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This is about the lawsuit where our tenants and we, the landlord, are being sued for misappropriating competing beauty salon's trade secrets (i.e. customer list).

We are about to sign retainer contract with our to-be attorney and will try to get us dismissed on basis that we are merely the other two defendants' landlord and not employer. So don't have anything to do with the alleged theft of trade secrets.

However, to my surprise, the other two defendants went to at least 3 different attorneys and neither was willing to take up the case (I don't know the reason yet - will discuss with them tomorrow). The tenants are young and have limited life experience and are totally at risk of default judgement if they don't take up the case themselves or still can't find attorney. I am willing to help them for free and at least attempt to build some defense by doing the paper work that they would submit under their names (I have an engineering background and I like to take up challenges outside my comfort area).

But this left me wondering - is customer list really a trade secret in California that attorneys are afraid to challenge?

The plaintiff in complaint states that the customer list is a trade secret that was built over years by providing quality services that helped to establish business' reputation and helps to attract new customers and causes existing customers to return while generating stable income for business. Here are my 2 defense arguments that I came up with to at least build defense against the trade secret misappropriation:

  1. Most hair salons attract new customers based on business' reputation that is readily accessible on public websites, like Yelp or Google. Contrary to secretive tech startups, beauty salon customers after receiving service are explicitly encouraged by the employee or employer to post public, non-anonymous reviews describing their experience without any restrictions. Which implies that customer list can't be a trade secret because there is no effort to hide customer identities.
  2. Most returning customers are usually seeking their favorite hair stylist. Which means that customer list alone can't be constructed as trade secret. It should be viewed as trade secret only in tandem with their favorite hairstylist that they are explicitly seeking. Which means that the moment their favorite hairstylist leaves the employer the information becomes incomplete and hence can't be a trade secret anymore.

Would, in your opinion, something written like above convince court?

  • The attorneys might have refused based upon the other defendants ability to pay, but gave a different reason. – Pete B. Dec 10 '19 at 19:30
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    @PeteB That also occurred to me as possibility. I would find it only fair that a defendant who could provide a proof that multiple attorneys rejected him should be allowed to invite a friend to represent him. Yes, I know ethics, but really there is almost nothing worse than default judgement that will ruin defendants personal life. /end of rant/ – user389238 Dec 10 '19 at 19:39
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The customer list is indeed a trade secret if the shop kept its customer list secret and has an advantage from having that customer list, while others don’t have it. And I would think that is the case, because a competitor laying their hands on the list could for example send special offers to the customers in the list.

The question is whether your two hairdressers took that customer list and whether the store has reasonable evidence that they did. If customers find out where their favourite hairdresser moved to that’s no legal problem.

Can’t understand why no attorney wants to take the case. To the attorney it doesn’t make a difference whether they took the list or not. If they took the list then his or her job is to end the case with the smallest possible amount of damages being paid.

PS. Just read in the comments that there is an accusation of "intentional interference with economic relationship". I would want a lawyer who knows the difference between perfectly legal competition which includes trying to get customers to move their business, and "intentional interference with economic relationship".

PS. Really make sure that these guys appear in court. With a lawyer. Not appearing means that if the plaintiff says "Judge, these guys did X, punish them!" and they are not there to say "We absolutely didn't do X, prove it if you can", the judge will assume that they did X.

  • Perhaps they just memorised/copied the list? Would the Plaintiff not need to prove they used the information in the list to persuade customers to change from their old hairdresser to their new one? (ie phoned the customer on the list, telling them they have moved) If it's just word of mouth or making information generally accessible I can't see there being a case to answer. – Smock Dec 10 '19 at 13:29
  • @Smock plaintiff in complaint alleges that there was a physical contact book that was misused by ex-employees. And at the same time also alleges that the other two defendants were giving out their personal phone numbers for the last few months (which, in my opinion, is not misappropriation of trade secret as employees were voluntarily giving out their personal phone numbers that don't have anything to do with trade secret). They are also being sued "for intentional interference with economic relationship". – user389238 Dec 10 '19 at 16:37
  • Often times hair salons rent booths to the stylists who are individual contractors. Are these actual employees or were they booth renters? – Pete B. Dec 10 '19 at 19:31
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    I would not say it is tax evasion as it is common practice in the industry. However, if they only tried to take their own clients, I would say that the plaintiff does not have a valid claim. If they "stole" others' clients, then perhaps they do. Keep in mind, I am no lawyer. I just read this site because it is fascinating. – Pete B. Dec 10 '19 at 20:00
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    I'm still not sure that a list of customers names and numbers is a trade secret. Unless there's some extra information in there besides the name and number of the customer (like their favourite music, topics of conversation they like) I can't see how that could be classed as a compilation of information that is not generally known or reasonably ascertainable by others, and by which a person or company can obtain an economic advantage over competitors. (if that definition holds in your jurisdiction). – Smock Dec 11 '19 at 1:57

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