Noncompete Restrictions

Employee noncompete restrictions are supposed to provide a company with a means to preserve its legitimate competitive interests when an employment relationship ends. But they can also be used by unscrupulous employers to make demands that outside of the guardrails of the judicial system would resemble extortion.

This post discusses a recent example of arguably

Springing noncompete restrictions on job applicantsCVS Pharmacy Inc. sued online pharmacy retailer Capital Rx Inc., claiming the web-based business is trying to keep a former employee from working for CVS. The lawsuit, filed on 9/16/2021, claims Capital Rx’s noncompete agreement violates Massachusetts law.

Why It Matters:

CVS’ lawsuit highlights an all-too-common issue new hires often face – the surprise non-compete

unfair competition
commercial illustrator

President Biden signed an Executive Order broadly targeting anti-competitive tactics that disadvantage smaller businesses and people.

One aspect of this order targets the use of noncompete agreements. Under the Order, the Federal Trade Commission (FTC) is encouraged to ban or limit noncompete agreements.

The noncompete provision of the Order

Trade Secret RisksNephron Pharmaceutical Corp. agreed to accept $7.9 million to settle its trade secret misappropriation lawsuit against its competitor U.S. Compounding Inc., its parent company Adamis Pharmaceuticals Corp., and former employees.

Why it Matters: 

For the defendant businesses, the case arose from actions that every company routinely faces – hiring employees. But the competitors

Buying and Selling a BusinessA business seller failed to convince a Michigan Business Court Judge that his noncompetition and nonsolicitation restrictions stemming from the sale of a Business should be enjoined.

For business owners considering or involved in transactions to buy or sell a business, the opinion from the highly respected Kent County Business Court Judge Christopher Yates, highlights

Noncompete Ripple EffectA recent court opinion is a cautionary tale for business owners and entrepreneurs and their attorneys about the importance of protecting attorney-client communications. It is also a reminder of how easily that privilege can be inadvertently waived and the downstream impact it can have on noncompete disputes.

The Decision

The court opinion comes from a

Trade secret competitionEcolab Inc. sued a former marketing manager, Preston Alexander, alleging he used stolen trade secrets to set up a rival business in violation of the federal Defend Trade Secrets Act and related claims. Ecolab seeks the immediate return of its confidential information and damages for contract breach and trade secret misappropriation.

Why it Matters:

Ecolab’s

McDonald's Noncompete AgreementMcDonald’s recently announced it terminated its chief executive, Steve Easterbrook, for having a consensual relationship with an employee. This termination presents a buffet of employment law and HR issues upon which one could devour. However, I want to focus on the non-compete restriction that Mr. Easterbrook ultimately agreed to upon ending his employment.

The Background

Is “continued employment” sufficient “consideration” to support the enforcement of a non-compete agreement? It is an issue present in many non-compete disputes. But it is also an issue that may be overlooked or (incorrectly) assumed to be a “non-issue.”

If you need a refresher course on what consideration is and why it matters, we’ve got