As if banks were losing enough money....here is a story about Bank of America (BoA) suing several ex-employees for violations of their non-compete contracts.
The suit was filed Monday in U.S. District Court for the Western District of Missouri. BoA accuses “certain of the individual defendants”, now employed by UMB Financial Corp., of sending direct-mail solicitation to their former BoA clients, in violation of their noncompete agreements.
I have not seen the language in the non-compete agreements and do not practice law in Missouri so I cannot speak to the laws of that state. However, a little history puts the former BoA employees' actions in a better light.
Former BoA wealth management employees in the Kansas City, MO area have been hired by competing firms since the start of 2009, when BoA announced a plan to cut 30,000 to 35,000 jobs throughout the company in the next three years. The cuts stemmed from a combination of duplication of services after BoA bought Merrill Lynch last fall for $50 billion and the recession, which caused huge reductions in assets under management for wealth management firms throughout the country.
My Take: I hope the law in Missouri allows the judge who will decide this case to focus on the employees' right to earn a living and support their families....especially when BoA most likely would have terminated these employees anyway.
Thursday, July 30, 2009
Thursday, July 23, 2009
COST BENEFIT ANALYSIS OF LITIGATION
I realize most of our clients don't want to spend thousands of dollars on having a business contract reviewed, before or after they sign it.
Nor do they want to get legal help when they leave a job.
I do however, believe in an ounce of caution.
If you have the contract reviewed, you could develop a plan of exit that would reduce your chances of being sued. $500 and you have a plan...
Please don't take a new job or start a new business, or arrange for a new contract without seeking help.
$500 may save you $20,000 and a year or so in litigation.
Nor do they want to get legal help when they leave a job.
I do however, believe in an ounce of caution.
If you have the contract reviewed, you could develop a plan of exit that would reduce your chances of being sued. $500 and you have a plan...
Please don't take a new job or start a new business, or arrange for a new contract without seeking help.
$500 may save you $20,000 and a year or so in litigation.
Friday, July 17, 2009
ED VA CASE NON-SOLICITATION CLAUSE
In this week's VA. Lawyer's Weekly is a blurb about a case in Norfolk's federal court. Bank of America asked the court to enjoin - stop ex-employees from contacting clients when they left BOA.
The Court held there simply wasn't sufficient proof that the employees had solicited any old clients. In fact, the new employer Wachovia, testified that they told the employees NOT to contact their old clients.
Further, the court says even if there was proof of the solicitation, there was not sufficient proof that Bank of America would suffer irreparable harm such to require an injunction.
Motion for injunction denied in Bank of America v. Byrd.
While this is good news, every case is different and rarely in these personal services cases (like bankers, stock brokers etc) do we see the new employer stating on the record - "Don't contact your old clients!"
The Court held there simply wasn't sufficient proof that the employees had solicited any old clients. In fact, the new employer Wachovia, testified that they told the employees NOT to contact their old clients.
Further, the court says even if there was proof of the solicitation, there was not sufficient proof that Bank of America would suffer irreparable harm such to require an injunction.
Motion for injunction denied in Bank of America v. Byrd.
While this is good news, every case is different and rarely in these personal services cases (like bankers, stock brokers etc) do we see the new employer stating on the record - "Don't contact your old clients!"
TRADE SECRET CASE LEADS TO BANKRUPTCY
Trade Secret Claims are serious.
Just how serious? Read this article about a successful Roanoke Virginia company - who recently had a California Court order they pay over $30 million dollars for a trade secret case.
"Roanoke-based Luna Innovations Inc. filed for Chapter 11 bankruptcy protection this morning in the U.S. Bankruptcy Court for the Western District of Virginia.
The filing comes after a California jury ordered Luna to pay $36.3 million in a breach of contract and misappropriation of trade secrets dispute. That verdict was issued in April and Luna has continued to challenge the outcome in court."
Just how serious? Read this article about a successful Roanoke Virginia company - who recently had a California Court order they pay over $30 million dollars for a trade secret case.
"Roanoke-based Luna Innovations Inc. filed for Chapter 11 bankruptcy protection this morning in the U.S. Bankruptcy Court for the Western District of Virginia.
The filing comes after a California jury ordered Luna to pay $36.3 million in a breach of contract and misappropriation of trade secrets dispute. That verdict was issued in April and Luna has continued to challenge the outcome in court."
Thursday, July 16, 2009
VIRGINIA BUSINESS ATTORNEY
I was born and raised by an entrepreneur.
What does that really mean? It means my entire life I have thought about "owning my own business." I don't think I am alone in this crazy dream.
According to Entrepeneur Magazine,
-68% of business students are interested in owning their own business. (Collegiate Entrepreneurs Organization, July 2006)
- 77.8% of students with entrepreneur family members would like to start their own business someday; 64% of students whose family are not self-employed agreed. (JA Worldwide, August 2006)
Ok - so Millions of Americans will start their own business. What does this mean?
It means Millions of Americans are excited, passionate and may unknowingly be setting themselves up for expensive litigation.
