Knott’s Wholesale Foods, Inc. v. Azbell, No. 01A-01-9510-CH-00459, 1996 WL 697943, at *3 (Tenn.Ct.App. Dec.6, 1996). During his employment relationship with the Clinic, however, Dr. Efird had a fiduciary duty of loyalty to the Clinic. Id. An employee “must act solely for the benefit of the employer in matters within the scope of his employment. The employee must not engage in conduct that is adverse to the employer’s interests.” Id.
Efird v. Clinic of Plastic and Reconstructive Surgery, P.A. 147 S.W.3d 208, 219 (Tenn.Ct.App.,2003)
During the employment relationship, an employee has a fiduciary duty of loyalty to the employer. The employee must act solely for the benefit of the employer in matters within the scope of his employment. The employee must not engage in conduct that is adverse to the employer’s interests. See 27 Am Jur 2d Employment Relationship § 216 and cases cited therein.
This duty of loyalty includes, of course, a duty not to compete with the employer during the employment relationship, even in the absence of a noncompetition agreement. See Eaves v. Hillard Co., No. 88-37-II, 1988 WL 49959, at *3 (Tenn.App. May 18, 1988); Restatement (Second) of Agency § 393. The law distinguishes between solicitation by an employee during the employment relationship and solicitation after the employment has been terminated:
*4 After the termination of his agency, in the absence of a restrictive agreement, the agent can properly compete with his principal as to matters for which he has been employed…. Even before the termination of the agency, he is entitled to make arrangements to compete, except that he cannot properly use confidential information peculiar to his employer’s business and acquired therein. Thus, before the end of his employment, he can properly purchase a rival business and upon termination of employment immediately compete. He is not, however, entitled to solicit customers for such rival business before the end of his employment nor can he properly do other similar acts in direct competition with the employer’s business.
Restatement (Second) of Agency § 393, cmt. e.
Knott’s Wholesale Foods, Inc. v. Azbell L 697943, 3 -4 (Tenn.App.,1996)
This case centers on whether Azbell’s conduct while employed by Knott’s amounted to a solicitation of Knott’s customers in breach of his common law duty of loyalty. This issue was addressed in Eaves v. Hillard Co.:
Also, an employee not bound by covenant, and absent any breach of trust, may anticipate the future termination of employment and, while still employed, make arrangements for some new employment by a competitor, or the establishment of his own business in competition with his employer. However, he may not solicit his employer’s customers for his own benefit, before he has terminated his employment. This would constitute a breach of the undivided loyalty which the employee owes to his employer while he is still employed.
Eaves, 1988 WL 49959, at *3 (citing United Bd. & Carton Corp. v. Britting, 164 A.2d 824, 828 (N.J.Super.Ct. Ch. Div.1959), aff’d, 160 A.2d 660 (N.J.Super.Ct.App.Div.1960) (emphasis omitted)). In Eaves, two employees sued their former employer for breach of an oral employment agreement. Id. at *1. The employer filed a counterclaim alleging that, during their employment, the employees engaged in unfair competition and breached their duty of loyalty by operating a competing business and soliciting the employer’s customers. Id. To determine whether there had been a breach of the duty of loyalty, the court examined the conversations that the two employees had with two of their employer’s largest customers. Id. at *2. The court noted that an employee stated to one customer, “I’m going to start my new business and I want you to go bring your business with me.” Id. To another customer, an employee said, “I’m leaving. I’m going to form my new company. I want your business.” Id. The Court concluded that the employees wrongfully solicited the employer’s customers and breached their fiduciary duties. Id.
Knott’s Wholesale Foods, Inc. v. Azbell 1996 WL 697943, 4 (Tenn.Ct.App.) (Tenn.App.,1996)
