Thursday, October 11, 2018

The Janitor Non-Compete, This Time for Real

The janitor hypothetical is one of the most timeless aspects of non-compete cases. That is, when illustrating how broad a non-compete is, courts and lawyers alike often resort to a sometimes absurd hypothetical. It often contains some variation of "this non-compete is so broad it would restrict [insert poor sap stuck in litigation] from being a janitor." Feigned outrage and chuckles then ensue.

Only this time, no absurd hypothetical. Enter the combatants. On one side is C&W Facility Services, which provides maintenance services to commercial property owners. On the other side is UG2, a competitor. In the middle sits poor Sonia Mercado, a non-exempt "janitorial supervisor" making $18 per hour at C&W.

C&W is faced with a contract renewal to provide maintenance services at some outfit called Lonza Biologics, a life sciences company. Apparently, Lonza put the maintenance contract out to bid and lost it to UG2. Mercado worked for C&W on-site at Lonza. From her Declaration (unrebutted), she describes her job like this:

"As a supervisor, my job responsibilities differed from clearness only in that I helped to train new staff in how to clean. Otherwise, I was a cleaner. My English is better than some of the other cleaners, and I believe this is why I was made a supervisor."

She continues, again without rebuttal:

"I cleaned in the Carpet World. The Carpet World cleaners, including myself, did vacuuming, cleaning rugs, dusting, emptying trash cans/recycle bins, and periodically washing windows. We had a small room with cleaning supplies." She went so far as to attach a goddamned picture of the room with cleaning supplies."

After C&W loses the services contract to UG2, it presents Mercado with a two-year non-compete agreement. The upshot of the agreement is that Mercado, under the agreement, could not provide services at Lonza for another maintenance company. Mind you, by this time, C&W has lost the agreement and Mercado had no involvement in that process whatsoever.

The circumstances under which Mercado signed the restrictive covenant are questionable. From her affidavit, Mercado says that C&W informed Mercado and others that they would be placed at a new facility (Lindt chocolate...overrated, by the way). Apparently, C&W felt that UG2 would have trouble handling the job and told Mercado that she would be back at Lonza in no time. Weird, but plausible.

Mercado then signs the restrictive covenant along with a bonus agreement, most of which she ultimately returns. She ends up back at Lonza working for UG2, which should have surprised no one.

C&W then takes the inexplicable step of suing Mercado to enforce the agreement. The Verified Complaint is the typical sort of canned pleading we've come to hate, playing up what a total fucking disaster it would be for the company's confidential information to be lost. Mercado had no access to any such information, but the point seems to have been lost on C&W. In fact, the so-called protectable interest allegations, to me, do not pass the smell test. If believed, Mercado's responsibilities as a janitorial supervisor are on par with Lonza's head of operations.

The district court then enters an order of injunctive relief, enforcing the non-compete for four months (not two years) and ordering C&W to pay Mercado a portion of the bonus she returned to C&W. In effect, the court told C&W its non-compete was overbroad, required some modified form of "garden leave," and then struck as unreasonable the fee-shifting clause. The ruling preserved some semblance of sanity, though the court made a grave error. It should have denied the injunction outright.

The overarching problem is the court's complete lack of engagement with the protectable interest requirement. In other words, what was C&W hoping to achieve by preventing a custodian from working for another service provider after C&W already had lost the service contract? The court never says, beyond some unconvincing reference to training costs.

This is a problem in non-compete cases. Judges must be engaged with the facts to understand the rationale behind enforcing the restriction. Too often, plaintiffs get a free pass because they lodge vague generalities about threatened injury that sound just fine on paper, but fall apart in practice. It is unclear where C&W possibly could go from here. This case won't get any better. It's likely to get far worse.

A final word. It seems pretty clear to me that C&W is using Mercado as a pawn in much larger tactical battle with UG2. C&W could care less about her - that much is clear from the mere filing of the suit. Companies that use ex-employees in this way, as well as the "lawyers" representing them, do grave damage to the labor market and the use of human capital. This particular dispute sucks, and it's a total waste of time. C&W doesn't care. No one at UG2 is likely losing sleep. But I guarantee you Mercado cares.

I know people like her. I see them at night when I am working late. I make a point to get to know them and let them know they're appreciated. They work hard, for not much money, and people take them for granted. When my father was a school superintendent, he knew each custodial worker in my high school. He knew them by name. He gave them little things, an old TV comes to mind, knowing how much they'd appreciate it. That always has stuck with me.

Ultimately, it is C&W that will suffer the consequences of this inane and utterly pathetic lawsuit. It will be used as exhibit A for non-compete abuse. It ought to be used as a justification by some future client of C&W to not hire C&W at all.

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