American Credit Indemnity Co. v. Sacks

In American Credit Indemnity Co. v. Sacks (1989) 213 Cal. App. 3d 622, the plaintiff's customer list also satisfied this test. There, the plaintiff's customer list consisted of demonstrated purchasers of credit insurance. All potential purchasers of credit insurance were generally known, but only 6.5 percent of the potential customers had ever purchased the insurance. The evidence also showed that 65 to 75 percent of the customers on plaintiff's list had renewed their policies, and that customers had to be sold on the concept of credit insurance before they would purchase a policy. Thus, the plaintiff's customer list derived value from not being generally known, because it would have allowed the plaintiff's competitors to direct their sales efforts to the "elite 6.5 percent" of potential credit insurance purchasers. (ACI, supra, 213 Cal. App. 3d at pages 630-631.) The Court of Appeal reversed and all but ordered the issuance of a preliminary injunction pre-trial because of the aggressive manner in which the defendant terminated her employment. There, the defendant had contacted her customers by mail and informed them she was leaving the plaintiff's employment and that her future employer had an interesting competitive alternative to the plaintiff's policies. Also, in the same letter, she advised the customers she would be willing to discuss the alternatives in detail. Finally, she petitioned, importuned and entreated the customers to call her at any time for information about the better policies being provided by her new employer. Not being satisfied with those actions, the defendant also followed up the letters with phone calls to all of the clients. The court held, as a matter of law, "Given the aggressive manner in which Sacks chose to terminate her employment, ACI likely will sustain continuing interim harm in the absence of an injunction. Further, based on our ruling that ACI's customer list is a trade secret, and that Sacks's letter amounted to a solicitation, ACI is likely to prevail on the merits at trial." (Id. at p. 637.)