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LABOR AND EMPLOYMENT REVIEW The Duty of Loyalty and Preparations to Compete by Kevin Allen and Jennifer Schlatter This column is sponsored by the CBA Labor Law Forum Committee to present current issues and topics of interest to attorneys, judges, and legal and judicial administrators on all aspects of labor and employment law in Colorado. Column Editor: John M. Husband ofHolland & Hart LLP in Denver—(303) 295-8228, [email protected] About The Authors: This month's article was written by Kevin Allen, Denver, a partner in the law firm of Allen & Vellone, P.C., where he specializes in employment law and commercial litigation(303) 534-4499, [email protected]; and Jennifer Schlatter, Denver, an as- sociate of Allen & Vellone, P.C., where she specializes in protecting and en- forcing intellectual property rights and employment law(303) 534- 4499, [email protected]. This article summarizes the current status of Colorado law regarding the duty of loyalty and permissible preparations to compete by employees, and the practical implications of advising employees and employers pertaining to such preparations. E mployers frequently face the pos- sibility of employees resigning and going to work for a competi- tor. Occasionally, employees leave their current employer to start a competing business, and additional employees might accompany them in leaving the current employer to join the new busi- ness venture. To properly advise employ- ees who are planning such a departure, attorneys must be mindful of the bal- ance between the right of employees to pursue their livelihoods and the right of employers to avoid injury as a result of the opportunistic behavior of departing employees. For example, consider the scenario of employees who leave an employer to start a competing business. The employ- ees may rely on their skills and knowl- edge of the industry to start the rival en- terprise. They may investigate potential markets, locations, andfinancing.While still employed, they also may obtain fi- nancing, purchase or lease a building for the new business, prepare andfilearti- cles of incorporation, acquire business cards and stationery, and install a fax and phone line. To elevate the stakes even more, the employees may make and receive calls on their cellphones re- lating to the new venture during busi- ness hours. They may discuss with cur- rent clients or co-employees the possibil- ity ofjoining the new business. All of the above actions by the employees are done to prepare for the day they leave their current employment, and in an effort to immediately commence operations of the new business. Colorado law provides that employ- ees owe the employer a duty of loyalty and must not, while employed, act in a manner that is contrary to the employ- er's interests. 1 However, employees need not wait until the morning after the em- ployment terminates to begin preparing to compete with the former employer. 2 The issue that often arises in such cases is determining at what point the prepa- rations to compete become a breach of the duty of loyalty owed to the employ- er. Despite the importance of the duty of loyalty and high stakes in drawing the line between permissible preparatory conduct and actionable disloyalty, this area of law has garnered relatively little detailed analysis in Colorado. As a re- sult, courts, attorneys, and clients must deal with uncertainty when confronted with the nebulous area of "preparations to compete." This article examines the current status of Colorado law regarding per- missible preparations to compete, and the practical implications of advising employees pertaining to such prepara- tions. After discussing the relevant case law, this article presents guidelines for advising clients who are planning to so- licit customers, prepare new businesses, and resign from their current employ- ment in a group. The Colorado Lawyer / November 2005 / Vol. 34, No. 11 / 61

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Page 1: The Duty of Loyalty and Preparations to Compete...an employee's actions in preparation for competing with his employer constituted a breach of the employee's duty of loyalty was an

LABOR AND EMPLOYMENT REVIEW

The Duty of Loyalty andPreparations to Compete

by Kevin Allen and Jennifer Schlatter

This column is sponsored by theCBA Labor Law Forum Committeeto present current issues and topicsof interest to attorneys, judges, andlegal and judicial administrators onall aspects of labor and employmentlaw in Colorado.

Column Editor:John M. Husband of Holland & HartLLP in Denver—(303) 295-8228,[email protected]

About The Authors:

This month's article was written byKevin Allen, Denver, a partner in thelaw firm of Allen & Vellone, P.C.,where he specializes in employmentlaw and commercial litigation—(303)534-4499, [email protected];and Jennifer Schlatter, Denver, an as-sociate of Allen & Vellone, P.C., whereshe specializes in protecting and en-forcing intellectual property rightsand employment law—(303) 534-4499, [email protected].

