Wednesday, December 17, 2008

Employer Hit For Sanctions in Washington Non-Compete Dispute (Anderson Paper & Packaging v. Johnson)

Sanctions, destruction of evidence, nefarious computer activity. All continue to be part and parcel of non-compete/trade secrets litigation these days.

In a recent Washington case, alteration of evidence was front and center after an employer sued a former sales representative for violating his covenant not to compete. Rick Johnson was a former employee of Anderson Paper & Packaging from 1994 through 1998. He was then re-hired in January of 2002.

At that time, Johnson was presented with a non-compete agreement - which he contended he did not sign. His employer claimed he signed it after being offered a signing bonus. Several years later, Johnson left and went to work for a competitor. Anderson Paper then sued to enforce the non-compete against him.

During the preliminary injunction phase of the proceedings, Rick Anderson, the plaintiff's President, submitted a declaration which attached a letter dated January 5 containing the covenant Johnson says he refused to sign. (Though the facts are not clear, it appears the document submitted to the court bore Johnson's signature.)

The parties later discovered that the January 5 letter Anderson submitted contained a letterhead the company was not using in 2002. In fact, Anderson manipulated the evidence to make it appear Johnson signed the January 5 covenant when he in fact did not. The trial court imposed evidentiary and monetary sanctions, effectively ending Anderson Paper's claim to enforce the non-compete clause.

On appeal, Anderson Paper did not challenge the appropriateness of sanctions ordered under the state court's equivalent of Rule 11. It did challenge the amount of the fees, since the court awarded Johnson all fees spent defending the non-compete claim. The court affirmed, though, reasoning that Anderson Paper's argument concerning consideration was so wrapped up in the January 5 letter that fees could not be parsed out.

As to the remaining issue on appeal, the court reversed the dismissal of the other common-law claims, reasoning that the dismissal sanction was not the "least severe sanction adequate to serve the purpose of" the sanctions rule. Those dismissed claims had included causes of action to which Johnson was not a party.


Court: Court of Appeals of Washington, Division One
Opinion Date: 11/3/08
Cite: Anderson Paper & Packaging, Inc. v. Johnson, 2008 Wash. App. LEXIS 2569 (Wash. Ct. App. Nov. 3, 2008)
Favors: Employee
Law: Washington

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