Harry R. Defler Corporation v. Kleeman

19 A.D.2d 396 (1963)

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Harry R. Defler Corporation v. Kleeman

New York Supreme Court, Appellate Division
19 A.D.2d 396 (1963)

KL

Facts

Harry R. Defler bought and sold industrial carbons, charcoal, and other similar products. Over 25 years, Defler developed a confidential, comprehensive catalogue of office records, including customer lists. This information was not available to the public and could not have been duplicated by anyone who did not have Defler’s actual experience. Defler sold his company to an individual who continued doing business as Harry R. Defler Corporation (HRD) (plaintiff). The company did not have many physical assets; rather, its one substantial asset was the property rights to the confidential information Defler had amassed. HRD hired Francis Kleeman (defendant) to serve as its general manager, granting Kleeman access to HRD’s confidential information. Kleeman, who had no experience in the carbons and charcoal industries, was made aware of the confidential nature of the information. Kleeman later hired a salesman, Edward Schneider (defendant) who also had no experience in those industries. Eventually, Kleeman and Schneider, along with their wives, created a new company called Carchem Products Corporation. Like HRD, Carchem bought and sold industrial carbons, charcoal, and other similar products, and Kleeman used HRD’s resources and confidential information to create Carchem and do business under the Carchem name. HRD sued Kleeman and Schneider, asserting a conspiracy to exploit HRD’s trade secrets. The lower court denied HRD’s request for an injunction, and HRD appealed.

Rule of Law

Issue

Holding and Reasoning (Williams, J.)

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