Friday, January 30, 2009

Texas Court Predicts Pennsylvania Will Adopt Inevitable Disclosure Doctrine (Industrial Insulation v. Sproule)

The "inevitable disclosure" theory of trade secrets misappropriation continues its journey through the courts, this time making a stop in Pennsylvania.

Actually, the stop was in Texas, but the court decided to apply Pennsylvania law. In this particular case, Industrial Insulation Group v. Sproule, the dispute arose out of a business sale that occurred over 20 years ago in the business of perlite pipe coverings. At the time, Gary Sproule's company was the only U.S.-based manufacturer of perlite pipe insulation. He sold the assets of his company to Calsilite Manufacturing (later succeeded by Industrial Insulation) and transferred all intellectual property to Calsilite in the sales agreement.

Sproule also received a license back to use the transfered IP for his pipe fitting cover business. The parties entered into various restrictive covenant agreements, none of which is relevant to the case.

In 2008, a competitor of Industrial Insulation, ITW Insulation Systems, issued a press release announcing a strategic alliance with Sproule to construct a perlite facility in Texas. Immediate concerns arose within the IIG ranks about the affiliation. ITW had just acquired two facilities overseas.

IIG filed a motion for preliminary injunction, contending that Sproule could not consult with ITW without disclosing trade secret information sold to IIG many years back. In granting the injunction, the court noted that the application of the inevitable disclosure theory of misappropriation was unclear in Pennsylvania. Still, it determined that, based on prior cases, courts there would apply the doctrine.

The court held that even though certain aspects of the perlite manufacturing process were known by some in the industry and were in the public domain, the totality was not. This is the "unified process" theory of trade secret protection that many courts have spoken of in rejecting similar defense arguments. The court stated: "Although portions of both the formula and the process may be publicly accessible at this time, the combination of the formula and the process which enables the producer to consistently manufacture ... perlite remains a valuable trade secret."

Because ITW was attempting to develop similar perlite technology, and sought to hire Sproule in a research and development capacity, an injunction was proper under the inevitable disclosure theory.

The case illustrates the difficulty of applying inevitable disclosure. Generally, four approaches are taken by courts in applying the rule: (a) a fact intensive inquiry; (b) bad faith of the employee; (c) the level of technical skill required of the position; and (d) an objective look at the position and nature of the competition. The approach in this case clearly fell within (c) - the technical skill of Sproule had to be the determining factor.


Court: United States District Court for the Southern District of Texas
Opinion Date: 1/28/09
Cite: Industrial Insulation Group, LLC v. Sproule, 2009 U.S. Dist. LEXIS 5746 (S.D. Tex. Jan. 28, 2009)
Favors: Employer
Law: Pennsylvania

Tuesday, January 27, 2009

Pennsylania Court Enforces Non-Compete Agreement Against Pyrotechnics Designer (Zambelli Fireworks v. Wood)

Cases with interesting facts usually produce interesting results, and a recent decision out of Pennsylvania demonstrates this. The case of Zambelli Fireworks v. Wood involved the defection of a pyrotechnics designer from his long-time employer to a direct competitor. At issue in the case was the reasonableness of a nationwide covenant not to compete that barred Matt Wood from working in the pyrotechnics business in any capacity for a total of two years.
The court's findings of fact were extensive, and I'll try and summarize the most critical of those here:

(1) Wood worked in several job capacities for Zambelli, primarily involving choreography and design of high-profile fireworks shows. However, he also had customer contacts and was responsible for preparing business proposals.

(2) Wood had customer responsibility throughout the United States and was not assigned a specific geographic territory.

(3) In 2007, after Wood signed his second non-compete with Zambelli, the family-owned business went through a major restructuring, whereby an outside investor group bought 50 percent of the stock from the family. Two daughters in the family business were pushed out in favor of Doug Taylor, who had no experience in the fireworks business.

(4) Wood was contacted by Pyrotechnico, a close (and apparently friendly) competitor with Zambelli, in late 2007. He negotiated with them through the beginning of 2008, eventually resigning in February. Wood prepared a list of items that he returned to Zambelli on his departure and received a verification from Zambelli that key documents were returned or deleted.

(5) After he began working at Pyrotechnico, Wood refrained from customer contact and tried to minimize competitive activity that would constitute a breach of his Zambelli agreement.

There were several issues discussed by the court in granting an injunction in favor of Zambelli. By way of background, Pennsylvania appears to have a pro-employer bent, due in large part to two factors: (1) the range of protectable interests that a non-compete can support; and (2) its willingness to modify or rewrite covenants to make them reasonable. Both issues were on display in the court's ruling.

First, the court noted that Pennsylvania will recognize a protectable interest in an employee's "specialized training or skills." This is an increasingly popular interest courts deem worthy of protection, notable in New York for its widespread use. Still, it is unavailable for employers to assert in many jurisdictions. In this case, Wood clearly had been trained and had a unique skill in a very narrow, specialized industry - pyrotechnics choreography.

Second, the court found that the lack of geographic restriction on Wood's non-compete was not fatal to the reasonableness inquiry. It was patently clear from the testimony Wood had customer contact throughout the United States, and that he could choreograph shows from his home computer for any customer wherever it may be situated.

Third, the court found the total ban on any competitive activity far too broad, stating that it "would literally prevent [Wood] from engaging in his chosen profession." Accordingly, the court modified and rewrote the contract to make it reasonable. The injunction contained two key components. First, Wood could not contact those customers with whom he developed a business relationship during his employment with Zambelli. Second, Wood's activity restriction was modified so that he could not design or choreograph aerial pyrotechnic dsiplays - the specific expertise he developed at Zambelli.

Finally, the court rejected a novel defense raised by Wood, although it appeared to be a close call. In essence, Wood claimed that the change in job conditions following the stock sale resulted in a new Zambelli and that this was an unauthorized assignment of a non-compete. Though the court called Wood's argument "weighty", it ultimately was not able to rely on any authority for the defense.

Because the company's stock was sold, Wood's non-compete was never assigned. Had Zambelli sold its assets without an express assignment provision in Wood's non-compete, the result may have been different.


