Reach out and Sue Someone

New York State has a statute that says:

“… a court may exercise personal jurisdiction over any non-domiciliary…who in person or through an agent: …transacts any business within the state….”

It is called a “Long Arm” Statute. So you can reach out from your own state and sue that non-paying client on your home turf.

In layman’s language this means that if someone has purposely availed himself of the privileges and benefits of New York’s laws he is deemed to have subjected himself to the jurisdiction of the New York courts.

Simply stated, what this means, is that if a client in California asks a recruiter in New York to find a candidate and then does not pay the recruiter the fee that is due then the client can be sued in a New York Court. So if you are a California client you have to come a long way to defend that lawsuit.

Enforcing a Judgment

And if the client does not defend the lawsuit and judgment is entered against the client by default, then that judgment can be sued upon in California under the “Full Faith and Credit” clause of the United States Constitution that requires the California courts to enforce that judgment, and the underlying cause of action for the fee cannot be litigated again.

Did you know for example that the same is true when you are driving your car in another state and get into an accident? By driving in the state you are subjecting yourself to the jurisdiction of the courts of that state in case there is lawsuit arising out of that accident.

Do other states have such a law? I cannot say with certainty, but I believe that all do, with possibly varying language and interpretations. So the first thing to do is ask your lawyer. Is there such a statute in your state?

Then, when that far away client does not pay your fee, and thinks you have to come to its state, and you would not do that because of the cost and inconvenience, reach out and sue from home. That’ll teach ‘em.

Hire a Litigator

So the next question is: does your lawyer know how to sue for your fee and deal with all of the specious defenses that unknowledgeable defendant clients think prevents you from collecting that fee? It would help to have an expert in your corner, but if you do not have one you can create one.

Retain a lawyer who is a litigator: someone with experience suing on contracts. Then explain your case, and that there are cases that support your position. Refer back to some articles that appeared in this publication and elsewhere. That is my recommendation when I get the call from an out of state recruiter that needs help with a fee matter. Use and develop local counsel and reach out and sue.

An Ounce of Prevention

But to save you the trouble of relying on the Long Arm Statute you can do something else. Insert this phrase in your contract:

GOVERNING LAW: This agreement will be governed by and enforced in accordance with the laws of the state of ____. The parties agree that state and federal courts within the state of __________ shall have the exclusive jurisdiction over any litigation brought or arising out of this agreement.

COST OF ENFORCING AGREEMENT: In the event (Recruiter) institutes litigation to enforce its rights under this agreement and is the prevailing party in such litigation, (Recruiter) shall be entitled to costs of suit and reasonable attorney fees incurred by it in connection with such litigation.

Have your attorney review these clauses to conform to your state law. This provision takes the uncertainty out of whether your state’s courts have jurisdiction in a lawsuit against an out of state defendant.

From Where I Sit

I don’t as a rule offer personal comments or observation about the subject matter that I am writing about. Nor do I usually editorialize about the material. I like to keep my observations to whatever law is the subject matter of the article. But in this instance I have to make an exception and tell the reader why I wrote about this subject.

Of late I have been receiving an unusual number of telephone calls from recruiters from different parts of the country, even as far away as California. In each instance the recruiter was a single practitioner or part of a small boutique specialty firm. Although they all practiced in different areas of expertise or industries they all had one thing in common; they recruited for companies in other states than where they were located and recruited candidates from other states as well. They were not dealing locally. So their clients were not nearby but rather across state lines.

And in each instance there was no problem with the placement, or even proving that they were the “efficient procuring cause.” In some instances there were even written and signed contracts. The amount of the fees was not in dispute and there was not a question that they had sent the hired candidate. There was just the fact that the company was in another state and thought that the recruiter would not go after them given the cost and inconvenience of doing so.

What then surprised me when I looked at their contracts was that there was no provision for local “venue and jurisdiction” i.e., the consent of the client to be sued in the local courts where the recruiter was located, a clause such as is contained in this article. Then I realized how uninformed the recruiting industry as a whole may likely be as well.

