A recent case decided in the Middlesex County Superior Court
illustrates how not every claim of generalized
"unfairness" will be sufficient to avoid enforcement of a
A.R.S. Services, Inc. v. Baker, the defendant employee worked
for A.R.S. Services, a company in the disaster restoration field,
and had signed an agreement with non-competition and
non-solicitation provisions, both enforceable for one year after he
left the employ of A.R.S. Shortly after the employee had resigned
from A.R.S., he began working for a competitor of A.R.S. and
solicited A.R.S. customers for his new employer. A.R.S. filed suit
against the employee and his new employer to enforce the agreement
and moved for a preliminary injunction to enjoin the employee from
soliciting its customers for the competitor and working at the
competitor in a disaster restoration position.
Judge Murtagh of the Middlesex Superior Court allowed the motion
for a preliminary injunction. The employee did not challenge the
reasonableness of the agreement, but rather only argued that A.R.S.
was estopped (that is, precluded) from seeking to enforce the
agreement because A.R.S. materially breached the agreement by
directing him to engage in acts involving "moral
turpitude." The employee alleged that, while he was an
employee of A.R.S., the president of A.R.S. requested that he
reduce an estimate to rebuild a home that was destroyed by a
tornado. He "reluctantly" reduced his estimate. The
employee argued to the court that the president's request was
improper. The court, however, ruled that there was insufficient
evidence that A.R.S. and its president were engaged in any fraud or
illegal activity. Rather, the employee's "apparent
disagreement with [the president] involved ARS' attempt to
minimize costs to maximize profits."
As this case shows, binding obligations in non-competition
agreements are ignored at an employee and new employer's peril.
There are legitimate reasons for a court to rule that a
non-competition agreement is not enforceable, but an employee's
mere business disagreement with his former boss is not one of
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Though similar legislation failed to pass last year, Representative Ehrlich said that she believes there is now greater support in the legislature for limitations on the use of non-competes. Significantly, however, Governor Baker has yet to take a position on the issue.
In a joint statement issued by the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice late last month, the Agencies suggested Virginia's Certificate of Public Need Work Group, currently convened, consider repealing or retrenching Virginia's Certificate of Public Need law.