On March 11, 1964, Nalley's Inc. (Nalley's) respondent, sought an injunction against Corona Processed Foods, Inc. (Corona), Gary Osborne (Osborne) and James
The complaint further alleges that: some of the customers on the aforementioned routes were more profitable than others; the identity of those customers was confidential information; said customers would ordinarily patronize only one distributor; the business relationship between Nalley's and these customers would normally continue unless interfered with. Further, it was alleged that: after November 22, 1963, Corona altered its marketing procedure to employ a route system similar to Nalley's; Osborne and Daly as employees of Corona utilized their friendly relations with Nalley's customers and confidential information obtained while in the employ of Nalley's to solicit the most profitable customers of Nalley's for their new employer; all appellants have acted as aforesaid with intent to injure Nalley's; Nalley's has been harmed and will continue to suffer irreparable injury unless appellants are restrained from further solicitation; and that Nalley's has no plain, adequate or speedy remedy at law.
Nalley's then prayed for judgment enjoining appellants from soliciting any of the present or past customers of Nalley's on the aforesaid routes and from utilizing any of the confidential information obtained by Osborne and Daly while they were employed by Nalley's.
A temporary restraining order predicated on the verified complaint was issued and appellants were ordered to show cause why a preliminary injunction should not issue against them.
The hearing on the order to show cause why a preliminary injunction should not issue was on the record and the declarations filed by the litigants. A preliminary injunction was issued and appellants Corona, Osborne and Daly were enjoined
Appellants appeal from the order granting the preliminary injunction.
The gist of appellants' argument is that the declarations fail to present probative evidence supporting the issuance of the preliminary injunction. Integrated with this argument is the contention that many of the criticized declarations contain conclusions and hearsay.
It should be noted preliminarily that the record shows no objection to the form of Nalley's declarations.
We confine ourselves therefore to a determination whether the declarations irrespective of form contain sufficient probative evidence to validly support the preliminary injunction.
All parties to this appeal rely heavily on the case of Alex Foods, Inc. v. Metcalfe, 137 Cal.App.2d 415 [290 P.2d 646]. In Metcalfe, the legal and factual issues are substantially identical to those in the case at bench. In Metcalfe the court discussed the law and policy underlying the right of an employer to enjoin former employees and their new employers from utilizing confidential information gained by such former employees under a prior employment. The court said at pages 423-424:
"Section 2860 of the Labor Code provides that everything which an employee acquires by virtue of his employment, except the compensation which is due to him from his employer,
(1) The information must be confidential and not readily accessible to competitors; (2) The former employee solicited the customer of his former employer with intent to injure him. (3) The former employee sought out certain preferred customers whose trade is particularly profitable and whose identities are not generally known to the trade; (4) The business is such that a customer will ordinarily patronize only one concern; (5) The established business relationship between the customers and the former employer would normally continue unless interfered with.
When these facts are established the injunction may issue not only against the guilty employee, but also against his new employer. (Alex Foods, Inc. v. Metcalfe, supra, at p. 429.)
Jerry Elliot, a route salesman for respondent, listed 8 of the 11 stores enumerated in the preliminary injunction, declaring that "none of the stops above mentioned which were solicited by Gary Osborne and/or James D. Daly are listed under `Delicatessens' in the Yellow Pages of the directories for the areas involved, nor are they listed in the route lists, area maps and market data published by the Los Angeles Times."
Clarence Purcer, another Nalley's route salesman, made a similar declaration with respect to the remaining three business establishments listed in the preliminary injunction. The Second Element: (Solicitation with intent to injure): There are numerous declarations establishing the intent of Corona and appellant employees to deprive Nalley's of its customers. From these declarations and from the evidence as a whole, it is reasonable to infer that the solicitations were made with the intent to injure. The Third Element: (Preferred, most profitable customers whose identities are not generally known in the trade): The anonymity required by this element is inferable from the declarations made with respect to Element One. The declarations of Elliot and Purcer state that Osborne and Daly solicited only those customers which were most profitable to Nalley's, including the 11 establishments listed in the preliminary injunction. The Fourth Element: (Patronizing a single supplier): Jerry Elliott declared that "[t]he customers which buy the type of food distributed by both [Nalley's] and Corona ordinarily patronize only one distributor of the bulk salads inasmuch as they are used in a delicatessen and do not constitute packaged foods." This statement was applicable to 8 of the 11 specified businesses.
It is inferable from the foregoing declarations that the stores included in the preliminary injunction ordinarily purchased bulk salad products from only one supplier.
Appellants insist that this element is not established, placing great reliance on two photographs submitted to the trial court and now included in the record. These photographs show Nalley's and Corona products lying side by side in a cooler in several markets. This conflict in the evidence is, of course, not within our province to resolve. Nevertheless, we note that the products shown in the pictures are packaged goods while the preliminary injunction proscribes only the solicitation and sale of bulk products. The declaration of Jerry Elliot explains that it is bulk goods which are ordinarily purchased from only one distributor. This explanation is in accord with common sense. A consumer purchasing a salad in bulk form from a delicatessen will not ordinarily rely on a brand name as he would with packaged foods. The Fifth Element: (Continuation of the business relationship absent interference): Jerry Elliot declared with respect to eight of the businesses: "That in contacting the former customers who have changed over from the products of Nalley's, Inc. to that of defendant [Corona] ... declarant has determined that the business relationship between declarant and the customers would normally have continued but for the price cutting and giving of loss leaders by defendants Osborne and Daly."
While no similar declaration was made with respect to the remaining three establishments, the evidence as a whole justified an inference that had it not been for the unlawful interference of appellants, the customers would have continued to purchase bulk salad products from Nalley's.
The order granting preliminary injunction is affirmed
Herndon, J., and Fleming, J., concurred.