## Facts

- Bancroft-Whitney Company, a California law-book publisher, invested heavily in developing and employing a large staff of legal researchers and editors in San Francisco.
- Judson B. Glen served as Bancroft-Whitney’s president and a director.
- While still in office, Glen secretly negotiated with Matthew Bender & Co., a competing law-book publisher, to establish a San Francisco-based western division.
- Without resigning or notifying Bancroft-Whitney’s leadership, Glen signed a contract to become president of Bender’s planned western division, to begin around January 1962.
- Glen and Bender coordinated a recruitment effort aimed at Bancroft-Whitney personnel, using Glen’s nonpublic knowledge and confidential business information to identify and target specific employees.
- The recruitment program solicited more than twenty Bancroft-Whitney officers, directors, and trained employees.
- Beginning around December 15, 1961, more than fifteen Bancroft-Whitney employees—including key editorial and research personnel—left without notice and joined Bender’s new western division.
- Bancroft-Whitney sued Glen for breach of fiduciary duty and sued Bender and its president John T. Bender for unfair competition and related misconduct, seeking damages and injunctive relief.

## Issues

1. Whether a corporate president and director breaches fiduciary duties by secretly contracting with a competitor and using confidential information and corporate position to facilitate a coordinated departure of key employees.
2. Whether a competitor and its executive are liable for unfair competition when they knowingly cooperate in, and benefit from, the fiduciary’s disloyal conduct to raid employees.

## Decision

- The California Supreme Court reversed the judgments for defendants.
- The court held Glen liable for breach of fiduciary duty as a corporate officer and director.
- The court held Matthew Bender & Co. and John T. Bender liable for unfair competition based on their knowing participation in and exploitation of Glen’s breach.
- The case was remanded for further proceedings to determine appropriate relief, including potential damages and equitable remedies.

## Legal Principles

- Corporate officers and directors owe a strict duty of loyalty and must act in the corporation’s highest good faith; they may not place themselves in a position where personal interests conflict with corporate duties.
- Limited “preparation to compete” may be permissible, but an officer may not, while still serving, secretly bind himself to a competitor and use his office, time, or access to advance the competitor’s interests.
- A fiduciary breaches duties by using or disclosing confidential corporate information—such as internal personnel and compensation data—for personal gain or to aid a competitor.
- Employee solicitation by a competitor is not automatically unlawful, but becomes actionable when accomplished through a fiduciary’s breach, misuse of confidential information, misrepresentations, or a coordinated scheme designed to cripple the employer.
- A third party that knowingly participates in or encourages a fiduciary’s breach may be jointly liable for resulting harm under unfair competition and related business-tort theories.

## Conclusion

The court held that a sitting corporate president/director acted disloyally by secretly aligning with a competitor and using confidential information and his corporate position to orchestrate a targeted, coordinated employee raid, and that the competitor and its president were liable for unfair competition because they knowingly cooperated in and profited from that breach.


Bancroft-Whitney Co. v. Glen, 64 Cal. 2d 327 (Cal. 1966)