Court: United States District Court for the Western District of Pennsylvania
Opinion Date: 1/21/09
Cite: Zambelli Fireworks Mfg. Co., Inc. v. Wood, 2009 U.S. Dist. LEXIS 3974 (W.D. Pa. Jan. 21, 2009)
Favors: Employer
Law: Pennsylvania

Monday, January 26, 2009

Minnesota Court Refuses to Enter Headstart Injunction In Absence of Non-Compete Agreement (Cenveo Corp. v. Southern Graphic Systems)

There are generally three ways an employer can prevent an ex-employee's post-termination competitive activity: (1) breach of a valid non-compete agreement; (2) breach of a fiduciary duty of loyalty; and (3) misuse of trade secrets or other confidential information. In the case of the last two theories, the scope of injunctive relief is always the subject of vigorous debate. Specifically, in the case of egregious pre-termination wrongful conduct or extensive trade secret theft, a court may deploy its power of equity to order what in effect is a non-compete remedy.

However, almost always, the employer needs a factually compelling case, and not mere isolated tidbits of circumstantial evidence. To illustrate, a Minnesota court last week denied an employer's motion for preliminary injunction, which sought to prevent several ex-employees from servicing its customers. None apparently had a non-compete agreement. But the dispute arose out of a mass exodus from one direct marketing firm to another, and there appeared to be some pre-termination competitive activity as well as limited disclosure of one business document.

The court, though granting the injunction to protect disclosure of some of the identified information, denied the relief pertaining to client solicitation. In particular, the court noted that ordering the defendants to stay away from certain clients would change the status quo, since the competitive activity took place while they were still employed by Cenveo several months earlier. Courts have gone either way on this issue, with Illinois one of the states a bit more flexible on the status quo issue and more willing to grant a so-called "headstart" injunction. That type of injunction can enable the plaintiff to recapture some of the headstart gained by unfair competitive activity. In this case, the Minnesota court found that a legal remedy of damages would be adequate, and it never addressed the propriety of a headstart injunction.

Additionally, the court noted the potential harm to third-parties - the customers themselves - from being denied the opportunity to work with a vendor of their choosing. This, too, is a fact with undetermined relevance. The cases come out both ways, with some placing more importance on third-party preferences than others.


Court: United States District Court for the District of Minnesota
Opinion Date: 1/22/09
Cite: Cenveo Corp. v. Southern Graphic Systems, Inc., 2009 U.S. Dist. LEXIS 4542 (D. Minn. Jan. 22, 2009)
Favors: Employee
Law: Minnesota

Michigan Case Illustrates Breadth of Legitimate Employer Interests (Edwards Publications v. Kasdorf)

Michigan traditionally is a state which readily enforces non-competes. A recent dispute involving competitors in the advertising circular business demonstrates the broad array of legitimate business interests which will support an otherwise reasonable non-compete in Michigan.

Tracy Kasdorf was a sales representative for Edwards Publications, who left to take a similar position with Bilbey Publications. From the court opinion, there is no indication what the exact wording of Kasdorf's non-compete restricted in the way of competitive activity. That said, it was clear she was working in direct competition with Edwards to solicit businesses for the placement of advertisements in a free circular distributed to shoppers.

In 1985, Michigan enacted a new non-compete statute as part of the Michigan Anti-Trust Reform Act. The statute has been interpreted broadly, conferring upon the courts the ability to recognize a fairly wide range of legitimate business interests which can support a non-compete agreement. (In most states, an employer must not only demonstrate that the covenant is reasonable, but also that it is used to protect something - a legitimate business interests - the law deems acceptable.)

In reversing a summary disposition for Kasdorf on the non-compete agreement, the court noted as follows:

"By going to work for Bilbey, where Kasdorf's accounts would be with many of those same customers or where those customers would be subject to not-so-cold cold calls, Kasdorf would be gaining and taking an unfair advantage in competition with Edwards after years of acquiring a unique insight into various business operations thanks to her employment with Edwards."

The court went on to emphasize the "goodwill and strong personal relationships" developed by Kasdorf with accounts. In this sense, Michigan is more expansive in its recognition of a legitimate business interest than some other states. While states, such as Illinois, tend to disfavor covenants involving sales of ordinary goods or services, Michigan makes no such distinction. It also will recognize the amorphous term of "goodwill" as a protectable interest in the employment context - a concept amenable to use by any creative attorney.


Court: Court of Appeals of Michigan
Opinion Date: 1/20/09
Cite: Edwards Publications, Inc. v. Kasdorf, 2009 Mich. App. LEXIS 109 (Mich. Ct. App. Jan. 20, 2009)
Favors: Employer
Law: Michigan

Saturday, January 24, 2009

Kansas Court Sides With Narrow Application of Computer Fraud and Abuse Act (Us Bioservices v. Lugo)

Another court has weighed in on whether the federal Computer Fraud and Abuse Act can be applied to essentially federalize trade secrets claims. The answer, in the case of US Bioservices v. Lugo, was a resounding "no."

In granting the defendant's motion to dismiss the CFAA claim, the court adopted a narrow reading of the predicate act giving rise to liability under the statute. Though the CFAA has a number of different provisions, the touchstone of liability is that a defendant must use a protected computer without authorized access or in a manner which exceeds the access granted to him.

The Lugo case is based on a fairly typical of fact-pattern under the CFAA. An ex-employer claims that an employee downloaded or accessed confidential business information while on her work computer, e-mailed that to another location (usually a home account), and then permitted a new employer to use or obtain the benefit of the stolen data.

Does this activity equate to unauthorized access?

Lugo held no, noting along the way that federal courts are split on the issue. There are a number of factors supporting this narrow reading of the authorization language:

(1) the CFAA is at heart a criminal statute, and the rule of lenity applies
(2) "without authorization" is not defined but means, basically, "without permission" and there was no dispute that the employee had permission to access the information, irrespective of whether she misused it later
(3) the focus of the CFAA is wrongful procurement of data, not wrongful use of it

The court rejected the reasoning applied in other jurisdictions that principles of agency law can be grafted onto the CFAA. Under cases like the influential Citrin decision from the Seventh Circuit, an employee's "access" to his work computer ends when he is in breach of a duty of loyalty. Therefore, in those jurisdictions where Citrin is the prevailing rule, it is much easier to state a claim under the CFAA for cases involving misuse of data.


Court: United States District Court for the District of Kansas
Opinion Date: 1/21/09
Cite: Us Bioservices Corp. v. Lugo, 595 F. Supp. 2d 1189 (D. Kan. 2009)
Favors: Employee
Law: Federal

Friday, January 23, 2009

California Appellate Court Rules Liquidated Damages Clause Unreasonable (Nissanoff v. Balikian)

Any California case involving a covenant not to compete has a fairly predictable outcome. The recent unpublished decision in Nissanoff v. Balikian is no different.

