YIKES – A VA. CASE WHERE THE EMPLOYER WINS, FOR NOW
Dan and I try to keep up with relevant Virginia case law that involves employee non-compete agreements and other business torts.
This morning I read about two such relevant cases decided in the Commonwealth recently. One case created great law for employees on tortuous interference of contract cases. The other case is a clear victory for the Employer on a non-compete case and Trade Secret issue.
Eastern District of Virginia (Federal Court for Northern Va., Richmond and East) decided in early November that a stock broker who left his firm, could not serve his old firms clients pending litigation for breach on contract.
This is likely what happened.
Employee (we will call him Gray because that was his name) leaves company. Tells clients to follow him to new company. 12 clients and $9 million dollars worth of accounts follow him. (This is an actual relevant fact). Employer sues Gray and asks court to enjoin him (in the form of an injunction) from serving these clients and taking more.
Court hears evidence on the following facts:
1. Is the information secret
2. Did the employee, Gray, have permission to take and use it
3. was the employee Gray, contractually bound not to use this information.
4. Did he use it anyway.
5. Will the old company be harmed by further use
Yikes. Turns out the Court thinks the old company will be injured and so company is granted an injunction.
Now, I am not sure whether employee can work, or whether he is just enjoined from serving old clients or taking old clients… BUT either way, this is clearly not a great case for the employee, Gray.
There is a good lesson here.
If you have a non-compete, and you breach it by taking information or contacting clients, you will likely get sued.
You may even get sued if you didn’t take clients… but it is close to a sure bet a lawsuit is on the way if you did.
Call us when you get a cease and desist letter or a lawsuit. Call soon. Don’t wait until day 18 and then decide your old employer may not be bluffing.