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Law School Case Brief

Town & Country House & Home Serv., Inc. v. Newbery - 3 N.Y.2d 554, 170 N.Y.S.2d 328, 147 N.E.2d 724 (1958)

Rule:

Even where a solicitor of business does not operate fraudulently under the banner of his former employer, he still may not solicit the latter's customers who are not openly engaged in business in advertised locations or whose availability as patrons cannot readily be ascertained but whose trade and patronage have been secured by years of business effort and advertising, and the expenditure of time and money, constituting a part of the good-will of a business which enterprise and foresight have built up.

Facts:

An employer brought for an injunction and damages after former employees formed a competing house cleaning service using many of plaintiff's methods and persuaded several of plaintiff's customers to switch companies. The action was based on the theory of unfair competition. The complaint asked to restrain them from engaging in the same business as plaintiff, from soliciting its customers, and for an accounting and damages. The court granted broad injunctive and other relief and former employees appealed. 

Issue:

Was the former employer entitled to injunctive relief?

Answer:

Yes

Conclusion:

The court stated that the former employer was entitled to injunctive relief because their customer list was a trade secret, the employer had expended great amounts of time and energy to develop it, and the contents of the list were not easily discernable from any other source. The information became known to defendants only because of their employment by the employer. Therefore, the employer was entitled to enjoin defendants from further solicitation of its customers and to receive damages corresponding to the profits defendants made by reasons of the customers they enticed away from the employer. The employer was not, however, entitled to enjoin defendants from operating a competing business.

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