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
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
With DOJ's Antitrust Division and the FTC ramping up antitrust enforcement, it is critical for companies to take a hard look at their compliance programs and update them on a regular basis to avoid potential antitrust violations and discover antitrust malfeasance early on so a company can have the option of self-reporting and applying for leniency under DOJ's leniency program.
Last week we posted a discussion concerning effective antitrust corporate compliance programs, and provided some factors that in-house counsel should consider in developing compliance programs governing employees’ communications with competitors and dealings with customers and suppliers.
On Friday, August 8, Judge Claudia Wilken of the Northern District of California issued her much-anticipated findings of fact and conclusions of law in O'Bannon v. NCAA. (Read our prior coverage of the case here.)