November 2013

By: James B. Sherman, Esq. & Phoebe A. Taurick, Esq.

After two employees left RELCO, LLC and allegedly took thousands of confidential files to a competitor, the dairy and food process plant technology company sued for misappropriation of its confidential business information. Following a trial a jury handed down a huge verdict and the court ordered the defendants to pay $22.7 million in damages for knowingly using the files to improperly compete with RELCO. Custom Fabricating & Repair was deemed liable for 90% of the damages, with the other 10% – approximately $2 million dollars – assessed against the two former RELCO employees.

While it may seem like a windfall when new employees come with a wealth of valuable information, it can cost an employer big money – in this case more than $20 million – if that information was wrongfully acquired. Hiring employers have an obligation to ensure that those they hire are not taking trade secrets or engaging in other unlawful practices while transitioning from a former employer. It is also wise to determine whether individuals being offered a job are under any non-compete or other employment contracts with former employers, that may restrict their activities or pose problems. For advice on protecting your company’s confidential information or assessing and avoiding risks when hiring employees from competitors, contact James B. Sherman or Phoebe A. Taurick, at (952) 746-1700, or email jusummer@wesselssherman.com.