I know this sounds cruel, but when you spend 1 day reading about business litigation in Virginia, and what employers allege, you will be just as scared.
Start your own business? Great idea. But not while you have a job with a competing company.
Write a business plan - again, great. Don't do it on company time or using work computers.
Want to tell your friends and start to advertise? Again, a good idea - but not while you are still under contract elsewhere.
All of this will be used to form an action against you called BREACH OF FIDUCIARY DUTY - and maybe BREACH OF CONTRACT.
Like the pricing structure of your current job and want to incorporate it into your new business? That may lead to a TRADE Secret claim.
I don't mean to be alarmist, but sometimes those focused on starting a new business, are not focused on protecting themselves.
Please obtain legal help and advice to try and avoid these pitfalls - BEFORE you put the first word of your new business on paper. Not when you get the lawsuit.
Entrepreneur says that "Roughly 82% of small business owners turn to their accountant for business advice over their lawyer or banker." (SurePayroll, September 2006)
That is certainly bad news. Please seek a professional that can help you avoid business litigation, that will be worth its weight in gold.
What does that really mean? It means my entire life I have thought about "owning my own business." I don't think I am alone in this crazy dream.
According to Entrepeneur Magazine,
-68% of business students are interested in owning their own business. (Collegiate Entrepreneurs Organization, July 2006)
- 77.8% of students with entrepreneur family members would like to start their own business someday; 64% of students whose family are not self-employed agreed. (JA Worldwide, August 2006)
Ok - so Millions of Americans will start their own business. What does this mean?
It means Millions of Americans are excited, passionate and may unknowingly be setting themselves up for expensive litigation.
I know this sounds cruel, but when you spend 1 day reading about business litigation in Virginia, and what employers allege, you will be just as scared.
Start your own business? Great idea. But not while you have a job with a competing company.
Write a business plan - again, great. Don't do it on company time or using work computers.
Want to tell your friends and start to advertise? Again, a good idea - but not while you are still under contract elsewhere.
All of this will be used to form an action against you called BREACH OF FIDUCIARY DUTY - and maybe BREACH OF CONTRACT.
Like the pricing structure of your current job and want to incorporate it into your new business? That may lead to a TRADE Secret claim.
I don't mean to be alarmist, but sometimes those focused on starting a new business, are not focused on protecting themselves.
Please obtain legal help and advice to try and avoid these pitfalls - BEFORE you put the first word of your new business on paper. Not when you get the lawsuit.
Entrepreneur says that "Roughly 82% of small business owners turn to their accountant for business advice over their lawyer or banker." (SurePayroll, September 2006)
That is certainly bad news. Please seek a professional that can help you avoid business litigation, that will be worth its weight in gold.
Tuesday, July 14, 2009
DO YOU HAVE A NON-COMPETE?
Are you a plumber?
Exterminator?
Doctor?
Dentist?
Hair dresser?
Fashion consultant?
Engineer?
Salesman/woman?
Computer programmer?
If you are any of the above, then you probably have a non-compete.
And if you do have a non-compete, we recommend the following:
Please get a copy when you sign it.
Please re-read it before you leave or quit your job.
Please don't start a new business or a new job without asking an attorney to review the non-compete.
Please tell your new job about the non-compete. (In Virginia, they can fire you for lying or withholding that sort of useful information).
Exterminator?
Doctor?
Dentist?
Hair dresser?
Fashion consultant?
Engineer?
Salesman/woman?
Computer programmer?
If you are any of the above, then you probably have a non-compete.
And if you do have a non-compete, we recommend the following:
Please get a copy when you sign it.
Please re-read it before you leave or quit your job.
Please don't start a new business or a new job without asking an attorney to review the non-compete.
Please tell your new job about the non-compete. (In Virginia, they can fire you for lying or withholding that sort of useful information).
Thursday, July 9, 2009
IMPORTANT COURT DECISION ON FINANCIAL ADVISORS AND NON-COMPETES
The U.S. District Court in Norfolk, Virginia just issued an important ruling on the effects of non-compete/non-solicitation agreements on financial advisors who are regulated by the Financial Industry Regulatory Authority or "FINRA." The case is Bank of America Investments Services, Inc. v. Michael Byrd and Gregory Harris.
Byrd and Harris were employed as financial advisors for Bank of America.
Both Byrd and Harris resigned from Bank of America (BOA) to join Wells Fargo Advisors, formerly known as Wachovia Securities, LLC ("Wachovia"). Following his resignation, both employees telephoned former BOA clients and, at a minimum, informed such clients that he had left BOA and joined Wachovia.
BOA filed a request for a preliminary injunction and restraining order citing a non-competition/non-solicitation agreement entered into with the departing employees. Interestingly, the parties agreed they are subject to and bound by the rules of conduct promulgated by FINRA and that the merits of their dispute involving purported post-employment solicitation were subject to mandatory and binding arbitration. However, applicable employment agreements and the FINRA Code of Arbitration Procedure expressly provide that preliminary injunctive relief may be sought in court, pending a final arbitration ruling.
