Court holds recruiting firm liable for misusing rival’s candidate data

According to the company, one of its own recruiters passed candidate names from that database to EJR Search Partners, a rival firm run by two principals. EJR then placed those candidates with its own clients and kept the fees. 

Two placements sat at the heart of the case, and the court treated them differently. 

The first was a trade-secret question. EJR used one candidate’s information, pulled from Columbia Technology’s database, to place him and earned a $45,787 commission. EJR’s principals argued they had known the candidate and his availability all along, so no secret was in play. The court was not persuaded. The secret, it said, was never the candidate’s existence. It was the up-to-date resume the recruiter had taken from the database – a document capturing recent experience an older copy would have missed. 

The second placement turned on client relationships. After the recruiter was fired, he leaned on a Columbia Technology contact at Nomura to place another candidate there, then split the $22,000 fee with EJR. The trial court found that contact had belonged to Columbia Technology before the recruiter ever arrived, pointing to an email between the company’s chief executive and the contact that pre-dated his hire. 

Here a familiar HR document did the work. The recruiter had signed a Duty of Loyalty Agreement when he joined, promising to keep client information such as the Nomura relationship confidential, and had confirmed the promise would hold after he left. The court found he broke it, using the company’s proprietary client information for EJR’s benefit after his termination. On that basis, it held EJR liable for his misuse of that information.