This article summarizes the current status of Colorado lawregarding the duty of loyalty and permissible preparationsto compete by employees, and the practical implications ofadvising employees and employers pertaining to suchpreparations.

Employers frequently face the pos-sibility of employees resigningand going to work for a competi-

tor. Occasionally, employees leave theircurrent employer to start a competingbusiness, and additional employeesmight accompany them in leaving thecurrent employer to join the new busi-ness venture. To properly advise employ-ees who are planning such a departure,attorneys must be mindful of the bal-ance between the right of employees topursue their livelihoods and the right ofemployers to avoid injury as a result ofthe opportunistic behavior of departingemployees.

For example, consider the scenario ofemployees who leave an employer tostart a competing business. The employ-ees may rely on their skills and knowl-edge of the industry to start the rival en-terprise. They may investigate potentialmarkets, locations, and financing. Whilestill employed, they also may obtain fi-nancing, purchase or lease a building forthe new business, prepare and file arti-cles of incorporation, acquire businesscards and stationery, and install a faxand phone line. To elevate the stakeseven more, the employees may makeand receive calls on their cellphones re-lating to the new venture during busi-ness hours. They may discuss with cur-rent clients or co-employees the possibil-ity of joining the new business. All of theabove actions by the employees are doneto prepare for the day they leave their

current employment, and in an effort toimmediately commence operations ofthe new business.

Colorado law provides that employ-ees owe the employer a duty of loyaltyand must not, while employed, act in amanner that is contrary to the employ-er's interests.1 However, employees neednot wait until the morning after the em-ployment terminates to begin preparingto compete with the former employer.2

The issue that often arises in such casesis determining at what point the prepa-rations to compete become a breach ofthe duty of loyalty owed to the employ-er.

Despite the importance of the duty ofloyalty and high stakes in drawing theline between permissible preparatoryconduct and actionable disloyalty, thisarea of law has garnered relatively littledetailed analysis in Colorado. As a re-sult, courts, attorneys, and clients mustdeal with uncertainty when confrontedwith the nebulous area of "preparationsto compete."

This article examines the currentstatus of Colorado law regarding per-missible preparations to compete, andthe practical implications of advisingemployees pertaining to such prepara-tions. After discussing the relevant caselaw, this article presents guidelines foradvising clients who are planning to so-licit customers, prepare new businesses,and resign from their current employ-ment in a group.

The Colorado Lawyer / November 2005 / Vol. 34, No. 11 / 61

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62 Labor and Employment Review November

The Genesis of theDuty of Loyalty

When approached by a client facing theabove issues, there are few Colorado cas-es to which an attorney can turn. Practi-tioners representing such clients shouldbe familiar with Jet Courier Service, Inc. v.Mulei,3 ("Jet Courier") and its progeny.

The Jet Courier CaseIn the Jet Courier case, the plaintiff was

an air courier company based in Ohio thatsupplied a specialized transportationservice to customer banks. Jet Courierprovided air and incidental ground couri-er service to carry canceled checks for thebanking system. In 1981, Jet Courier es-tablished Denver operations. In Februaryof that year, Mulei was hired to managethe Denver operations.

Before commencing employment withJet Courier, Mulei worked for another aircourier service in a management capacityand had worked in the business for sever-al years. He also had numerous businessconnections in the banking industry inDenver and other cities. As a condition ofhis employment, Jet Courier requiredthat Mulei execute an employment agree-ment containing a non-competition cove-nant, whereby Mulei agreed not to com-pete with Jet Courier for two years aftertermination, with no geographic restric-tion.

During his employment, Mulei becameprogressively dissatisfied with Jet Courierand, as a result, began to look for otherwork in the air courier field. In the courseof seeking other employment opportuni-ties and while still employed by Jet Couri-er, Mulei investigated setting up anotherair courier company that would competewith Jet Courier.

