Legal Question in Business Law in California

Re: Company mis-informing my customers regarding non-compete

The first serious issue that you and your attorney will need to consider is whether, and if so to what extent, the substantive law of New Jersey will apply. New Jersey law MAY apply if you signed any agreements that have either a forum-selection clause or a choice-of-law clause, or both. If you were sued, jurisdiction (where the trial would take place) is a separate issue.

To the extent California law applies, here are the guiding principles in brief:

1) Non-compete agreements are often legal in the context of sale of a business, when the buyer pays the seller a premium over the value of other assets for "goodwill" -- otherwise, non-compete agreements are usually illegal (i.e., not enforceable).

2) Non-compete clauses in employment contracts are always unenforceable and are so disfavored that the presence of a non-compete clause may render other terms of the agreement unenforceable by the employer. By "non-compete," I refer to any contract term that attempts to limit the future employment possibilities of the employee.

3. On the other hand, California guards employer trade secrets from unfair misappropriation by current employees or ex-employees. The heading "trade secrets" does not apply only to things like the secret recipe for Coca-Cola; it extends to mundane things like customer information.

4. Customer info that can be read on-line or in industry directories isn't secret and can't be the basis of a trade-secret suit. Specialized info such as the purchasing agent's favorite teams and his wife's nickname and his timing and budget for the big project are probably trade secrets. If you use them to your or your new employer's advantage, you may be liable for damages.

5. If X improperly interferes with Y's contractual relationships or prospective economic advantage, X may be liable to Y for damages, possible including punitive damages.

This is an oversimplification. Contact me for details.

Re: Company mis-informing my customers regarding non-compete

The former employer can be sued for interference with prospective economic advantage.

Re: Company mis-informing my customers regarding non-compete

The prior replies deal with CA law; your question lists CA and NJ as the sites of the conflict. If you can provide additional information as to the contacts within NJ, I will be happy to respond in regard to the NJ issues.

Re: Company mis-informing my customers regarding non-compete

Non-competes are generally not valid in California. Furthermore, if he is interfering with your customers, that may be an actionable offense. However, you should be careful with soliciting customers of your former employer. You should not use any trade secrets of your former employer, which may include customer lists.