Archives: Non-Solicitation

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Texas Court Rejects Effort To Dismiss Non-Compete Lawsuit On Free Speech Grounds

By Victor N. Corpuz and Colin A. Thakkar on Posted in: Case Law update, Non-Compete, Non-Solicitation, Texas, Texas Citizens Participation Act
Texas courts are increasingly encountering efforts to challenge restrictive covenant agreements on free speech grounds, where the restricted activity includes business-related communications. A recent Texas appellate court decision indicates that this strategy has its limits. In Hieber v. Percheron Holdings, LLC, No. 14-19-00505-CV (Tex. App.—Houston [14th Dist.] Nov. 14, 2019), Percheron Holdings, LLC (“Percheron”) sued … Continue Reading

Massachusetts High Court Upholds Enforcement of Employee Non-Solicitation Covenant

By Erik J. Winton and Colin A. Thakkar on Posted in: Case Law update, Employee Non-solicitation, Employee Raiding, Massachusetts, No-Poaching Agreements, Non-Solicitation, Unfair Competition
Over the past few years, legislators and government agencies at both the state and federal levels have pushed reforms limiting the use of non-competes and other restrictive covenants by U.S. businesses. Some of those efforts have extended to covenants that restrict a party’s ability to solicit and/or hire employees who are not party to the … Continue Reading

Court Rejects Delaware Choice of Law Provision in Refusing to Enforce Customer Non-Solicitation Covenant Against California Employee

By Clifford R. Atlas, Erik J. Winton, Ravindra K. Shaw and Colin A. Thakkar on Posted in: California, Case Law update, Choice of Law, Delaware, Non-Compete, Non-Solicitation
On August 26, 2019, the Delaware Chancery Court invalidated a California employee’s customer and employee non-solicitation covenant on the grounds that it violated California law. In doing so, the Court rejected the plaintiff company’s attempt to override California law by including a Delaware choice of law provision in the underlying agreement. Background We initially reported … Continue Reading

New Jersey Court Offers A Reminder That The Duty Of Loyalty Is Thicker Than Ink

By Ronald V. Sgambati and Colin A. Thakkar on Posted in: Common Law Duty of Loyalty, New Jersey, Non-Solicitation
Do employees in New Jersey owe a duty of loyalty to employers, even without a written employment agreement? Eliminating any possible doubt, the New Jersey Appellate Division answered, emphatically, yes. In Technology Dynamics, Inc. d/b/a Nova Battery Systems v. Emerging Power, Inc. et al., Docket No. A-0952-17T3 (N.J. Sup. Ct. – App. Div. Feb. 26, 2019), … Continue Reading

Wisconsin Supreme Court Applies Non-Compete Law To Invalidate Anti-Poaching Covenant

By Sharon Mollman Elliott and Colin A. Thakkar on Posted in: Case Law update, Employee Raiding, No-Poaching Agreements, Non-Solicitation, Unfair Competition
On January 19, 2018, a divided Wisconsin Supreme Court held that an employee non-solicitation covenant was overly broad and unenforceable under state law. In the decision, entitled The Manitowoc Company, Inc. v. Lanning, Case No. 2015AP1530 (Wisc. Jan. 19, 2018), the Court confirmed Wisconsin Statute §103.465, which governs covenants not to compete, extends to agreements … Continue Reading

A Protocol On Life Support – Financial Industry Assesses The Aftermath Of Major Defections From Broker Recruitment Pact

By Clifford R. Atlas, A. Robert Fischer, Lee A. Lastovich, David K. Montgomery, Marc S. Wenger and Colin A. Thakkar on Posted in: Non-Disclosure and Confidentiality Agreements, Non-Solicitation, Uncategorized, Unfair Competition
In the fourth quarter of 2017, two major financial firms dropped out of an industry-wide Protocol for Broker Recruiting (the “Protocol”), an agreement designed to reduce litigation surrounding the movement of stockbrokers between competing firms. While those departures do not necessarily seal the fate of the Protocol, they do portend an increase in litigation to … Continue Reading

Federal Court Interprets Florida and Pennsylvania Law To Endorse Protection Of Salon Services Company’s Customer Relationships And Specialized Information

By Richard Margulies, Benjamin D. Sharkey and Colin A. Thakkar on Posted in: Case Law update, Injunctions, Non-Compete, Non-Solicitation, Uncategorized, Unfair Competition
In states that permit the enforcement of non-compete and other restrictive covenant agreements against former employees, companies must still demonstrate that the restrictions are designed to protect a legitimate business interest, and not to simply avoid ordinary competition. In Osborne Assocs. v. Cangemi, Case No. 3:17-cv-1135-J-34MCR (M.D.Fla. Nov. 14, 2017), the federal court for the … Continue Reading

