Customer List Not Secret Enough

By Rose McCaffrey

An employer was unable to protect the confidentiality of its customer list, because it failed to present any evidence that the list was worthy of trade secret protection. Calisi v. United Financial Services, Inc., No. CV 2010-000795 (Ariz. App. April 11, 2013). A customer list may qualify as a trade secret when the list contains valuable customer information that the company reasonably attempts to keep secret, “such as [the client’s] particular needs, preferences, or characteristics” or if the company expended substantial effort and resources to acquire its customer information so that a competitor could not easily duplicate the customer information.

In this case, the employee worked as a financial advisor. After leaving his first employer, the employee went to work for a different employer, but as a CPA. The two employers had maintained a mutual referral arrangement, and the new employer sent out a mass email to its clients, and some clients of the prior employer. The original employer sued, arguing that the mass mailing unlawfully relied on its own confidential client list. The court rejected the original employer’s suit for theft of a trade secret because the employer failed to identify unique information acquired in the course of its business or to show that substantial effort and resources were invested to capture information unknown to its competitors.

The case is a strong cautionary reminder that information does not rise to the level of a trade secret or confidential business information just because an employer says so. Wise employers take aggressive, and well-documented steps to imbue their business information with trade secret or confidential status. It is the documentation of those steps, and the documentation of the value of the information, that ultimately wins the day in many of these cases.

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