Mulei's pre-termination actions con-sisted of: (1) speaking and meeting witha Kansas air charter operator who was inthe business of supplying air transporta-tion services to discuss starting a part-nership; (2) meeting with two Jet Couri-er employees to discuss starting a newbusiness and acquiring customers; (3)communicating with Jet Courier's cus-tomer banks to inform them he would beleaving Jet Courier and that he wouldprovide the same services to them; T4)communicating with Jet Courier's cus-tomers regarding his ability to reducecosts; (5) meeting with nine of Jet Couri-er's pilots to discuss the formation of thenew venture; (6) meeting with Jet Couri-er's Denver office staff to discuss poten-

tial future employment with his new ven-ture; and (7) incorporating the new busi-ness.

When Jet Courier learned that Muleiwas organizing a competing business, hisemployment was terminated. That sameday, Mulei caused his new venture to be-come operational and begin competingwith Jet Courier. Several customers of JetCourier followed Mulei to his new busi-ness, as did three of the four other em-ployees of Jet Courier's Denver office. Allof Jet Courier's ground carriers in Denveralso joined Mulei's business.

Mulei filed suit against Jet Courier,seeking to recover unpaid compensationas well as a declaratory judgment that thenon-competition covenant was void. JetCourier counterclaimed for breach of con-tract, breach of fiduciary duty, and civilconspiracy. The district court concludedthat Mulei's non-competition covenantwas void for lack of consideration and un-reasonableness and that Mulei did not vi-olate his duty of loyalty. As a result, JetCourier's counterclaims were dismissed.The Court of Appeals affirmed.4

The Colorado Supreme Court grantedcertiorari to review the decision of theCourt of Appeals on three issues: (1)whether the district court erred in con-cluding that Mulei did not violate a dutyof loyalty to Jet Courier; (2) whether anybreach by Mulei of a duty of loyalty owedto Jet Courier prevented Mulei from ob-taining full recovery of the salary, bonus,and statutory penalty otherwise due him;and (3) whether the district court erred indismissing Jet Courier's civil conspiracyclaims.5 For the purposes of this article,the following discussion focuses only onthe first issue.

Breach of Duty of Loyalty: The Colo-rado Supreme Court noted that whetheran employee's actions in preparation forcompeting with his employer constituteda breach of the employee's duty of loyaltywas an issue of first impression in Colo-rado. The Court turned to the Restatement(Second) of Agency6 for guidance on apply-ing the duty of loyalty to a preparation tocompete action. The Court determinedthat it is the "nature of the employee'spreparations which is significant" in de-termining whether a breach of duty of loy-alty has occurred.7 The Court noted thatother jurisdictions have recognized "aprivilege in favor of employees which en-ables them to prepare or make arrange-ments to compete with their employersprior to leaving the employ of theirprospective rivals without fear of incur-

ring liability for breach of their fiduciaryduty of loyalty."8

With respect to soliciting co-employeesfor a competing venture, the Court setforth a three-part test for determiningwhen such solicitation was impermissible.Factors to be considered are: (1) the na-ture of the employment relationship; (2)the impact of the employee's actions onthe employer's operations; and (3) the ex-tent of any benefits promised or induce-ments made to co-workers to obtain theirservices for the new competing enter-prise.9 Factors such as the solicited em-ployee's position and responsibilities andwhether the solicited employee is an at-will employee also are relevant.10

In a thoroughly pragmatic analysis ofthe issue, the Court stressed that thisthree-part test should be flexible so that

actions traditionally taken by departingemployees with regard to co-workersleaving simultaneously will not amountto a breach of duty of loyalty unless oth-er factors, such as the extent of the so-licitations or nature of the offers of em-ployment dictate finding of a breach ofthe duty of loyalty.11

The Court further indicated that not allsolicitations of co-employees are improp-er:

Under this flexible approach, tradition-al actions by departing employees, suchas the executive who leaves with hersecretary, the mechanic who leaveswith his apprentice, or the firm partnerwho leaves with associates from her de-partment, would not give rise to abreach of loyalty unless other factors,such as an intent to injure the employerin the continuation of his business,were present.12