Georgia Court of Appeals Confirms Non-Solicitation of Employees Covenant Need Not Have Geographic or Material Contact Language

By Adriana R. Midence and Colin A. Thakkar on Posted in: Employee Raiding, Non-Solicitation, Unfair Competition
As previously noted in Jackson Lewis’ Non-Compete & Trade Secrets Report, Georgia adopted legislation governing restrictive covenant agreements entered into on or after May 11, 2011. This law, however, does not address employee non-solicitation (i.e., anti-pirating) covenants, leaving courts to apply common law to such restrictions.  Georgia common law can be confusing and even contradictory … Continue Reading

Referral Sources Can Be A Protectable Interest Under Florida Law

By Colin A. Thakkar on Posted in: Case Law update, Non-Compete, Non-Solicitation, Unfair Competition
In Florida, non-competition and other restrictive covenant agreements are enforceable to the extent they are tailored to protect a legitimate business interest. On September 14, 2017, the Florida Supreme Court held that a company’s relationships with business referral sources may constitute a protectable business interest – White v. Mederi Caretenders Visiting Services of Southeast Fla., … Continue Reading

Kansas Decision Highlights The Perils Of Overreach In Restrictive Covenant Agreements

By Colin A. Thakkar on Posted in: Blue Penciling, Injunctions, Non-Compete, Non-Solicitation, Unfair Competition
In a recent decision examining Kansas non-compete law, the United States District Court for the District of Kansas partially granted a company’s motion to enjoin its former employee’s violations of the non-compete and customer non-solicitation provisions of his employment agreement. The decision, in the matter of Servi Tech, Inc. v. Olson, highlights a number of key … Continue Reading

Selective Enforcement Not A Viable Defense to Non-Competition Agreements Under Ohio Law

By Vincent J. Tersigni and Jackson Lewis P.C. on Posted in: Case Law update, Non-Compete, Non-Solicitation
Employers sometimes worry whether seeking to enforce their non-competes in some circumstances but not others might preclude enforcement altogether in the future.  Not so, says one court.  Applying Ohio law, the United States District Court for the Western District of Tennessee, in GCA Services v. ParCou, held in a discovery ruling that information regarding an … Continue Reading

Non-Solicitation Agreement Enforced in Wisconsin

By Clifford R. Atlas and Sharon Mollman Elliott on Posted in: Injunctions, Non-Compete, Non-Solicitation
There are so many stories about restrictive covenants being unenforceable in Wisconsin that it is refreshing to see a case where a restrictive covenant is enforced – especially at the preliminary injunction stage.   This week, the U.S. District Court for the Eastern District of Wisconsin granted a preliminary injunction in favor of BMO Harris Bank, … Continue Reading

Texas Court Reminds: Lost Sales Are Not Lost Profits

By William Stukenberg on Posted in: Enforcement Update, Non-Compete, Non-Solicitation, Uncategorized
Proof of damages in restrictive covenant matters can be complicated.  In Rhymes v. Filter Resources, Inc., the Ninth Court of Appeals in Beaumont, Texas reminded parties that revenue and sales are not the same as lost profits, and expenses must be considered when developing a damage model. George Rhymes (“Rhymes”) was employed by Filter Resources (“Filter”) … Continue Reading

Wisconsin Court Finds Anti-Poaching Agreements to be Unenforceable

By Clifford R. Atlas on Posted in: Case Law update, Non-Solicitation
For all the court decisions out there interpreting non-competition restrictions and customer or client restrictions, case law regarding non-solicitation of employees restrictions can be a little hard to find. At the link below is a report about a new decision from the Wisconsin Court of Appeals — written by our colleague in Madison, Sharon Mollman Elliott … Continue Reading

Groundhog Day for Massachusetts Non-Compete Reform

By Clifford R. Atlas on Posted in: Non-Compete, Non-Disclosure and Confidentiality Agreements, Non-Solicitation
Once again, the Massachusetts legislature was unable to agree on non-compete reform legislation by the July 31, 2016, end of the current legislative session. The House and Senate had passed versions of non-compete reform that differed on key provisions. At the end of the session, however, the House and Senate failed to pass a compromise … Continue Reading

Illinois Appellate Court Finds Non-Compete Restrictions Over-Reaching and Affirms Court Decision Not to Blue Pencil

By Gregory H. Andrews on Posted in: Non-Compete, Non-Disclosure and Confidentiality Agreements, Non-Solicitation
A recent decision from an Illinois Appellate Court suggests that employers with non-compete agreements “built to scare” may end up with an unenforceable contact and even the loss of confidential information under Illinois law. AssuredPartners, Inc. v. Schmitt (October 27, 2015 1st Dist.) Illinois Courts continue to carefully scrutinize contracts containing post-employment restrictions over concerns … Continue Reading

