N.J. Integrator Earns $837K Judgement vs. 3 Disloyal Employees
A New Jersey security integration company has successfully defended a non-compete agreement it had with three former employees to the tune of $737,087 in compensatory damages, $100,000 in punitive damages, plus attorneys’ fees.
The Superior Court of New Jersey rendered a ruling (Docket No. UNN-L-001292-08) on January 2, 2013 in favor of B&H Security in Union, N.J. The 30-year-old company, owned solely by president Eliot Barry, claimed three of its former employees - a salesman, customer service rep, and IT manager - violated their confidentiality and 48-month non-compete agreements not to disclose or access B&H’s customer information.
According to court documents outlined on security attorney Ken Kirschenbaum’s website, back in 2007 (the wheels of justice grind slow) the three employees set up multiple companies named Advanced Integration Security (AIS) LLC, The Vorst Group (dba as Security Supply Store), Advanced Integration Systems, Pandora Security and Pandora Advanced Integration Security.
According to Barry, all of the information that B&H deals with is sensitive. This includes the identities of clients, their access codes, central station codes, and plans for what is secured. The customized solutions, which involve assembly of equipment from various vendors, are also deemed confidential.
B&H takes precautions to maintain the confidentiality of its information. It applies security to its own offices and computers systems. It also provides employees with a handbook containing a Non-Disclosure/Confidentiality section.
According to court documents, a former employee misappropriated confidential information belonging to B&H, taking with him virtually the entire database, which he then used to solicit B&H customers while still employed at B&H in at least one instance. In the end, four of B&H’s largest clients canceled their agreements or initiated new projects with AIS.
The court ruled that the employees breached their “duty of loyalty” and their “restrictive covenant” (the non-compete) to their employer by setting up the competing company. In the final ruling, the court determined the loss in revenue to B&H was $1,363,059 and a lost profit of $737,087.
Whether B&H will ultimately be able to collect on this judgement is unknown.