As to solicitations of customers, the JetCourier Court concluded, "an employeemay advise customers that he will beleaving his current employment."13 How-ever, the Court emphasized that the em-ployee may not solicit customers for fu-ture business.14

Armed with these legal principles, theCourt concluded that the trial and appel-late courts had applied unduly narrowstandards in determining what actionsconstituted a breach of the duty of loyalty.The Court remanded the case for a retri-al and instructed the lower court to con-sider, under the standards adopted,whether Mulei had violated his duty ofloyalty. The Court also held that Muleiwould not be entitled to any compensationor bonus payments for the period duringwhich he was disloyal. The Jet Courier de-

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64 Labor and Employment Review November

cision stands squarely for the propositionthat, regardless of the competitive pres-sures facing departing employees, theycannot seek to position themselves for in-stant success at the expense of their em-ployers.

Subsequent Case LawAlthough the facts of Jet Courier un-

equivocally demonstrated wrongful con-duct by the employee, cases that comethrough an attorney's door are rarely soclear-cut. Although the standards inMulei are often cited, cases followingMulei offer little guidance for dealing withfacts similar to those set forth in the hy-pothetical presented in the introduction ofthis article. Determining whether conductin a given case amounts to a breach of theduty of loyalty in a preparation to com-pete case requires a close analysis of thefacts and circumstances, with particularattention given to the nature of the prepa-rations.

For example, in Koontz v. Rosener15 fourplaintiff real estate salespersons boughtinto a real estate brokerage firm whilestill employed by a competing firm. Beforebeing terminated from the original firm,the plaintiffs systematically listed proper-ties for only a short time and failed to listother properties in an attempt to keep thepotential listings available for their com-peting venture.16

The Colorado Court of Appeals, quotingwith emphasis the precedent set forth inJet Courier, found that the plaintiffs' ac-tions were tantamount to active competi-tion and were not in the employer's bestinterests "but [were] done with a view to-ward promoting [the employee's] privateinterests at [the employer's] expense andto its detriment."17 The court found theagreement among the plaintiffs to termi-nate their employment en masse "evi-denced an intent to diminish [the employ-er's] prospective ability to compete withtheir anticipated venture and thus violat-ed a duty of loyalty owed to [the employ-er]."18

In Graphic Directions, Inc. v. Bush,1® de-fendants Bush and Dickerson were em-ployed by Graphic Directions, a graphicsbusiness. Bush ultimately became theVice-President and Marketing Director,and Dickerson became the Art Director.Dissatisfied with the management ofGraphic Directions, Bush made prepara-tions to start a competing business anddiscussed his plans with Dickerson andanother Graphic Directions employee.Shortly thereafter, the three employees re-

signed from Graphic Directions and im-mediately began a competing graphicsbusiness. Graphic Directions filed suit as-serting a claim for breach of fiduciary duty.At trial, the jury returned a verdict againstBush and Dickerson. Bush and Dickersonappealed.

Dickerson argued that because he wasan hourly employee with no managementor administrative authority, he was notsubject to the fiduciary duties outlined inJet Courier. The Colorado Court of Ap-peals disagreed, stating that the duty ofloyalty was based, in part, on agencylaw.20 The Court of Appeals observed thatthe Jet Courier decision suggested that ahigher standard of the duty of loyalty maybe appropriate only where an employeehas sufficient authority to act for the em-ployer or has access to confidential infor-mation.21 However, based on his appoint-ment to the position of Art Director, Dick-erson was cloaked with such authorityand the court applied the principal/agent analogy.

The Court of Appeals held that eventhough the evidence was not "overwhelm-ing," it was sufficient to support the jury'sconclusion that Bush and Dickersonbreached their fiduciary duty to GraphicDirections.22 Although it acknowledgedthat employees may make preparations tocompete after termination of their em-ployment, including advising current cus-tomers that they will be leaving, the courtalso recognized that obligations of loyaltyare necessary to protect the employer.23

In T.A. Pelsue Co. v. Grand Enterprises,Inc.,24 the court found that Beaver, a for-mer director of TA. Pelsue Co. ("Pelsue"),breached his duty of loyalty when he,while still employed by Pelsue, activelyengaged in designing, manufacturing, andselling products for a competing business,as well as the solicitation of Pelsue's cus-tomers.25 After resigning as a director andfull-time employee, Beaver continued toreceive group insurance coverage and oth-er benefits from Pelsue.

