cases, commentary and news related to restrictive covenants
Thursday, October 15, 2009
Failure to Produce Non-Compete Agreement at Trial Not Fatal to Employer's Case (CBM Geosolutions, Inc. v. Gas Sensing Technology)
The Supreme Court of Wyoming affirmed the issuance of a preliminary injunction in a non-compete case filed against two former employees. The case involved the business of measuring coal bed methane gas. Two employees, Bret Noecker and Brian LaReau, had been employees of Gas Sensing Technology's predecessor, WellDog. A few months after they departed, WellDog sold substantially of its assets to Gas Sensing Technology.
On one of the schedules to the asset purchase agreement, Noecker's August 2004 non-compete agreement was listed as a purchased asset. At trial, however, the plaintiff did not produce the agreement. On appeal, Noecker contended the plaintiff's failure to produce a written non-compete violated the statute of frauds, which prohibits contracts that cannot be performed in less than a year unless the same are in writing. The Court rejected Noecker's argument, reasoning that there was enough evidence produced to demonstrate Noecker in fact signed such an agreement.
I have dealt with a number of situations when an employer cannot produce a non-compete, either because the record-keeping is poor, an employee is suspected of taking the agreement, or (as in this case) an acquisition has complicated the process of locating old agreements. My experience is that too much is made of this particular issue, and if there is a reasonable amount of evidence that an employee actually signed an agreement, the fact it's missing usually is irrelevant. The existence and content of the agreement can be proven with secondary evidence. With the advent of the digital workplace, there is no reason anymore why employers should not scan in and save non-competes or other key contracts on its information technology system.
Court: Supreme Court of Wyoming
Opinion Date: 9/14/09
Cite: CBM Geosolutions, Inc. v. Gas Sensing Technology Corp., 215 P.3d 1054 (Wyo. 2009)
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