Thursday, December 22, 2011

Stealing a Non-Compete Agreement May Not Do You Any Good and It Could Land You In Jail

A man in Wisconsin who wanted to open up his own karate studio has been charged with a felony after trying to break into his former employer's work and steal a non-compete contract. The story can be found here.

Obviously, this was pretty stupid. But it likely would not have done much good even had this novice criminal pulled off his caper.

For starters, a missing non-compete hardly means a court cannot find one existed. I wrote about a similar case in Rhode Island exactly three years ago. A trial court certainly can consider evidence from knowledgeable people that an employee did in fact sign a non-compete. Helpful testimony would include the following:

(1) Facts indicating that a new employee must sign the contract as part of an established process at the time of hire;
(2) Evidence an agreement was sent to an employee;
(3) Evidence that personnel files were regularly audited to make sure agreements were on file; and
(4) Some admission by the employee that he signed the agreement.

My impression is that clients, particularly those who are new to litigation, are too enamored with formalities and technicalities. Courts (and rules of evidence) aren't that myopic.

I have had at least one case where my client (the employer) felt an ex-employee stole his non-compete agreement, and we have every reason to think he did. Of course, we did not have the direct evidence which landed our Wisconsin friend with a felony charge. But the judge in our case was willing to consider extrinsic evidence that an agreement was in fact reached.

The case of the missing non-compete, however, should not be an issue. Important documents should be saved (and backed up) electronically.

No comments:

Post a Comment