The court noted that Beaver used infor-mation and resources that were availableto him during his many years of employ-ment with Pelsue to develop and promotethe competing business to the detrimentof Pelsue. The court relied on Mulei infinding a breach of the duty of loyalty, butalso applied a heightened view of the duty,given Beaver's relationship to the employ-

er:Resignation or termination does not au-tomatically free a director or employeefrom his or her fiduciary obligations. A

former director breaches his or her fi-duciary duty if he or she engages intransactions that had their inceptionbefore the termination of the fiduciaryrelationship or that were based on in-formation obtained during that relationship. Once the fiduciary relation-ship is terminated, employees maycompete with their employers as longas prior fiduciary confidences are notused to the corporation's detriment.26

Thus, the court seems willing to scrutinizethe pre- and post-termination behavior ofdirectors more closely than that of em-ployees with less responsibility.

Practical ConsiderationsIn Advising Clients

Although the Jet Courier decision andits progeny indicate that it is permissiblefor employees to engage in preparations tocompete with employers, Colorado courtswill not permit conduct that offends basicand practical notions of fairness. Accord-ingly, issues involving the nature and ex-tent of the preparations to compete posesignificant problems for attorneys advis-ing clients. Such problems may arise, forexample, when the employees solicit cus-tomers, prepare new business ventures,and plan mass resignations.

Solicitation of CustomersSolicitation of customers for a new busi-

ness while still employed is not permittedby Colorado law.27 However, drawing theline between permissible and impermissi-ble conduct can be difficult. An employeemay wish to verbally notify a customer ofhis or her plans to leave the current em-ployer to start a new venture, or to sendwritten notification of the new businessusing newly acquired stationery and busi-ness cards. Practitioners should be pre-pared to advise clients whether such con-duct constitutes improper solicitation.

Although Jet Courier indicates that anemployee may advise customers that heor she is leaving the current employmentto compete with the employer,28 Coloradolaw does not specifically address the issueof written announcements. A primarypurpose of sending an announcement is toinform customers that the new venturewill be available to assist them, and theannouncement could lead to conversa-tions between the employee and customer.Case law from other jurisdictions sug-gests that sending an announcementshould not be construed as improper solic-itation.29

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2005 Labor and Employment Review 65

Distinguishing between "discussions"and "solicitations" can be difficult. Em-ployees should be warned that any over-ture, no matter how innocuous, to a cus-tomer relating to obtaining the customer'sfuture business could rise to the level ofimpermissible solicitation. If the employ-ee and customer have a long-standing re-lationship, it is likely that the employeewould wish to continue working for thatcustomer. However, to avoid breaching theduty of loyalty, the employee should con-sider waiting until after he or she has leftthe current employment before engagingin discussions with the customer.30

Preparation of New BusinessesEmployees might seek legal advice

when determining what actions to takewhen preparing to compete with currentemployers. Based on the case law dis-cussed above, employees should be urgedto take no action to prepare new businessventures while on company time and torefrain from using company resources.31

Employees likely would look for officespace, meet with bankers to secure loansfor the new business, or discuss businessneeds with an office supply company be-

fore establishing the new business. Em-ployees should be urged to limit such ac-tivities to lunch breaks, after hours, orover the weekend—never during workhours. They should avoid using companyresources such as fax machines, comput-ers and computer networks, and phonesto prepare their competitive business ac-tivities.

