Recently, one of our employees left the firm and opened his own company to sell the identical product. Since until now he worked for our firm, he knows our customers and he is trying to woo them away from our company. The customers he is trying to take from us can be divided into three categories. There are customers with whom we are near closing a sale and if he does not interfere we fully expect to close a deal. There are customers with whom we are talking but we are not yet near finalizing a sale. Finally, there are customers we have identified as potential customers but haven’t begun talking to. Can we prevent him from turning to either of these customers?
In this article we will discuss the first category: customers with whom you have been talking and expect to close a deal if not for the interference of your former employee. What we write applies to anyone who interferes with someone who would otherwise have completed a sale.
The Gemara (BB21B) discusses the rules of competition, namely which activities are permitted and which are not. Every society needs such rules since competition is desirable but at the same time must be fair. This section of Gemoro discusses the rules which were enacted by the Chachomim for Jews.
The Gemoro discusses opening a competing business in close proximity to an existing business. The Gemoro quotes Rav Huna that one may not establish a mill in a movuy which already has a mill, since the second mill will take away customers who otherwise would have used the first mill.
The Gemoro also cites the dissenting opinion of Rav Huna the son of Rav Yehoshua who maintains that one is allowed to establish a competing mill. His argument is that the second person is just setting up another mill that gives customers a choice of which mill to use. He is not taking away anything from the proprietor of the established mill. Halocho is like the latter opinion and in general one is allowed to open a second store even in close proximity to an existing store.
The Gemoro cites a ruling that if one fisherman spread out his net, it is forbidden for another fisherman to spread his net within a parso (about four kilometers) of the first net. The Gemoro comments that this would seem to support the position of Rav Huna that one may not open a competing store in close proximity to an existing store.
The Gemoro replies that even the second opinion that allows establishment of a rival store agrees that it is forbidden to spread a net. The Gemara says that the difference is that the fish which will be caught by the second net were already destined to be caught by the first net. The Rishonim offer various interpretations of how the fish were related to the first net.
Rashi, whose explanation is authoritative, explains that the Gemoro means that the behavior of fish is to swim to the place where they see food. The proprietor of the first net discovered where the fish were swimming and he placed his bait in a place where the fish would certainly notice it. Since fish always swim to food that they notice, the first fisherman could be confident that he would catch all the fish. Even though they were not yet actually caught by the first fisherman, since he could be confident that he would catch the fish, another person may not spread out a net since he will damage the owner of the first net by preventing him from actually catching the fish that he had been almost certain that he would catch.
This is exactly what his happening in the case of a sale, since there is no difference between closing a sale and catching fish-in either case the second person is acting in a manner which will prevent another person from realizing profit that he had been destined to earn. The Chasam Sofer (Res CM 79) gives as an illustrative case where a customer already entered someone’s store. If someone would cause the customer to decide to refrain from purchasing, he would violate this prohibition since he is preventing the store owner from realizing a certain sale.
The other explanations of the Gemoro are only slightly different from Rashi’s explanation. The Ramban understands that the Gemoro is saying that by spreading a net in close proximity, the second fisherman may cause fish that had already entered the first net to leave. Similar to Rashi, the Ramban understands that the nature of the prohibition is that one may not act in a manner that will prevent a Jew from realizing otherwise certain profit. The only difference is that according to the Ramban the reason why the profit was virtually certain is because the fish already entered the first person’s net.
Tosafos (BB 21B and Kiddushin 59A) adds clarity about the nature and scope of this prohibition. Tosafos questions the prohibition in light of Rabbeinu Tam’s ruling concerning the prohibition of “oni hamehapeich bacharoro.” The prohibition of oni hamehapeich is that if a person is close to earning a profit another person may not intervene and try to get the profit for himself. For example, if a person is about to be hired for a job another person may not attempt in any manner to obtain this position. Rabbeinu Tam rules that this prohibition applies only to a situation like being hired for a job where even if one lands the position, he will have to work to earn his salary. However, if the issue is something that is available for free, like an object that is ownerless, according to R. Tam a second person may try to get the free object even though the first person was reasonably certain that he would otherwise get it.
Tosafos questions the ruling of the Gemoro in light of Rabbeinu Tam’s position. He asks that since the fish that were being caught were ownerless, Rabbeinu Tam should permit the second person to spread out his net even if that will prevent the first person from catching them.
Tosafos answers that the reason even Rabbeinu Tam agrees that such fishing is prohibited is because it is the fisherman’s livelihood. Even though with regard to the prohibition of oni hamehapeich the second person’s action is permitted, if the first person will lose an element of his livelihood – even one fish – the second person’s action is prohibited.
Turning to our case, it is prohibited for anyone to take any action that will prevent another person from realizing a profit that it is reasonable to assume that he would have otherwise earned. Therefore, it is totally prohibited for your former employee – or any other Jew for that matter – to offer anything to those customers whom you expected to sell to.
The next two issues to investigate are the nature of the prohibition and the penalties that are imposed on those who violate the prohibition. Many Acharonim (Shearis Yosef 17, Maseis Binyomin (res 27), Chasam Sofer (res 79) and others) classify the prohibition as yored le’umnos chaveiro-it is forbidden to harm a person’s livelihood. Many poskim, including the Ramo (Res 10., as explained by the Chasam Sofer) and Maseis Binyomin and Chasam Sofer, say that the prohibition is from the Torah and included in the Torah’s prohibition of stealing. (Rashi calls the prohibition mazik which is essentially the same.)
Moreover, in contrast to many actions that are only Rabbinic stealing, one who violates this prohibition (see Chasam Sofer) is fully liable for the loss that he caused. In your situation, if your former employee causes you to lose a sale, he will have to pay you fully for your loss of profit. You will have to determine the net earnings that you would have had from the sale and beis din will obligate your former employee to fully compensate you for your loss.