In Contract Assocs., Inc. v. Atalay (2015), a Virginia business owner was stunned when two long-time employees resigned to form a competing company. Within three hours of resigning, the employees used inside business financial information and the business contacts list to contact each of their previous clients and solicited their business (at a reduced rate of course). Their actions nearly terminated the business owner’s entire revenue stream. All it took was three hours of betrayal, and this business was gutted and listing.
This Virginia business owner sued the Defendants for using his client list, contacts list, and fee rates to solicit his entire roster of clients… but LOST because he failed to formulate specific policies to keep the client list and contrast list private.
He failed to plan. The business owner could have won. What did he do wrong?
First, he failed to have his employees sign non-compete and non-solicitation agreements. Next, he failed to show efforts that he reasonably maintained the secrecy of his customer list.
So how do you avoid the same mistake and protect YOUR customer information?