A textbook lawsuit: Boston publisher sues California rival over allegedly purloined sales reps - and the secrets that they kept
K-12 book publisher Houghton Mifflin Harcourt, headquartered on High Street downtown, is accusing a former sales exec who jumped to rival IXL of San Mateo, CA of taking "confidential HMH information and trade secrets" with him - and with playing "Pied Piper" to bring over three top salespeople.
In a lawsuit filed in US District Court in Boston this week against both its former senior vice president for sales, Donald Black, and his new employer, Houghton Mifflin Harcourt charges that Back violated a federal law against taking HMH "trade secrets" with him and broke his contract with the company by hiring away the salespeople, responsible for some $130 million in annual sales of the company's textbooks and related learning materials.
HMH says the day Back told HMH he was quitting, he sent an e-mail to a personal account containing a variety of files that might just prove useful at his new job, including a PowerPoint presentation detailing product and campaign strategies for the company's most successful line of reading resources and details of the company's efforts to win a statewide contract in Florida for the materials - and that he may have downloaded even more proprietary information from a cloud service HMH uses to store documents, all in violation of the federal Defend Trade Secrets Act.
The company alleges Back may have tried to gain even more info: Two days after IXL announced his hiring, Back tried twice to log into his HMH e-mail account, but failed because HMH had already disabled his access.
HMH adds that the hiring away of three regional salespeople over just three days was a violation of Back's contract. The company claims it was pretty obvious that Back was involved. As former senior vice president of sales, he would have known how much the three made and so could make them better offers, HMH says, adding nobody from HMH had ever before jumped to IXL.
[I]t is implausible that the Regional Sales Managers would all coincidentally resign from HMH in quick succession to follow their former boss at his new company.
In a separate motion, HMH is requesting a judge issue a temporary restraining order and preliminary injunction against Back and IXL that would require them to hand over all the HMH information they allegedly have, detail what they've used the info for and to stop doing that, basically fire the three guys he allegedly got to quit HMH and to not hire them back for at least a year, forbid Back from trying to recruit any additional HMH employees and bar Back from making any sales calls on any customers he had "material contact with or solicited" while at HMH.
|Complete HMH complaint||382.64 KB|
|HMH motion for temporary restraining order and preliminary injunction||109.67 KB|
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This is not a novel idea for this comment section, but they really should throw the book at him.
It's one thing if he stole
It's one thing if he stole actual secrets. Though you'd think a sales exec would already know the company's strategies.
But anyone should have the right to hire anyone, and anyone should have the right to quit and work for a competitor. Especially if they had no protection from being fired at will by their old employer.
Not if it was in his contract
Even run of the mill average positions will often have a ban on recruiting any employees for a year if you leave the company in the terms you agree to when you take the job. I would imagine that at an executive level there are more extensive contracts that also include similar language.