Other activities done in preparation tocompete with a current employer are notspecifically limited by Colorado law. How-ever, as suggested in Jet Courier, and al-luded to in T.A. Pelsue Co., the higher thelevel of the employee and the commensu-rate access the employee had to confiden-tial information of the employer, the morelikely a court is to subject the preparatoryactivities to greater scrutiny, even if notaccomplished on company time. For ex-ample, an employee might visit a compa-ny vendor over the weekend to securethat vendor as a supplier for his or hernew business; however, if the employee'sknowledge of the vendor's pricing prac-tices resulted from his or her position asan employee or access to confidential in-formation, such otherwise innocuous be-havior may come under greater scrutiny.

Mass ResignationsAs alluded to in Koontz, an agreement

among employees to terminate their em-ployment en masse can evidence an intentto diminish the employer's prospectiveability to compete and thus violate the du-ty of loyalty. On the other hand, Jet Couri-er suggests that the firm partner wholeaves with associates from a departmentof a law firm would not breach the duty ofloyalty unless other factors, such as an in-tent to injure the employer, were present.

When advising a group of employeesplanning to leave an employer, an attor-ney should be mindful of these of consid-erations. Factors to consider in determin-ing whether a group of employees canleave an employer at the same time afterhaving had discussions among them-selves, without breaching the duty of loy-alty, include: (1) their overall significancein relation to the size of the employer; (2)their level of importance to the employer;(3) their access to confidential or propri-etary business information of the employ-er; (4) their ability to use such informationto the employer's detriment; (5) the will-ingness of the employees to give notice oftheir intent to depart; and (6) their moti-

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The Colorado Lawyer / November 2005 / Vol. 34, No. 11 / 65

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66 Labor and Employment Review November

vations for leaving, including their ownperceptions of how they are being treatedby the employer.32

Employees who perceive that they areunderpaid or who may be subject to a re-duction in force and wish to seek betteremployment elsewhere may be viewedsympathetically, even if harm to the em-ployer results. Similarly, a group of em-ployees who are a small part of a muchlarger operation may not harm the em-ployer's interest when they depart, eventhough they may be valued employees.Another factor a lawyer should considerwhen advising clients is whether the em-ployer has provided the employees withsignificant confidential information thatcan be easily used against the employer'sinterests, as well as the desire of the em-ployees to use that information.

ConclusionCounsel advising employees who may

be planning to leave an employer to estab-lish a competing business must considernumerous issues when providing such ad-vice. It is not enough to conclude that JetCourier prohibits only solicitation of em-ployees and customers, because employeesmay be contemplating additional types ofbusiness preparations in addition to suchsolicitation. Courts have adopted a flexibleapproach, which includes analyzing theemployees' role in the employer organiza-tion. Therefore, it is imperative that coun-sel obtain sufficient information regardingthe client's circumstances and role withthe employer to properly advise as to whatpreparatory steps may be permissible.Practitioners also should advise clients tobe cautious when preparing to competewith employers, because the case law pro-vides little insight into how the courts willresolve disputes if litigation results fromthe activities of departing employees.

NOTES

1. See, e.g., T.A. Pelsue Co. v. Grand Enters.,Inc., 782 F.Supp. 1476,1486 (D.Colo. 1991) (em-ployee has fiduciary duty not to engage in en-terprises directly in competition with and nec-essarily having injurious or detrimental effecton employer's business); Alexander & Alexan-

der, Inc. v. Frank B. Hall and Co., 1990 WL8028, *8 (D.Colo. 1990) (employee must actsolely for employer's benefit in all matters con-nected with employment, giving due regard toemployee's right to make preparations to com-pete).

2. Jet Courier Service, Inc. v. Mulei, 771 P.2d486,493 (Colo. 1989):

In attempting to accommodate the compet-ing policy considerations of honesty andfair dealing on the one hand and free andvigorous economic competition on the oth-er, courts have recognized a privilege in fa-vor of employees which enables them toprepare or make arrangements to competewith their employers prior to leaving theemploy of their prospective rivals withoutfear of incurring liability for breach of theirfiduciary duty of loyalty (internal citationsomitted).3. Id.4. Mulei v. Jet Courier Service, Inc. ,739 P.2d

889 (ColoApp. 1987).5. Jet Courier, supra, note 2 at 491.6. Restatement (Second) of Agency § 387.7. Jet Courier, supra, note 2 at 492-93.8. Id. at 493, citing Maryland Mutual, Inc.

v. Metzner, 382 A.2d 564,569 (1978).9. Id. at 497.