So I decided to send out the message. Be prepared to “reach out and sue someone,” and to tell you and your lawyer how to do it as well.

Good luck.

A. Bernard Frechtman, Esq. is the author of Staffing Industry Law, A Guide for the Personnel Professional. He may be reached at (212) 580 7402 or via e-mail at abflaw@att.net or on his web page: http://www.frechtman.com. Note: This article is not intended as legal advice. In all instances the reader is cautioned to consult with legal counsel when utilizing this information. A.B.F.

“Will the Court Enforce your Agreement?”

Note: This article is not intended as legal advice. In all instances the reader is cautioned to consult with legal counsel when utilizing this information. A.B.F.

I. We are finally in Court

It was Monday morning, and the courtroom was crowded with the usual assortment of litigators waiting their turn to get to the judge to argue their motions with the fervor of a Clarence Darrow, or in the alternative to set their trial date. One young lawyer sitting in the back row was trying to absorb what was happening as each lawyer approached the bench and addressed the judge, some in low tones, while others spoke in a loud, effusive manner. All the while he wondered what should be his approach in trying his first jury trial. He had come early to watch the judge to see if he could learn something about him before the trial began and to get comfortable in the courtroom. It would be at least an hour before his case was called. So he continued to listen and review his notes.

The case he was to try this day on behalf of his client, a contingency recruiter, involved a fee of $50,000 for the placement of a corporate executive for a public company that was paying the executive a yearly salary of $250,000. The fee was 25% of the first year’s computed income. He began to review his notes, thinking of how he would present a prima facie case

II. Plaintiff’s Facts

As he reviewed his notes he remembered the first time his client had called him and told him about the trouble he was having collecting his fee. The client was so angry at the outset of the conversation that he had to calm him down so that he could hear the “facts.” But now on this day of trial he had to think in legal terms of how to present his witnesses so he was able to lay out in a logical sequence the “facts” upon which he hoped to prove the client’s claim.

First, he needed to demonstrate that his client had a commitment from the defendant to pay a fee if they hired any candidate he referred. He planned on doing this by having the client, as the first witness testify that: he had received a resume from a candidate who stated that he was seeking to leave his present employment; that he then had called the candidate and told him about an anonymous bank and asked permission to submit the resume; that the candidate agreed; he then sent the resume together with a fee schedule to the defendant bank.

He would then have his client testify to how he had called the defendant to question him about the resume; how the defendant asked to interview the candidate; that he then told the candidate to call the defendant; that the client had then called the defendant to tell him that the candidate would call; that he thereafter checked and learned that the call had been made; and that at a point thereafter he learned from the defendant that the candidate had been hired at a computed annual salary of $250,000 and that the fee was 25% of that sum equaling $50,000.

In support of the plaintiff’s testimony, he would offer the records of the plaintiff that had entries made by the plaintiff reflecting telephone calls made by plaintiff and defendant, be accepted into evidence on the basis that they were records that were kept in the ordinary course of business. While not evidence of the facts they reflected, they did offer support of the facts.

His other witness would be a contingency recruiter competitor with long experience in the industry and a leader in the trade association of contingency recruiters who was knowledgeable about custom and usages in the industry. He would have him testify that oral contracts were the norm and that it was understood that once a candidate was presented, if later hired, the recruiter was entitled to its fee and expected to take no further action unless requested to do so.

III. Defendant’s Facts

At the other side of the courtroom, the attorney for the defendant was likewise reviewing the evidence he was going to present to rebut the plaintiff’s claims for a fee. He would rely on the defendant as a witness who would testify that long before he had accepted the referral from the plaintiff he had signed a 60-day exclusive search agreement with a retainer recruiter and never told the plaintiff about it; that the retainer recruiter also had the resume of the candidate and submitted it to the defendant; that the retained recruiter told him that he had contacted the candidate who told him that he knew about the job opening through the plaintiff but had not yet been interviewed for the job; that when he realized that both recruiters were dealing with the same candidate he stopped taking calls from the plaintiff.