The case involved an attempt by Philip Balikian to become affiliated with an orthopedic practice in California after a relocation from Kentucky. Unfortunately for Balikian, he seemed to run into Jonathan Nissanoff wherever he looked. At first, Balikian went through a headhunter and discussions ensued with respect to Balikian joining that practice. The deal fell apart when Nissanoff balked to working with the headhunter, presumably because of the fees involved.

Then, in an unrelated transaction, Balikian found a listing for a medical practice - which turned out to be Nissanoff's. Eventually, Balikian signed a non-disclosure clause to conduct some due diligence about Nissanoff's practice. The NDA contained an end-around non-compete and a liquidated damages clause. As a fairly transparent way to circumvent California's statute against non-compete agreements, Nissanoff's contract with Balikian provided that it would be a breach of the confidentiality clause if, after reviewing Nissanoff's so-called proprietary information, Balikian opened up a medical practice for orthopedic surgery within 25 miles of Nissanoff's office within one year from signing the NDA.

The agreement contained a liquidated damages clause of $300,000 and a $1,000 per day violation every day thereafter for breach. (It is entirely unclear how a $1,000 per day penalty could be applied for breach of confidentiality, but that academic issue was not addressed).

Eventually, Balikian continued his search and ran into another physician who asked if he had looked at other options. Balikian remarked that he "had interviewed with Nissanoff." The same physician then asked Nissanoff if he was planning to leave San Diego. Apparently, Nissanoff concluded Balikian breached the confidentiality provision and demanded $300,000 and $1,000 per day. Balikian declined to pay.

Balikian then accepted a job with another orthopedic surgery center and found himself sued by the disgrunted Nissanoff.

Not surprisingly, the court had little trouble disposing of the case in favor of Balikian. In terms of the liquidated damages clause, the court of appeals affirmed the ruling that it constituted an unenforceable and unreasonable penalty under California's statute governing liquidated damages.

Key to the court's ruling were a couple of factors: (1) that there was no discussion whatsoever between the two surgeons about potential damages which might arise from a breach; (2) that there was no effort by either party to ascertain what damages might arise from a breach of the covenants; (3) that the agreement referred to the $1,000 per day amount as a "penalty."

Generally, liquidated damages clauses that are fixed fee or flat sum amounts are unreasonable and unenforceable. They are inherently arbitrary, and courts will not uphold damages clauses which are not a reasonable estimate of the damage likely to occur.

Though Balikian may have regretted his decision to relocate, he had the last laugh. He obtained over $76,000 in attorneys' fees from his opponent.


Court: Court of Appeal of California, Fourth Appellate District
Opinion Date: 1/20/09
Cite: Nissanoff v. Balikian, 2009 Cal. App. Unpub. LEXIS 425 (Cal. App. Ct. 4th Dist. Jan. 20, 2009)
Favors: Employee
Law: California

Tuesday, January 20, 2009

Massachusetts Court Finds Successor Company Cannot Enforce Non-Compete (Randstad Professionals v. Wilson)

I wrote yesterday regarding the law of assignment and how it pertains to non-compete obligations of employees. Though approaches vary from one state to the next, assignments of covenants not to compete are generally permitted and may even be implied if the contract is silent.

Of course, nothing precludes a contract from prohibiting assignment altogether, as a recent Massachusetts decision illustrates. In the case of Randstad Professionals v. Wilson, the defendant signed an employment contract with a professional staffing agency, New Boston Select Group, Inc., which contained an 18-month, 100 geographic mile non-compete and a customer non-solicit clause. Several years after he started, New Boston was sold to Placement Pros. In 2008, the plaintiff - Randstad - took over Placement Pros. When it became apparent that Randstad would be Wilson's new employer, he quit.

Randstad sued to enforce the non-compete when Wilson defected and joined a direct competitor. The court had little trouble denying Randstad's motion for a preliminary injunction, holding that a specific provision of the non-compete agreement provided that "Employee's obligations ... may not be assigned."


Court: Superior Court of Massachusetts at Worcester
Opinion Date: 12/26/08
Cite: Randstad Professionals US, LP v. Wilson, 2008 Mass. Super. LEXIS 405 (Mass. Super. Ct. Dec. 26, 2008)
Favors: Employee
Law: Massachusetts

Monday, January 19, 2009

Assignment of Non-Compete Agreements In Ohio Continues To Be Fact-Specific (Michael's Finer Meats v. Alfery)

One technical defense frequently raised by employees looking to break a non-compete agreement has to do with a change in ownership of the business. During the course of a business sale, the buyer conducts extensive due diligence regarding employee agreements and the availability of non-compete contracts, particularly as to key sales and executive employees.

The lack of valid non-compete agreements can impact the goodwill purchased in the transaction. Similarly, if those agreements are not assignable, the buyer's ability to protect customer relationships, and concomitantly a stream of sales revenue, will be detrimentally impacted. With that reality in mind, courts generally favor the assignment of non-compete covenants from a seller to a buyer. The rule is not absolute. Pennsylvania, for instance, requires a non-compete agreement to have an express assignment clause permitting the transfer.

Ohio is a more fact-specific state. Assignment of a covenant is not governed by a per se rule for or against the transfer. Rather, courts there continue to examine the facts bearing on the assignment if the non-compete agreement is silent on the issue. The precedents from Ohio are mixed.

In Michael's Finer Meats v. Alfery, the court sided with the employer on the assignment issue. Alfery began work as a sales representative with Michael's when it was a corporation owned entirely by Michael Bloch. Subsequently, Bloch merged the corporaton into a limited liability company with a Utah investor group. Bloch maintained a minority ownership interest. The merger was effectuated under Ohio law, and a certificate of merger was filed with the State pursuant to governing statute.

The court analyzed the facts and determined that the assignment was permissible for three main reasons: (1) the Bloch family remained in charge of day-to-day operations such that Alfery's line of reporting did not change significantly, (2) Alfery's job duties and sales responsibilities were not impacted significantly, and (3) assignment was necessary to protect the goodwill of the seller in the business transaction. In particular, the court stated: "nothing in Defendant's salary structure, his territory, his supervision or sales targets changed as a result of the sale of business."

Additionally, the court found that Alfery's non-compete was overbroad as drafted. It barred him from competing with Michael's for a one-year period, but the geographic term was silent. Under Ohio's liberal modification doctrine, the court rewrote the contract to prohibit Alfery from making sales of competitive products within one county around Pittsburgh, where he was the "face of the company." Assisting the court was clear evidence that Alfery did in fact make such sales to his former accounts in violation of the covenant.


