Trade Secrets & Employee Mobility

In a recent NLRB decision, confidentiality and proprietary information and non-disparagement provisions contained in a mortgage banker's employment agreement were found to violate the NLRA.

In the latest salvo in a long-running legal dispute stemming from a classic raid by a competitor upon a commercial insurance broker's business and employees, a New York appellate court has refused to dismiss a New York lawsuit in favor of a prior-filed California lawsuit which has already addressed many of the same issues.

On December 21, 2012, the Supreme Court of New Hampshire, in Ellis v. Candia Trailers & Snow Equipment, Inc., found that a non-compete agreement was a fundamental component of a purchase and sale transaction which was memorialized in three separate agreements. The Seller began competing with Buyer shortly after the sale. After the Buyer did not follow through on purchasing all required assets of the Seller, the Supreme Court reversed the trial court's decision to partially rescind the non-compete agreement, and instead decided that the non-compete was so essential to the transaction that it required complete rescission of the transaction.

Trade secret misappropriation cases turn on details. A recent Indiana misappropriation of trade secrets case turned on a contractual clause requiring the return of all company property and confidential information at termination.

A federal judge in Chicago recently wrestled with two issues that we frequently blog about: what constitutes misappropriation of confidential information, and to what extent can a current employee prepare to compete with his employer without breaching his fiduciary duty?

This week, a Wisconsin Court of Appeals issued a decision determining that a non-compete clause does not render an arbitration clause in an employment agreement unenforceable.

In a per curiam opinion issued yesterday, the United States Supreme Court reversed a decision of the Oklahoma Supreme Court that had determined the enforceability of a non-compete agreement arising out of a contract that contained an arbitration provision. Despite the fact that the restraint at issue was found to violate Oklahoma law, the US Supreme Court determined that the Oklahoma Supreme Court overstepped its bounds and that under the Federal Arbitration Act enforceability of the non-compete should have been left to the Arbitrator.

In a recent decision in Pactiv Corporation v. Rupert, the U.S. District Court for the Northern District of Illinois held that under an employer's severance pay plan, the employer could not require a former employee to agree to a restrictive covenant in order to receive severance pay.

Last week, the Ohio Supreme Court reversed its decision of earlier this year in Acordia of Ohio, L.L.C. v. Fishel et al., in which the Court held that when a company that was the original party to a noncompete agreement merges in to another company, unless the noncompete agreement contained a "successors and assigns" clause, the merger was a termination of employment which triggered the running of the restrictive period in the noncompete.

Although the California courts have steadily eroded employers' ability to contractually limit their former employees' solicitation of their customers, a recent decision held that a stipulated injunction limiting solicitation can still be enforced.