The attorney then planned on having the retainer recruiter testify how he set up interviews for the candidate with the defendant and how he had convinced the candidate and his wife of the merits of moving to the town where the defendant had its main office and where the job would be located, and that the candidate had accepted the position.

The trial proceeded as planned. Both sides presented their evidence, the judge denied defendant’s motion to dismiss on the claim that plaintiff failed to prove that it had entered into a valid contract with the defendant for it to pay a fee for a placement. Defendant also objected to plaintiff introducing into evidence certain records that it had reflecting the telephone calls and conversation between the parties in support of the facts testified to orally. The judge denied this motion as well. Defendant then requested that the judge charge the jury, that in order for the plaintiff to collect its fee, it had to be the predominant efficient procuring cause of bringing about the candidate’s employment. The judge refused to so charge the jury.

IV. Summations and Verdict

After both sides rested, the attorney for the defendant addressed the jury and tried to persuade it that the plaintiff had not really been the efficient, procuring cause of the placement; that it had not made the appointment for the interview that resulted in the hire; that it had not done anything to help persuade the candidate and his wife to move to the town where the defendant was located; that, in fact, another recruiter had done all of this, and that this recruiter had been paid a fee for its efforts, and that the defendant should not be obligated to pay two fees.

Then the attorney for the plaintiff addressed the jury. He reminded them that the plaintiff had been asked by the candidate to find him a job; that the plaintiff had then asked the defendant if it would be interested in a candidate with his qualifications and when told yes, it had then sent the resume to the defendant for consideration. He then set forth the testimony that showed that it was the defendant who had prevented the plaintiff from completing the normal recruitment process by not returning any of the plaintiff’s telephone calls when it attempted to set up the interview for the candidate. And at the end of his presentation, he reminded them of the testimony of the expert witness who had testified that the practice in the industry favored giving the placement fee to the recruiter who had first introduced the candidate and that the recruiter was not obligated to do anything else in order to earn its fee.

The jury then retired to consider a verdict and upon their return advised the court that it had found in favor of the plaintiff for the amount of $25,000.

V. Defendant Appeals

The Appellate Court sustained the verdict in favor of the plaintiff and made a number of interesting observations that impact on the everyday presentation of candidates to potential employers by a contingency recruiter where other recruiters are simultaneously working on the same job order, and particularly where a retainer recruiter is also involved.

Defendant argued that the interview was never scheduled through the plaintiff; that defendant did all of the work to bring the parties together; that mere negotiations by the contingency recruiter that did not result in bringing the parties together do not entitle the contingency recruiter to a fee. Defendant also argued that as a matter of law only one “employment agency” can be the efficient procuring cause of an employment transaction and the defendant can only owe one fee. The Court also found that the plaintiff had entered into a contingency fee contract long before any efforts by the retainer recruiter

The defendant’s claim that the plaintiff had to be the “predominant” efficient procuring cause of the employment of the candidate was also rejected by the court and that it had only to be the efficient procuring cause of the employment. And it further pointed out that the defendant’s actions of not returning the plaintiff’s telephone calls prevented it from being the efficient procuring cause of the employment as defendant did this in an effort to avoid its fee obligation, even though plaintiff had made the initial contact of the candidate with the defendant.

VI.Conclusion

Thorough preparation of witnesses and the assembling of the records and other writings for presentation of the essential evidence to prove a case is essential for success at trial.

Having expert testimony introduced to explain the practices and customs of the industry go a long way to giving perspective to the evidence about what occurs during the recruitment and placement process. Having some understanding of what happens at trial can be helpful in a recruiter’s conducting day-to-day activities. The better the records, the clearer the contract obligations (preferably in writing and signed by the prospective employer), and having a paper trail of all of those activities will always help a recruiter prevail in a trial for a fee.

