Here's a switch - employer sues employees and wins

In a case out of the New York Appellate Court, a company sued 3 former employees for breach of their duty of fidelity. "While they were still in the plaintiff's employ, they surreptitiously organized a competing organization, and, utilizing the [company's] lists containing information regarding their customers' reservicing dates, and the prices offered to individual customers, secretly undersold their services to the plaintiff's customers. Accordingly, the Supreme Court properly determined that McDonnell, Ayala, and Lupo forfeited their right to compensation for services rendered from July 1, 1991, until their termination on December 6, 1991." The employees were ordered to pay back six months' pay, plus the revenues they received from their former company's customers.

The Court said, "It is well settled that one who owes a duty of fidelity to a principal and who is faithless in the performance of his or her services is generally not entitled to recover compensation, whether commissions or salary. [citations ommitted] On this record it is apparent that the appellants Laurie McDonnell, Angel Ayala, and Anthony Lupo, Jr., failed to show the loyalty expected of trusted employees. "

ROYAL CARBO CORPORATION v. FLAMEGUARD, INC.,
No. 95-05288. Supreme Court, Appellate Division, Decided July 8, 1996.

Information here is correct at the time it is posted. Case decisions cited here may be reversed. Please do not rely on this information without consulting an attorney first.