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Century-Old Blacklisting Statutes Provide Unsuccessful Applicants With Potential Cause of Action

Submitted By Firm: Miller Nash LLP

Contact(s): Michael Porter, Susan Stahlfeld

Author(s):

Frank Van Dusen and Wayne Landsverk

Date Published: 6/18/2012

Article Type: Legal Update

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Relying on a 19th-century criminal statute, a Washington court has recognized a cause of action for unsuccessful job applicants seeking to work for competitors of their present or former employers.

Although the state court appellate panel rejected plaintiff Robert Moore's hiring blacklisting claim when Mr. Moore could not show that Commercial Aircraft Interiors ("CAI"), Mr. Moore's prior employer, acted with "malice" by blocking Mr. Moore's job offer from a competitor, the court decision affirmed job applicants' right to sue former employers that try to stop former employees from working for competitors. Moore v. Commercial Aircraft Interiors LLC, No. 66279-1 (Wash. Ct. App. May 29, 2012). CAI had laid off Mr. Moore, and the competitor, International Arrow Interiors ("IAI"), withdrew its job offer to Mr. Moore after CAI said Mr. Moore would inevitably disclose CAI's trade secrets if he worked for IAI, the new employer. IAI told Mr. Moore that it withdrew the job offer only because of CAI's threat to sue both Mr. Moore and IAI if IAI hired Mr. Moore. Mr. Moore had never signed, nor was he ever asked to sign, a covenant not to compete or an agreement not to solicit CAI's customers or employees. Mr. Moore had signed CAI's nondisclosure agreement.

Mr. Moore sued CAI, his former employer, alleging that CAI had tortiously interfered with Mr. Moore's prospective employment agreement with IAI and alleging a second cause of action that CAI had "blacklisted" him in violation of an 1899 criminal statute designed to prevent railroad union busting. RCW 49.44.010 makes it a criminal offense to "wilfully and maliciously make or issue any statement or paper that will tend to influence or prejudice the mind of any employer against * * * such person seeking employment."  Under the court's holding, that 1899 criminal statute now gives job applicants the right to file a civil lawsuit against prior employers that "willfully and maliciously" try to block applications for employment. The court relied on a 1915 case involving a discharged railroad engineer.

Although the court held that the criminal statute gave Mr. Moore the right to file a civil cause of action against CAI for blacklisting, the three-judge panel affirmed the trial court's dismissal of both the blacklisting claim and the tortious interference claim. CAI argued that Mr. Moore would inevitably disclose CAI's trade secrets to the new employer, IAI, if employed by IAI. The court held that CAI's allegation of "inevitable disclosure" was sufficient to overcome Mr. Moore's allegation that CAI had "maliciously" interfered with his job offer.

Oregon also has an anti blacklisting law, dating from 1903. That law, ORS 659.805, currently provides as follows:

"(1)  No corporation, company or individual shall blacklist or publish, or cause to be blacklisted or published, any employee, mechanic or laborer discharged by such corporation, company or individual, with intent and for the purpose of preventing such employee, mechanic or laborer from engaging in or securing similar or other employment from any other corporation, company or individual."

"(2)  No officer or agent of any corporation or any other person shall, in any manner, conspire or contrive by correspondence or otherwise to prevent an employee discharged by such corporation or such person from securing employment."

Violation of the Oregon statute is a Class C misdemeanor, which carries a maximum fine of $1,250 or maximum imprisonment of 30 days, or both. Additionally, as early as 1928, the Oregon Supreme Court recognized a civil cause of action for blacklisting, with the potential for recovery of compensatory and punitive damages. Johnson v. Oregon Stevedoring Co., Inc., 128 Or 121, 270 P 772 (1928). For liability to attach, however, there must be a "wrongful act" with the intent to injure the worker by preventing his or her ability to obtain future employment. In a 2009 case, the District Court for Oregon held that providing an accurate account of how a worker's employment ended was not "wrongful."

Helpful Hint:  Although Mr. Moore ultimately lost his blacklisting lawsuit, the court's explicit recognition of a blacklisting cause of action should raise a red flag for any employer seeking to prevent competitors from hiring present or former employees in the absence of a covenant not to compete. While the courts in the case found the threat of disclosure of trade secrets mitigated against a finding of malice on the part of CAI, employers should nevertheless consider requiring employees to sign covenants not to compete before attempting to persuade competitors not to hire their employees or former employees. Employers should also be careful in responding to requests for references and should require a release before providing information to prospective employers.
 

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