A.Bernard Frechtman, Esq. is the author of Staffing Industry Law, A Guide for the Personnel Professional. He may be reached at (212) 580 7402 or via his web page: http://www.frech tman.com.

It’s 8 o’clock on Saturday morning, and a man carrying two suitcases walks jauntily into the lobby of an office building. He approaches the security desk and presents his credentials to the watchman on duty, and signs the register to go to his office. The watchman issues a pass, and the man, swinging the suitcases lightly, enters the elevator.

At 4 o’clock in the afternoon the doors to the elevator open in the building lobby, where the same watchman is still on duty. The man who had signed in that morning emerges carrying the two suitcases, his shoulders sagging. He walks slowly to the security desk and with a deep sigh, he sets the suitcases down and signs the register, noting his departure time in the appropriate column.

On the following Monday he arrives at the office and tells his employer that he is quitting. He says that he is going to go first on a long-deserved vacation and then back to his original occupation, as he has tired of recruiting.

The following Sunday an advertisement appears in the classified section of the newspaper announcing the opening of his new recruiting office. And on Monday he is on the telephone calling clients and candidates with whom he had contact in his previous employment.

At the hearing for a preliminary injunction, the watchman testifies that he observed the man enter in the morning, swinging the suitcases easily, and then leave in the evening, struggling with what were apparently full suitcases. The court inferred that the man had taken copies of résumés and carried them out in the two suitcases. The preliminary injunction against their use was granted.

Leaving a Trail

Across town, three people gather together and decide to leave their employer and go into a competing recruiting business. They wait for the Christmas holiday, while their boss is out of town, and give notice that they are quitting. They set up shop and start calling candidates and companies with whom they did business while working for their previous employer. They place a candidate with whom they previously worked, with a company that just gave their previous employer the same job order.

The previous employer sues for the fee that the three employees collected, and at the trial, the employees testify that they did not take any files or résumés when they left their prior employment. When queried as to how they came to call candidates with whom they had dealt, they say that they remembered their telephone numbers and that they were friends.

The court awards the fee to their previous employer. They stop making calls to candidates they knew of from that prior employment.

A Farewell Message

It was the night before Christmas, so the poem goes, and all is quiet throughout the house. The same is true at the office of the recruiter who has already given notice that he is leaving at the end of the week just before Christmas. When all of his fellow employees are gone, he enters his password into the computer and accesses the list of candidates with whom he has been working for the last couple of years, 400 in all. All he does is copy their email addresses, nothing more, and makes a printout. It takes about an hour.

In January, at his new employment he emails all of these candidates, telling them where he is now located. He calls one candidate in particular to discuss a potential new job at a company with whom the recruiter did business while at his old employment and knew about from that time. The placement is made and his new employer collects a six-figure fee.

When the old employer learns of that, a lawsuit is filed against the new employer and the former employee. When the computer is checked, a special program provides exact information of when the employee accessed it, how long he was on it, and precisely what he downloaded and printed. The case was settled before trial.

Trade Secrets: Are They Secret?

These three stories are true legal cases, three of many more that could be told about in this article. They are typical of what has been happening in the recruiting profession from time immemorial. And it is likely this will continue as new people enter into the occupation and then decide to strike out on their own, using confidential information that they acquired while employed. They will then take all or part of a database full of résumés of potential candidates that have been identified as such at great expense and time. And taking the information is easier today than ever before because of the use of the computer and the storing of information in a format that is so easily accessible and transferable.

A long time ago (and sometimes even today), depending on where you are in the country, courts did not understand recruiting, and why the information about candidates for employment represented an important asset of the recruiting company, and that it was not otherwise available in any public documents or source. But today, enough case law has developed that clearly confirms that the information gathered by recruiters about potential candidates for employment constitutes confidential information and therefore is a trade secret deserving of protection by the courts against improper taking by an employee.

