Reeves v. Hanlon, 33 Cal. 4th 1140 (2004)

Attorney Robert L. Reeves filed a lawsuit against attorneys Daniel P. Hanlon and Colin T. Greene and their law firm, Hanlon & Greene (H&G), after Hanlon and Greene abruptly resigned from their positions with Reeves & Hanlon (R&H) and allegedly persuaded certain R&H employees to join H&G, solicited R&H’s clients, misappropriated trade secrets, destroyed computer files and withheld property that belonged to R&H. Following a bench trial, the judge concluded that H&G had engaged in interference with contracts and prospective economic opportunity, resulting in damages totaling $182,180, which was reduced to $150,000 as a result of a prior stipulation of the parties. The court of appeal affirmed the judgment in favor of Reeves, holding that Hanlon and Greene had interfered with the Reeves firm’s employment relationship with its employees, even though the employees were terminable at will. The Supreme Court affirmed the court of appeal’s judgment, holding that Hanlon and Greene "did not simply extend job offers to plaintiffs’ atwill employees. Rather, [they] purposely engaged in unlawful acts that crippled [Reeves’s] business operations and caused [Reeves’s] personnel to terminate their at-will employment contracts." The Supreme Court expressly disapproved the contrary holding of GAB Business Services, Inc. v. Lindsey & Newsom Claim Services, Inc., 83 Cal. App. 4th 409 (2000). Further, the Supreme Court affirmed the lower courts’ judgment that Hanlon and Greene had violated the Uniform Trade Secrets Act by using Reeves’s customer list to directly solicit clients for their own pecuniary gain to the detriment of Reeves.