Several years ago, the Texas law firm of Carrington Coleman spear-headed the most breath-taking employment litigation coup I have seen in my 16 years of civil litigation practice. They represented a “c-level” executive, who was subject to a non-compete, who nevertheless defected from the company he worked for, then immediately entered into direct competition with his former company, and, in the litigation between him and the company he left, the suit was settled by his becoming the C.E.O. of the two companies merged – his past employer and his new one. The litigation, in short, was masterfully executed, almost surgical in its precision, regicide.
This leads me to a question: in these kinds of cases, can it be “done right” so that defectors will either simply win or will “not play,” if their lawyers know what they are doing? Can a high-powered legal team representing the defector reliably predict probable outcome in such cases?
I would think so. In Texas, non-competes were not worth the paper they were written on once upon a time. In California, “[t]he effect of Business and Professions Code section 16600 can be imagined to be an addendum to [an employee’s] non-compete clause to add the words “void in California.'”
So, presumably, lawyers experienced in this area of the law might be able to predict the outcome of Supervalu’s case against Leon Bergmann, who left Supervalu in October and then, notwithstanding his non-compete, was soon with a direct competitor, Unified Grocers, based in … (wait for it)… California.
Maybe the entire battle will boil down to the choice-of-law analysis the court will undertake. If U.S. District Court Chief Judge Michael J. Davis (D. Minn.) applies California law, maybe Supervalu’s case, for the most part, is dead on arrival? Note, however, that there is not only a claim for breach of contract but also claims of tortious interference and misappropriation of trade secrets…
This is not an area of law in which I have a great deal of experience and no one should rely on anything in this post to handicap Supervalu’s odds in its case against Bergmann, or their own odds in their particular situation. The point of this post is only that these kinds of cases are very common. The law is long-established and fairly settled. Lawyers with extensive experience in this area of law probably hold reliable insight into how such cases play out. They certainly could never guaranty success but they can probably give their clients a fairly narrow range of the likely risk and “price” to a competitor for poaching an adversary’s executive.