In Roberson et al. v. C.P. Allen Construction Co., Inc., No. 2080537 (Ala. Ct. App. May 7, 2010), we once again encounter a familiar scenario. Despite the existence of a non-competition agreement, a sales employee responsible for many clients goes to work for a direct competitor. In the subsequent litigation, the employee argues that his former employer cannot establish the presence of a protectable interest because all of the clients he dealt with are listed in the yellow pages or are otherwise readily identifiable. While this argument may have carried the day had the parties’ dispute focused solely upon the confidentiality of the employer’s client list, it was not dispositive on the issue of enforceability of the non-compete. As the court observed: “[cases dealing with a non-confidential customer list] hardly stand for the proposition that an employer who deals with publicly identifiable customers may never enforce a noncompete agreement.” In this particular case, the employer provided the means for the employee to entertain clients and to develop relationships with those clients. The Court concluded that the employer’s relationships with its customers – relationships that were important to stimulating its business within the concrete-cutting industry – were sufficient to constitute a protectable interest.
The important point to take away from Roberson is not to get bogged down on the issue of whether the identities of particular clients are publicly known. In most such cases, the real issue is not the identity of the client, but rather the employee taking advantage of a relationship built at the company’s expense. Similarly, in the related area of trade secrets, the real issue with a customer list is usually not the names of specific clients – which are usually generally known – but rather the more significant non-public information that is also contained on the list such as contact information for specific individuals, contract expiration dates, pricing/discounting information, etc.
One final note about customer relationships: When analyzing whether an employer has a protectable interest, there is no uniform test as to how different courts will view the significance of customer relationships. For example, Illinois courts require “near permanent” customer relationships in order to establish a protectable interest. Alabama courts – as evidenced by the Roberson case discussed above – do not impose the same “near permanent” requirement. Be sure to check the case law in your jurisdiction.