Roughly two months ago, we wrote about Michael Scott and Dwight Schrute, two fictionalcharacters on NBC’s sit-com The Office, stealing the trade secrets of a competitor: Prince Paper. On last Thursday night’s episode, we learned the fate of Prince Paper: it went out of business. (5:35 into the linked clip.) Is this a result of Dunder Mifflin taking Prince Paper’s key customers? The show leaves this question unanswered.
Last Thursday night’s episode also illustrates a classic series of violations of the duty of loyalty by Michael Scott. At the close of the preceding week’s episode, Scott had given two weeks’ notice of his resignation from Dunder Mifflin. In last Thursday night’s episode, Scott learns that Prince Paper (where Scott had hoped to move after resigning) has gone out of business and then decides to open his own competing paper company, creatively named “Michael Scott Paper Company.” Scott proceeds to solicit a number of other employees in the office, including all three of the branch’s sales representatives, to resign from Dunder Mifflin, and join his new competitor. (The various solicitation efforts start at 6:30 in the clip and run for much of the episode.) Scott goes to the lengths of soliciting one employee in the branch parking lot and a second in the men’s room. Scott also spends company time asking Pam Beesley, the branch receptionist, to change the Dunder Mifflin invoice to say “Michael Scott Paper Company.” (8:35 into the clip.) Finally, the show strongly implies that Scott took a customer list because his new boss, Regional Vice President Charles Minor, asks the branch employees about “the client list that Michael was supposed to be working on.” (17:15 into the clip.)
Scott’s removal of a client list would be a case of trade secret misappropriation. Although the law on the duty of loyalty varies from state to state, Scott’s solicitation of employees for a competing venture while still employed by Dunder Mifflin would violate the duty of loyalty in most states. There are at least two cases in Georgia that reach this conclusion. U.S. Anchor Mfg., Inc. v. Rule Indus., Inc., 717 F. Supp. 1565, 1576 (N.D. Ga. 1989); E.D. Lacey Mills v. Keith, 183 Ga. App. 357, 362-363, 359 S.E.2d 148 (1987). More importantly for Dunder Mifflin and its Scranton branch, Pennsylvania law is similar. Reading Radio, Inc. v. Fink, 833 A.2d 199, 211 (Pa. Super. Ct. 2003). Scott’s use of company time and resources to create an order form for his new company would also be an issue for him.
While Prince Paper illustrated what an employer should not do in safeguarding its interests, Minor gives a lesson in an appropriate response. (Minor’s character is a level-headed, model manager, which is what creates comedic tension with the unorthodox, oft-inept Scott.) Minor keeps tabs on Scott after he hands in his two weeks’ notice. Minor intervenes when Scott is alone with sales representative Jim Halpert. Finally, Minor has Scott escorted out of the building by security when he learns that Scott is planning on starting a competing paper company. Dunder Mifflin likely would be in a good position to argue that it takes reasonable steps to protect its interests based on Minor’s actions.