Court: United States District Court for the Southern District of Ohio
Opinion Date: 1/13/09
Cite: Michael's Finer Meats, LLC v. Alfery, 649 F. Supp. 2d 748 (S.D. Oh. 2009)
Favors: Employer
Law: Ohio

Sunday, January 18, 2009

Louisiana Appellate Court Affirms Finding That No-Hire Clause Is Overbroad (Bell v. Rimkus Consulting Group)

The Louisiana case of Bell v. Rimkus Consulting Group has a long and tortured history, and generally speaking, appears to substantially favor the departing employees who sued their former firm seeking to have their rights under a customer non-solicitation clause declared invalid.

A recent ruling by the Court of Appeal of Louisiana further favors the employees and strictly applies an employee non-solicitation, or "no-hire" clause. These types of restraints of trade are receiving increased judicial scrutiny as employers attempt to prevent the poaching away of key employees. Courts have taken a number of different approaches in analyzing no-hire clauses. The general rule appears to be that, while the same are restraints of trade, they are not necessarily subject to the same rigorous analysis as customer non-solicitation or general non-compete covenants.

In the Bell case, the court upheld a trial court ruling, however, that a no-hire clause was invalid due to its overbreadth. The clause provided that Bell, following his termination, "will not, directly or indirectly, solicit, employee, or in any other fashion, hire persons who are, or were, employees, officers, or agents of the Company, until such person has terminated his employment with the Company for a period of eighteen (18) months."

The overbreadth of the no-hire clause was fairly obvious: it had no temporal limitation at all on Bell's conduct. As an illustration, if Bell waited ten years to approach a Rimkus employee for a new position, he would be barred from soliciting that person until he or she had left Rimkus' employment and was gone for at least 18 additional months. Put another way, the temporal limit was tied not to Bell, the party seeking to hire the employee, but rather to the employee being solicited.

The Louisiana court appeared to apply a conventional restrictive covenants analysis to the no-hire clause.


Court: Court of Appeal of Louisiana, Fifth Circuit
Opinion Date: 1/13/09
Cite: Bell v. Rimkus Consulting Group, Inc., 2009 La. App. LEXIS 48 (Ct. App. La. Jan. 13, 2009)
Favors: Employee
Law: Louisiana

Saturday, January 17, 2009

Illinois District Court Issues Partial TRO In Employee Competition Dispute (Hal Wagner Studios v. Elliott)

A federal district case out of Southern Illinois illustrates the difficulty employers face in attempting to enforce restrictive covenants - even those reasonably drafted.

The case of Hal Wagner Studios v. Elliott arises out of the school photography business. HWS provides yearbook and portrait services to schools in the Southern Illinois area. At the end of 2008, several of its key employees defected to a competitor, Herff Jones, and immediately began soliciting key HWS accounts. HWS also produced substantial evidence that certain of the employees misappropriated a substantial number of corporate documents. To its credit, HWS listed the specific documents missing, produced logs indicating suspicious copying and printing activity, and outlined for the court how it would be harmed by the defendant's use of those documents.

HWS also produced a non-compete agreement with the lead defendant, Kris Elliott. The non-compete was well-drafted and reasonably tailored; it only barred Elliott from soliciting school photography accounts which were in his defined territory or which he produced for HWS. (A separate aspect of the non-compete further barred Elliott from engaging in other competition with respect to those accounts, but the reasonableness of this clause was not discussed.)

HWS immediately filed suit and moved for a TRO on both the non-solicitation covenant and on several common-law claims seeking return of the information taken by the defendant group around the time of their mass exodus. The court denied HWS' effort to prevent Elliott from soliciting clients, but granted an affirmative injunction mandating return of documents.

In denying relief on Elliott's non-solicitation covenant, the court found that it was of questionable applicability under Missouri law because HWS had failed to pay Elliott commissions for a period of time. Though HWS claimed it adjusted Elliott's salary instead, the court found that a provision of the contract requiring modifications or amendments to be in writing doomed HWS' explanation. As such, and even though the court warned Elliott about the risks of further solicitation, the court could not issue a TRO in light of the likelihood HWS would not prevail on the merits.

The issue regarding return of documents proved easier for the court. Under a fiduciary duty theory, the court exercised its power of equity to demand immediate return and an accounting of documents HWS identified as missing. Key to this finding was the balance of harms analysis. Not only was HWS likely to prevail on the merits, but HWS was in a far worse position from not retrieving its documents than the defendants were from having unlawful continued access to them.

To its credit, the court issued a very specific TRO outlining by document name what should be returned and how the documents needed to be accounted for. Frequently, courts issue overbroad TROs without any degree of required specificity.


Court: United States District Court for the Southern District of Illinois
Opinion Date: 1/15/09
Cite: Hal Wagner Studios v. Elliott, 2009 U.S. Dist. LEXIS 2778 (S.D. Ill. Jan. 15, 2009)
Favors: Employee
Law: Missouri, Illinois

Thursday, January 15, 2009

Texas Non-Compete Cases Continue Down Bizarre Path (TransPerfect Translations v. Leslie)

The non-compete jurisprudence coming out of Texas courts strains all bounds of reason. For years, the Supreme Court of Texas had managed to botch statutory interpretation so poorly and negligently that virtually all non-compete agreements for at-will employees were void for lack of consideration. The cases were impossibly confusing.

Recently, that changed, and the law shifted back decidedly pro-employer. Texas is one of a number of states that regulates non-compete agreements by statute, with a confusing overlay of contradictory case law. It makes for a potent mix.

The oddity about non-competes in Texas lies in its version of the blue-pencil rule, which requires courts to modify overbroad non-competes to make them reasonable. Florida adheres to a similar approach.

The perverse incentive created by this rule is that employers tend to draft agreements without regard to temporal, geographic or scope of activity limits, knowing full well that a court will just rewrite it as long as a true legitimate business interest is at stake.

In a recent preliminary injunction decision, Texas' modification doctrine - regardless of how ill-advised and illogical it may be - was on full display.

Brett Leslie worked in Georgia and Houston as a business manager for TransPerfect, a service company which translation services to businesses and individuals throughout the United States and abroad. Leslie signed a non-compete agreement that barred him from competing "with the TransPerfect business in any activities involved in the provision of goods or services in competition with the business" for a period of one year. The geographic scope was spelled out in a subsequent provision and applied to the "states in which TransPerfect maintains U.S. Offices."