The court's analysis of the issues is a "road map" for employees who find themselves defending these types of claims by their previous employer. In determining whether to issue a preliminary injunction, the Court used the "Blackwelder test" which considers: (1) the likelihood of irreparable harm to
the plaintiff should the court refuse to grant the injunction; (2) the likelihood of harm to the defendant should the court grant the injunction; (3) the likelihood that the plaintiff will succeed on the merits; and (4) the public interest.
The court reviewed and discussed the evidence on these issues and held that BOA was not entitled to the requested preliminary injunction.
My Take: This is a good decision for employees and financial advisors and should be read and studied by anyone finding themselves in this situation.
Byrd and Harris were employed as financial advisors for Bank of America.
Both Byrd and Harris resigned from Bank of America (BOA) to join Wells Fargo Advisors, formerly known as Wachovia Securities, LLC ("Wachovia"). Following his resignation, both employees telephoned former BOA clients and, at a minimum, informed such clients that he had left BOA and joined Wachovia.
BOA filed a request for a preliminary injunction and restraining order citing a non-competition/non-solicitation agreement entered into with the departing employees. Interestingly, the parties agreed they are subject to and bound by the rules of conduct promulgated by FINRA and that the merits of their dispute involving purported post-employment solicitation were subject to mandatory and binding arbitration. However, applicable employment agreements and the FINRA Code of Arbitration Procedure expressly provide that preliminary injunctive relief may be sought in court, pending a final arbitration ruling.
The court's analysis of the issues is a "road map" for employees who find themselves defending these types of claims by their previous employer. In determining whether to issue a preliminary injunction, the Court used the "Blackwelder test" which considers: (1) the likelihood of irreparable harm to
the plaintiff should the court refuse to grant the injunction; (2) the likelihood of harm to the defendant should the court grant the injunction; (3) the likelihood that the plaintiff will succeed on the merits; and (4) the public interest.
The court reviewed and discussed the evidence on these issues and held that BOA was not entitled to the requested preliminary injunction.
My Take: This is a good decision for employees and financial advisors and should be read and studied by anyone finding themselves in this situation.
Wednesday, July 8, 2009
NON-COMPETES AND PROFESSIONALS
People call our office and say "I am not worried because I know my non-compete can't be enforced."
Seriously? Where did you hear that? (I want to ask).
Finally, I found the source of this terrible and incorrect rumor. The internet.
I just read an article purporting to give legal advice on non-competes and the author (a self proclaimed motivational speaker) writes "One interesting thing to note: noncompete agreements are not enforceable against certain "professionals," like doctors, CPAs, and lawyers."
I hate to call you out sir, but what you have written is absoluitely not true. I would do some more research before making such an incorrect statement.
To read about how enforceable non-competes are against virginia doctors, please read an article Dan and I finished today, based on his numerous blog posts.
YIKES - now I know where people are getting these ideas and claiming them to be true.
Please don't believe everything you read - call a professional before you bank on internet advice.
Seriously? Where did you hear that? (I want to ask).
Finally, I found the source of this terrible and incorrect rumor. The internet.
I just read an article purporting to give legal advice on non-competes and the author (a self proclaimed motivational speaker) writes "One interesting thing to note: noncompete agreements are not enforceable against certain "professionals," like doctors, CPAs, and lawyers."
I hate to call you out sir, but what you have written is absoluitely not true. I would do some more research before making such an incorrect statement.
To read about how enforceable non-competes are against virginia doctors, please read an article Dan and I finished today, based on his numerous blog posts.
YIKES - now I know where people are getting these ideas and claiming them to be true.
Please don't believe everything you read - call a professional before you bank on internet advice.
Monday, July 6, 2009
DOCTORS AND NON-COMPETES: ANOTHER REPORT
I just read an interesting article about a doctor in Montana who may be prevented from moving her medical practice from one hospital to a local Veterans Administration Hospital. It appears Dr. Elain Samuel had previously entered into a "recruitment contract" with St. Peter's Hospital which prevented her from "competing" with St. Peter's by moving to another local hospital.
The CEO of St. Peter's Hospital says his hospital should not have to "eat" monies advanced to a new doctor if the doctor should chose to move her/his practice to another hospital. I agree but they way to accomplish that goal is to require the doctor to sign a contract agreeing to reimburse the hospital for reasonable expenditures....but not to require the doctor to sign a non-compete which only hurts the patients.
The legal case is awaiting a decision from Judge Kathy Seeley of Helena, Montana.
The CEO of St. Peter's Hospital says his hospital should not have to "eat" monies advanced to a new doctor if the doctor should chose to move her/his practice to another hospital. I agree but they way to accomplish that goal is to require the doctor to sign a contract agreeing to reimburse the hospital for reasonable expenditures....but not to require the doctor to sign a non-compete which only hurts the patients.
The legal case is awaiting a decision from Judge Kathy Seeley of Helena, Montana.
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