As the solar panel market continues to heat up and competition between companies intensifies, one local business has filed a lawsuit against a competitor in an effort to protect its client base by enforcing employee confidentiality agreements.
SolarCity, one of the country’s largest home and business solar panel companies headquartered in San Mateo, filed the suit Wednesday against Vivint Solar, Inc. This isn’t the first time the two solar providers have entered into litigation concerning former employees who’ve left to work for a competing company.
In the recent suit, the company alleges five former SolarCity employees left to work for Vivint, took confidential information about potential or current clients and began trying to convince other workers to leave the company — a violation of SolarCity’s year-long no-solicit agreement all employees are required to sign.
The San Mateo-based firm argues confidential proprietary information such as “the identities of qualified, credit-worthy homeowners who have decided to add solar panels to their rooftops are valuable information that SolarCity obtains only through significant effort and expense.”
The lawsuit continues to allege Vivant and five former SolarCity employees attempted to persuade customers to cancel their contracts and sign with Vivant as well as solicit “other SolarCity employees to leave the company” while offering bonuses and promotions.
While companies frequently poach employees from competitors, particularly in the Bay Area where tech businesses are rapidly expanding, SolarCity’s no-solicit contract aims to prevent individuals from encouraging former coworkers to leave.
The no-solicit agreement shouldn’t be mistaken with a non-compete clause, the majority of which are considered illegal in California when referencing the ability for employees to work wherever they choose.
“SolarCity firmly believes that employees should be free to work wherever they want, and unlike Vivint, SolarCity does not include non-compete clauses in its employee agreements anywhere in America,” Fred Norton, deputy general counsel and head of litigation for SolarCity wrote in an email. “Of course, if our employees go to work for a competitor, we expect them to respect their obligations to keep company information confidential and not to solicit their former colleagues. We don’t like to bring these kinds of cases, but when a former employee makes written plans to ‘poach’ signed customers for a competitor, we have to defend ourselves.”
SolarCity also sued Vivint Solar in 2013 on behalf of its then recently hired employee who was allegedly under a non-compete agreement with Vivint.
In that case, SolarCity contended “the non-compete agreements are unlawful contracts of adhesion and are therefore unconscionable,” and that “Vivant Solar has threatened to sue employees who leave Vivint Solar in Utah to preclude them from working for SolarCity in California.”
Vivint Solar did not return a request for comment and, according to court records, the case was dismissed in 2014.
Norton said Vivint went so far as to sue a former executive after he quit his job to join SolarCity, despite the employee agreeing to wait a year before starting with the San Mateo company to avoid a conflict.
“Unfortunately, Vivint is willing to intimidate its employees when they try to leave for a competitor and still comply with their agreements; at the same time Vivant allows its new hires to misappropriate their prior employers’ confidential data,” Norton wrote.
Now, the two solar competitors could return to court as SolarCity seeks a jury trial and for Vivant to stop soliciting current SolarCity customers as well as employees.
The local firm is familiar with this type of suit having filed a similar one against another competitor Soligent Distribution, LLC.
In that case, SolarCity lost 10 employees to its competitor over the course of just a few months in fall 2013, according to the suit. SolarCity alleged Soligent hired the former employees with the intent of obtaining confidential trade secrets. At least one former SolarCity employee allegedly solicited customers and retained client lists they sought to bring to Soligent, according to the suit.
After a San Mateo County Superior Court judge denied SolarCity’s request for documents concerning contact Soligent had with its former employees, the company dropped the suit, according to court records.
Moving forward, Norton emphasized SolarCity’s suit against Vivant is not about non-compete agreements; it’s about the company retaining confidential information and ensuring workers adhere to confidentiality agreements.
“Before we filed suit, we asked Vivint to agree that this conduct was unacceptable and they would make sure it stopped — they refused to say,” Norton wrote. “It is regrettable that Vivint has allowed this kind of behavior by its employees.”
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