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

Wednesday, November 18th, 2009 | Breach of Contract, Noncompete Litigation, Noncompetition Litigation, Tortious Interference | No Comments

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.

Jury Awards $130 Million to Minnesota Dentists

Thursday, June 4th, 2009 | Breach of Contract, Tortious Interference | No Comments

A Hennepin County jury has awarded PDG P.A. (“PDG”), a Twin Cities dental group, more than $130 million in damages for multiple claims, including breach of contract and tortious interference.  The verdict stems from a dispute over a 1996 service agreement where PDG agreed to pay PDHC Ltd. (“PDHC”) certain fees in exchange for non-dental administrative services.  In 2006, PDG filed a complaint against PDHC, alleging that the company wrongfully engaged in conduct constituting the practice of dentistry in violation of Minnesota law and the parties’ service agreement.  PDG also alleged that after it terminated its contract with PDHC, the company tortiously interfered with its ability to transition patients to new clinics by refusing to provide copies of patient records and recruiting PDG dentists for a new venture in direct competition with PDG.  PDHC denied all allegations. After a month-long trial, the jury found for the plaintiffs and concluded that PDHC was liable among other things, for breach of contract, breach of fiduciary duty, and tortious interference.  Finding that PDHC acted with deliberate disregard when it tortiously interfered with PDG’s prospective economic advantage, the jury awarded PDG $42 million in punitive damages.  This verdict is significant because it reminds companies that there is no tolerance for the interference of plaintiff’s existing and prospective contractual relationships.  For information on The Employment Law Group® law firm’s practice go to http://www.employmentlawgroup.net/PracticeAreas/EmploymentContractDisputes.asp.