If Im a 1099 (independent contractor) at a cash advance firm and I left (quit). Can I take the leads I sorted through and became "my list" and take those leads and start my own merchant cash advance business? Or, am I legally not allowed to take them. Or if I am able to take them, how can I?
Breach of confidence
In the absence of a non-disclosure or confidentiality agreement you can still be liable for breach of confidence. To succeed, your ex-principal must prove:
- the information was confidential
- it was given to you in such a manner that a reasonable person would know it was confidential
- they suffered damage as a result of their use.
Whether a client list is confidential or not depends on the circumstances of the case, but they usually are. Possible exceptions are where a business uses their client list as a marketing tool - "Look at who our clients are, aren't we great!". Your use of it would normally be considered a confidential transfer. Your using it in the way described would harm your ex-principals interest.
On balance, you probably can't do this legally.
A trade secret is information: * from which a business derives commercial advantage, * that is not public or generally known, * that the business makes reasonable efforts to keep confidential, and * that some or all of the commercial advantage to the business comes from the information not being known.
Client lists will often fit these conditions, and be treated as trade secrets.
Under the UTSA, a business may be able to obtain an injunction against improper use or disclosure of a trade secret, may be able to obtain damages for such improper use or disclosure, and may have other remedies. I believe that all or all but one US state has enacted a version of the UTSA.
Under the federal DTSA similar cases may be brought in federal court, and in some cases improper disclosure of a trade secret may be criminal.
In addition, if there is a contract requiring the employee in general terms to protect confidential information (as there often is) any client lists or information might well fall under such a provision. Any remedy under a contract is in addition remedies under the UTSA or DTSA.