Close the Barn Door Now

Recruiting-company employers have displayed a tendency over the years to not take precautions to protect the most valuable asset that they possess: the database of identified candidates. Enormous amounts of time and energy, and certainly money, have been invested in creating this enormous stockpile of information that is not otherwise available to anyone else from public sources.

While you have to depend on the honesty and integrity of recruiters not to take what is not theirs when they leave to compete, whether on their own or with another employer, it is prudent to put certain systems in place so as to at least be able to demonstrate to a court what has been taken, by whom, and when. In the days when we did not have computers and all records were paper, we depended on having résumés and making copies when needed. Copying machines were the first electronic advance that made a difference in recruiting. The fax machine was next; then came the computer.

One way of checking up on whether an unusual number of copies were made at any one time was to check the counter at night, when the office was closed, and again in the morning to see what use may have been made in the interim. Then find out who stayed late the night before. Today we do not have to do that; computers can be programmed to give exact information of their use at any time. Not to take advantage of that ability is foolhardy, given what is at stake. In some states, if a password is required to access a computer, it constitutes a crime to do so without permission or authority.

Is a Trade Secret, Secret?

There are two elements to a trade secret that make it a trade secret: the information is not generally available, and the information is treated as secret. In the case of the database of identified candidates, the first element is satisfied by the fact that there is no other such list available to the public. The second element is provided by treating it as a secret. To do so, access must be limited to only those who must use it in their daily employment activity. In addition, and most important, it needs to be made clear to all employees that the information is a trade secret and it must be maintained as such; that its use otherwise would be a violation of the employee’s fiduciary responsibility; and that any violation of its integrity will be met by legal action to restrain its unlawful use.

In some states, where restrictive covenants against unfair competition by former employees are enforceable, contracts with such a provision are utilized. But in all states, the common law of an employee’s fiduciary obligation of good faith to act with honesty and loyalty to one’s employer can be used to enforce protection of an employer’s trade secrets. In fact, even where restrictive covenants are used, their enforcement is predicated on protecting a trade secret that could not otherwise be protected. Enforcing the fiduciary responsibility can do the same.

Conclusion

1. Make it clear to all employees that the database of identified candidates constitutes a trade secret.
2. Restrict access to the database to only those who use it in the course of their employment.
3. Require a password for access and limit remote access.
4. Insert a program that identifies all users of the database, when and for what purpose, with a permanent record of all such activity. Make sure that any deletions are retained in the backup.
5. Keep the barn door closed.

Note: This article is not intended as legal advice. In all instances the reader is cautioned to consult with legal counsel when utilizing this information. A.B.F.

____________________________

A. Bernard Frechtman, Esq., is the author of “Staffing Industry Law: A Guide for the Personnel Professional.” He can be reached at (212) 580 7402, via email at abflaw@att.net, or on his Web page: http://www.frechtman.com.

Whose contract is it anyway?

Background

There is an ever increasing practice of company clients who insist on using their own contingency recruiting contracts when utilizing the services of a recruiter. Often the recruiter, anxious to obtain the job order, fails to carefully read the contents of those contracts before beginning the assignment. That failure can cause severe problems down the road after a candidate is introduced and hired by the client who then turns to a contract provision to claim that a fee is not owed to the recruiter

The time to review and negotiate the contract is before you begin the search. Too many recruiters are so anxious to get started they never stop to establish the contractual terms beforehand. Then they are confronted by the contract the client wants and it is too late, they have already started. And bear in mind that the client is trying by whatever means it can, to limit, even eliminate, its obligation to the recruiter after the placement has been made and the candidate has been hired.

Read a Company Contract Carefully

Not all company contracts are the same, but they do have many similar provisions, again because the objective is to control when and if a fee payment will be made when a hire occurs. An overall observation that needs to be made at the outset is that, whatever provisions are established by the client, you can be assured that they will be in violation of the legal principles that normally govern the relationship between recruiter and client and the customary recruiting practices that are generally followed by recruiters. This is because they are generally drafted by attorneys not familiar with the recruiting industry and who are trying to satisfy Human Resources and their petty annoyances or mistaken beliefs in how the recruiting process should be governed.
The provisions discussed in this article come from actual client contracts.

