October 01, 2011
When a senior executive of our client, a global retail company, resigned to become the CEO of a competitor despite having signed a two-year non-competition and confidentiality agreement, our client turned to the lawyers who had provided advice on the very agreement its former executive had signed. Our attorneys sought injunctive relief before the Court of Chancery, and were successful, on an emergency application, in obtaining a temporary restraining order prohibiting the executive from beginning the new job. Following expedited discovery conducted in four states over the course of less than two weeks, our client prevailed in obtaining a preliminary injunction barring its former executive from accepting the new position with its competitor until trial on the application for a permanent injunction, scheduled several months later.
In granting the injunction, the court found that our client would likely succeed at trial in enforcing the non-competition agreement against the retail competitor, despite the executive’s claims that the entities did not truly compete. In its ruling, the court upheld the reasonableness of the specific terms of the non-competition agreement, which were carefully crafted to address the many issues raised by Delaware law. Rather than deal with the uncertainty created by the 3-month delay until trial, during which our client’s competitor could not hire a new CEO, the other party elected to look elsewhere for a new CEO. And our client’s former executive found employment somewhere else – in a company that didn’t compete with our client.
Clients can count on our labor and employment lawyers to follow through: we advise on the enforceability of non-competition agreements, and we stand behind our advice.