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.
- Rohm & Haas Elec. Materials, LLC v. Elec. Circuits Supplies, Inc., 2010 U.S. Dist. LEXIS 136080 (D. Mass., Dec. 22, 2010). In this case, brought against a corporate distributor of Rohm, Judge Joseph Tauro denied a preliminary injunction for a variety of reasons, including Rohm’s failure to prove the distributor possessed trade secrets or confidential information, and because Rohm’s damages were quantifiable and relatively small,
- Marino Company, Inc. v. Anderson, 2010 Mass. App. Unpub. LEXIS 448 (2010). This case was moot on appeal where the employer sought specific performance of a three year non-compete agreement, but by the time of trial more than three years had already passed. See EMC v. Arturi, below.
- Palladium Group, Inc. v. MacGillivray, 2010-2246 (Middlesex Sup. Ct. 2010). The court construed the non-compete agreement to provide only for forfeiture of benefits, and therefore injunctive relief against the former employee was not available to the former employer.
- Me. Pointe, LLC v. Starr, 2011 U.S. Dist. LEXIS 10442 (D. Mass. Feb. 3, 2011). Judge O’Toole found that where a sales representative signed an independent contractor agreement on behalf of his company the agreement committed the company, but not the individual in his personal capacity.
- People’s Choice Mortgage, Inc. v. Premium Capital Funding, LLC, 26 Mass. L. Rptr. 582 (Super. Ct. 2010). This opinion, written by Judge Stephen E. Neel sitting in Suffolk County, is notable because the new employer was found liable for tortious interference and violation of M.G.L. c. 93A.
- Ansys, Inc. v. Computational Dynamics North America, Ltd., 595 F.3d 75 (1st Cir. 2010). The First Circuit, applying an “abuse of discretion” standard to denial of a preliminary injunction by the New Hampshire District Court, affirmed the lower court. This case applied New Hampshire non-compete law.
- 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).
- Empirix v. Ivanov (Middlesex Sup. Ct., May 17, 2011). Superior Court Judge Frances A. McIntyre, sitting in Suffolk County, issued an injunction enforcing a one year non-compete.
- 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.”