The evidence showed Leslie primarily worked in TransPerfect's e-Learning division, marketing products nationally and in certain foreign countries. In November of 2008, Leslie submitted his resignation letter and advised TransPerfect he was taking a job with Merrill Brink International in Chicago, selling e-Learning and Life Sciences products.

TransPerfect filed suit to enforce the covenant, and the court granted a preliminary injunction restraining Leslie's ability to work. The court specifically found that the non-compete agreement was overbroad as drafted, noting that "the agreement is extremely broad in scope and prohibits competition in geographic areas where Leslie did not even attempt to make sales." Instead of denying enforcement of the agreement, the judge correctly held that Texas law required him to modify the contract to make it reasonable.

In other words, the judge assumed the position of rewriting the parties' contract. And the absurdity of this rule was on full display. The court basically struck the entire non-compete and wrote two new paragraphs into the contract - a contract presumably drafted by TransPerfect's attorneys. The court barred Leslie from participating in any with the e-Learning market or working with customers he contacted or to whom he made a sales presentation while employed by TransPerfect.

Sounds fair, at least considering this was a Texas case, but the revisions were nowhere in the agreement to begin with. It is perhaps relevant, too, that Leslie claimed he was willing not to contact any customer he serviced at TransPerfect and stay out of the e-Learning market at Merrill. Had he pressed this issue further, the court might have felt obliged to limit the injunction just to customer solicitation.


Court: United States District Court for the Southern District of Texas
Opinion Date: 1/12/09
Cite: TransPerfect Translations, Inc. v. Leslie, 2009 U.S. Dist. LEXIS 1541 (S.D. Tex. Jan. 12, 2009)
Favors: Neutral
Law: Texas

Tuesday, January 13, 2009

Massachusetts Legislator Files Bill to Outlaw Non-Compete Agreements

For some time now, many inside the Massachusetts technology community have been debating whether restrictive covenants have hampered its competitiveness, particularly with California companies.

Yesterday, Rep. Will Brownsberger filed a bill to ban non-compete agreements in Massachusetts. The text of the bill makes void and unenforceable any written or oral contract "arising out of an employment relationship that prohibits, impairs, restrains, restricts, or places any condition on a person's ability to seek, engage in or accept any type of employment or independent contract work, for any period of time aften an employment relationship has ended."

At first glance, the text contains one glaring loophole. It would not prohibit a non-compete if the initial relationship is between a principal and an independent contractor. The bill also does not address sale-of-business covenants, or covenants set forth in partnership or shareholder agreements. Presumably, those would still be valid.

If passed, the bill could be interpreted similar to Oklahoma's law against restraints of trade, which prohibits non-compete agreements but not customer non-solicitation covenants. California recently rejected this so-called "narrow restraint" exception to Section 16600 of its Business and Professions Code, which contains a prohibition not all that dissimilar to what Rep. Brownsberger's bill proposes.

Monday, January 12, 2009

Georgia Court Dismisses Computer Fraud Claim for Failure to Allege "Damages" (Andritz v. Southern Maintenance Contractor)

In 1996, Congress dramatically extended the reach of the Computer Fraud and Abuse Act by extending jurisdiction over any fraud claim involving a "protected computer", that is, one used in interstate commerce. The result has been a de facto federalization of trade secrets and unfair competition cases, whereby companies file suit against defecting employees in federal court for computer fraud, trade secrets and, often times, breach of a non-competition covenant. Because pre-departure activity frequently involves an employee's use of a computer - normally to access business information - CFAA claims are part and parcel of unfair competition cases these days.

Over the past several years, court decisions have begun to emerge out of federal district and circuit courts interpreting the reach of the CFAA. Many of those decisions involve the application of the statute's jurisdictional requirement that an aggrieved plaintiff show "damage" or "loss." Under the CFAA, "damage" has a specific meaning: "any impairment to the integrity or availability of data, a program, a system, or information that causes loss aggregating at least $5,000 in value during any 1-year period..." The "loss" component is even more narrow; it basically means damage assessment and data restoration costs. It also includes lost revenue from service interruption.

In a recent Georgia federal district court case, the court addressed an (a)(4) claim, known in legal circles as a claim for "unauthorized access with intent to defraud." The court held that neither "loss" nor "damage" can be interpreted to mean "lost revenue caused by the misappropration of proprietary information and intellectual property from an employer's computer." The Eleventh Circuit apparently has not opined on the issue, and the court granted the defendants' motion to dismiss under Rule 12(b)(6) for failure to state a CFAA claim.

This issue has a somewhat tortured history in federal court. Illinois cases out of the Northern District of Illinois yield conflicting results on whether impairment of data in the form of trade secrets theft is qualitatively the same as deleting or destroying that data. Other courts, including a district court within the Eleventh Circuit, hold that misappropration of such data constitutes legal impairment under the CFAA. The parameters of this statute continue to develop, often times with confusing results.


Court: United States District Court for the Middle District of Georgia
Opinion Date: 1/07/09
Cite: Andritz, Inc. v. Southern Maintenance Contractor, LLC, 626 F. Supp. 2d 1264 (M.D. Ga. 2009)
Favors: Employee
Law: Federal

Friday, January 9, 2009

Texas Federal Court Dismiss Computer Fraud Claim for Lack of Jurisdiction (Ennis Transportation v. Richter)

A federal court in Texas has dismissed an employment unfair competition case for lack of subject-matter jurisdiction. The plaintiff, Ennis Transportation, had sued its former employees in Ellis County, Texas for misappropriation of trade secrets and a violation of the Computer Fraud and Abuse Act.

The CFAA does contain criminal penalties, but litigants can maintain a civil cause of action and obtain legal and equitable relief under certain provisions of the Act. Increasingly, attorneys (particularly for employers) are federalizing garden-variety trade secrets disputes by adding CFAA claims, particularly after a number of court rulings making it easier to sustain unfair competition actions within the construct of the CFAA.

In this case, however, when the defendants attempted to remove the case to federal court in Dallas, Judge Jane Boyle remanded the case back to Ellis County, holding that the CFAA is a criminal statute and cannot form the basis for removal under federal question jurisdiction.

This is bizarre ruling, given that the CFAA provides for civil remedies. One other court has recognized removal jurisdiction as appropriate. See First Bank & Trust v. Haines, 2006 U.S. Dist. LEXIS 55811 (E.D. La. July 24, 2006).


