California Law/Lawyer question

I've passed a couple of bar exams, but have not attempted California's. However, I do know that the non-compete issue is not as cut and dry as simply not allowed across the board.

1) What industry?

2) Was the non-compete drafted to protect trade secrets?

3) Was the employee fired?

4) Was the non-compete a condition of employment?

All of these variables could affect the validity of the non-compete.



Preliminary injunctions and temporary restraints could be filed two ways.

The first is ex-parte; an application directly to the judge without noticing the other party. These would rarely be granted, and if they are, the other party has something like 3 weeks to move to get those restraints dissolved.

The more common method is an Order to Show Cause, where the moving party makes an application to the court and a hearing is held with oral arguments in front of the judge but no jury yet. The judge then moves on the issue at hand and either issues the injunction/restraints or doesn't.

The suit will progress as long as there is a question of law or fact to be decided and the moving party continues to prosecute. Suits can be dropped at any time for myriad reasons including the parties settling, lack of prosecution, no prima facie showings, etc.

The law is a fairly specific field, meaning it is tough to answer your questions with any specificity unless there are more details. But, seeing as how I am not a california lawyer, this is just to give you a general idea of how things work until a CA attorney comes along.

Scrawler said:

Big Corporate Employer had former employee to sign an agreement that contained restrictive covenants. Employer is suing former employee to prohibit competing within 100 miles of the former office and from soliciting any accounts.

Though non-complete agreements are illegal in California, could a preliminary injunction be filed? Or, what would be the first step in filing a law suit?

What would it take, and how long would it take for the former employee’s lawyer to get this suit dropped? Would the lawyer simply write a letter or make a phone call, or is it possible this would progress to ____? (Blank = what would be the next progressive step?)

Do I make sense? Thanks for any input!

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I'm not an attorney but did high level human resources in California.

What we were told by legal (and in continuing education classes) is that 1) non-compete agreements are difficult to enforce, 2) enforcing non-compete agreements can be VERY expensive, and 3) no matter how "tight" the non-compete you can not stop someone from earning a living.

It is more likely you can enforce a non-compete in a single city than you would be able to outside a reasonable commute distance. What that means is that you can't force someone to move outside the state to be able to work at their normal occupation. If your non-compete says "within 30 miles" it would be more enforceable than "within 100 miles".

The clause regarding prohibited solicitation of former clients is more enforceable. Employees aren't generally allowed to leave one employer and then actively solicit the former employer's customers (not only is it unethical, it could be considered theft,interference with economic opportunity or interference with contract).

If the customers track down the employee at the new job then that is an entirely different matter. In that case, as the HR Senior, I would strongly recommend that the contacts by the former customers be very carefully documented and that legal be consulted to make sure that everything is handled in as low-risk of a manner as possible.

Where did you hear that non-compete agreements are illegal in California? I haven't worked in Calif. HR for 5 years but they weren't illegal then.

Finally, in answer to your final questions, it would all depend on how much money was at stake, how mad the former employer was and how long they were willing to spend the money to pursue it. The former employer could chose to make the former employee's life a living hell (particularly if there was lots of money at stake). The former employer would most likely elect to sue the employee personally, as well as suing the competing company, and it would be highly unlikely that the employee's new employer would pay for their personal legal expenses.

Hope this helps, remember, I'm not now nor have I ever been an attorney.

Judy

Scrawler said:

Thanks for the replies!

California Business and Professions Code 16600 provides that "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." Customer non-solicitation provisions are enforceable only to the extent necessary to protect an employer's legitimate trade secrets.

I'm sure there are lots of little ins and outs and details in these Civil Codes, but I'm using this as the basic premise. I appreciate your replies!!

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Ahh, this sent me back to the "reading room" and I found a very good article authored by a Ca. attorney about the shift in the California Courts' interpretation on non-competes. Glad I asked the question and thanks for the info. I haven't been able to work in so long that my skills are rusty (especially in California where things seem to change every other week).