What happens when a former employee, who had signed a non-competition agreement with your company, starts calling on your customers? Can you seek to enforce the agreement and prohibit the former employee from soliciting your customers?
Case law in Massachusetts has not been consistent or clear on if or when the identities of a company’s customers are considered “confidential” or a “trade secret” and entitled to protection under a non-competition agreement.
Judge Salinger of the Massachusetts Superior Court Business Litigation Session (“BLS”) recently issued an Order dismissing an employer’s case attempting to enforce a non-competition agreement, and the Order includes analysis that clarifies the issue. Specifically, in Oxford Global Resources, LLC v. Hernandez, the employer alleged that their former employee breached the non-competition agreement (which defined “trade secret information” to include the identity of the employer’s customers and prospective customers) by soliciting companies and individuals that “he knew” were customers of the employer. In rejecting the employer’s argument, Judge Salinger stated:
An employee is free to carry away his own memory of customers’ names, needs, and habits and use that information, even to serve or solicit business from those very customers. Such “remembered information” is not confidential because the information itself, as distinguished from an employer’s compilation of such information into a list or database, is known to the customers and thus not kept secret by the employer.
There we have it: compilations of customer information are confidential and entitled to protection, but employers cannot prevent former employees from using “remembered information” regarding their customers – even if such information is defined as being “confidential” in an agreement.
While the decision is not binding on Massachusetts courts, we can expect that deference will be paid to Judge Salinger’s decision by state and federal Courts because he and the BLS are held in high regard.
Please feel free to call a member of Mirick O’Connell’s Labor and Employment Group if you have any questions about the decision or would like to discuss strategies for protecting your trade secret and confidential information.