Your Competitor Hired Your Whole Branch. Now What?

California employers have largely accepted that when a competitor strips out a team, nothing can be done because noncompetes are void here. The resignations land, the clients follow, and leadership writes it off as the cost of operating in this state.

A California appellate court just priced that resignation wave differently. In Guild Mortgage Co. v. CrossCountry Mortgage LLC (Cal. Ct. App. 2026), the court revived an employer’s claims against a competitor that allegedly worked with still-employed staff to copy confidential customer and borrower data and stage a coordinated branch exit, after the employer had already recovered roughly $11 million in arbitration from the former employees.

The hooks have nothing to do with noncompetes. Loyalty still binds.

Employees owe an undivided duty of loyalty while still on payroll, managers can owe fiduciary duties, and California’s computer data statute, Penal Code section 502, reaches unauthorized copying of electronic data even where trade secret law does not.

The court also rejected the argument that trade secret law swallows everything else. Claims for misuse of electronic data, interference, and unfair competition under Business and Professions Code section 17200 can run on their own track.

These cases are won on forensics, not outrage. Access logs, download trails, and the timing of resignations against data movement either exist in your systems or they do not, and that evidence is usually degrading while leadership is still deciding whether to act.

Whether a departure is lawful competition or an actionable raid depends on what happened before the resignation letters arrived, and that is a fact question your records have to answer. What your systems capture this quarter decides what your options are next quarter.

If you want to know where your business stands, contact Michael Trust Law, APC for a no-charge initial consultation. The facts determine what needs to be addressed — and how much of a conversation that takes.

This post shares general information based on common patterns I see in California workplaces. It is not legal advice, does not create an attorney-client relationship, and outcomes depend on specific facts — no lawyer can guarantee a result. Past results do not guarantee or predict future outcomes. AI may have been used to create this post. All content reviewed by a CA attorney before publication.