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Los Angeles Superior Court Judge Awards Judgment of $3,135 in Misappropriation of Trade Secrets Case Involving Former Sales Employees

In Verdicts on September 2, 2010 at 8:11 am
Water Filtration
Image by QuintanaRoo via Flickr

A former employer was awarded $3,135 in compensatory damages after a Los Angeles Superior Court bench trial related to former sales employees’ alleged misappropriation of trade secrets .   LifeSource Water Systems Inc. vs. Stansfield, GC041297, 36 Trials Digest 13th 12 (Judgment Date May 4, 2009).   Plaintiff filed suit for breach of written contract, misappropriation of trade secrets, unfair competition, and interference with prospective economic advantage.  According to Trials Digest, the court issued a permanent injunction, ordered defendants to deliver all of plaintiff’s property in their possession, ordered Stansfield to pay $1,940 compensatory damages and ordered Kline to pay $1,195 compensatory damages.

Contentions

According to court records: Plaintiff LifeSource Water Systems Inc, has been developing, manufacturing, and selling its proprietary water filtration systems and maintains a database with complete customer details, including the product purchased, the customer’s contact information and particular needs, quotations, payment terms, purchase orders, job costs, vendor invoices, shipping costs, and any service call history.  Plaintiff requires its employees to sign and abide by a Non-Disclosure, Non-Solicitation, and Invention Assignment Agreement.  Plaintiff terminated defendant employees Felix Stansfield and Lydia Kline on January 15, 2007. The termination letters requested that each return all “company material,” including “leads, pitch books, demo-units, brochures, invoices, business cards and customer lists.” Neither defendant returned any of the materials to plaintiff in January 2007. Defendants were alleged to have used those documents to contact plaintiff’s customers for the purpose of soliciting them to permit defendants to perform service work for plaintiff’s customers on their systems.

As reported in Trials Digest:

Approximately 80 of plaintiff’s customers informed plaintiff that defendants contacted them about performing after-sales service on the customers’ systems and that defendants have come to their homes and performed services on their systems in exchange for payments of $75, payable directly to Stansfield per his request. In each of these cases, Stansfield charged plaintiff’s customers for services that plaintiff customarily provided at no charge in the interest of maintaining and developing good will. Plaintiff did not authorize Stansfield to perform any of these services.

Defendants, in soliciting plaintiff’s customers to perform unauthorized service calls, have been representing to plaintiff’s customers that they are employees of plaintiff. Stansfield, in certain instances, has given customers plaintiff’s business cards identifying himself as an employee of plaintiff, although he crosses out plaintiff’s telephone numbers and writes his own telephone number on the card.

As part of his solicitations to plaintiff’s customers, Stansfield has represented to plaintiff’s customers that they run the risk of electrocution unless they permit Stansfield to service their systems. He has also implied to plaintiff’s customers that he needs to perform an immediate service for health and safety reasons.

Judges and Attorneys

Hon. C. Edward Simpson

Plaintiff: Miles Carlsen, Carlsen Law Corporation, Los Angeles.

Defendant: Lydia Kline, in pro per; Felix Stansfield, in pro per.

By CHARLES JUNG

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