Cases Cited in My 2011 MCLE Noncompete Chapter Update

by Lee Gesmer on November 7, 2011

Cases Cited in My 2011 MCLE Noncompete Chapter Update

Earlier this year Massachusetts Continuing Legal Education  (MCLE)  asked me to update my 2009 chapter on Employee Noncompetition Agreements.   The revised chapter, part of the 2-volume Massachusetts Employment Law series, was published in June.

Below are links to the cases I added to this chapter.   I’ve also included a sentence or two regarding each case.  However, I did not make an effort to describe every legally significant aspects of each case.

  • Ethicon Endo-Surgery, Inc. v. Pemberton, 27 Mass. L. Rptr. 541 (Super. Ct. 2010).  This case, decided by Judge Peter Lauriat  in the Suffolk Business Litigation Session, applies New Jersey non-compete law, but Massachusetts procedural law for purposes of ruling on a preliminary injunction.  The former employee filed suit in California first, but Judge Lauriat  refused to dismiss this case based on the “first filed” rule.  The court enforced an 18 month covenant not to compete against the former employee.
  • Inner-Tite Corp. v. Brozowski, No. 2010-0156 (Worcester Super. Ct. 2010).  This lenghy decision was written by Judge Janet Kenton-Walker, sitting in Worcester County, following a bench trial.   The judge enforced a one year convenant not to compete against an employee who had worked for Inner-Tite in Georgia.  Given Brozowski’s  relatively low salary, and the fact that he was asked to sign the non-compete after beginning work for Inner-Tite, this contract would not have been enforceable under the various proposed Massachusetts non-compete statutes.  Either ground would have invalidated the agreement.  This was a tough outcome for the former employee, and one which might have had a different outcome in Suffolk, Middlesex or Norfolk counties, which tend to have more liberal leanings in these cases.
  • Parexel International Corp. v. Nanavati, 26 Mass. L. Rptr. 426 (Super. Ct. 2011).  In an odd twist (one which I can’t recall having seen before), Judge Thayer Fremont-Smith, sitting in Middlesex County, found that the fact that the new employer had agreed to pay the employee during the non-compete period, even if the employee was enjoined from working, was a factor that actually favored entry of the injunction, since the employee would not be injured by the injunction.

And a few cases that have been decided following the MCLE publication:

  •  OfficeMax v. Levesque (1st Cir.).  In this case the non-compete agreements were found to be unenforceable because they were not assignable to OfficeMax as part of a corporate acquisition.  This probably came as a surprise to OfficeMax, and shows why “due diligence” is an important part of the corporate acquisition process.   (Applying Maine law).
  • EMC v. Arturi (1st Cir., Aug. 26, 2011) (Souter, J). In this decision, written by former Associate Supreme Court Justice Souter, the First Circuit upheld the denial of a preliminary injunction where the one-year non-compete period had expired.  “Like any contracting party, EMC makes its agreements subject to the rules of equity governing specific enforcement; rules, moreover, that were clearly in place in the governing federal and state cases well before the company required [the employee] to sign. Being forewarned, EMC could have contracted . . .  for tolling the term of the restriction during litigation, or for a period of restriction to commence upon preliminary finding of breach. But it did not.”  I would venture to say that this decision puts to rest, once and for all,  the argument that a noncompete provision can be enforced beyond its term in the absence of a tolling agreement.
  • Aspect Software v. Barnett (D. Mass., May 27, 2011).  In this decision, Judge Denise Casper’s first non-compete case since she was appointed to the federal district court, the court granted a preliminary injunction that it deemed necessary to protect the former employer’s trade secrets.  The employee had moved to California, and argued that California law (which does not enforce employee non-compete agreements against employees) should apply.  However, the employee’s agreement with Aspect provided that  Massachusetts law controlled the agreement, and  therefore the court rejected the employee’s “California defense.”

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