June 22, 2012
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What is the first thing a lawyer looks for when a client wants to enforce a non-compete agreement? What is the first thing a lawyer hopes not to find when a client is the subject of a non-competition demand letter or lawsuit? Bad facts. Did the employee take confidential information belonging to the former employer? Did the employee contact customers of the former employer and solicit them for the prospective employer before leaving the former employer? If the employee was an executive or owed a fiduciary duty to the former employer, did the employee solicit other employees to leave with her? If the employee did any of these things, did the employee try to cover it up? Bad facts! The plaintiff’s lawyer will say. Give me those bad facts! OK, I exaggerate a bit – of course a lawyer first wants to see if there is a written agreement that contains a non-compete provision. But believe me, any experienced lawyer is itching to find those bad facts. Lawyers know that judges are ambivalent about non-compete agreements, and putting someone out of work by issuing an preliminary injunction to enforce a non-compete provision is something few judges do with an easy conscience. It’s no secret that there are some judges who will bend over backwards to find a way not to enforce a non-compete. So, lawyers trying to enforce these agreements know that the one…
April 4, 2012
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Here is an unusual spin on Massachusetts non-compete law. As best I can understand the facts (which require a bit of “between the lines” reading) Trillium sued Cheung, a former employee of Trillium. Cheung had, it appears, released an employee from a non-compete agreement without company approval. Trillium’s suit asserted breach of fiduciary duty to the company. A trial ensued, but at the outset the judge observed that if the underlying non-compete agreement had not been enforceable the release had caused no harm to Trillium, and hence there had been no legal wrong committed by Cheung. In other words, the trial involved a concept that lawyers dislike greatly: a “trial within a trial.” (Think Russian nesting dolls). Here, the two trials involved the question of whether the non-compete was enforceable and, if so, whether Cheung acted illegally by releasing the employee from the agreement. The trial began with a jury proceeding, during which the jury was asked to decide the second of these issues first – whether Cheung had improperly given the employee a release from the non-compete. However, in an odd twist the parties agreed that the judge, not the jury, would rule on damages. Before doing so, however, the judge addressed the second issue (which, one would think, should have gone first), held that the non-compete agreement was unenforceable, and concluded therefore that Trillium had suffered no damages….