NON COMPETE SCAPEGOATS

You know what a scape goat is?

Sadly, most of our non-compete litigation cases arise when an employer wants to make an example, and someone becomes the non-compete scapegoat.

Employers aggresively pursue breach of contract action against the employee, seeking emergency injunction.

Will they win? Maybe, probably not. But that is not really the point and not really the goal. The goal is to scare everyone else into submission.

Afterall, will you quit your job when your old colleague is buried in litigation costs?

I tell prospective clients all the time "I know the court may hold your non-compete is unenforceable.... but in the meantime, you will have all of these other allegations to defend in Court, discovery to undergo etc. Even if your employer loses, they haven't really lost if they have made an example to all the other employees as to what happens when you breach your non-compete."

Is that fair? No. is it the truth? Yes.

FIDUCIARY DUTY - YES - BUT TO WHOM?

Virginia Circuit Court Judge in Fairfax recently held that one member of an LLC could not sue the manager of the LLC for breach of fiduciary duty. The Supreme Court of Virginia agreed.

Why was the case dismissed?

Because the member did not have standing to bring suit.

"Standing" is legal speak for - a right. The member, in her individual capacity, did not have the legal right, to claim an employee of the LLC had breached a duty to her. In fact, the manager / employee had no duty to this member individually at all, only to the LLC. So the LLC could have claimed breach of fiduciary duty but a member, not representing the LLC, was not owed a duty and therefore did not have standing to allege breach of the duty.

Confused? I know it is strange.

Often times in business tort suits we attack or defend the case from two angles: (1) legal angle - "Judge they don't have facts to support that claim," and (2) from a factual angle - "Even if they can allege that, they don't have facts to support it or to support damages."

These cases can get very complicated.

I hope as an individual employee, you will never know how complicated!


Remora Investments LLC v. Orr (Lemons, J.); Fairfax Cir.Ct. (Bellows) Robert K. Richardson for appellant; Richard C. Sullivan Jr. For appellee.

REVENGE IS NOT ALWAYS THE ANSWER

I often get calls from people, upset, frantic about a threatening letter received from an ex-employer.

The letter may say "We understand you are in breach of your non-compete. Cease immediately or we will seek and injunction against you in a Virginia court and ask for damages in the amount of $1,000,000."

"I have to make a living," my clients / callers say. "I can't afford a legal battle." "How can they come after me like this?"

Most often these comments are born when they realize they are being sued for breach of contract.

You remember the old adage - "Don't get mad, get even?" Well, that is BAD advice when we are talking about bashing corporations or employees of your old employer.

I have had folks say "well if they can come after me like this, I will give everyone their trade secret information and say terrible things about them to their clients."

I often scream into the Phone - DON'T DO THAT. REVENGE DOES NOT HELP IN VIRGINIA BUSINESS TORT CASES.

Don't bad mouth them anywhere - especially in writing. Those writings will turn into a Defamation claim, which will make any breach of contract claim much more complicated.

So please, I understand anger, and even getting really mad when your employer threatens to take you to Court in Virginia for breaking your contract. I also understand the desire to get even, but before you do, please call an attorney to find out what you can and cannot do, say, etc.

You will be glad you did.

IMPORTANT RULING FOR FINANCIAL ADVISORS

A federal court judge in Wisconsin has rejected a request by Smith Barney to order financial advisers who now work for Robert W. Baird & Co.'s Green Bay office to stop soliciting Smith Barney clients. Smith Barney sued Baird last week and asked for a restraining order, claiming the financial advisers who abruptly left the firm's Green Bay office to work for Baird had breached confidentiality and non-solicitation agreements.

U.S. District Judge William C. Griesbach ruled that Smith Barney's non-solicitation agreement with the employees was "overly broad" and invalid under Wisconsin law.

Interestingly, Judge Griesbach ruled that if the new Baird employees took any confidential client information, they must return or destroy it...but that didn't include names, addresses, phone numbers and e-mail addresses.

DO YOU HAVE A VIRGINIA EMPLOYMENT CONTRACT?

Do you work for a Virginia corporation or business?

Was it started in Virginia?

Does it have offices in Virginia?

Even if you have never stepped foot in the Commonwealth, you may have an employment contract governed by Virginia law. How do you know? They are called "choice of law provisions" and can be found in most professionally written employment contracts.

There may be a paragraph that says
CHOICE OF LAW: This contract and the terms therein are governed by Virginia law. Should litigation arise from the construction, enforcement or breach of this Contract, parties agree the Circuit Court of X County will be proper jurisdiction.."

I often have folks that call us and want us to help, only to find out they have a non Virginia choice of law provision, which means I can't provide any advice (unless its West Va - I am licensed there too).

So before you call an attorney (1) Check to see if you have a choice of law provision. (2) Then check to see if there is a jurisdiction listed or selected. Does the agreement call for Arbitration? We Arbitrate employment claims and will handle matters in most Virginia Circuit Courts, but always good to know what you are looking at before you call.

Now, Why would your contract contain Virginia law if you didn't work in Virginia? It may be the business is incorporated here, has a principal place of business here, or maybe, the attorney who wrote the contract thought Virginia law was more employer friendly. Sometimes, choice of law provisions can be held invalid - so again, if you have any question, call a Virginia employment attorney or someone who specializes in contract issues.