In an August 19 opinion in Pacific Valley Bank v. Servi, No. H052965 (Cal. App. Aug. 19, 2026) , a California appeals court upheld a trial court's decision awarding a former employer nearly $230,000 in damages, finding that the former employee (defendant Servi) had been guilty of trade secret misappropriation by virtue of forwarding to his personal e-mail account a copy of the customer list he had accumulated while working for Pacific Valley Bank, and then sending targeted emails to that customer list upon assuming his new role at a competing bank, Pinnacle Bank.
Here's what one of Servi's emails to this customer base said:
“I wanted to let you know that I am now with Pinnacle Bank[, a] community bank with larger lending options that will help my customers including [sic] construction loans (large and small projects), a SBA department, a robust online banking platform and cash management tools and last but not least . . . very competitive rates. [¶] I will be reaching out once I get settled, but feel free to contact me via cell or my email below if you have a customer with an immediate need.”
Servi used the customer lists because it was easier than independently searching for the e-mail addresses.
How Servi's Actions Were Discovered
As a threshold matter, the first question that arises is "How did the former employer discover the misappropriation and solicitation?"
The answer in this particular instance - as is usually the case - is that a number of these customers who were contacted by Servi in his new role turned around and informed Pacific Valley that they had received these e-mail communications from Servi. Pacific Valley then initiated its own internal investigation and found that Servi had forwarded to his personal e-mail account these confidential customer lists, and then used them to try to interfere with Pacific's business relationships with those customers.
Pacific Valley proceeded to issue cease and desist letters to both Servi and his new employer, Pinnacle Bank, but apparently, that did not remedy the situation, leading Pacific Valley to file suit against both Servi and Pinnacle Bank for damages flowing from Servi's misappropriation of the customer list and the benefit inuring therefrom to Servi and Pinnacle.
But Weren't Those Customer Lists Publicly Available Information?
Predictably, the centerpiece of Servi's defense to Pacific Valley's claims - and the thrust of his appeal - was as follows:
The customer lists are not trade secrets because: (1) components of the lists are publicly available and readily ascertainable, (2) the lists do not provide a “substantial competitive advantage” because the information in the lists “was long since stale and out of date” when he sent the April 2022 e-mails, and (3) Pacific Valley did not take reasonable measures to protect them.
Addressing these arguments, the appellate court stated as follows:
"The customer lists contained information about the longevity of the customers’ relationship with Pacific Valley (an indication of their value to the bank), loan information (indicating the size of the company and its creditworthiness, and the customers’ contact information (which, as Servi and Pinnacle admitted, made it easier to contact the customers than if they had had to independently search for their e-mail addresses) ... Pacific Valley presented undisputed evidence that compiling the customer lists was a lengthy process that required the expenditure of a significant amount of its employees’ time and resources and required the collection of information from multiple databases. Servi himself confirmed this fact."
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"[S]ubstantial evidence in the record supports the trial court’s finding of misappropriation. Pacific Valley did not authorize Servi to send the customer lists to his personal e-mail address or to a location outside of the bank’s computer system, and Servi admits that he received no such authorization. Although Servi also testified that he sent the customer lists to his personal e-mail address because of difficulties he had accessing Pacific Valley’s system while working remotely, Pacific Valley proffered testimony that none of its employees, including Servi, complained of any such access issues."
How the Trial Court Arrived at its Damages Figure
Notwithstanding the (compelling, in my view) argument by Servi that Pacific Valley could not point to any customers it lost as a direct result of Servi's actions, the trial court awarded Pacific Valley roughly $230,000 in damages it incurred in conducting its investigation of Servi's wrongdoing, and in notifying its customer base of Servi's data breach, finding
Pacific Valley was entitled to damages because it “reasonably took steps to protect the private financial information of its customers by notifying regulators and its customers of the breach” and “to protect its reputation.”
The Trial Court's Judgment That Was Affirmed on Appeal Was a Mixed Bag
While the appellate court upheld the damages verdict against Servi, it also affirmed the dismissal of the claims that were leveled against Pinnacle Bank, holding that there was not sufficient evidence in the record to conclude that the trial court erred in determining, based upon disputed facts, that Pinnacle was not liable under the doctrine of respondeat superior. There was ample evidence in the record to support the trial court's determination, including that Servi's written agreement included express instructions that he was not to use any former employer's customer lists or confidential information in performing his job duties.
The Takeaway(s)
An important takeaway from this decision is that contrary to very popular belief, even in California, it is not an absolute free-for-all for departing employees; while they retain great freedom to change jobs unfettered by noncompete agreements, that does not entitle them to take their employer's client base with them, as these client lists will often qualify as a trade secret worthy of judicial protection.
