Notwithstanding a forum-selection provision in the parties’ consulting agreement designating the Northern District of Georgia as the place for litigating non-competition and non-solicitation covenants disputes, a Georgia federal judge transferred covenant violation litigation to the Middle District of Florida. Also, the judge explained why he thought that an arbitration clause was unenforceable, but he said that the Florida court should … Continue Reading
Contractual choice of law provisions often seek to apply the law of the state that, when applied by a court to the contract at issue, is most likely to result in favorable interpretations, application, and/or enforcement of those provisions in the contract most valued by the contracting parties. However, when the law chosen is of a state different than the … Continue Reading
As we have discussed on this blog before, on May 11, 2011, Georgia reissued its new Restrictive Covenant Act (the “New Act”). The New Act reflected a fundamental change in Georgia’s law regarding restrictive covenants because it permitted Georgia courts to “blue pencil” (i.e., partially enforce) restrictive covenants that otherwise would be overbroad and, … Continue Reading
A recent Indiana Court of Appeals opinion, designated as non-precedential, discussed that state’s law concerning non-competition agreements. Most significant, the court upheld a commitment not to solicit the employer’s current or recent customers for two years even though the covenant contains no geographical limitation. However, provisions precluding any “contact with” such customers, and forbidding acceptance of “referrals of” them, were “blue penciled.” The … Continue Reading
The question has been raised: What is the effective date of Georgia’s new non-compete statute, O.C.G.A. § 13-8-50 et seq.?
The statute provides that it goes into effect on the day after the passage of an enabling Constitutional amendment.
This Act shall become effective on the day following the ratification at the time of the 2010 general election of an amendment to … Continue Reading
ING Life Ins. and Annuity Co. v. Gitterman, Slip Copy, 2010 WL 3283526 (DNJ August 18, 2010)
Plaintiffs ING Life Insurance and Annuity Company (“ILIAC”) and ING Financial Advisors (“IFA”) (collectively, “Plaintiffs” or “ING”), sought to enjoin defendants, all of whom were former employees of ING, from soliciting clients to withdraw certain accounts from ING, pending the resolution of a … Continue Reading
The U.S. Court of Appeals for the Tenth Circuit recently held that a former employer’s price quotations to prospective customers were not trade secrets under Oklahoma law because they did not contain a confidentiality provision, but the former employee who took advantage of those quotations on behalf of his new employer did violate his non-compete covenant. Southwest Stainless, LP v. … Continue Reading
In Smith Barney, Inc. v. Darling, No. 09-C-540, 2009 WL 1544756 (E.D. Wis. Jun. 3, 2009), the United States District Court for the Eastern District of Wisconsin denied Smith Barney’s request for temporary injunctive relief in aid of arbitration against five departing financial consultants and their new employer. Smith Barney sought an injunction to: (1) require the former employees to return … Continue Reading
On April 29, 2009, Governor Sonny Perdue signed HB 173, legislation intended to revamp the way that non-compete, non-solicit and non-disclosure agreements are enforced in Georgia.
The Ohio 12th District Court of Appeals recently uphelda lower court’s injunction against two former employees and their new employer in light of defendants’ apparent breach of duty of loyalty, misappropriation of trade secrets, and tortious interference with business relations. DK Prods., Inc. v. Miller, Case No. CA2008-05-060, 2009 WL 243089 (Ohio Ct. App. 12 Dist. Feb. 2, 2009)
System … Continue Reading
This morning (September 24, 2008), Rep. Kevin Levitas and Sen. Judson Hill from the Georgia Legislature convened the first meeting of a legislative study committee reviewing the law of Georgia with respect to restrictive covenants in employment and business relationships. The House Committee is chaired by Representative Kevin Levitas, and includes the following members: Representative Tim Bearden; Representative Butch Parrish; Representative Richard … Continue Reading
Alliant Insurance Services, Inc. v. Gaddy, No. C055192, 2008 WL 331065 (Cal. App. 3 Dist., Feb. 07, 2008)
On February 7, 2008, the California Court of Appeals affirmed a preliminary injunction, enjoining defendant G. Scott Gaddy from competing against his former employer, Alliant Insurance Services, Inc., within the entire state of California. The appellate court also upheld a non-solicitation provision … Continue Reading
Trujillo v. Great Southern Equipment Sales, LLC, No. A08A0245, 2008 WL 269606 (Ga. Ct. App. Feb. 1, 2008).
