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ABILITY SEARCH, INC. v. LAWSON

October 28, 1981

ABILITY SEARCH, INC., Plaintiff,
v.
CAROLE LAWSON, RITA RAZ and RAZ CONSULTING, INC., Defendants



The opinion of the court was delivered by: MOTLEY

FINDINGS OF FACT AND CONCLUSIONS OF LAW

 CONSTANCE BAKER MOTLEY, District Judge.

 This is an action for injunctive and monetary relief based on plaintiff's claim that defendants, plaintiff's former employees, breached their fiduciary obligations while employed by plaintiff and after starting their own business. Defendants counterclaimed for commissions which plaintiff allegedly owes them. Plaintiff was granted a preliminary injunction on June 11, 1980, prohibiting defendants from using plaintiff's files and certain confidential information they learned while employed by plaintiff. The case was tried on December 17 and 18, 1980, and January 5, 6, 7, 8 and 9, 1981, without a jury.

 FINDINGS OF FACT

 Plaintiff, Ability Search, Inc. (Ability Search), is a Washington, D.C., corporation engaged in the business of placing individuals in executive positions for a fee. It was formed in 1964. Ability Search has its main office in Washington, D.C., and a smaller office in New York City.

 Defendant Rita Raz (Raz) was hired by Ability Search as a consultant in its New York office in July, 1978. Defendant Carole Lawson (Lawson) was hired in the same capacity in May, 1978. Their duties included interviewing and screening candidates who submitted resumes to Ability Search, ascertaining clients' personnel needs, developing new clients and making placements. Ability Search used the term "client" to signify corporations or companies at which it placed individuals and the term "candidate" to signify individuals who submitted their resumes to Ability Search and who Ability Search attempted to place. Defendant Raz Consulting, Inc., was formed for tax purposes in October, 1979, and performed the same duties performed by Raz. Lawson and Raz were the only consultants in the New York office.

 Pursuant to the employment contracts entered into between Ability Search and defendants, Raz and Lawson were entitled to a percentage of any fee earned by Ability Search as a result of their efforts. The agreements also provided that in the event that Ability Search received any revenues after the termination of the agreement as a result of services rendered by the consultant before termination, Ability Search would pay the usual compensation to the consultant. Raz and Lawson signed nondisclosure agreements which acknowledged the confidentiality of certain information about Ability Search's clients and candidates. Plaintiff, however, does not rely on these agreements for the relief it seeks in this action.

 Ability Search specializes in placing candidates in the operations research and management science fields. Most of the companies that hire personnel in these fields are among the Fortune 500 companies and the eight major accounting consulting firms. Many of these companies have several divisions or departments which hire individuals in these fields. Many of these companies do business with several executive recruiting agencies such as Ability Search.

 Ability Search maintains files, books and other records which contain information about candidates and clients not ascertainable by the general public. With respect to clients, such information includes names and telephone numbers of individuals within the company to contact, profiles of the types of candidates generally hired by a particular company, particular job listings and Ability Search's prior experience with the company. Information about candidates includes resumes, additional information concerning the candidates' characteristics and needs, a list of companies to which the candidate has been referred and the results of these referrals. While employed at Ability Search, Raz and Lawson had access to books, records, files and roladex systems which contained this information, with the exception of each other's private files.

 It was the intention of the president of Ability Search, Eva June (June), that the offices of Ability Search operate in a very systematic fashion. This system was described to each consultant when she began work at Ability Search and was set forth in a training manual. The system for processing resumes at the New York office was as follows.

 The administrative assistant or secretary opened the mail received by Ability Search and logged in resumes received from candidates. Resumes were assigned to a particular consultant according to an alphabetical system. If a resume appeared to have potential, the consultant circled on a "hot sheet" the clients to whom she wanted the resume sent. The "hot sheet" was a list of companies with which Ability Search did business. The consultant placed the resume and "hot sheet" in the secretary's file to be retyped, if necessary, and mailed in pre-addressed envelopes. All resumes were to be stamped with Ability Search's name.

 When a consultant learned of a new requirement for personnel in the operations research or managing sciences field, she was to write a "job order" with this information and add it to a book containing job orders. The "hot sheet" and pre-addressed envelopes were also updated as new information was received. Copies of all information, such as placements, job orders and resumes, were sent from the New York office to the Washington, D.C. office.

 Raz and Lawson failed to follow the normal office procedure outlined above in a number of ways, particularly during the last three months of their employment at Ability Search. Both often mailed candidates' resumes to clients without the Ability Search stamp, and sometimes with no identification of Ability Search at all. Some resumes stated simply "Contact Rita Raz" or "Contact Carole Lawson," with Ability Search's telephone number below. Lawson also mailed to clients a few resumes with the words "Contact Carole Lawson" and her home telephone number which also rang at Ability Search's office. Raz placed an advertisement at Columbia University which stated that resumes should be sent to her at her home address. The ad included the Ability Search telephone number but did not mention Ability Search by name. Raz also advised some candidates to contact her at home.

 Raz and Lawson mailed candidates' resumes to clients without the Ability Search stamp because, they testified, the stamp detracted from the attractiveness of the resume as submitted by the candidate. They also testified that identifying Ability Search was not necessary where the client had dealt with them in the past and that, in some cases, it might even make a client less likely to read the resume. The primary objective, according to Raz and ...


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