## Facts

- Town & Country operated a contract house-cleaning business using crews that serviced homes on a recurring basis.
- The business invested substantial time and money developing a customer list; customers were identified through extensive telephone and neighborhood solicitation, yielding over 200 accounts.
- Defendants were employees for about three years and learned customer identities, needs, and preferences only through their work for Town & Country.
- After resigning, defendants formed a competing company and obtained business primarily by soliciting Town & Country’s existing customers rather than finding new customers independently.
- Town & Country alleged defendants breached a confidential relationship by using customer information and sought to prevent defendants from competing and from soliciting its customers.

## Issues

1. Whether former employees, absent a restrictive covenant, may solicit an employer’s customers using customer identities and preferences learned solely through employment.
2. Whether the proper remedy may include a broad injunction barring competition, or must be limited to preventing exploitation of protectable confidential information (including customer lists).

## Decision

- The Court of Appeals affirmed the Appellate Division’s reinstatement of the complaint but modified the relief and remanded.
- The court held defendants breached duties owed to the employer by soliciting customers whose identities and patronage were not readily ascertainable and were obtained through the employer’s efforts and expense.
- The court treated the customer list and related customer information as protectable confidential information tied to the employer’s goodwill.
- The court approved injunctive relief barring solicitation of Town & Country’s customers and allowed damages (including lost profits) attributable to customers wrongfully diverted.
- The court rejected a sweeping restraint that would bar defendants from engaging in the house-cleaning business generally, because the methods and techniques were not sufficiently secret to justify excluding defendants from the field.

## Legal Principles

- Absent an enforceable non-compete, employees may leave and compete using general skills and experience acquired in employment.
- Employees may not misappropriate or exploit an employer’s confidential information or trade secrets learned through a fiduciary or confidential relationship.
- Customer lists may be protected where customers are not readily ascertainable through proper means and the list was compiled through significant business effort and expenditure.
- Injunctive relief should be limited to preventing misuse of the specific confidential asset (such as solicitation of customers derived from the employer’s list), not to restraining ordinary competition in the industry.
- An employer may recover damages or an accounting for profits causally connected to diversion of customers through misuse of confidential customer information.

## Conclusion

The court held that former employees were free to compete in the same service business, but could be restrained from soliciting the employer’s customers and held liable for resulting losses where their competition depended on confidential customer information and goodwill obtained through their prior employment.


Town & Country House & Home Serv., Inc. v. Newbery, 3 N.Y.2d 554 (N.Y. 1958)