A Florida court recently held a former employee’s “mass-mailing” to her former employer’s customers did not violate her non-solicitation agreement. In Variable Annuity Life Insurance Co. v. Laeng, Docket No. 8:12-cv-2280-T-33MAP (M.D. Fla. Feb. 11, 2013), the employer, VALIC, marketed financial services to tax exempt organizations. As a condition of her employment, the employee, Laeng, executed a “Registered Representative Agreement” under which the she promised to not use or disclose VALIC’s trade secrets and confidential and proprietary information at any time. Laeng also agreed to not solicit VALIC’s customers for one year after leaving her employment. However, Laeng was not prevented from competing with VALIC.
After leaving VALIC, Laeng began working at LPL Financial, VALIC’s direct competitor. Laeng sent a mass-mail solicitation to employees of two local school districts. The mass-mailing included VALIC’s customers to whom Laeng was assigned.
VALIC filed suit and a motion for a preliminary injunction alleging Laeng violated her agreements to not disclose VALIC’s confidential information, including its customer lists, and to not solicit VALIC’s customers. VALIC asserted Laeng’s actions resulted in a loss of more than $629,113.32.
The court denied VALIC’s motion for a preliminary injunction on the grounds there was not a substantial likelihood VALIC would succeed on the merits of its case. Other than its suspicions, VALIC presented no evidence that Laeng took or used any confidential information. Significantly, the court found that even though Laeng’s mass-mailing included VALIC’s customers, the customer information was not unique to VALIC. Rather, the customers were public employees of local school districts whose identities were publicly available upon request. The court found Laeng’s mass-mailing was achievable without the use of VALIC’s confidential customer information.
The court did not discuss Laeng’s non-solicitation agreement which, on its face, would prevent Laeng from soliciting VALIC’s customers regardless of how the customer information was obtained. Rather, the court focused on the fact that the customer information was publicly available. Hence, the court’s ruling could be read to support the position that a former employee does not violate her non-solicitation agreement when the employer’s customer information is not confidential.
If you would like additional information on non-compete agreements and trade secrets law, please contact one of the Burr & Forman Non-Compete & Trade Secrets team members.