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In what may seem to be a surprising series of events, given the state’s infamous hostility to restrictive covenants, a California appellate panel recently affirmed a Los Angeles Superior Court judgment effectively enjoining Netflix from soliciting certain employees subject to specific fixed-term employment agreements with Fox. More specifically, the panel—applying reasoning similar to the California Supreme Court’s in Ixchel Pharma, LLC v. Biogen, Inc.—upheld the trial court’s granting of summary adjudication in favor of Twentieth Century Fox Film Corporation and Fox 21, Inc. (collectively, “Fox”) on their claim under Business and Professions Code sections 17200, et seq. against Netflix Inc. (“Netflix”) and corresponding injunction in an unpublished but closely followed decision.

In affirming the judgment, the panel expressly rejected Netflix’s contention that the injunction, which prohibits Netflix, “individually … and/or in concert with others,” from “solicit[ing] employees who are subject to [f]ixed-[t]erm [e]mployment [a]greements with [Fox] or induc[ing] such employees to breach their valid [f]ixed-[t]erm [e]mployment [a]greements with [Fox],” constituted “an invalid restraint on employee mobility” under California public policy, Business and Professions Code section 16600, and other statutes concerning personal services contracts. The panel acknowledged each of these arguments and underlying public policy concerns, but ultimately found that they were not supported by the facts at hand, particularly in light of countervailing policies “favoring the stability and predictability of fixed-term employment relationships.” The panel also observed that the injunction had been carefully limited, and narrowly drawn by the trial court to curb wrongful conduct by Netflix without impeding the ability of individual employees to independently seek out new employment. …
Continue Reading California Court of Appeal Affirms Injunction Barring Netflix From Poaching Fox Executives, Citing Unfair Competition

shutterstock_115262968A Texas Court of Appeals held on August 22, 2016, that a former employer was entitled to $2.8 million in attorney’s fees against a former employee who used the employer’s information to compete against it. The Court reached this ruling despite the fact that the jury found no evidence that the employer sustained any damages or that the employee misappropriated…
Continue Reading Texas Appellate Court Affirms Injunctive Relief and $2.8 Million Award in Attorney’s Fees Against Former Employee in Trade Secret Misappropriation Case

A federal district court in the Northern District of California recently found that a non-signatory to an arbitration agreement may enforce that agreement against a signatory and compel arbitration under the doctrine of equitable estoppel.

Semin, a software developer, worked for Torbit, Inc. He signed an employment agreement containing a proprietary information non-disclosure provision, and a commitment not to compete…
Continue Reading California Federal Court Allows Non-Signatory to Arbitration Agreement to Compel Arbitration in Trade Secrets Dispute

By Paul Freehling and Joshua Salinas

A recent Missouri federal court opinion describes an almost unbelievable scenario. Employees signed well-drafted employment agreements — containing such provisions as non-competition, confidentiality, promise of loyalty, and commitment to return employer’s property within 24 hours of termination of employment — and then incorporated and operated a competitor company while still employed. Moreover, they transferred…
Continue Reading Missouri Federal Court Finds Violations of Employment Agreement May Constitute Unlawful Access Under the Computer Fraud and Abuse Act