Court: United States District Court for the Northern District of Texas
Opinion Date: 1/05/09
Cite: Ennis Transp. Co., Inc. v. Richter, 2009 U.S. Dist. LEXIS 462 (N.D. Tex. Jan. 5, 2009)
Favors: Neutral
Law: Federal Rules of Civil Procedure

North Carolina Court Rules Non-Compete Overbroad as a Matter of Law (Medical Staffing Network v. Ridgway)

While non-compete disputes are inherently case-specific, the reasonableness of a particular covenant is a question of law for the court to decide. In a recent North Carolina appellate ruling, an employer had a $1,000,000 damages judgment overturned because its non-compete agreement was overbroad as a matter of law without consideration of any facts and circumstances regarding the employee's competitive conduct.

Medical Staffing Network v. Ridgway arose out of a dispute between two entities in the market for healthcare staffing. Defendant Ridgway was a highly productive branch manager for MSN in its Raleigh office when he was recruited away by Trinity Healthcare Staffing (through another ex-MSN employee). The evidence showed Ridgway accessed confidential documents on MSN's computer just before a lunch meeting with Trinity, something he had only occasionally done in the past.

Shortly after the meeting, Ridgway quit and joined Trinity in a directly competitive position. Ten nurses resigned from MSN and began working for Trinity. Still, it appeared as if MSN lost just one client (its largest) to Trinity.

At the trial court level, MSN obtained a judgment of $1,104,495 against Trinity and Ridgway under several theories - breach of the non-compete agreement, Trinity's interference with the same, trade secrets misappropriation, and deceptive trade practices. The appellate court reversed the judgment on breach of contract and interference with contract due to an invalid and overbroad non-compete agreement between MSN and Ridgway.

North Carolina is a relatively difficult state in which to enforce non-compete agreements. Because it adheres to a strict blue-pencil rule, any agreements that are overbroad run a serious risk of being thrown out altogether. That eventually doomed MSN.

The court noted that MSN was defined in the contract to include any of its affiliates and other divisions - even though Ridgway had not responsibility for those other divisions. Accordingly, because it would prohibit Ridgway from working in a business that had nothing to do with his MSN employment duties, the non-compete clause was held overbroad and unenforceable as a matter of law.

Also, the client non-solicitation clause - prohibiting Ridgway from soliciting the business of any MSN client - was unenforceable. It went beyond those clients with whom Ridgway had developed a business relationship at MSN, and again, included clients of MSN in other non-competitive divisions or affiliates. For the court, this was far too extensive of a restriction.

Attorneys drafting non-compete contracts governed by North Carolina must proceed with caution. While reasonable contracts will be upheld, this State takes a very careful look at the breadth of covenants and won't hesitate to grant an employee a loophole through which he or she can crawl. Simply taking a standard form contract won't work. The more narrow, specifically tailored agreement has a far better chance of being upheld than one which seems to be one-size-fits-all.


Court: Court of Appeals of North Carolina
Opinion Date: 1/06/09
Cite: Medical Staffing Network, Inc. v. Ridgway, 670 S.E.2d 321 (N.C Ct. App. 2009)
Favors: Employee
Law: North Carolina

Thursday, January 8, 2009

A Quick State-By-State Guide on the Blue-Pencil Rule

One aspect of non-compete law that is subject to wide variation across jurisdictions involves the so-called "blue-pencil" rule. In reality, it is much more than that.

The concept is whether a court is allowed to tailor, reform or modify an otherwise overbroad covenant to make it reasonable under the law. To call it the blue-pencil rule is actually wrong conceptually. That is but one approach. The far more common rule, as shown below, is to allow a court to modify or reform a covenant in its discretion. Blue-penciling a covenant permits a court only to sever or strike offending language from the contract. It is a mechanical exercise, with an overlay of judicial discretion.

Take a simple example. Assume a non-compete clause reads like this:

"Employee agrees not to work in any sales capacity for any business competitive with the Employer for a period of six months in the following Illinois counties: Cook, DuPage and Kane."

Under the blue-pencil rule, a court could strike out DuPage and Kane if the employee only sold to customers in Cook County. However, if the employee worked in product development - and not sales -the blue-pencil rule would not work. The court could attempt to strike out the words "any sales capacity," but then the covenant most likely would be overbroad because it encapsulates too many work activities. The blue-pencil rule would not allow a court to add its own terms, such as "any product development position."

However, under the equitable reformation doctrine, a court could substitute (even rewrite) the covenant to prohibit the employee from working in product development for a competing organization. There is much more flexibility in this approach.

The difference in the two rules - reformation vs. blue-pencilling - is subtle and highly technical, but it can be outcome-determinative. Sometimes it won't make a difference at all. In a blue-pencil state, attorneys have a much more arduous task in drafting agreements, and one-size-fits-all contracts truly won't work in a legal dispute.

With that in mind, here is a state-by-state summary:

1. Court Will Not Reform or Blue-Pencil Covenant.


2. Court Only Will Blue-Pencil Covenant.

North Carolina
South Carolina

(*In Oklahoma, only activity restraints - or non-solicitation covenants - are valid. General non-competes are void under the law.)

3. Court Will Equitably Reform Covenant.

New Hampshire
New Jersey
New York
West Virginia

4. Court Must Reform Covenant.


5. Approach Is Unclear From Case Law or Unresolved.

District of Columbia - Presumed to be equitable reformation
Hawaii - Not decided
Louisiana - Reformation presumed to be appropriate as to duration and scope of activity, but not to geographical area
Maryland - Presumed to be blue-pencil rule
New Mexico - Not decided
Rhode Island - Case law conflicting; recent case modified covenant; others suggest blue-pencil rule is appropriate
South Dakota - Not decided
Utah - Not decided

6. Inapplicable

California - Covenants not to compete void
Montana - "Direct restraints" against employees are void
North Dakota - Covenants not to compete void

Final Notes:

The above summary does not apply to sale-of-business non-competes, where judicial reformation of covenants is much more prevalent. Also, some courts say they will "blue-pencil" covenants when really they reform them.

Courts articulate a number of factors when deciding whether to reform covenants. The most common are:

(a) How close the agreement is to being reasonable
(b) Good faith or bad faith on the part of the employer
(c) Whether there is a severability or modification clause in the contract
(d) Whether the employer requests in the court pleadings a more narrow restraint as an alternative if the clause as written is found to be too broad

Wednesday, January 7, 2009

Arizona Case Highlights Problems With Overbroad Non-Competes (Nouveau Riche v. Tree)

A federal court's recent denial of a preliminary injunction motion illustrates perfectly a situation in which restrictive covenants will be ruled unenforceable.