Following a System

No referral will be recognized, nor a fee paid therefore, unless it is processed through the human resources department.

To begin with, the contract may contain a provision that establishes a protocol that requires all referrals be processed through Human Resources, and that a violation of that procedure will abrogate the requirement to pay the fee if a hire results. In fact, we know that this procedure is not generally followed, even by the client itself and certainly not by recruiters. In fact, on the contrary, both the recruiter and the manager to whom the candidate will report want to deal directly, and not through a middle man.

In Person Interview

Some contracts will require that an in-person interview of the candidate by the recruiter precede any referral to the client. While this may be a general practice at some levels, it is most often not followed at even the highest level where candidate compensation may run into hundreds of thousands of dollars, even millions. This happens every day. Why have a provision that is not being followed, only to have the client use its violation (even with the client’s complicity) as an excuse to threaten not to pay the fee?

Resume Required

No fee shall be due where the candidate’s resume was not submitted by ABA Recruiters before interview

What about the non-acceptance of the referral of a candidate by telephone before having transmitted the candidate’s resume to Human Resources? Is that real? This flies in the face of the client’s usual need to move swiftly in certain situations and often the loss of a candidate that is being recruited, and not necessarily looking to change employment, in not having a resume. What is more important, the referral or the protocol? Again, we want to eliminate controversy when the fee is due so get rid of it.

Prior Resume

No fee shall be due where Widgett, Inc. has received the candidate’s resume for a position from another firm, referral or other source within six (6) months prior to ABA Recruiter’s submission for the same position.

How will you ever know if you are going to earn a fee when you refer a candidate who is interviewed and hired, but it subsequently turns out the company had the candidate’s resume on file but never acted on it? You could be sandbagged every time. After all, the name of the game is being the “efficient procuring cause” for having brought about the hire. And if it was you making the referral happen, you should be entitled to the fee, not some other recruiter that dropped a resume in the mail that the client conveniently had in its file.

Rejected Candidate

No fee shall be due if a candidate is referred for a specific position and is rejected and later hired for a different position

So long as you were the efficient procuring cause for having brought the candidate to the attention of the company and there was no intervening event, then you should not be precluded from earning the fee to which you are rightly entitled. Such a provision can lead to all kinds of abuses by a company seeking to avoid paying a fee.

Prior Ad Response, Prior Contact, Exact Position

No fee shall be due where a candidate referred by ABA Recruiters responded to an advertisement from Widgett, Inc. for the same position, prior to the candidate’s resume being submitted by ABA Recruiters, Inc.

This again belies the basis on which a contingency recruiter earns a fee. It should be based on being responsible for having brought the attention of the candidate to the company and the company acting on that referral, ending in a hiring: to then not be paid a fee for doing what you were retained to do is to “unjustly enrich” (legal term) the client. Sometimes this is also combined with the provision:

No fee shall be due where the candidate had prior contact with the company within 365 days of referral by ABA Recruiters

Or this provision:

A fee shall be due, if and only if, a candidate, actively recruited and referred by ABA Recruiters, is hired for the exact position requested by Widgett, Inc.

This is reason enough to read, carefully, any contract provided by a client in lieu of yours.

Referral Time Limit

Then there is the time limit imposed by the client in which the referral or resume is valid after which there is no obligation to pay a fee. This provision is sinister and, in fact, eliminates the very predicate under which a recruiter makes a referral and expects to earn a fee, i.e., that if the recruiter is the “efficient procuring cause” for having brought about the hire, the recruiter is entitled to the fee. For this there need be no time limit, only a causal relationship between the making of the referral and the offer of employment. A provision with a time limit on the validity of a referral defeats that principle and loses you the fee. Some companies even use a three-month validity period. A high-level placement can take a year or even more. You have to watch out for that one.

