Our law firm was recently hired to represent clients – former employees – being sued for allegedly violating a noncompete agreement, trade secret misappropriation, and other business related claims.
As is typical with these sorts of cases, the Plaintiff, the former employer, was seeking injunctive relief in the form of a temporary restraining order (TRO) to shut-down the former employees’ competing business. Our law firm filed an opposition to the Plaintiff’s motion for TRO and argued the motion before the judge.
After the legal dust settled, the judge agreed with our position that a TRO should not be issued and “strongly” encouraged Plaintiff to consider settling due to issues we raised about the noncompete agreement. While the case is far from over, winning this initial TRO “battle” goes a long way towards winning the noncompete war.
Common Mistakes in Enforcing a Noncompete Agreement
Each noncompete and business dispute is certainly unique, but our law firm’s recent defense against the above noncompete violation relied upon common fact patterns in such disputes. And these issues should be a cautionary tale for employers and individuals.
- First, noncompete agreements need to be consistent within the agreement itself and also in the larger context of other employment agreements and policies. This point is especially critical for employers who, under basic contract law, should expect to have any ambiguity construed against the employer.
- Second, noncompete agreements are going to be enforceable only to the extent they are reasonable. And what is reasonable in one business context is not necessarily reasonable in another.
In our experience, this is a point of frustration for both employers implementing a non-compete agreement or advising entrepreneurs looking to start a competing business; Both want a bright-line conclusion of whether the noncompete agreement is or is not enforceable.
Seldom will an attorney be able to give such a conclusion. Our response to this issue, however, is to provide a client with a range of potential outcomes, identify where the client is comfortable in terms of being on this range, and then working to understand the clients business to maximize the factors for enforcing a noncompete agreement or distancing and/or distinguishing why the new business or former employee is not in violation of the noncompete agreement.
For more information about Michigan noncompete law, as well as drafting, enforcing, or defending against a noncompete violation, contact attorney Jason Shinn. Since 2001, his practice has focused on noncompete legal issues involving both employers and employees.