Hearkening back to the rivalry between the Boston Celtics and Los Angeles Lakers in the 1980s, Massachusetts courts (as well as others around the country) have increasingly been asked to analyze the application of California law in litigation related to non-competition agreements. As many readers of this blog know, non-competition agreements are generally not enforceable under California law. Thus, even where the subject agreement contains a forum selection clause outside of California, or where the employee may have worked in another state, former employees are increasingly racing to file first in California courts or arguing that California law should be applied, thereby hoping to avoid any restrictions on mobility.
The Business Litigation Session of the Suffolk Superior Court in Massachusetts recently analyzed these issues in a pair of cases involving the application of California law to cases and agreements outside of the state. In FTI, LLC, et al. v. Duffy, et al., three of the plaintiffs’ former employees resigned and shortly thereafter filed suit in California seeking a declaration that the former employees’ non-competition agreements were unenforceable. Five months later, the plaintiffs filed a lawsuit in Massachusetts, alleging breach of the non-competition agreements, trade secret misappropriation, breach of fiduciary duty, unfair competition, and other business torts. The defendants moved to stay the case pending final resolution of the California case. One of the former employees also moved to dismiss the claims against him for lack of personal jurisdiction. Continue Reading The Latest East Coast/West Coast Conflict: Massachusetts Courts Consider the Application of California Law in Non-Compete Litigation