I know Lauren shared an “employee victory” with you yesterday so, in order to balance things out, here is a court decision where the employer can claim victory…at least for the time being.
The case is Fidelity Global Brokerage Group, Inc. v. Rodney Gray and Morgan Stanley Smith Barney, LLC and is currently pending in the U. S. District Court in Alexandria, Virginia.
It appears Rodney Gray, a former account executive with Fidelity, signed an employment agreement which required him to keep Fidelity’s customer list confidential and to refrain from soliciting Fidelity’s customers for three years should he leave the company… you can see this one coming.
Gray left Fidelity joined Morgan Stanley and proceeded to solicit Fidelity’s customers for Morgan Stanley. Apparently Gray was good at what he does as Fidelity alleged his efforts caused 12 Fidelity customers to take their accounts (valued at over $9 million) to Fidelity. Fidelity sued Gray and his new employer, Morgan Stanley, for violation of the non-solicitation agreement, requesting the court to enter an injunction prohibiting Gray and Morgan Stanley from continuing to solicit Fidelity’s customers.
The court granted the requested injunction. The surprising part of this decision is that the court approved a 3 year period of restriction. In our experience, most courts will enforce similar restrictions for, at most, 2 years. The judge in the Fidelity decisions drew a distinction between a 3 year non-compete and a 3 year non-solicitation of customers contract…finding the non-solicitation of customers provision “far narrower” than a 3 year non-compete contract.
The battle continues………..