Company allowed to pursue suit against former employee for unfair competition despite absence of trade-secret violation

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In Angelica Textile Services, Inc. v. Park, a California court of appeal considered the issue whether Angelica’s common-law claims for breach of contract, unfair competition, and interference with business relations would be allowed to proceed against a former employee despite the absence of any trade-secret violation. Angelica operated a large-scale laundry business serving hospitals and other health care facilities. While employed and in preparation for starting his new competing business, Park disparaged Angelica to Angelica’s bank, and he negotiated contracts with Angelica’s customers that included early cancellation rights that were not customary in the industry. As a result, when Park started his new competing businesses, these customers were able to cancel their contracts with Angelica and immediately transfer their business to Park. There were admittedly no trade secrets at issue, and Park convinced the lower court to dismiss the breach of contract and other claims on the ground that the claims were displaced by the Uniform Trade Secrets Act (“UTSA”) such that a violation of trade secrets was an essential element for a UTSA claim. Reversing, the court held that the common-law claims were not displaced by the statutory claim for violation of the UTSA, and that Park’s alleged misconduct during his employment was independent of and not predicated on any violation of Angelica’s trade secrets.

Topics:  Breach of Contract, Interference Claims, Trade Secrets, Unfair Competition

Published In: General Business Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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