Law for Business 12th Edition by James Barnes,Terry Dworkin,Eric Richards

Exercise 6

Edward Taylor and James Petri left their employment with Pacific Aerospace Electronics, Inc. (PAE) to form a competing concern, RAAD Technologies, Inc. (RAAD). After leaving PAE, Taylor and Petri compiled for RAAD a list of prospective customers, projects, and history. The list was derived from their memories of information developed by or available to them at PAE and included customer contacts, information about active projects and engineers, and customers' business and design preferences. Information they could not recall, including telephone numbers and addresses, was obtained from a business card file which Taylor took with him from PAE. Taylor and Petri used customer information they took from PAE to contact and solicit business from PAE customers. For instance, in preparation for a sales trip to southern California, Taylor and Petri prepared a memorandum summarizing their recollections of particular PAE customers' engineers and their histories and attitudes about PAE. Because of this information, RAAD was able to negotiate a lower commission structure with potential customers. Did the former employees violate their duties of loyalty and confidentiality? Explain.