Borgata Earns a Win in Customer Poaching Case
A judge has ruled in favor of the Borgata Casino regarding former employees and their move to Ocean Casino Resort.
Late last week, a federal judge ruled in favor of the Borgata Casino in New Jersey after a case was filed by parent company MGM Resorts International involving two former employees. The two employees took jobs at a competitor, Ocean Casino Resort, and allegedly poached customers to benefit their new employer.
Details of the Ruling
United States District Judge Gloria Navarro provided a 17-page order in Nevada, prohibiting William Callahan and Kelly Ashman Burge from contacting clients of the Borgata as well as soliciting them. They both now work at the Ocean Casino Resort and reportedly have a list of contacts they could use to bring existing Borgata customers to the Ocean Casino.
The two former Borgata employees are also ordered to avoid providing trade secrets of their former employer. Callahan held on to a company mobile phone that had information on Borgata customers that he would not turn over. The court has forced him to do so.
While the two have been ordered to take certain steps in their new roles, they can still work at the Ocean Casino. They joined the team of the casino back in the summer months. Callahan was the vice president of casino marketing for the Borgata while Burke was the executive director. The Ocean reportedly began recruiting their employees in June and by July, the two had accepted jobs at the competing casino. Four other marketing employees also moved to Ocean.
According to the Borgata, Burke and Callahan signed contracts and they are not allowed to work with competitors for one year. Once the Ocean Casino issued a press release revealing their new employees, Borgata filed the suit. They reportedly tried to settle the issue informally, but that did not work.
Judge Sees Borgata’s Side
The Borgata was seeking a temporary injunction in the case and claimed the smartphone that Callahan still had in his possession was a lifeline when it came to top customers. These individuals provide over $25 million in revenues each year for the casino. The list of contacts includes high rollers and conversations that Callahan had with these individuals via text.
In its press release, Ocean Casino stated Callahan would be in charge of guest experiences from the hotel side. Borgata claims that Callahan does not have experience in these areas like front desk employees or housekeeping management.
According to Judge Navarro, the Borgata had compelling evidence to back up the claims. The casino was able to supply a phone bill that is associated with the mobile device that confirmed Callahan had contact with top customers of the casino. The judge stated that even if Callahan was able to complete his new duties at Ocean Casino without being in violation of the Borgata non-competition agreement, he most likely took part in behavior where he was in violation of non-competition and confidentiality agreements.
Callahan must now return the mobile smartphone to the Borgata. Callahan and Burke are not allowed to contact clients of the Borgata or share trade secrets with their new employer. The judge has also ordered the two individuals to provide depositions within 10 days of this new order.
The defendants in the case want to see it dismissed. They argue that Nevada is not the right jurisdiction for the case. They point out that the New Jersey residents are listed in the case as being in violation of New Jersey law and the conduct took place in New Jersey.
For Ocean Casino, they claim they are not privy to the employment agreements between the Borgata and Burke/Callahan. The defendants think the claim should be settled in arbitration and not in a federal court setting.