Monterey, CA, June 27, 2014 - Under what circumstances may a former employee solicit his former employer’s customers? And can non-solicitation agreements ever be enforceable?
Those questions came closer to being answered in California — a state that rarely permits any action which is seen to inhibit or reduce competition — when a Santa Cruz superior court granted a temporary restraining order against a former employee of Echo Holdings LLC.
Represented by Monterey law firm Hudson Martin Ferrante Street Witten & June, PC, Echo was granted the rare TRO on June 18, 2014, against a former employee who has been accused of stealing valuable trade secrets and pursuing the company's existing customers. Firm partner Amy June argued the case in one of the few states in which non-compete agreements are considered void as against public policy.
The state’s Business and Professions Code section 16600 provides that “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Exceptions to this rule are limited, and focus on the sale of a business or dissolution of a partnership. However, through adoption the Uniform Trade Secrets Act, California also makes it illegal for employees to misappropriate trade secrets from a former employer and to use those trade secrets to solicit customers of the former employer.
Hudson Martin Ferrante Street Witten & June, PC, has long represented One Stop Logistics, Inc., which acquired Echo in May of 2014. June, who argued the matter before Presiding Judge Paul Marigonda, agreed that the ruling was appropriate and necessary to protect the company's interests in the area.
The decision comes on the heels of May’s ruling by Judge James Robertson of the San Francisco Superior Court in the case of Guardsmark v. Bowman.
In that case, Guardsmark, a company that provides security services, won a rare non-compete order against a former manager who had signed an agreement stating that he would refrain from misusing Guardsmark’s confidential information, but who secretly formed a competing security services company, Teton Security Services, Inc., and won a contract to work with a former Guardsmark client.
Judge Robertson ordered a permanent injunction prohibiting Bowman and Teton from contacting or soliciting any of Guardsmark’s current customers in San Francisco and from taking any action to induce any of Guardsmark’s current customers in San Francisco to discontinue service with Guardsmark.
Company Background Information:
Hudson Martin Ferrante Street Witten & June PC provides value-added legal services to a variety of businesses, from entrepreneurial startups to multimillion-dollar nationwide enterprise. Since 1908 it has provided Monterey County families and business owners high-quality legal representation. The firm has played a big part in Monterey County’s rich history and has represented many of the area’s most notable figures, including John Steinbeck and Henry Miller. The attorneys represent and advise clients on a broad array of legal matters, including corporate law and governance, contracts, intellectual property, employment law, estate planning and administration, mergers and acquisitions, and litigation.
Hudson Martin’s experience counseling on a wide range of legal issues across a variety of industries has given the firm an exceptional understanding of their clients’ businesses — making them a true business partner. The firm provides the most responsive, efficient and effective legal strategies and solutions available. Hudson Martin is headquartered at 490 Calle Principal, Monterey, CA 93940, and recently opened an office in downtown Los Angeles.
For more information, call (831) 375-3151 or visit their web site at www.hudsonmartinwittenjune.com.
Marci Bracco Cain
Hudson Martin Witten & June PC
490 Calle Principal
Monterey, CA 93940