Breach of Contract Interference with Contractual Relations: Business Competitor Hires Away Client’s Employees; Suit Filed to Stop Unfair Competition

Our client, a Scottsdale-based company, brought suit in federal court against a Florida-based competitor for interference with contractual relations and misappropriation of trade secrets. Both companies sell computer hardware and software products nation-wide. In a three-month period, the competitor company hired away from our client at least eight employees—which constituted more than 20% of our client’s sales force — and also tried unsuccessfully to hire away other employees. Our client’s competitor then improperly and unfairly used confidential information possessed by our client’s former employees to gain competitive advantage.

Contract CaseAll of the “pirated” employees had valid employment agreements with our client, and the competitor company knew that the employees had such agreements when it hired them away. The competitor company induced our client’s employees to terminate their employment with our client and, in some cases, contrary to the terms of their contracts, to solicit other employees from our client.

Our client filed a motion for preliminary injunction to stop its competitor from recruiting any additional employees and from using confidential information to compete unfairly. Prior to the hearing on our client’s motion, the parties entered into a settlement agreement pursuant to which our client’s competitor agreed not to solicit or hire any of our client’s employees for a period of 18 months, or to interfere without client’s contracts with its employees. Accordingly, the lawsuit was dismissed.

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