Ernst & Ernst v. Carlson

In Ernst & Ernst v. Carlson (1966) 247 Cal. App. 2d 125, an accountant employed by an accounting firm took exception to the prior treatment of certain items of a client's moneys as long term capital gain rather than ordinary income. Following the termination of his employment, the former employee took various steps to call the client's attention to the questionable accounting procedure. In addition, the former employee brought the matter up at a public stockholders' meeting and contacted the Internal Revenue Service. The Court of Appeal affirmed a permanent injunction against the former employee. The Court of Appeal explained: "Any unwarranted disclosure of confidential information constitutes a breach of trust and equity will restrain any threatened disclosure or use thereof by an employee or former employee to the detriment of the employer. . . . " (Id. at pp. 128-129.)