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There is definitely some benefits to a large, well run organization.
In my jurisdiction, it's not really a waiver argument. The burden of proof is on the employer seeking to enforce the non-compete to show that the post-employment restriction is necessary to protect the company's confidential and proprietary information. The issue is one of access - i.e., because this category of employee is entrusted with access to sensitive confidential and proprietary information, a post-employment competitive restriction is justified (even without evidence of misappropriation - as you're entering into the contractual restriction long before there is any competitive activity). As such, the primary focus of the litigation is on the confidential nature of the information, the value of that confidential information, and why the non-compete's length, geographic scope, and activity to be restrained is necessary to protect that confidential information. A key factor in litigating these issues is the extent to which the employer treated the information as confidential and took steps to protect that information. In a sales context, the employer is typically relying on information contained in client files, buying histories, sales reports, contract details, pricing information, cost detail, marketing plans, etc. And it's easy enough in many cases through discovery from the employer itself to demonstrate that these other people who left and went into competition received the very same sales reports and price lists and had access to the same client info as the person you're trying to enforce the non-compete against. And if the employer didn't care to enforce the non-compete against the others who had access to the very same information, then it becomes difficult to argue that the non-compete is contractually necessary to protect the company's confidential information. Because that burden always lies with the employer. So it's not about waiver of an otherwise enforceable restriction. It's about establishing that the restriction wasn't enforceable in the first place. In other words, the truth comes out. If the employer is letting employees compete who had access to the very same information, then it's not about protecting the information. It's about restraining competition for the sake of restraining competition and gaining an advantage in the market. And in Texas at least, that dog don't hunt.
I think we're saying the same thing. The above is one one of the chief reasons why I try to dissuade my clients from filing noncompete enforcement suits. It's not just in Texas.
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Thanks guys.
That was one of my favorite arguments when I was trying to bust a non-compete. My favorite when I was trying to enforce one was this: Often (but not always), when a company seeks to enforce a non-compete against a former employee, the company will also sue the industry competitor who hired the employee. After all, if there is sensitive confidential information at issue that has been misappropriated and is now in the possession of the competitor, you need an injunction against them as well. So the competitor is sued for tortuously interfering with the non-compete, and for misappropriating confidential information. In these situations, the litigation is really between two industry competitors, and the hiring company is doing everything they can to bust the non-compete. They'll argue that the information involved in the particular industry at issue isn't confidential at all. Everyone knows the customers, pricing is publicly available, etc., etc. This is all in an effort to show that the non-compete you are trying to enforce is not enforceable. The only problem? The hiring company has their folks sign non-competes. In one case, the hiring company had the very employee they had hired away sign a non-compete that was longer in duration and far broader in terms of geographic scope and activity to be restrained. That was a fun deposition, and a fun bench trial. I had their non-compete blown up into a giant exhibit and had the CEO twisted up in knots trying to explain why our non-compete couldn't possibly be enforceable but theirs was despite hiring the guy for the identical role. Not only did the Court enforce the non-compete (albeit for a shorter period of time than the contract provided), but now the CEO was on record arguing that none of the information in their industry was confidential. Will make it very difficult for them to enforce their own non-competes in the future.
Hope your brother lands on his feet. I have to think he wasn't long for the company anyway given the new DB in charge.Just wanted to say I'm really enjoying the dialogue here, both from the lawyers who are chiming in as experts, and those who have been through similar cases on both sides. I hope this thread provides a nice base of knowledge for anyone going through this in the future. One of the very many thinks I love about this forum.
Ha! Good one. I had two like that in New York, same deal, but neither reached trial and only one yielded a semi-fun dep. In my most recent one of these, plaintiff's counsel (from a "megafirm") seemed a little lost that my client, the hiring/subsequent ER, didn't bother with noncompetes of its own (on my rec).
Ask the DB's father if he will fund the company with a plan to pay it back rather than an ownership stake.
yea...no.Update:
Employer blocked Unemployment under terms of "violation of company policy" for not signing the noncompete... His attorney is advising him that continued employment IS sufficient "additional compensation" to allow introduction of a noncompete in FL.
Has a hearing over phone to defend himself and attorney is saying he should be fine handling it by himself without their assistance.
I don't do employment.Update:
Employer blocked Unemployment under terms of "violation of company policy" for not signing the noncompete... His attorney is advising him that continued employment IS sufficient "additional compensation" to allow introduction of a noncompete in FL.
Has a hearing over phone to defend himself and attorney is saying he should be fine handling it by himself without their assistance.
I agree he would most likely be fine, but I don't think that translates to it being okay not having his lawyer there. That's BS.Update:
Employer blocked Unemployment under terms of "violation of company policy" for not signing the noncompete... His attorney is advising him that continued employment IS sufficient "additional compensation" to allow introduction of a noncompete in FL.
Has a hearing over phone to defend himself and attorney is saying he should be fine handling it by himself without their assistance.
The hearing will likely be recorded and would be discoverable in later litigation between the parties. If further litigation is possible (perhaps they sue him for taking confidential information or interfering with customer relationships), this hearing could end up having much larger implications than a determination of unemployment compensation.Update:
Employer blocked Unemployment under terms of "violation of company policy" for not signing the noncompete... His attorney is advising him that continued employment IS sufficient "additional compensation" to allow introduction of a noncompete in FL.
Has a hearing over phone to defend himself and attorney is saying he should be fine handling it by himself without their assistance.
