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Filing Case Against Former Employee

Question

Continental Carriers, Inc. (CC), a large East Coast moving and storage company, employed Ben Arnold as its national sales manager at its home office in Frederick, Maryland. On January 28, 2014, Arnold abruptly tendered his resignation, without giving CC advance notice or an explanation for his departure and he copied all of CC’s records that related to his job there. On the next day, Arnold began working for Howe’s Majestic Service (HMS), a competitor of CC, as its national sales manager.

For several months prior to Arnold's departure from CC, Arnold and his six regional sales managers held discussions among themselves about leaving CC, which they did not reveal to anyone else. Within five weeks of Arnold's departure, three of the six CC regional sales managers who had worked directly under Arnold also left CC for employment in HMS’s sales at a greater rate of pay than they received from CC. Arnold had initiated contact with each of the six regional sales managers about employment opportunities at HMS after Arnold had left CC.

During his last week at CC, Arnold called Point Suppliers (Point) and Andre's Retailers (Andre's), both customers of CC, and told each that he was leaving CC. In talking with Point, Arnold encouraged Point to postpone signing a contract with CC without specifically stating why. After initially following Arnold’s advice, Point nevertheless eventually entered into a contract with CC, but not before Point negotiated a significant reduction in its costs under the contract by using an offer from Arnold as national sales manager of HMS as leverage. In mid-February 2014, Arnold called Andre's and expressly urged Andre's to switch its business to HMS, which Andre's subsequently did.

Since Arnold’s departure, CC’s sales revenue has declined. Martha Washington, chairperson of CC’s board of directors, acting on behalf of the board, wants to pursue legal action against Arnold based on his former employment by CC? Please answer the following:

1. What kind of lawsuit should the company bring against Arnold? What are the allegations and what damages can they recover? Please explain your answer fully.

2. Discuss what duties were breached by Arnold’s abrupt departure? Provide a detailed analysis.

3. What duties did Arnold breach regarding the regional sales managers’ departures? Provide a detailed analysis.

4. Discuss what duties were breached by Arnold in his relationship with Point? Identify all improper conduct.

 

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