for emails, photos and documents that support one spouse’s theory that the other is hiding assets or has a sweetie on the side.
In my line of work, these smart and expensive experts are hired to find out what documents, client lists and information you dear employee, took, transferred, stole, or sent to Drop Box before you quit your job. The thumb drive you used to “transfer only personal information,” and the texts you sent to customers telling them you were starting your own firm are just the tip of the iceberg for these enterprising computer experts.
And guess what I learned?
I learned, not only can they typically recover all the information you sent, saved, transferred etc. – they can also:
- Read deleted texts
- Read deleted emails
- Find deleted files
- Discover what paper documents you printed to the office printer before you left
- Discover what documents you transferred to a cloud
- Search all emails using key words to determine whether you at any time, took protected trade secret information home
- Recreate programs and files deleted using program called Evidence Eliminator
Long and short is this – if you tweeted it, messaged someone on Linked In, typed it, saved it, emailed it, transferred it – and you shouldn’t have – they will find out.
And guess what people do when they find out you are taking information from them? THEY SUE YOU.
And guess what I advise you to do when I find out you have taken things (such as client lists, emails) or solicited clients inappropriately? I TELL YOU TO GIVE IT BACK.
Why don’t I make the lawyers do their job and see what they can and cannot prove? Because chances are good you can’t afford that kind of legal battle.
And chances are also good if you let someone go to the computer forensic guy, he will dig up much much more than you and I realize is there.
So, here is the moral of the story.
Have a duty – honor it.
You don’t know whether you have a duty? – find out.
And don’t think you can simply delete everything to protect yourself. Not only will they find it, but Courts typically don’t like the destruction of evidence. It rarely helps your case. Ok, so it never does.
I am going to send a cease and desist letter to all major TV News outlets. The letter will be stern, on my firm’s letterhead, sent certified mail, use punctuation incorrectly, and ALL CAPS for emphasis. The letter will state the following:
DEAR JOURNALIST -
YOU ARE HEREBY COMMANDED TO CEASE AND DESIST FROM YELLING, RAISING YOUR VOICE OR ARGUING WITH ANYONE ON LIVE TV. YOU ARE DESTROYING CIVILITY IN OUR NATION AND I WILL NO LONGER STAND FOR IT.
YOU HAVE 2 DAYS TO CEASE THIS ILLEGAL AND HORRIBLE BEHAVIOR, or I will file suit in State and Federal Court. I will seek damages for emotional distress, money damages spent on therapy because I feel attacked and constantly belittled by you, and all other damages allowed by law.
Lauren Morgan Ellerman Attorney, Lawyer, Counselor at Law, Esq.
Note, I am using CAPS inappropriately, claiming a violation of the law and demanding the actions cease, immediately.
It’s a very forceful and clearly written demand.
It must mean something, right? It must be a binding legal document?
Nope. It means nothing. It is a waste of paper product and has no effect whatsoever on the recipients, their legal obligations or my potential legal claims. It is a farce. As are many cease and desist letters written and sent on behalf of Virginia companies.
Some however, are quite
useful and important. Some cease and desist letters are good faith efforts to resolve conflict prior to seeking judicial intervention. Some, deserve immediate attention and behavioral modification.
Want to know whether the Cease and Desist letter you received is (a) useless like the one I plan to send to all TV news anchors, or (b) the rare exception where controversy exists and invites potential remedy, call our office. I would be happy to help translate for you.