Are those clients really yours? Consider this before you quit.

“I made a copy of the client list because they are my clients; I won the business for my company” is a refrain I hear often in consulting with former employees. We’re sorry to have to tell you that this commonly held belief is not accurate. Those clients and customers you may have generated as an employee are not “yours” to take with you. They belong to the company. Making a copy of such a list by printing it, downloading a file, copying it onto a flash drive, or emailing the list to yourself can get you into a lot of trouble because such actions violate Virginia common law as well as certain Virginia statutes. This is true whether or not employees are subject to a noncompete or nonsolicitation agreement. Here are several laws a former or soon-to-be former employee may be violating by copying or taking a former employer’s client or customer list:

If you copy, download, or upload the company’s client and/or customer lists, you may be committing the business tort (the legal term for a civil “wrong”) of conversion. Conversion is the wrongful exercise over another’s property, which deprives the owner of possession, or any act of dominion wrongfully exerted over the property in denial of or inconsistent with the owner’s rights. This means that if your former employer gets its IT people to inspect your computer or work phone and discovers you’ve taken a client list, you may be found liable for conversion of the employer’s property.

Your company may also assert a claim of tortious interference with a contract, a business expectancy, or with a prospective business relationship or economic advantage. If you knew of a contract your company had with a client or customer, or that the company was actively seeking such a business relationship, and then you take that client list, call the client, and obtain the business for your new company, you could be liable for tortious interference. This tort requires your intentional misconduct, and conversion constitutes intentional misconduct. Tortious interference damages generally won’t be granted absent a reasonable certainty that the former company would have obtained the business were it not for your interference, but the fact remains: iquit.jpgformer employers confronted with an ex-employee who takes their property are often irate enough to sue you first and worry about proving damages later. You do not want to be a part of that. Don’t copy or download your company’s client list.

Among the list of claims your former employer is likely to sue you for if you take its client or customer list is misappropriation of trade secrets, codified by the Virginia Uniform Trade Secrets Act (VUTSA) at Virginia Code § 59.1-336. Under VUTSA, if the court considers the client list a “trade secret,” you can be held liable for misappropriating it. “Trade secrets” are not limited to secret formulas like the recipe for Coke. VUTSA defines “trade secret” much more broadly, to include “information, including but not limited to a formula, pattern, compilation, program, device, method, technique, or process, that (1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

Client lists often, but not always, fall within that definition. Whether the information will be deemed a trade secret depends on many factors. While some courts will not afford trade-secret protection to the client list, you should assume that the client list qualifies as a trade secret if it is not made available to the general public.

“Misappropriation” consists of either improper acquisition of a trade secret, or improper disclosure of a trade secret. So, for example, if a former employee uses a computer or computer network without authority (e.g., by logging back into the former employer’s network after the termination of employment) to acquire a client list, a court might view that as misappropriation by improper acquisition. Or, if the employee shares the information with third parties while under a duty to maintain its secrecy, that could give rise to liability for misappropriation by improper disclosure. Misappropriation of a trade secret may even occur by accident or mistake. So take care. Taking your company’s client or customer list without their consent when you know the company has taken steps to maintain the secrecy of such lists is high-risk activity that will likely violate the VUTSA.

If you’ve already moved on, do not log back onto your former employer’s computer or computer system to take the client list or to take any other action. You will likely be deemed to have violated the Virginia Computer Crimes Act (VCCA) at Va. Code § 18.2-152.1-3 et seq. This is computer fraud, people. Don’t do it. Harsh penalties abound for former employees found guilty of poaching information from their former employers to which they had no right. Section 18.2-152.4 of the VCCA also prohibits any person without authority to use a computer or computer network to make “an authorized copy” of “computer data.” Don’t copy the client list from your company-owned laptop, phone, iPad, tablet, or otherwise. It’s not worth the risk.

And if you commit any or all of these violations of Virginia law while you are still an employee, you can bet that your former employer will tack on a claim for breach of fiduciary duty (e.g., the duty of loyalty owed to one’s employer). Three elements must exist for a company to claim breach of fiduciary duty under Virginia law: (1) the existence of a fiduciary duty; (2) breach of that duty; and (3) damages resulting from the breach. An employee, at-will or otherwise, owes a fiduciary duty of loyalty to his or her employer while still employed. An employee’s breach of his fiduciary duty may be shown by alleging the employee misappropriated trade secrets, misused or converted confidential information, or solicited the company’s clients/customers or employees while he or she was still employed.

While this short blog post is not meant to lay out every detail of these torts or describe all situations in which they can arise, it is meant to explain the very real potential consequences of a common misperception. Clients or customers you generated for the company you work for are not yours–they belong to your employer. You can’t take these lists with you without running afoul of several of these torts and exposing yourself to a potential lawsuit. If you are considering leaving your job and have questions about your legal rights and obligations, it’s always a good idea to consult an attorney to help you plan your exit strategy.

by Amy Epstein Gluck – Contributor

Contact Us

Virginia: (703) 722-0588
Washington, D.C.: (202) 449-8555
Contact Information