The operators of an Aurora daycare center primarily for disabled and elderly immigrants did not steal trade secrets from a competitor facility where some of them used to work, the Colorado Court of Appeals ruled on Thursday.
Mazin Ahmed and Magdi Mohammed Abdallo purchased Relax Adult Daycare Corporation, and soon hired Nuha Alamil and Sahar Al Tahhan to work there. Three of them had worked or volunteered for another Aurora facility, Aza Adult Day Care, for periods ranging from less than a month to several years. While they worked for Aza Group, they were subject to a confidentiality agreement.
The primary clientele of both businesses was elderly and disabled individuals from the Middle East and Africa. (Relax’s operators also acquired an in-home care business, Four Star Home Care Inc.) Some clients from Aza Group ended up transferring to Relax.
When Aza Group learned of this, they sued for misappropriation of trade secrets, among other claims.
Specifically, Aza Group charged that their former employees stole the company’s client lists, business operations details and information about client needs. Trade secrets, per Colorado law, include scientific or technical data, plus confidential information about business or finances. Names, addresses and phone numbers are also covered.
Aza Group lost in Arapahoe County District Court, and the Court of Appeals affirmed that decision. The three-member panel explained that the state Supreme Court has held client lists to not be trade secrets if they consist of former employees simply knowing who the customers were from their interactions. Further, Aza Group did not treat information about its customers — except for their federally-protected health data — as confidential, nor did their former employees have similar documentation in their possession.
“With respect to client needs, as the court found, the treatment provided to address elderly day care clients’ needs is dictated primarily by Medicare and Medicaid and is required of any adult day care facility,” wrote Judge Diana Terry in the unpublished opinion. “Because any such day care must be operated according to those regulations, the manner in which Aza Group ran its day care cannot be a trade secret.”
To the extent that Aza Group used immigrant-specific protocols, such as English-language classes, in its business, the court agreed that programming to help immigrants assimilate “is readily discernible without any improper use of confidential information.”
Because none of the information or experiences the former employees may have taken with them to Relax constituted a trade secret, the defendants were also not in violation of their signed confidentiality agreements with Aza Group.
“Relax, Four Star, and their principals have every right to run their daycare center and effectively serve their clients, and never had an issue with other agencies endeavoring to do so,” said Wadi Muhaisen of Muhaisen & Muhaisen, LLC, who represented the defendants. “Competition is better for the clients, and no one agency has a monopoly over serving our community. The trial court and Court of Appeals have now fully vindicated Relax and Four Star.”
Attorneys for Aza Group did not immediately respond to a request for comment.
The case is Aza Adult Day Care v. Relax Adult Day Care.