Many experts in non-compete law recognize that the further West you go geographically, the less likely it is a non-compete agreement will be found enforceable. That said, Arizona's law concerning non-compete agreements is fairly middle-of-the-road, much like Illinois law in many respects. At issue in Nouveau Riche v. Tree were three common restrictive covenants - all of which were ruled to be unreasonable or inapplicable.

Because the restrictive covenants were so utterly one-sided, the court's opinion gives little mention of the underlying facts of the case. However, it appears that Nouveau Riche sells real estate investing products and educational materials. Disappointed "students" blog about the company and accuse it of being a "scam." Here, the plaintiffs were independent contractors and, thought it's not clear, were responsible for marketing Nouveau Riche's educational products to consumers (i.e., potential investors in short-sales and foreclosures).

The non-compete agreement prevented each of the defendants from working in any business competitive with Nouveau Riche for a period of one year, and the geographic territory extended to "all states in which the Company does at least 10% of the Company's business." It left undefined what types of activities were barred.

The district court had little trouble voiding the non-compete clause. In particular, the court noted that the flexible, shifting geographic term was incapable of definition, and that it could change every year - putting no one on notice of where he or she was prohibited from working. The court, in fact, called the non-compete clause "unfairly amorphous." Additionally, the court concluded that the activity restriction was far too broad. It purported to restrict the defendants from selling any products competitive with Nouveau Riche, going beyond those actually sold by the defendants.

The district court also found that the durational term of one year was too long, since the primary defendant's replacement had been found and trained effectively in less than four months. The court relied on Arizona case law holding that a duration term is reasonable only if it is no longer than necessary to put a new man on the job and to demonstrate his effectiveness.

Arizona adheres to a strict "blue-pencil" rule, meaning the court only can strike or delete overbroad terms. It cannot modify or rewrite the contract to make it reasonable, which is permissible in many jurisdictions including Alaska, Minnesota, Texas and Idaho. Here, there was nothing to blue-pencil; it was not as if the non-compete listed some states which could be crossed off to make the contract valid. Instead, the clause defined the geographic area by a percentage-of-total-business, which would require the court to interpret and identify specific states that were off-limits.

Secondary to the court's decision were the no-hire and non-disclosure clauses. Both were again held unreasonable. As to the no-hire clause, the defendants were nominally barred from soliciting any employee or contractor of the company even if they did not have any contact with them whatsoever. The court further noted that the clause would bar the defendants from soliciting them to join even a recreational club. Such absurd, overbroad language had no chance of being adjudicated favorably for Nouveau Riche. No-hire covenants are accorded much more deference in most jurisdictions, but they should be drafted to limit solicitation of key employees or at least those who have some connection to the departing employee. Because they are still technically restraints of trade, they must protect a legitimate business interest.

Finally, Nouveau Riche could not demonstrate a breach of the non-disclosure clause since it offered no evidence of what confidential information was even at issue.

This case is a perfect example of terrible contract drafting. An overbroad non-compete is often unenforceable in its entirety simply on the grounds that a court will find it failed to put the employee on clear notice of what was actually prohibited. That was the case here. Applying the contract language yielded an almost indefinite set of restraints on the defendants, going far beyond what was necessary to protect the plaintiff.

Even if Nouveau Riche could demonstrate a legitimate protectible interest to support the restraints - which appears doubtful - the agreements had no chance of standing up in an Arizona court.


Court: United States District Court for the District of Arizona
Opinion Date: 12/23/08
Cite: Nouveau Riche Corp. v. Tree, 2008 U.S. Dist. LEXIS 105577 (D. Ariz. Dec. 23, 2008)
Favors: Employee
Law: Arizona

Tuesday, January 6, 2009

JPMorgan Lawsuit May Highlight New York Docket in 2009 (JPMorgan Chase v. The IDW Group)

By all accounts, 2008 was a significant year for non-compete and trade secrets developments in New York. The injunction issued in the IBM-Apple dispute concerning Mark Papermaster certainly received a number of headlines, and the Marsh USA v. Karasaki case also involved a high-profile set of players fighting over the applicability of a client non-solicitation agreement. On top of that, Gov. David Paterson signed into law a prohibition on non-compete agreements for broadcast industry employees, bringing New York in line with other jurisdictions (Illinois, Maine, Washington, D.C., Arizona, and Massachusetts) banning such non-competes.

At the end of last year, JPMorgan Chase filed suit against one of its executive search firms - The IDW Group. The suit arose out of a series of contracts JPMorgan entered into with IDW for the placement of financial services executives. According to the allegations of the Complaint, IDW violated the retained search agreements by facilitating the departure of JPMorgan executives to Citadel Investment Group, presumably another of IDW's clients.

IDW appears to be fighting back hard, and from the publicly available information, its theory on the breach of contract claims seems to be that the Investment Bank employees at JPMorgan who left for competitive opportunities at Citadel were not off-limits by the terms of the retained search agreements. Indeed, those agreements seem to limit IDW from soliciting JPMorgan employees in the Credit Trading Hybrids Group, the North American Portfolio Group, and the Proprietary Positioning Group.

There is no mention in the Complaint's allegations that the ex-JPMorgan employees were within any of these three groups. Whether the JPMorgan Investment Bank is tied into these three enumerated groups probably will be an issue for trial.

Right now, IDW's motion to dismiss the remaining claims is pending and has been fully briefed. One interesting issue will be the ruling on JPMorgan's breach of fiduciary duty claim. The financial services behemoth apparently claims that IDW had some heightened relationship with it that transformed an ordinary commercial deal into one cloaked with fiduciary obligations. Frankly, the allegation seems bizarre. That said, JPMorgan has defended it vigorously, arguing the existence of a duty cannot be decided on a motion to dismiss.


Court: United States District Court for the Southern District of New York
Opinion Date: n/a
Cite: JPMorgan Chase Bank v. The IDW Group (Civil Action No. 08:cv:09116)
Favors: n/a
Law: New York

Monday, January 5, 2009

Federal Court in Pennsylvania Upholds Choice-of-Law Clause (Perma-Liner Industries v. U.S. Sewer & Drain)

Choice-of-law clauses continue to be a ripe area of litigation, with rules and cases that yield results difficult to reconcile.

