Sue For the Fee

Note: This article is not intended as legal advice. In all instances the reader is cautioned to consult with legal counsel when utilizing this information. A.B.F.

The age old problem of recruiters leaving their employ and taking a long list of candidate resumes and going into competition evokes thoughts of expensive litigation to protect those trade secrets. Today more than ever with candidate and company information on computers downloading such a list has made the problem even more prevalent.

After litigating numerous such cases and seeing the reluctance of clients (and advisably so) to engage in protracted and expensive litigation seeking injunctive relief I decided to try something different for a client faced with just such a situation. I decided to sue for the fee instead.

The case involved three recruiters who leave and establish their own company taking copies of candidate information with them and proceed to call those candidates. Instead of immediately suing them and seeking an injunction against their using the list they have taken, my client monitors the situation by having his remaining recruiters report if a candidate they have in their files responds to a recruiting call by saying they have found a new job.

That occurs and it is learned that not only has the candidate been placed but has been placed at a company in a job order that the client had in his files.

We then sue for the fee they were paid on the basis of their having taken a trade secret and violating their fiduciary responsibilities as employees. There is no employment contract involved. This is all based on common law principles. Although the cost of litigation was equal to the fee that was recovered, it was well below the cost of seeking injunctive relief and far less complicated at trial.

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And the immediate byproduct of the lawsuit was that the defendants never attempted to contact any of the candidates on the list they had wrongfully taken. By making it into a “collection case” we simplified the situation and got right to the heart of the matter quickly.

It was interesting that the defendants claimed that this information was .”..independently ascertainable through established recruiting procedures and therefore is not entitled to trade secret protection.” The court disagreed, stating that such information was a trade secret and awarded the fee to my client. Next time it happens to you have your attorney look up the case Fisher v. Ryan, 470 N.Y.S.2d 968.

A.Bernard Frechtman, Esq. is the author of Staffing Industry Law, A Guide for the Personnel Professional.  He may be reached at (212) 580 7402 or via e-mail at abflaw@att.net or on his web page: http://www.frechtman.com.

A. Bernard Frechtman, Esq. is the author of Staffing Industry Law, A Guide for the Personnel Professional. He may be reached at (212) 580-7402 or via e-mail at abflaw@att.net or on his web page: www.frechtman.com.

This article, the many others that he has written and the contents of his book, are based on his 50 plus years as an active litigator and transactional lawyer, predominately practicing nationwide in the staffing industry. Bernie maintains an active office in New York City while residing in Indianapolis, Indiana, from where he commutes whenever court appearances require it. His representation has included public companies, nationally franchised staffing companies, both state and national staffing industry trade associations, and litigation from the basic fee controversy to the more sophisticated and complicated trade secret, restrictive covenant and contract litigation. He has also served as an expert witness.

Among his many accomplishments is being named by NAPS as its first Hall of Fame Honoree. A graduate of Brown University and St. John's University Law School, where he was a member of the Law Review, Bernie is admitted to practice in the States of New York and Indiana, various Federal District and Circuit Courts and the U.S. Supreme Court.

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