Mass poaching of a competitor’s staff constitutes an act of unfair competition […].
Mass poaching of a competitor’s staff resulting in its disorganization constitutes an act of unfair competition.
Cass., Com, April 13, 2023, no. 22-12.808
In its ruling of April 13, 2023, the French Supreme Court affirms that hiring a competitor’s staff, even though they are released from their non-competition clause, constitutes an act of unfair competition if it results in the company’s disorganization.
1. The legal framework
Under Articles 1240 and 1241 of the French Civil Code, acts of unfair competition may give rise to extra-contractual liability on the part of the perpetrator.
While in principle the hiring of a competitor’s employees is clearly an act of unfair competition when the latter are bound by non-competition clauses, the French Supreme Court (Cour de cassation) reminds us in this ruling that even without a clause, employers can be bound, under certain conditions.
2. The facts
In this case, a company hired the former technical director of a competitor.
He will then contact employees of his former employer to offer them the chance to join the company he has joined. These steps led to the poaching of four employees.
His new employer was therefore sued for damages for unfair competition. He appealed on the grounds that the employees had not been subject to a non-competition clause, thus ruling out any unlawful or disloyal character that might be attached to their hiring.
In a ruling dated January 13, 2022, the Court of Appeal rejected his claim, arguing that the poaching had been accompanied by unfair maneuvers which had resulted in the disorganization of the competitor’s business. These maneuvers were characterized by the fact that the first employee hired had contacted half the company’s staff in an attempt to poach them, and that the four employees actually poached made up the entire “quality” department, resulting in a profound disorganization of the company’s structure. In this case, the company had difficulty in replacing the staff it had poached, and its business slowed considerably as a result.
3. The opinion of the Court of Cassation
The Cour de cassation rejected the appeal ruling, holding that although they were not bound by a non-competition clause, the mass poaching of a competitor’s staff with the effect of causing its disorganization constituted an act of unfair competition.