Disputes frequently arise when a corporation is headquartered or maintains its principal place of business in one state, while the employee works in another state. Almost always, the choice-of-law clause provides for application of the law from the employer's home state. Is such a provision valid, particularly if the employee's only real connection to the forum state is that his employer is based there?

That was the issue in Perma-Liner Industries v. U.S. Sewer & Drain, where the district court in Pennsylvania upheld a Florida choice-of-law clause in a Pennsylvania employee's contract. Perma-Liner was a Florida-based company, and this apparently was enough to validate the clause and give effect to the terms of the written agreement.

The trend in these choice-of-law cases appears to be a sharp move towards upholding the validity of the choice-of-law clause, unless it is so totally arbitrary to be unreasonable. In a garden-variety breach of contract case, the choice of substantive state law matters little. For the most part, contract law is static across state lines.

Not so in non-compete cases. Each state has permutations and quirks and odd precedents on which either side can rely. The Perma-Liner case is a perfect example. In Pennsylvania, continued employment is not sufficient consideration for execution of a non-compete agreement, while in Florida it is. Had the employee signed the non-compete after he began work - there is no indication that was the case in the lawsuit - then choice of law could be outcome-determinative on this issue alone.

In fact, Florida is perhaps the most employer-friendly state for non-compete law. The fact a Pennsylvania federal court held no public policy was implicated in applying Florida law to a Pennsylvania employee does not bode well for others seeking to invalidate a choice-of-law provision.

The black-letter law is fairly simple: choice-of-law clauses will be honored, unless: (a) the chosen state has no substantial relationship to the dispute; or (b) application of the chosen state's law is contrary to a fundamental public policy of a state with a materially greater interest in the dispute (i.e., the state where the employee lives and works). It is the latter exception that employees often rely upon. But mere differences in non-compete law, even ones that are outcome-determinative, will not suffice to implicate public policy concerns.

Outside of a completely arbitrary selection (for instance, choosing employer-friendly Florida law when neither the employer nor employee have any connection there at all), I can envision two paradigms where choice-of-law clauses may give employers problems if they seek to enforce them against out-of-state employees: (a) anything involving a California resident; and (b) application of Delaware law if the only connection is incorporation to take advantage of its body of corporate law.


Court: United States District Court for the Eastern District of Pennsylvania
Opinion Date: 12/31/08
Cite: Perma-Liner Indus., Inc. v. U.S. Sewer & Drain, Inc., 630 F. Supp. 2d 516 (E.D. Pa. 2008)
Favors: Employer
Law: Pennsylvania

Florida Court Holds Non-Compete Clause Cannot Survive Expired Employment Agreement (Zupnik v. All Florida Paper)

The second case of the year is just like the first, although this non-compete dispute concerned an employment agreement, rather than a sale-of-business transaction.

In Zupnik v. All Florida Paper, the defendant employee signed a two-year employment agreement to work as a sales representative for a janitorial products company. His non-competition clause provided he would not compete against All Florida "during the Employment Term and within twelve (12) months from the termination of said term...." At the end of the two-year term, Zupnik retained an option to remain at All Florida as an at-will employee, which he exercised properly. However, he signed no new non-compete agreement once he became an at-will employee.

More than two years later, Zupnik quit and formed his own paper products distribution company. All Florida sued on the non-compete and prevailed in the trial court. The Court of Appeal of Florida, however, reversed and held that the non-competition covenant lapsed once the two-year employment agreement ended.

All Florida easily could have avoided this problem with a properly drafted contract. Since it was well-aware Zupnik controlled his ability to remain an at-will employee, the non-compete agreement would have remained in effect indefinitely had the operative triggering language been expanded to include termination of his employment either at the end of his two-year term agreement or as an at-will employee.


Court: Court of Appeal of Florida, Third District
Opinion Date: 12/31/08
Cite: Zupnik v. All Florida Paper, Inc., 997 So. 2d (Fla. Ct. App. 2008)
Favors: Employee
Law: Florida

Saturday, January 3, 2009

Fifth Circuit Interprets Meaning of "Termination" In Non-Compete Dispute (Specialty Rental Tools & Supply v. Shoemaker)

The new year starts with a rare, published federal appellate court decision interpreting a non-compete agreement. This decision, rendered two weeks ago, comes from the State of Mississippi, and it opines on a fairly significant issue of contract interpretation.

The case of Specialty Rental Tools & Supply v. Shoemaker arose out of a sale of business transaction, and it concerned a rather common problem of separate non-compete clauses in the business purchase agreement and a corresponding employment agreement executed at the closing. As is common in many such transactions, the selling party - here, William Shoemaker - went to work for the buyer pursuant to a long-term employment agreement.

The Purchase Agreement contained a non-compete clause barring Shoemaker from working for a competitive business within two years from the date of the closing, or two years from the date his employment with SRT was "terminated", whichever was later. His employment agreement was for a five-year term and contained no non-compete clause. Shoemaker did, however, sign a third document at closing - a Non-Competition Agreement. However, that agreement purported to expire two years after closing.

Exactly five years after closing, SRT gave Shoemaker notice that it was not renewing his employment agreement. The notice delivered to him expressly stated that Shoemaker was not being "terminated." Within days, Shoemaker began working for a direct competitor, and SRT filed suit.

At the trial court level, Shoemaker prevailed on summary judgment, and the Fifth Circuit had no trouble affirming the decision. The court first dispensed with the Non-Competition Agreement, noting that it expired by its own terms - in March of 2004 - and was not tied to Shoemaker's employment. The Purchase Agreement's non-compete clause, therefore, was the only contract potentially applicable.

The key question became whether Shoemaker was "terminated." It was clear he served his entire five-year employment term with SRT, and SRT even admitted his contract expired. He was not terminated with cause, or without cause. Does expiration equal termination? Illinois appellate courts have addressed this issue twice, both times holding it does not. In this case, the Fifth Circuit agreed.

The court noted that the interplay of the closing documents showed the parties clearly did not intend for expiration to equal termination. Termination required an affirmative act to end Shoemaker's employment, not the mere lapse of his five-year contract. The court concluded by noting that SRT's notice of non-renewal was significant with respect to how the parties intended the word "terminate" to apply.


Court: United States Court of Appeals for the Fifth Circuit
Opinion Date: 12/17/08
Cite: Specialty Rental Tools & Supply v. Shoemaker, 553 F.3d 415 (5th Cir. 2008)
Favors: Employee
Law: Mississippi