In The Retirement Group v. Galante, the employer sued former employees for misappropriation of trade secrets and violating a customer non-solicitation agreement. The employer obtained a preliminary injunction that prohibited the former employees from (1) soliciting any current customers and (2) using the company's information found solely and exclusively on its customer databases, except if the names and contact information were available through independent third party sources.
The Court of Appeal found that California courts have repeatedly held that a former employee may be barred from soliciting existing customers to redirect their business away from the former employer and to the employee's new business if the employee is utilizing trade secret information to solicit those customers. Thus, the court found that "it is not the solicitation of the former employer's customers, but is instead the misuse of trade secret information, that may be enjoined." While the former employees could be prohibited from using the employer's trade secrets, the court found that the customer non-solicitation restriction was an unenforceable restraint on competition in violation of California Business and Professions Code Section 16600.
This decision, along with other recent California case law, emphasize that customer non-solicitation provisions must be carefully drafted to only restrain customer solicitation to the extent an employee does so by using or disclosing the employer's trade secret information.