Coin company sues former employee over confidential information

Kelly Holleran May 18, 2010, 8:11am

A coin seller claims it shared top secret and confidential information with an employee for four years, and now that employee is using that knowledge to recruit customers for a competing company.

First National Reserve filed a lawsuit May 7 in Jefferson County District Court against Edward Hein and First United Reserve.

First National Reserve, a business selling coins to the public and dealers in the United States and Canada, claims it hired Hein on May 12, 2003, as a sales person.

As part of his job duties, Hein had to maintain contact with clients, employees and vendors of First National Reserve; had to render qualified and professional services concerning the sale of used and new gold coins, silver coins, platinum coins and other items; and had to use his best efforts to promote the interests of First National Reserve, according to the complaint.

During his employment, Hein acquired confidential information regarding all of First National Reserve's existing and former customers, the suit states. Hein agreed not to copy or remove any of these confidential lists from First National Reserve, the complaint says.

Hein also became exposed to trade secrets throughout his career with First National Reserve, such as secret inventions and compilations of information, which he also agreed to keep confidential, First National Reserve claims.

Under an agreement Hein signed at the beginning of his employment, he could not engage in any business, calling or enterprises that may be contrary to First National Reserve's interests, the suit states.

In fact, he agreed to refrain from directly or indirectly calling upon or solicit business from First National Reserve's clients for a company that owns more than 1 percent of interest in a recognized publicly traded market for at least three years following his job's termination, according to the complaint.

In addition, Hein agreed to refrain from soliciting the hiring of any present or future employee of First National Reserve, from engaging in a business similar to or related to First National Reserve's business in the geographical area and from lending credit, money or reputation for the purpose of establishing or operating a business similar to First National Reserve, the complaint says.

On May 15, 2007, Hein quit working at First National Reserve and subsequently violated his agreement with the company by commencing an affiliation, consultation, ownership or employment for First United Reserve, a competitor of First National Reserve, it claims.

First National Reserve seeks injunctive relief preventing Hein from calling upon, soliciting or taking away its customers; from soliciting the hiring of any of its employees; from engaging in a business related to its own in the geographical area; from lending his credit, money or reputation for establishing or operating a competing business in the same geographical area as First National Reserve; from directly engaging in the sale of coins to any individual; from contacting First National Reserve's clients; from taking possession of coins as a result of purchases he made on behalf of customers of First National Reserve; from using or disclosing First National Reserve's confidential and proprietary information; and from using its trade secret information.

First National Reserve alleges misappropriation and breach of employment agreement against Hein. It alleges tortious interference with contract against First United Reserve.

In addition to its injunctive relief, First National Reserve seeks actual and liquidated damages in excess of the minimum jurisdictional limits of Jefferson County District Court, attorneys' fees, costs, pre- and post-judgment interest and other relief the court deems just.

Gary J. Linthicum of Wells, Peyton, Greenburg and Hunt in Beaumont will be representing it.

The case has been assigned to Judge Bob Wortham, 58th District Court.

Jefferson County District Court case number: A186-813.

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