Cold case continues

Maersk faces unlawful competition claim

SOUTH AFRICA: The Western Cape High Court this month kept alive a significant legal claim by two South African fruit terminal companies against Maersk Logistics and Services South Africa and four others where allegations of unlawful competition, the misuse of confidential business information, and the deliberate poaching of key employees to give a new cold-storage operation an unfair head start in the market are being deliberated.

Southern African Fruit Terminals (SAFT) and Coldharvest (CH) contend that proprietary knowledge relating to specialised systems and processes built up over time gives them a genuine competitive edge and is known only to a limited number of employees, each of whom is bound by confidentiality obligations.

At the heart of the dispute is the allegation that Maersk Logistics and Services South Africa construction and commissioning of two cold storage facilities benefitted from access to this knowledge when they unlawfully induced employees to breach their contracts.

SAFT and CH argued that Maersk orchestrated what the court describes as a "springboard scheme" designed to shortcut the time and expense normally required to establish such an operation from scratch.

Two of the individual defendants were still employed by the plaintiffs when they were allegedly engaged by Maersk to advise on the design and construction of its new facilities. In doing so, they are accused of passing on the plaintiffs’ confidential information in breach of their employment contracts and their duties of loyalty. Maersk, it is alleged, was fully aware that these men were acting improperly and colluded with them to obtain the advantage.

The two remaining individual defendants were former employees who had likewise signed confidentiality agreements. They too, it is alleged, supplied Maersk with sensitive personnel and operational information.

The plaintiffs say that as a direct result of this scheme, they lost 23 managers and operators who left their employment to join Maersk. They further allege that Maersk’s new facility became operational some six months earlier than it otherwise would have, and that the defendants have continued to approach and solicit the plaintiffs’ remaining skilled staff.

The March proceedings were held to deal with two exceptions raised by the defendants who claim that there was a failure to demonstrate malicious intent as well as objection to the scale of legal costs being sought.

Both exceptions were dismissed by the judge who clarified that South African law does not require a claimant to prove malicious intent where a party has unlawfully induced employees to breach their contracts. According to the court documents the deliberate misappropriation of confidential information and the procurement of unlawful employee defection is deemed to be a criminal offence. As such, the judge noted that there is no additional requirement to show malicious intent.

On the question of costs, the judge found that whether punitive costs might ultimately be awarded is a matter for the trial court to decide in light of the evidence that emerges.

PHOTO SOURCE: Maersk news.

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