The “E” in injunction stands for “evidence.” (Who’s gonna tell him there’s no…)

 

Ready. Fire. Aim.

That’s often the approach companies take when they learn that a former employee with restrictive covenants like a noncompetition or nonsolicitation agreement has gone to work for a direct competitor.

Many rush into court demanding that a judge enter a temporary restraining order or preliminary injunction to stop the employee from violating their agreement. A party seeking this equitable relief must convince the court that they will likely win and irreparable harm could result without the requested relief.

Sometimes, the former employer has the evidence to back it up. But here is an example, — whether ready/fire/aim or ready/aim/fire — of where it didn’t.

Six months after his resignation, a sales manager with a noncompetition and nonsolicitation agreement informed his former employer (OldCo) that he had gone to work for a direct competitor (NewCo) in a competing position. OldCo responded by demanding the employee’s immediate resignation, to which the employee told OldCo to pound sand.

About two months after starting at NewCo, the employee attended a charity golf outing hosted by a mutual customer of OldCo and NewCo. He socialized at the event but did not play golf. However, the optics did not sit well with OldCo, who argued that the employee’s mere attendance at the golf outing violated his nonsolicitation agreement. OldCo further argued that his continued employment at NewCo violated his noncompetition agreement.

First, let’s examine the breach of contract claim as it relates to the non-solicit.

There’s not much to analyze. The former employee’s mere presence at a charitable event hosted by a customer of both parties, with nothing more (e.g., approaching the customer to solicit actual business), is insufficient to find that he violated the nonsolicitation agreement.

But how about the noncompete? OldCo has him dead to rights, yes?

Yes, assuming that the agreement is enforceable in the first place, which it appeared to be (one year anywhere OldCo does business), OldCo would likely succeed in showing that the employee breached it by working for NewCo six months after he resigned.

But remember that a party seeking an injunction must also establish that it will suffer irreparable harm without it. Here, OldCo seemingly took for granted that the employee transitioning to NewCo caused it to suffer any injuries, let alone irreparable ones, for it provided no evidence of either to the court. Similarly, OldCo had no evidence that the employee could not pay it money for its injuries, in which case the harm wouldn’t be irreparable.

In situations like these, the mileage of any company in OldCo’s shoes may vary depending on the state and the judge. Generally, however, “OldCo” stands a much better chance of getting that injunction when it shows that a former employee took its confidential information, solicited customers, and got new business from it.

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Before you leave, be sure to register for the return of The Employer Handbook Zoom Happy Hour on Friday, November 10, 2023, at Noon ET. I’ll discuss antisemitism, its impact on the workplace, and how companies can address it. My guests will be some employment lawyers who are very passionate about this issue: Amy Epstein Gluck, Jonathan Segal, and Gregory Slotnick.

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