Executive Counsel Blog

Virginia Judge Voids Non-compete, Enforces Non-solicitation Provision in Employment Agreement

admin — Wed, 25 Aug 2010 20:51:18 +0000

Settling the dispute between IT professionals and their former employer in Daston Corp. v. MiCore Solutions, Inc., Fairfax Circuit Judge Michael F. Devine held a non-compete provision in an employment agreement void while also holding the agreement’s non-solicitation provision enforceable. The judge found the non-compete too broad, because it prohibits the IT professionals from providing their cloud computing services to anyone in the United States for one year following termination. However, the judge found the non-solict to be no broader than necessary for protecting the employer’s “legitimate business interest,” because it merely limited the solicitation of the employer’s prior and current clients for two years.

For information about The Employment Law Group® law firm and Non-Compete Litigation, click here.

California Court of Appeal Broadens Scope of Wrongful Termination

admin — Fri, 06 Aug 2010 14:44:03 +0000

The Court of Appeal held in Silguero v. Creteguard, Inc. that an employer can be liable for wrongful termination when firing an employee for having signed an unenforceable non-compete agreement with their prior employer. Under Tameny, employers cannot terminate employees for a reason that is contrary to public policy. The court ruled that honoring an unenforceable non-compete agreement violates the public policy declared in Section 16600 of the California Business and Professions Code which favors employee mobility and open competition amongst employers. Click here for the full opinion.

The employment lawyers of The Employment Law Group® law firm have substantial experience litigating Wrongful Termination claims in California and other states. For more information, click here.

Jury Awards $26 Million to U.S. Small Business in Trade Secrets Lawsuit Against Chinese Manufacturer and Dubai Distributer

admin — Tue, 27 Jul 2010 22:02:51 +0000

On July 15, 2010, a jury for the U.S. District Court in the Eastern District of Virginia returned a verdict totaling $26 million in favor of Jordan Fishman against a Chinese tire manufacturer and a Dubai tire distributor for stealing trade secrets and infringing upon Fishman’s copyrights and trademarks. Fishman’s small businesses, Tire Engineering & Distribution LLC and Alpha Tire Systems, specialize in designing underground mining tires. Conspiring with an employee of Fishman’s, the Chinese and Dubai companies stole Fishman’s tire designs and sold similar tires under their brand names.

For information on The Employment Law Group® law firm’s Executive Compensation Practice, click here.

U.S. Court Declines Enforcing BP Non-Compete Against Virginia Gas Station

admin — Tue, 27 Jul 2010 20:36:38 +0000

On July 15, 2010, the U.S. District Court for the Eastern District of Virginia ruled in the case of BP Products N.A. v. Stanley that British Petroleum’s covenant not to compete with a Virginia gas station was overly broad, and therefore unenforceable. BP included the contested provision in the deed of a gas station it sold to the defendant, Telegraph Petroleum Properties, LLC (Telegraph), owned by Charles Stanley. The non-compete provision restricts the property owner from selling gasoline, lubricants, and other chemicals or repairing automobiles unless the property is operated as a BP branded service station. Stanley informed BP in April of 2009 that their fuel was too expensive and that he would purchase a competitor’s fuel.

In granting summary judgment to Stanley, Judge Brinkema applied the Merriman calculus, stating “In considering the enforceability of restraints on trade, Virginia courts have typically focused on the reasonableness of the restraint . . . .” and whether or not it injures the public by its effect on trade. Merriman v. Cover, 104 Va. 428, 51 S.E. 817, 819 (1905). The non-compete provision fails both prongs of Merriman, because it unreasonably restricts Stanley from repairing automobiles, a market where BP does not compete, and “its language chills, and in fact, in this case, entirely halts, the competitive sale of goods to the public.” Rather than removing the offensive language in the provision, the court ruled the entire non-compete provision unenforceable. Click here for the full opinion.

Mr. Scott Oswald and Mr. Jason Zuckerman, principals at The Employment Law Group® law firm, wrote an article on non-compete litigation.

Ethics Resource Center Publishes New Report on Reducing Misconduct in the Workplace

admin — Wed, 30 Jun 2010 21:43:03 +0000

On June 23, 2010, the Ethics Resource Center released a new report entitled, “The Importance of Ethical Culture: Increasing Trust and Driving Down Risks.” The report discusses the need for a top-down approach to ethics and the impact of co-worker culture on observed and perceived instances of misconduct in the workplace. A copy of the report is available on the ERC website, here.

