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In a recent decision from the U.S. District Court for the
District of Massachusetts, Judge Denise Casper
rejected an argument by the defendant employee in a noncompete
case that the employee was "fraudulently
induced" by his former employer to sign a noncompete
agreement. The employee argued that the offer letter he
received offering him stock options after he began working for the
employer only stated that he would be required to sign an agreement
with non-solicitation provisions in order to receive the stock
options, not a non-competition agreement. But the agreement
that accompanied the letter included non-competition provisions and
was titled "Non-Disclosure, IP Assignment and
Non-Competition." This, combined with the facts that (1)
the employee was notified two months earlier that, in order to
receive stock options, he would be required to agree to
non-competition provisions; and (2) the employee subsequently
agreed on three separate occasions to identical
non-competition provisions, the court determined that it was highly
unlikely that the employee could show he was fraudulently
induced to sign the agreement. The court preliminarily
enjoined the employee from working for a competitor of the
employer because it was likely that the employee breached the
noncompete he had with his former employer.
In fact, in ordering an injunction, Judge Casper applied the
"inevitable disclosure" doctrine to determine that the
former employer would be "irreparably harmed" if the
employee was not prevented from working for the competitor.
This is an issue Judge Casper
addressed in another recent case in a different context.
Judge Casper stated that, given the employee's recent high
level of control over his former employer's business and
the close competition between the former employer and the
competitor, what the employee knows about his former employer's
business is bound to influence what he does for the
competitor. So if the employee were not enjoined from working
for the competitor, he would "inevitably
disclose" his former employer's confidential
information to the competitor, to the former employer's
detriment.
This case shows that weak defenses like the argument based on
the misstatement in the offer letter will not
deter judges from enforcing otherwise proper
noncompetes.
To view Foley Hoag's Massachusetts Noncompete Law
Blog please click
here
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