COMPETITIVE EMPLOYERS BEWARE: A LITTLE SOLICITATION CAN LEAD TO BIG CLAIMS

The Ninth Circuit recently allowed one employer to go forward with claims against another employer based only on the competing employer’s alleged intentional interference with employment contracts.

Background

In CRST Van Expedited, Inc. v. Werner Enterprises, Inc. the complaining employer, CRST, paid for its truck drivers’ training and certification in three phases. During the first two phases, the prospective drivers were subject to a “Preemployment Driver Training Agreement,” after which CRST and the drivers entered into an “Employment Contract” for phase three. (Both parties agreed that the employment contracts were governed by California law). CRST’s employment contracts contained an initial one-year term during which the employees were not terminable at-will. After one year, however, the employees became “at-will.” The employment contracts also contained a provision that required the employee to devote “full-time” to their employment with CRST and take no actions in conflict with CRST’s interests.

The impetus for the lawsuit occurred when CRST learned that two of its drivers had applied for jobs as truck drivers with one of its competitors, Werner, only one month after they signed their employment contracts with CRST. CRST immediately sent letters to Werner informing the company of the employment contracts and alleging interference with these contracts. Despite the letters, Werner hired the truck drivers, which CRST alleged was part of Werner’s ongoing pattern of poaching drivers from CRST after CRST had trained them.

The Ruling

The court found that CRST had adequately established the elements of the tort of intentional interference with contract based on the existence of the employment contracts, Werner’s knowledge of these contracts (given CRST’s letters), Werner’s alleged intentional inducement of the employees to breach the contracts, the alleged resulting breach, and the alleged damages in the form of unreimbursed training, recruiting and advertising costs. The court next found that CRST had adequately established a violation of Section 17200 of the Business and Professions Code based only on its intentional interference with contract claim. Finally, the court found that although establishing a claim of intentional interference with prospective business advantage required the aggrieved party to establish a wrongful act independent of the alleged interference, the alleged 17200 violation met this requirement. The court expressed no opinion as to the merits of CRST’s claims, but it overturned a prior dismissal, thereby allowing CRST to proceed with these claims.

What Does This Mean For Employers?

The Ninth Circuit’s decision demonstrates that employers alleging unlawful solicitation of current employees can viably assert three different causes of action – two torts and one statutory violation. Additionally, employers should be aware that these three causes of action can all be based on only one cause of action – intentional interference with contract. Here, CRST’s ability to establish the elements of intentional interference with contract does triple duty. Firstly, it establishes that cause of action; secondly, it serves as the basis for a UCL violation, and thirdly, it also serves as the basis for the independent wrongful act required to establish a claim of intentional interference with prospective economic advantage.

Given this case, we strongly advise all employers to think twice and seek legal advice before soliciting and hiring competitors’ employees. Please contact any of our lawyers if you require more information.