Are a company's clients proprietary?

Asked over 4 years ago - Cherry Hill, NJ

My former employer is trying to sue my future earnings because I started my own company and one of the clients, that has dealt exclusively w/me for over 2 years has decided to continue with my services. No contracts were ever signed and now she's telling me her company "owns" their clients. Isn't this illegal? No business can ever "own" a client. I mean if person X cuts my hair she can't tell me that person Y can't color it because she "owns" me as a client! How worried should I be?

Attorney answers (1)

  1. Mark S Guralnick

    Contributor Level 14

    Answered . You are exactly right. As long as you did not sign a contract for a restrictive covenant (such as an agreement not to compete with your former employer), and as long as you did not agree to protect your employer's trade secrets, customer lists, etc., any attempt to stop you from doing business with your former client would constitute an illegal restraint of trade in violation of both federal and New Jersey state law.

    It is not a simple issue, however. If your former employer believes you used fraudulent or deceptive devices to lure business away, or otherwise interfered with its business operations, they can still sue you under several theories of law. For example, New Jersey law recognizes a lawsuit based on the "intentional interference with a business or contractual relationship." So this is definitely the kind of thing you should seek legal counsel for. Be sure to act promptly if you've been served with any papers or threatening letters.

    Please feel free to contact me. I am the author of a book on U.S. Employment Law, and our firm is based in Marlton/Mount Laurel.

    Mark S. Guralnick, Esq.
    (856) 983-9900

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Trade secrets and small businesses

A trade secret is an idea, process, or formula that gives the owner a competitive edge, and certain laws protect them from becoming public.

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