The Trade Secrets Blog

Following Trade Secrets Litigation

Coldwell Banker Sues Former Employees

In a scenario that is becoming all too familiar, Coldwell Banker has filed a federal lawsuit in the U.S. District Court in Baltimore, seeking $2 million in damages and a restraining order on soliciting its clients, against two former executives, John and Ann D’Ambrosia, who left to open a branch of GMAC.

The suit alleges that Coldwell Banker lost 10 listing agreements to GMAC within two weeks of the GMAC branch opening. The major evidence that Coldwell is banking on (excuse the pun) appears to be email transmitted using Coldwell Banker email accounts which were sent to future GMAC sales agents who were then working as independent contractors for Coldwell.

According to this article, the email messages discuss “recruitment of Coldwell Banker sales agents; how to convince Coldwell Banker clients to follow their individual brokers to the new GMAC office; and how to transfer data from computers.

“A common thread in the quoted e-mails is the D’Ambrosias’ alleged use of Coldwell Banker to springboard their upcoming affiliation with GMAC Real Estate, which has 1,300 franchised and company-owned real estate offices in the United States and Canada and 22,000 sales associates, according to its Web site.”

Coldwell Banker has alleged 14 counts in its complaint, including violations of the Federal Computer Fraud and Abuse Act, which governs unauthorized access to “protected computers” resulting in a business loss; breach of the duty of loyalty to Coldwell Banker; tortious interference with contractual and prospective economic relations; and violations of state trade secrets law.

This case is interesting because of the heavy reliance on emails as evidence that the D’Ambrosias were planning their business venture with GMAC, and were targeting Coldwell Banker listing agreements and sales agents while working for Coldwell Banker. This is a very typical trade secrets scenario. I have said many times that email is an important part of any trade secret case involving the departure of employees who leave to open a new business in competition with their former employer and begin taking their former employers’ employees, customers and other confidential information. I can’t say it enough, when you believe that this type of situation exists within your business, one of your first priorities should be to backup the email system so that you can prevent the accidental deletion of important emails due to a document retention policy.

It will also be interesting to see what the employment agreements said–were there non-disclosure agreements, confidentiality agreements? These items are critical to an effective trade secrets protection plan.

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January 23, 2008 - Posted by | confidentiality agreement, non-compete agreement, non-disclosure agreement, Trade Secrets | , , , ,

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