Fifth Circuit Affirms Rejection of Texas Choice-of-Law as to Oklahoma-Based Employees for Non-Compete Provisions, But Allows Texas Law to Apply to Non-Solicitation Provisions

By William R. Davis on Posted in: Case Law update, Compliance Tip, Non-Compete, Non-Solicitation, Trade Secrets
In a detailed, 26-page published decision in the matter of Cardoni v Prosperity Bank, No. 14-20682 (5th Cir. Oct. 29, 2015) the Fifth Circuit Court of Appeals took a deep look at choice of law provisions in restrictive covenants. The Appellate Court started out by noting that in addition to their well-known disagreements over boundaries and … Continue Reading

Eighth Circuit Finds Non-Compete May be Assignable Under Arkansas Law; Reverses Dismissal of Breach of Fiduciary Duty and Conspiracy Claims Where Manager took Subordinates with him.

By Jackson Lewis P.C. on Posted in: Common Law Duty of Loyalty, Non-Compete, Non-Solicitation
The Eight Circuit has concluded that the Arkansas Supreme Court would likely adopt the majority rule that a covenant not to compete can be assigned to the purchaser of a business. Stuart C. Irby Company, Inc. v. Tipton, No. 14-1970 and 14-2682 (8th Cir. Aug. 6, 2015) The appellate court reversed an across-the board win … Continue Reading

Hawaii Bans Non-Compete and Non-Solicit Clauses in High-Tech Employment

By on Posted in: Non-Compete, Non-Solicitation
Jackson Lewis Hawaii attorneys Andrew L. Pepper and Wayne S. Yoshigai have a post on the Jackson Lewis website about a new development in Hawaii non-compete law.  They write as follows: Departing from the state’s normally pro-employer laws and judicial attitudes regarding non-compete covenants, a new law bars high-tech companies in Hawaii from requiring their employees to … Continue Reading

Alabama Amends Non-Compete Statute

By Thomas A. Davis on Posted in: Non-Compete, Non-Solicitation
The Alabama legislature recently passed changes to Section 8-1-1 of the Code of Alabama, the provision which contains the state’s non-compete statute. Governor Bentley signed the new version of the statute and it will become effective January 1, 2016. While the new version does not drastically change the landscape of non-competes, there are several changes which … Continue Reading

Alabama Signals Possible Expansion of Exemption for “Professionals” from Non-Compete Restrictions

By Thomas A. Davis on Posted in: Non-Compete, Non-Solicitation
Alabama does not enforce non-solicitation and non-compete agreements against professionals as that term is traditionally defined – to include, by example, physicians, lawyers, and accountants.  In G.L.S. & Associates, Inc. v. Rogers, 2014 Ala. Civ. App. Lexis 87 (2014), the Alabama Court of Civil Appeals recently opened up a possible expansion as to what qualifies as a … Continue Reading

Claims in Pennsylvania Lawsuit Alleging En Masse Defection of Employees as “Sabotage” Survive Dismissal

By on Posted in: Common Law Duty of Loyalty, Employee Raiding, Non-Compete, Non-Solicitation, Tortious Interference, Trade Secrets, Unfair Competition
A U.S. District Judge in the Eastern District of Pennsylvania has allowed several claims to proceed to trial following a motion for summary judgment by defendants in Ozburn-Hessey Logistics, LLC v. 721 Logistics, LLC, et al, No. 12-0864 (April 4, 2014). The allegations in the case go beyond the typical defection of an employee or two to … Continue Reading

Pennsylvania Court Upholds Choice of Law Provision in Non-Solicitation Case Involving California Employee

By on Posted in: Non-Solicitation
In another example of out-of-state employers utilizing choice of forum and choice of law provisions to bind California employees to restrictive covenants, the Pennsylvania Superior Court recently held that a Pennsylvania choice of law and forum clause was enforceable as against a California resident. The case, Synthes USA Sales, LLC v. Harrison, involved a sales … Continue Reading

Tennessee Continues its Trend of Enforcing Non-Competes

By Conrad S. Kee on Posted in: Non-Compete, Non-Solicitation
In a recent Tennessee case, Fidelity Brokerage Services LLC v. Melissa Clemens, No. 2:13-CV-239 (E.D. Tenn., Nov. 4, 2013), the Court entered a preliminary injunction prohibiting a former employee from soliciting customers or prospective customers she served while working for Fidelity, from soliciting Fidelity’s employees, and from using Fidelity’s confidential information.  As  we previously stated regarding the Dill v. Continental decision, the Fidelity case … Continue Reading
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