Techno Lite, Inc. v. Emcod, LLC (2020) 44 Cal.App.5th 462.

Employees were found liable for fraud based on a false promise they made to their employer that a company which the employees’ owned would not compete with the employer.  The court found that the promise was not an unreasonable interference with the right to prepare to compete or contrary to public policy because the employer was entitled to rely on the employees’ duty of loyalty while they were still working for the employer and there was no statutory authorization or firmly established principle of public policy that would have allowed the employees to compete before they left their employment.  The promise was valid and enforceable, and the employees were properly found liable for fraud based on a false promise with the evidence showing that the employees surreptitiously had diverted customer accounts to their new company while they were working for the employer.

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