Fee Limits, Calculation, and Caps

Companies are often prone to limit the fees paid to below what the market will pay; and at the same time insert incomplete or inappropriate language describing the manner in which the fee will be calculated. This is almost as important as the amount of the fee. How do you describe the calculation so that you get a fee based upon the “computed first year’s projected income?” This may then be coupled with a provision that “caps” the fee at a certain level of candidate compensation. If, for example, your fee is 25% and the assignment is for a candidate who may earn $500,000 and the fee is capped at $100,000, it effectively reduces your fee to 20%.

First Resume in Wins

Another provision that serves to eliminate payment of a fee is the “resume in the house” catchall that says in one of many ways: if the client has the resume from another recruiter, even though you caused the client to interview and hire the candidate, the client will pay the other recruiter. Or, similarly, if the client received the resume through a direct response to an advertisement or voluntary mail-in and it is in their files, they will not owe you a fee. Sometimes this provision is limited to receipt of the resume within some period of time prior to your referral, like 180 days.
And last but not least, where the candidate worked for the client in the past it will not pay a fee.

Conclusion

What is the best way to deal with this problem? Provide your contract to the client at the very outset of the relationship and tell the client this is the basis on which you work. If there is a particular proviso that the client would like to change or one that the client would like to add, then negotiate it, or turn it down if it will only end up frustrating your earning a fee after you have done all of the work. But under no circumstances sign the client’s contract without reading and carefully evaluating each provision and how it will affect you if any one of the described circumstances occurs. It will be too late then.

A. Bernard Frechtman, Esq. is the author of Staffing Industry Law: A Guide for the Personnel Professional and can be reached at (212) 580-7402 and via email at abflaw@att.net or his website www.frechtman.com.

Note: This article is not intended as legal advice. In all instances the reader is cautioned to consult with legal counsel when utilizing this information. A.B.F.

The age old problem of recruiters leaving their employ and taking a long list of candidate resumes and going into competition evokes thoughts of expensive litigation to protect those trade secrets. Today more than ever with candidate and company information on computers downloading such a list has made the problem even more prevalent.

After litigating numerous such cases and seeing the reluctance of clients (and advisably so) to engage in protracted and expensive litigation seeking injunctive relief I decided to try something different for a client faced with just such a situation. I decided to sue for the fee instead.

The case involved three recruiters who leave and establish their own company taking copies of candidate information with them and proceed to call those candidates. Instead of immediately suing them and seeking an injunction against their using the list they have taken, my client monitors the situation by having his remaining recruiters report if a candidate they have in their files responds to a recruiting call by saying they have found a new job.

That occurs and it is learned that not only has the candidate been placed but has been placed at a company in a job order that the client had in his files.

We then sue for the fee they were paid on the basis of their having taken a trade secret and violating their fiduciary responsibilities as employees. There is no employment contract involved. This is all based on common law principles. Although the cost of litigation was equal to the fee that was recovered, it was well below the cost of seeking injunctive relief and far less complicated at trial.

And the immediate byproduct of the lawsuit was that the defendants never attempted to contact any of the candidates on the list they had wrongfully taken. By making it into a “collection case” we simplified the situation and got right to the heart of the matter quickly.

It was interesting that the defendants claimed that this information was .”..independently ascertainable through established recruiting procedures and therefore is not entitled to trade secret protection.” The court disagreed, stating that such information was a trade secret and awarded the fee to my client. Next time it happens to you have your attorney look up the case Fisher v. Ryan, 470 N.Y.S.2d 968.

A.Bernard Frechtman, Esq. is the author of Staffing Industry Law, A Guide for the Personnel Professional.  He may be reached at (212) 580 7402 or via e-mail at abflaw@att.net or on his web page: http://www.frechtman.com.