Labor Dispute (Tel Aviv) 32487-09-22 Moonshot Marketing Ltd. – Raz Jorgenson

Judgment

Whether an employee who has moved from his employer to a competing company has breached his duties and must compensate his former employer, and whether the company in which he currently works should compensate his former employer - these are some of the questions we have to decide.

The Facts

1. The defendant worked for the plaintiff as a business development manager from July 22, 2020 to May 30, 2022 (hereinafter: defendant 1 or defendant). An employment agreement was signed between the parties (Appendix 10 to the amended statement of claim).  The agreement included a clause limiting the business for 6 months and limiting the plaintiff's clients for 12 months.
2. The plaintiff and the defendant are companies that operate in the field of affiliate marketing on the Internet.
3. The plaintiff was established in 2014.
4. On March 31, 2022, the defendant resigned from his job with the plaintiff and the date of termination of his employment was May 30, 2022 (at the plaintiff's request).
5. The defendant began working for the defendant (hereinafter: defendant 2 or defendant).

The parties' arguments (as arose in the pleadings and as written therein)

The plaintiff's arguments

1. The defendant transferred the plaintiff's trade secrets, in violation of his undertaking and in violation of the agreement.
2. The defendant and the defendant joined together in the act of causing a breach of contract.
3. The plaintiff is a household name in the world of internet marketing.
4. The plaintiff markets, connects and mediates between Google users around the world and thousands of different customers (suppliers) around the world, through about 100 dedicated ranking sites, which the plaintiff built and developed with great effort, with each site focusing on the ranking of a different field of activity (paragraph 20 of the amended statement of claim).
5. The plaintiff has trade secrets and the plaintiff exposes her employees to confidential information.
6. In 2022, the defendant began to copy the core of the plaintiff's activity by enticing the plaintiff's 3 employees. The defendant approached Ariel Kobi (who refused) and Lior Lankri in order to join her.
7. Lankri shared with the defendant an offer he received from the defendant and connected him with Yogev Oz, one of the defendant's partners, and the defendant suggested that they convince another employee, Lior Bustani, to move with them to the defendant.
8. On March 13, 2022, an introductory meeting was held between the plaintiff's 3 key employees and the defendant's shareholders.
9. After negotiations, the terms of employment of the plaintiff's employees with the defendant were agreed: a monthly salary of ILS 25,000; a monthly bonus of 2% of the profit of the entire activity for which the employee is responsible for the defendant, to the extent that it is profitable; 3% equity shares in the defendant + the option to receive an additional 1% of the shares, if they meet certain targets; Legal defense in the event that the plaintiff files a lawsuit against her employees (paragraph 54 of the amended statement of claim)
10. The granting of equity shares is an exception in the labor market, and it indicates that it is not a standard recruitment of employees, and so is the granting of legal protection.
11. Two weeks after the meeting, the defendant announced his resignation (Appendix 7 to the amended statement of claim).
12. On April 25, 2022, Lankri and Bustani announced that they intended to resign because they had received a job offer.
13. The defendant signed an employment agreement with the defendant during the notice period.
14. After the efforts of the plaintiff, Lankri and Bustani retracted their resignation.
15. During the notice period, the defendant manipulated in order to continue to gain access to the plaintiff's confidential information.
16. The defendant concealed from the plaintiff that he was leaving in order to establish a competing operation.
17. During the notice period, the defendant recorded his managers.
18. The defendant undertook to Idan Cohen, one of the company's founders, near the end of his employment that he would not work for a competing company. It was a blatant lie.
19. The defendant's role in the plaintiff was central and included locating and recruiting customers and managing new and existing clients. The defendant handled the rating sites that the plaintiff opened in the field of online gambling.
20. The defendant knew dozens of the plaintiff's customers in the field of gambling and was exposed to agreements with them and confidential commercial details.
21. The defendant tried to get 3 employees to breach their agreements and was aware of the non-competition clause.
22. The defendant began working for the defendant, which is a company engaged in a field of activity identical to the plaintiff's, which operates rating sites identical to that of the plaintiff.
23. The defendant competed with the plaintiff while he was still in the notice period.
24. The defendant even persuaded another employee (PPC team leader) to move to work for the defendant.
25. During the notice period, the defendant received a laptop from the defendant.
26. During the defendant's notice period, the defendant set up a website identical to the plaintiff's gambling site in England - Casino UK, which was managed by the defendant. This is a new activity of the defendant.
27. The defendant (as of the date of filing the lawsuit) operated a number of ranking sites that compete with the plaintiff and are copied from it, inter alia, in the following areas of activity: casino in the UK, casino in IE, sports gambling in the UK, all-purpose loans in the US, animal insurance, food delivery in the US, fortune teller reading services in the US, antivirus software and online banking (paragraph 97 of the amended statement of claim).
28. The plaintiff presented a list of the plaintiff's customers who appeared on the defendant's websites on the Casino UK and Casino IE websites:

(Section 98 of the amended statement of claim)

29. The defendant contacted for the defendant, inter alia, customers (mentioned above) to whom he was exposed and with whom he contracted during the period of his employment with the plaintiff.

As a result of the defendant's solicitation action, the defendant was able to engage with these customers in a business relationship of "affiliation", and it advertises them on the rating sites it operates (Appendix 13 to the statement of claim) (paragraph 105 of the amended statement of claim).

30. Prior to the defendant's employment with the defendant, these clients did not work with the defendant.
31. Play (a customer) confirmed that the defendant contacted her and suggested that she engage with the defendant (Appendix 14 to the amended statement of claim).
32. The table below presents the two sites for which the defendant was responsible for the plaintiff, which the defendant copied:

(Section 111 of the amended statement of claim)