To learn more about The Employment Law Group® law firm’s Employment Law and Counseling Practice, click here.

Employment Lawyer Scott Oswald Presents at DC Bar

admin — Tue, 15 Jun 2010 16:20:42 +0000

On June 14, 2010, Scott Oswald, Principal at The Employment Law Group® law firm, spoke at a D.C. Bar CLE event entitled “Fundamentals of Employment Law: Establishing the Employment Relationship.” For more information about upcoming speaking engagements featuring the employment attorneys of TELG, click here.

COBRA Coverage Assistance Extended

admin — Mon, 28 Dec 2009 15:39:00 +0000

On December 19, 2009, the American Recovery and Reinvestment Act of 2009’s (ARRA) COBRA health insurance subsidy was expanded. Under ARRA, individuals involuntarily terminated from an employer covered under COBRA may be eligible to pay a reduced amount equal to 35% of their usual COBRA extended coverage premium. The extension, included in the Department of Defense Appropriations Act, 2010, increases the time that individuals may take advantage of the subsidies from nine to 15 months and extends the deadline to enter the program from December 31, 2009 to February 29, 2010. Additionally, the revision permits individuals to make retroactive premium payments to restore coverage and eligibility in the program.

For information on The Employment Law Group® law firm’s Executive Compensation Practice, click here.

CFAA Article by Adam Carter Published

admin — Tue, 08 Dec 2009 21:39:51 +0000

BNA has published an article by Adam Carter of The Employment Law Group® law firm on the Computer Fraud and Abuse Act in the most recent edition of the Workplace Law Report. The article, entitled “Combating Claims of Computer Fraud and Abuse,” discusses recent cases and techniques for defending against claims brought under the Act. A copy of the article is available here.

To learn more about The Employment Law Group® law firm’s Computer Fraud Practice, click here.

Former President of Refco Appeals to Supreme Court after 10 Year Sentence

admin — Tue, 01 Dec 2009 15:53:05 +0000

On Sept 28, 2009, Tone N. Grant, the former president of Refco Inc., filed a petition for a writ of certiorari. The petition questions the way a lower court handled evidence concerning documents that were given to the Securities and Exchange Commission. During an SEC investigation, Grant voluntarily turned over numerous documents. Contained in those documents were notes from a meeting that Grant attended which the government claims shows his involvement in the scheme. In 2008, Grant was sentenced to 10 years in prison for his apparent role in a scheme which hid $430 million in trading losses from investors, the public, and government.

The petition presents two questions for the Court: (1) whether the lower court violated Grant’s 5th Amendment right to due process when it refused to allow testimony that Grant knowingly handed over the notes, showing a consciousness of innocence; (2) whether a defendant should be held to a more demanding standard when presenting evidence of a consciousness of innocence (as opposed to evidence of consciousness of guilt presented by the prosecution). According to Grant, the prosecution deliberately mislead the jury by arguing that his “claim of intentional production was made up and without factual support, despite knowledge that Mr. Grant had sought to prove that very fact with testimony that has been excluded on the prosecutor’s objection.”

For information on The Employment Law Group® law firm’s Employment Law Practice, click here.

Eastern District Court of VA Grants Motion to Dismiss Employer’s Non-Compete Complaints

admin — Wed, 18 Nov 2009 19:52:30 +0000

On November 16, 2009, Judge Trenga of the U.S. District Court for the Eastern District of Virginia granted defendants’ Motions for Summary Judgment in a suit brought by an employer against former employees for breach of non-compete agreements. The suit also alleged various breach of contract and tortious interference with business claims.

In the case, Deltek, Inc. v. Iuvo Systems, Inc., the Court applied a balancing test. The Court acknowledged Deltek’s legitimate interests in preventing former employees from competing with its proprietary services through the use of Deltek’s confidential and proprietary information as well as the employees’ Deltek funded training and expertise. However, the Court found that the agreements were too broad and held that Deltek’s interests were eclipsed by the employees’ interests and public policy. In deciding, the Court took an unusual approach of comparing the agreements of two employees which extended one and two years. The Court drew a negative inference and found the existence of a one year agreement to suggest “that Deltek itself recognizes that a two year restriction is longer than its legitimate interests require.”

Employers have a legitimate interest in protecting their proprietary information and investment in their labor force. This interest must be balanced with the public’s interest in promoting gainful employment and economic growth. Anyone asked to sign a non-compete agreement should give it careful consideration and realize the potential for long-term consequences.

For information on The Employment Law Group® law firm’s Non-Compete Practice, click here.