This week we are going to discuss a local Company, Brooks Provisions, that experienced some very damaging employee activity in the summer. This will be a 2 part article focusing first on how to protect yourself legally, the 2nd part will focus on how to organize your processes to protect your data and your proprietary interests. Brooks has been a dominant player in the Philadelphia/New York regions for years, and if they can get hurt so can you.
What's not discussed in this newsletter is the potential effect on your Company's credit rating and, through that process, the tightening of credit. Lenders do not look favorably on companies that fail to protect their assets which could be your physical inventory, your workforce or your intellectual property. If you are perceived by the Lender as a not-very-secure-Company you're giving them an excuse to lower or deny you credit in the future, and as we've seen Lenders don't need much of an excuse to lower credit lines, note what the Credit Card companies have been doing lately. 
As reported by Agri-wire
(If you're familiar with the story already scroll down)
There are several lessons to be learned from this, let's break them down one issue at a time looking this week on the legal aspects of the issueBrooks Provisions stated in its complaint, filed in late July, that between June 10 and July 7 of this year, the four individual defendants, Chapman, Englehart, Vavala and Adams, resigned from Brooks Provisions to commence employment with G & C Food Distributors(1). Brooks Provisions alleged in the complaint that the defendants misappropriated confidential supplier and customer lists, sabotaged Brooks Provisions' business by deleting its computer files and failing to maintain the company's contact information for hundreds or more of its suppliers and customers and misappropriated corporate opportunities and commercial disparagement.
Specifically, Brooks Provisions said despite Chapman's partner status on an LLC agreement, on or about June 10 he began performing the same services he performed for Brooks Provisions for G & C Food Distributors after telling Brooks Provisions he was resigning to "take some time to work on his own thing."
Additionally, Brooks Provisions stated in its complaint that Chapman recruited Englehart, a category manager for its poultry division, Vavala, the lead salesman at the company responsible for approximately $27 million in annual revenue, and Adams, one of the company's lead salesman responsible for about $16 million in annual revenue(2), to join G & C Food Distributors.
Brooks Provisions told the court that through its continuing investigation, it learned that, prior to their resignations, the individual defendants maintained personal contact lists separate and apart from the contact lists they maintained on Brooks Provisions central server(3) which were not returned to the company upon the employees' departures.
Additionally, Brooks Provisions alleges that both before and after June 10, Chapman steered the company's vendors, customers and employees to G & C(4), engaged in commercial disparagement by suggesting to its vendors and customers that the business is financially unstable and otherwise breached his fiduciary duties to the company.
(1) Employees leave your company to work for a competitor or themselves - First let's clear the air, this happens all the time for a number of reasons. The trouble is, when they go, how do you discourage them from taking company property (your customer list and private information) with them. One way according to Marshall Tanick of Lawyers.com is to use a Non-Compete or No-Soliciting Contract
"Non-compete agreements are becoming an increasingly popular way for employers to try to limit employees and former employees from working for a competitor, or from divulging trade secrets or other proprietary data.
Contrary to common misperceptions, courts will uphold non-compete clauses if they comply with acceptable standards. Enforcement against an employee can be both by damages and by an injunction that prohibits the employee from engaging in conduct that violates a non-compete clause."
A quick caution here, non-compete and no-solicitation agreements are enforce differently in different states so be sure to talk to someone who can advise you of how they are handled in your state.
We'll be discussing topics (2,3,4) next week.
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