10. Id.l l .7da tn .13 .12. Id. at 495.13. Id. at 494.14. Id.15. Koontz v. Rosener, 787 P.2d 192 (Colo.

App. 1989).16. Id. at 195.17. Id. at 196.18. Id.19. Graphic Directions, Inc. v. Bush, 862 P.2d

1020 (ColoApp. 1993).20. Restatement (Second) Agency, supra, note

6.21. Mulei, supra, note 4.22. Graphic Directions, supra, note 19 at

1023.23. Id., citing Mulei, supra, note 4.24. T.A. Pelsue Co., supra, note 1.25. Id. at 1485-86.26. Id.27. Jet Courier, supra, note 2.28. Id at 494; see also Graphic Directions,

supra, note 19 at 1021.29. For example, under California law, an

employee is entitled to announce a new affilia-tion, even to those on a customer list that mayconstitute a trade secret. See Aetna Bldg.Maint. Co. v. West, 246 P.2d 11,14 (Cal. 1952);Morlife, Inc. v. Perry, 66 Cal.Rptr.2d 731, 737-

38 (Cal. Ct.App. 1997); Moss, Adams & Co. v.Shilling, 224 Cal.Rptr. 456, 458-59 (Cal.Ct.App. 1986); see also American Credit In-demnity Co. v. Sacks, 262 CaLRptr. 92,100 (Cal.Ct.App. 1989) ("the boundary separating fairand unfair competition in the context of a pro-tected customer list has been drawn at the dis-tinction between an announcement and a so-licitation."). The seminal case, Aetna Bldg.Maint. Co., supra, attempted to define this dis-tinction as follows:

"Solicit" is defined as "To ask for withearnestness, to make petition to, to endeav-or to obtain, to awake or excite to action, toappeal to, or to invite." "It implies personalpetition and importunity addressed to a par-ticular individual to do some particularthing...." It means: "To appeal to (for some-thing); to apply to for obtaining something;to ask earnestly; to ask for the purpose of re-ceiving; to endeavor to obtain by asking orpleading; to entreat, implore, or importune;to make petition to; to plead for; to try to ob-tain." Merely informing customers of one'sformer employer of a change of employment,without more, is not solicitation. Neitherdoes the willingness to discuss business up-on invitation of another party constitute so-licitation on the part of the invitee.

30. See, e.g., American Express Fin. Advisors,Inc. v. Topel, 38 F.Supp.2d 1233,1247 (D.Colo.1999), citing Comm. Couns. Serv., Inc. v. Reilly,317 F.2d 239,244 (4th Cir. 1963) ("during peri-od of employment, employee cannot solicit forhimself future business which his employer re-quires him to solicit for his employer; moreover,'[i]f prospective customers undertake the open-ing of negotiations which the employee couldnot initiate, he must decline to participate inthem."").

31. See, e.g, E. D. Lacey Mills, Inc. v. Keith,359 S.E.2d 148,155 (Ga. CtApp. 1987) (findingfull-time employees could not conduct "numer-ous" meetings, make "numerous" telephonecalls, and be "frequently" absent in pursuit ofplans to compete); Long v. Vertical Techs., Inc.,439 S.E.2d 797, 801-02 (N.C. Ct.App. 1994)(employees violated fiduciary duties by usingemployer's employees, facilities, computers,and computer programs to set up competingbusiness); Alexander & Alexander BenefitsServs., Inc. v. Benefit Brokers & Consultants,Inc., 756 F.Supp. 1408,1413-14 (D.Or. 1991)(discussing use of equipment during businesshours).

32. See, e.g, Jet Courier, supra, note 2 at 496;Koontz, supra, note 15 at 195-196; Graphic Di-rections, supra, note 19 at 1021. •

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66 / The Colorado Lawyer / November 2005 / Vol. 34, No. 11