Reviewing the “Confidentiality and Restrictive Covenant Agreement” signed by Sarah Alexandra Trujillo while employed by Great Southern Equipment Sales, LLC, the Georgia Court of Appeals reversed the part of the trial court’s judgment that enjoined Ms. Trujillo from competing with Great Southern … Continue Reading
National Elevator Cab & Door Corp. v. H & B, Inc., 2008 WL 207843 (E.D.N.Y.) No. 07 CV 1562
United States Magistrate Judge Levy recently denied a motion for reconsideration after he granted the plaintiff National Elevator Cab & Door Corp.’s motion for a preliminary injunction against defendant H & B, Inc. The litigation stems from the failed acquisition … Continue Reading
On December 7, 2007, the Illinois First District Appellate Court in Cambridge Engineering, Inc. (“Cambridge”) v. Mercury Partners 90 BI, Inc., No. 1-06-0758 (1st District Appellate Court of Illinois, Sixth Division) determined that Cambridge’s non-solicitation and non-competition provisions were overly broad and unenforceable because the provisions prevented former Cambridge employees from (a) taking any job, “even that of a janitor,” … Continue Reading
A half-dozen H&R Block employees in LaCrosse, Wisconsin, who had worked for the company for periods ranging from 10-25 years, left and within a few months began competing with their ex-employer. Each of the former employees had signed non-compete and non-solicitation covenants reciting that they lasted for a two-year period, but “such period to be extended by any period(s) of … Continue Reading
A California appellate court held in a recent decision that a broad “no-hire” provision contained in a consulting agreement was unenforceable as a matter of law because it was an impermissible restraint on trade in violation of the California Business and Professions Code Section 16600.
Despite the frequent use of “no-hire” and “non-solicitation” provisions in consultant and employment agreements, the … Continue Reading
In Kinesis Advertising, Inc. v. Hill, 652 S.E.2d 284 (N.C. Ct. App. 2007), the North Carolina Court of Appeals reversed the trial court’s grant of summary judgment and touched on two important issues under North Carolina law. Kinesis filed the action, attempting to enforce non-compete and non-solicitation provisions against its former employees, Larry Hill and Dan Robinette, as well as … Continue Reading
The District Court for the Southern District of New York recently demonstrated the importance of including nonsolicitation language in employment agreements, in addition to noncompetition language, where employers seek to protect their customer base from departing employees. In Silipos, the court, despite finding that the noncompetition covenant in the subject agreement was not enforceable, nevertheless found that the nonsolicitation covenant … Continue Reading
An Illinois Appellate Court recently affirmed a preliminary injunction granted to a medical products manufacturer against its former employee, enforcing 24-months’ non-competition and non-solicitation agreements. The non-competition agreement barred the defendant-employee from competing with the plaintiff with respect to all products and territory assigned to the defendant during his final 18 months of employment. The non-solicitation agreement prohibited the defendant … Continue Reading
Clients often ask whether they need to provide any consideration to their existing employees when they ask their employees to sign non-compete or non-solicitation agreements. The answer in Georgia typically is that continued employment is sufficient consideration for such an agreement. (The answer is different in Texas and North Carolina, for example.) Glisson v. Global Security Services, LLC, Georgia Court … Continue Reading
It appears that the Georgia Court of Appeals narrowly interpreted the phrase “on behalf of” in a non-solicitation clause to prevent application of a non-solicitation provision to support a breach of contract claim. Although the parties did not dispute that the Clause applied to clients who transacted business with the plaintiff, Atlantic Insurance Brokers LLC (“AIB”), and dealt with the … Continue Reading