American Alloy Steel Corp. v. Ross

VALLÉE, J.

Appeal by plaintiff from judgments of dismissal entered on the sustaining of separate, demurrers of defendants to the fourth amended complaint. The demurrers were sustained with leave. Plaintiff- declined to amend and the judgments of dismissal followed. The demurrers were general and special. The record does not disclose the ground or grounds on which the demurrers were sustained, a practice we have had occasion to criticize.

The allegations of the fourth amended complaint may be summarized as follows:

Defendant Harold Baker, doing business as Baker Metal Products, is engaged in the business of selling tool steel, alloy steel, and other steel products of the same type as sold by plaintiff. One Evans was engaged for more than seven years in the business of dealing with such products in Los Angeles County. In November 1954 plaintiff corporation was organized and on November 24, 1954, it acquired the business, assets, and good will of Evans. Since November 1954 plaintiff has been engaged in that business. In the course of its business plaintiff and its predecessor Evans, through solicitation and circularizing in person and by -mail, have built up a good reputation among purchasers of its products and have become well known to the trade as a source from which tool steel and alloy steel may be purchased.

Since November 1954 defendant Ross was employed by

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plaintiff as a salesman, and was at all times during Ms employment furnished with lists of customers of plaintiff and purchasers of its tool steel and alloy steel. The names and addresses of such customers constituted part of the good will of plaintiff’s business and a trade secret of great value.

The type of steel dealt with by plaintiff is used for the maintenance and repair of machinery and plant production machines and is known in the steel trade as tool steel and alloy steel. The only customers who have use for such steel are factories and plants whose equipment and machinery are in continuous operation and have wearable parts which must be replaced by this tool steel and alloy steel. "While there are hundreds of steel purchasers and prospective steel purchasers, all of whom are listed in various directories, there is no directory or any list of those customers who would have use for the tool steel and alloy steel sold by plaintiff. In order to ascertain the specific users of such tool steel and alloy steel it was necessary for plaintiff and its predecessor Evans, by means of personal contact, letters, and advertisements, to screen all the steel companies and steel users in order to pick out the companies who would require such tool steel and alloy steel. The list of users so obtained by plaintiff and its predecessor is not readily accessible to others and is a confidential and secret list. Such list was disclosed to Ross only by reason of his employment by plaintiff. An established business relationship has been developed between plaintiff and each of the users of plaintiff’s tool steel and alloy steel so obtained, which would normally continue unless interfered with by Ross. For any competitor to compile a list of such concerns would entail considerable time and effort as well as expense, and by reason thereof the list is very valuable to plaintiff.