WHY DAMAGES MATTER IN A NON-COMPETE CASE
I tell clients all the time, “While I think your ex-employer can sue you, make you defend yourself in Court and pay a ton of money in attorneys fees, I don’t think he or she or it can prove damages related to your actions.”
My analysis means little as many employers will proceed with cases even when they can’t prove damage. But, at the end of the day, damages remains an issue.
If Employer can prove damages, I don’t want to take my employee defendant to Court because he or she could lose.
But if the employer cannot likely prove damages, Court may be worth the risk.
Even if you breached your contract, and went to work for X company, a major competitor, and your employer didn’t lose a single client, or customer, they may not have any valid argument for damages caused by your breach.
Or, you told your colleague to quit and come start a business with you, may have been an actual breach of your non-solicitation, but if your colleague did nothing but laugh, no damages related to the breach exist.
Long and short, in all contract cases, you have to prove damages at some point.
And you don’t get all the gravy like punitive damages, attorneys fees, treble damages etc., unless you can prove actual damages.
So often times, my argument to the Court really rests on there being NO ACTUAL DAMAGES. SO WHAT if my guy breached the agreement, Your Honor, they can’t prove they lost a dime and without damages, they can’t win!
Oh, and the Supreme Court of Virginia, just agreed with me on this. (I realize they did not agree with me, they just wrote a decision that reflects Virginia law on which I base my opinion)
In Syed v. ZH Technologies, a business tort case with six separate counts including my favorites, tortious interference and breach of fiduciary duty, the jury held for the plaintiffs, but awarded no money – $0. in actual damages.
The Supreme Court said if the jury gave them only $0 in damages, essentially, it was a defense verdict and you couldn’t get attorneys fees.
This is great news for employees. What was a $700,000 case because of attorneys fees, was reversed and made into a defendant victory.
So yes, DAMAGES do matter. Maybe not to an angry employer who wants to sue you — but at least to a judge and jury.