I have tried three cases in the last 12 months, but none more difficult than a non-compete case in Lexington County. The judge did not grant summary judgment on the non-compete or non-solicitation provisions, and my client had conceded he breached the non-compete. The defendant was permitted to argue he was entitled to $2.7 million in lost profits, which encompassed a 5 year period although the non-compete was 1 year long. A jury deliberated 5 hours before asking for a calculator, and another couple doing math. When it was all said and done, the defendant will receive a breach of contract remedy that is 10% of the lost profits sought and one-half of the first settlement offer. But the motion for attorneys fees’ is still pending. (Defendant asked for a figure in excess $700,000.).
Well. This case has a lot of “boots on the ground” experience to dissect. Couple if quick take aways for now:
1. It is cliche, but you never know what a jury is going to do. This verdict appears to be an inconsistent verdict; it may be a compromise verdict; it is likely a confused verdict. But, do the parties really want to try this one all over again? Cost-benefit says “no.” However, rationality gets lost in the passion for revenge that can infect these cases.
2. Judges do not wade very deep into non-competes that often. The appellate law in the state of South Carolina is not as clear as it could be. The law has evolved slowly over the last 50 years, and sometimes in ways that appear to be inconsistent. This lends itself to variability and lack of predictability at the trial court level.
3. There is a fairness standard that seems to underpin much of what drives juries, and in the present political and cultural environment, juries in certain locales and/or in response to certain fact patterns are not as hostile to non-competes as one might guess. Whoever wins the fairness battle, wins the war. And, if there is a split decision in the fairness equation, then verdicts tend to reflect that through a compromise verdict.
Too many employees who have signed a non-compete agreement fail to take notice that they have agreed to be sued in another state. These provisions are known as “forum selection clauses.” The costs of going to another state to defend yourself can be significantly higher than litigating in your home state. At least half of the agreements I review state that the parties have agreed to having another state’s court will decide any dispute. Continue reading →
Okay. I confess: I have been really busy (what a blessing) and have not had a chance to write much. But, I have had a chance to read, and I came across something else I wanted to share. Management-side employment lawyer, Jay Shepherd, has written a good article directed at employees: Eight Ways to Guarantee Yourself a Non-Compete Lawsuit.Pretty good advice. Because, in the end, beating your non-compete begins with not acting stupidly and dishonestly, and even if you have a non-compete that will never hold-up in court, being dishonest before you leave your job or taking stuff with you when you leave will make your non-compete the least of your problems. Remember you can delete, but you cannot hide.
It has been a while since I posted. Will save the excuses, but thought I would take this opportunity to link to one of my favorite management oriented blogs: Gruntled Employees. Jay Shepherd provides interesting advice to employers looking to avoid workplace litigation. Shepherd’s Eight Ways to Lose a Non-Compete Caseis solid advice to those seeking to enforce a non-compete, and likewise provides insight to those who want to wiggle free.
I had a set back recently when a judge decided to “punt” instead of making the decisions he is paid to make. I represented an employee who had been fired and whose non-compete was making it difficult for him to get another job. The language of the non-compete appeared to be extremely broad. We asked the judge to read the non-compete and decide if he agreed with us. The law is clear: Whether or not such a non-compete is reasonably limited in its operation is a question of law. Stringer v. Herron, 424 S.E.2d 547 (S.C. Ct. App. 1992)(emphasis added); see also Bicycle Transit Authority, Inc. v. Bell, 314 N.C. 219, 333 S.E.2d 299 (N.C. 1985)(“The reasonableness of a restraining covenant is a matter of law for the court to decide.”). So, when the employer argued there were “questions of fact’ the obvious response what facts do you need to read the non-compete and decide whether it is reasonable limited. Continue reading →
E-discovery is the new trend in litigation; it is here to stay. Every lawsuit involves discovery, where lawyers get to ask questions and obtain documents that are relevant or might be relevant to the claims in the case. Now, because many documents exist in electronic form on computer hard drives, electronic files are also subjects for discovery. Parties are required to conduct searches of their computers for information, and in some cases, a party may be required to produce their hard drive so the opposing party can conduct its own search. And these searches can turn up deleted information. Continue reading →
I recently wrote a letter on behalf of a nice lady who had a noncompete, which was on the verge of costing her a good job offer. However, the prospective employer was temporarily holding the job open to see if she could get released from her non-compete. Fortunately, we had some strong arguments that the agreement was not enforceable, and sent a well researched letter making our case. Her former employer responded in two weeks that the company was releasing her from those obligations. It can be that simple.
But, it is not always that simple. Sometimes, former employers will continue to insist on enforcement, which requires an employee to institute a declaratory judgment action. Other times, the noncompete has a provision requiring an employee to litigate out of state, so it makes since to file a preemptive lawsuit before writing the letter. Otherwise, the former employer may bring its own action in another state, which can be more time consuming and more expensive. And, if you have filed an action before initiating negotiations, your former employer does not wonder whether you are serious or not. It all depends on the circumstances.
Nonetheless, in a few cases, a well written, well researched letter can be enough. The cost for a consultation and a letter will generally be about $500, although some cases can be a bit more complicated. Of course, the cost of inaction can be much more.