Seyfarth’s Trade Secrets, Computer Fraud & Non-Competes practice group is pleased to provide the 2022-2023 edition of our 50 State Desktop Reference, which surveys the most-asked questions related to restrictive covenants and trade secrets in all 50 states, plus the District of Columbia.
For the company executive, in-house counsel, or HR professional, we hope this guide will provide a starting
Continue Reading Now Available! 2022-2023 Edition of 50 State Non-Compete Desktop Reference
On Wednesday, November 30 at 1 p.m. Eastern, Robert Milligan—Seyfarth partner and co-chair of the firm’s Trade Secrets, Computer Fraud & Non-Competes practice—is presenting the “Negotiating Enforceable Noncompetition and Nonsolicitation Agreements: Compliance with State Statutes and Case Law” webinar for Strafford.
The experienced panel will discuss current legislative and case law trends regarding noncompetition and nonsolicitation agreements, provide best practices
Continue Reading Robert Milligan to Present Webinar on Non-Compete Enforceability for Strafford
M&A attorneys representing buyers, and their private equity and strategic clients, have long felt comfortable that the courts would uphold restrictive covenants in an acquisition. Even if the restrictive covenant at hand was perhaps somewhat broader than necessary, buyers and their counsel believed that the courts would judiciously apply their “blue pencil” to reform an overbroad covenant to make it enforceable. They also believed that by picking Delaware law and Delaware courts to hear any dispute, their restrictive covenants would be upheld by a court that has a well-deserved reputation for enforcing contracts.
Continue Reading A Delaware Surprise: Busting the Limits of Enforceability of Non-Competes in an M&A Transaction under Delaware Law
Tuesday, September 27, 2022
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific
In the fifth installment of our 2022 Trade Secrets Webinar Series, our team will cover recent legal developments and trends in Texas trade secret and non-compete law and how it
Continue Reading Upcoming Webinar! How and Why Texas Is Different When It Comes to Trade Secrets and Non-Competes
On August 10, 2022, Colorado’s new statute further restricting non-competition and non-solicitation provisions becomes effective. The new law, which passed earlier this year, continues Colorado’s trend toward increased scrutiny of post-employment restrictions and adds Colorado to the growing list of states that restrict the use of out-of-state choice of law and forum provisions in agreements that contain such restrictions.
Continue Reading Colorado Poised to Further Restrict Post-Employment Restrictions
There are limited exceptions to California’s general prohibition of post-termination non-competition agreements. One such exception is the sale of business exception found in California Business & Professions Code § 16601. This exception allows a buyer to enforce non-compete agreements against a seller if the seller is an “owner of a business entity selling or otherwise disposing of all of his or her ownership interests in the business entity.”
In Blue Mountain Enterprises, LLC v. Owen, 74 Cal. App. 5th 537 (2022), the Court of Appeal found that section 16601 applied to a three year post-termination non-solicitation of customer provision in an employment agreement and upheld the trial court’s decision to enforce the provision against the executive/seller who entered into a joint venture. The court found that section 16601 applied as a matter of law because the defendant “dispos[ed] of all of his … ownership interest” in one transaction agreement while concurrently agreeing under an employment agreement and that both contracts, along with other contracts the parties executed, were drafted to accomplish the parties’ joint venture. Id. at 553. The court also found that the trial court correctly found that the defendant’s letter for his new business constituted a solicitation as a matter of law because the letter went well beyond an announcement by actively encouraging customers to leave and do business with his new company. Id. at 556.
Continue Reading California Court of Appeal Enforces Non-Solicitation of Customers Provision in Joint Venture Transaction Involving Key Employee
On March 7, 2022, the US Department of the Treasury issued a report entitled “The State of Labor Competition,” (the “Report”)[1] making clear once again that the regulation of anti-competitive practices, including curtailing the use of non-competition covenants, continues to be a core component of President Biden’s agenda. The Report states that its purpose “is to summarize the prevalence and impact of uncompetitive firm behavior in labor markets,” focusing predominantly on practices that firms use to restrain competition for workers in order to lower compensation, including in particular no-poach agreements and non-compete agreements. Citing various research studies and data points, the Report asserts in particular that the lack of labor market competition decreases wages “at roughly 20 percent relative to the level in a fully competitive market,” noting in particular the impact of these practices on low-income workers, workers of color, women, and immigrants, and their contribution generally to income inequality and economic stagnation.
Continue Reading US Department of Treasury Takes Aim at Non-Compete Agreements
Wednesday, June 8, 2022
1:00 p.m. to 2:00 p.m. Eastern
12:00p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 to 11:00 a.m. Pacific
In the fourth installment of the 2022 Trade Secrets Webinar Series, Seyfarth attorneys will discuss restrictive covenants, including non-competes, non-solicitations,
Continue Reading Upcoming Webinar! Anatomy of a Restrictive Covenant
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
Suffice it to say, it’s never a good idea to deliberately violate a trial court’s order, much less do so repeatedly. That, however, is precisely what Khosrow Daneshgari did in Patriot Towing Services, LLC v. Daneshgari, et al. Notwithstanding Daneshgari’s willful contempt, the Georgia Court of Appeals recently ruled that the trial court nevertheless overstepped its authority by extending the expiration date of the parties’ non-compete agreement. See Daneshgari, et al. v. Patriot Towing Services, LLC, Georgia Court of Appeals, Case No. A21A0887, Oct. 21, 2021.
Continue Reading Georgia Court of Appeals Reiterates that Trial Courts Cannot Rely on Equity to Extend a Non-Compete’s Expiration Date