What Happens When California and Massachusetts Law on the Enforceability of Non-Compete Agreements Clash in Massachusetts Superior Court? Read on ….

by Lee Gesmer on May 5, 2009

David Donatelli was an EMC Executive VP. He left EMC, and went to work for Hewlett Packard in California. EMC filed suit to enforce Donatelli’s one year non-compete agreement. Donatelli argued that the Massachusetts court should defer enforcement to California law, which is hostile to non-compete agreements.

Judge Stephen Neel, in Suffolk Superior Court in Boston, didn’t buy it. He held that California’s legislative policy against non-compete agreements does not trump Massachusetts common law, at least under the facts of this case.

Once he got past this major bump in the road, Judge Neel held that continued employment sufficed as consideration for a non-compete agreement (he also noted that the agreement recited that it had been signed “under seal,” magic words that favor enforceability in Massachusetts), held that the agreement was not overbroad, and issued the injunction.

Justice Neel did, however, hold a branch above the waters before Mr. Donatelli sank beneath the waves – he stated that Donatelli could move to modify the order if he could show that his job duties at at HP would not “overlap with products or services being developed, produced, marketed or sold by EMC.” However, since the entire purpose of Donatelli’s hire by HP (according to press at the time) was to head HP’s Enterprise Storage and Server Division, which would be competitive with EMC, it’s hard to see how Donatelli could both satisfy the judge and serve HP as intended.

If you’re wondering why legislation aimed at making non-compete agreements unenforceable in Massachusetts is unlikely to be passed, meditate on this case for a while.

Donatelli will almost certainly file a single-justice appeal – nothing to lose and a lot to gain.

Here is a link to the decision: EMC v. Donatelli.

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