Legal puzzle involving geography and non-competes
December 18, 2009 9:51 AM
Non-compete requested as a condition of employment. Employment change was a surprise. Employee located in California, Massachusetts law invoked in language. Who to contact (YANML-filter)?
Some of my company's IP and trade secrets were sold off to another firm. I have been offered employment with that firm - it's either that or hit the road. Part of the offer is a noncompete, which invokes Massachusetts law. The (old) company is in California. The new company is a Delaware corporation with a presence in Massachusetts. I will stay employed in California.
In which state is it appropriate to seek legal advice?
Some of my company's IP and trade secrets were sold off to another firm. I have been offered employment with that firm - it's either that or hit the road. Part of the offer is a noncompete, which invokes Massachusetts law. The (old) company is in California. The new company is a Delaware corporation with a presence in Massachusetts. I will stay employed in California.
In which state is it appropriate to seek legal advice?
I would seek out a lawyer in the state/s where you believe it's most likely you will be employed in the future.
posted by yarly at 10:10 AM on December 18, 2009
posted by yarly at 10:10 AM on December 18, 2009
Check the language of your non-compete. A well-drafted one will include a choice of forum clause, indicating which states laws are to be used to interpret the document and naming the state in which it is appropriate to resolve legal disputes.
Seek legal advice from either an attorney in that state or the state where you will reside should you sign it.
posted by valkyryn at 10:12 AM on December 18, 2009
Seek legal advice from either an attorney in that state or the state where you will reside should you sign it.
posted by valkyryn at 10:12 AM on December 18, 2009
Whatever you do, do not listen to any legal advice given in this thread beyond advice on which jurisdiction to seek an attorney.
I am an employment lawyer. I am not your employment lawyer. Seek advice from a lawyer in the state in which you reside and expect to continue employment in.
I suggest seeking a referral from a lawyer from NELA, the National Employment Law Association.
posted by Ironmouth at 10:25 AM on December 18, 2009
I am an employment lawyer. I am not your employment lawyer. Seek advice from a lawyer in the state in which you reside and expect to continue employment in.
I suggest seeking a referral from a lawyer from NELA, the National Employment Law Association.
posted by Ironmouth at 10:25 AM on December 18, 2009
IANYL. I second Ironmouth.
But I will add that non compete clauses are almost never enforceable as written in my jurisdiction either. They are -- obviously -- anti competitive, and they tend to be drawn much too broadly, in the sense of being too long in duration, too expansive in geographic area, and too all encompassing in terms of areas in which competition is barred.
See what your lawyer says.
posted by bearwife at 11:13 AM on December 18, 2009
But I will add that non compete clauses are almost never enforceable as written in my jurisdiction either. They are -- obviously -- anti competitive, and they tend to be drawn much too broadly, in the sense of being too long in duration, too expansive in geographic area, and too all encompassing in terms of areas in which competition is barred.
See what your lawyer says.
posted by bearwife at 11:13 AM on December 18, 2009
I am Spartacus. No, wait.
I am a lawyer, but I am not your lawyer, either.
nth-ing California employment lawyer. If you go with a big firm, there is a danger that you will get billed for time from the CA lawyer as well as time from someone to consult on MA issues.
Also, despite the fairly definitive statement that non-compete clauses aren't enforced by California courts, there's a whole bunch of things that might come up which you and your lawyers will probably want to talk about. There could conceivably be a lot of "could happen", "might happen" and "not likely to happen but would be really painful if it did happen" scenarios.
The bill for exploring those scenarios may be higher than you'd like. If you're an exec with a $15 MM comp package, this is worth it. If it's a more modest compensation package, I'd suggest being VERY clear about what advice you're seeking and what the bill is going to be, especially if you go to a big national firm.
posted by QuantumMeruit at 11:45 AM on December 18, 2009
I am a lawyer, but I am not your lawyer, either.
nth-ing California employment lawyer. If you go with a big firm, there is a danger that you will get billed for time from the CA lawyer as well as time from someone to consult on MA issues.
Also, despite the fairly definitive statement that non-compete clauses aren't enforced by California courts, there's a whole bunch of things that might come up which you and your lawyers will probably want to talk about. There could conceivably be a lot of "could happen", "might happen" and "not likely to happen but would be really painful if it did happen" scenarios.
The bill for exploring those scenarios may be higher than you'd like. If you're an exec with a $15 MM comp package, this is worth it. If it's a more modest compensation package, I'd suggest being VERY clear about what advice you're seeking and what the bill is going to be, especially if you go to a big national firm.
posted by QuantumMeruit at 11:45 AM on December 18, 2009
Argh, should have edited. I mean to say in my post above, "the fairly definitive statement MADE BY OTHERS IN THIS THREAD" about non-compete clauses in CA. That previous post should not be interpreted as a legal advice of any sort.
posted by QuantumMeruit at 11:47 AM on December 18, 2009
posted by QuantumMeruit at 11:47 AM on December 18, 2009
I probably wouldn't worry about it, living in CA. But you should talk to someone who actually knows what they're talking about.
posted by delmoi at 12:23 PM on December 18, 2009
posted by delmoi at 12:23 PM on December 18, 2009
I am really not a lawyer. I don't even play one on Metafilter.
However, I have personally seen non-competes be thrown out of court with the admonition "If you ever try this again, I will hold you in contempt of court" to the litigant. However, it *went to court*. Note that. It still cost time and money. Yes, it was humiliating to the litigant, but they still did it. It was still painful to the person being sued.
Personally, I ignore them. I am fearless about non-competes *in my state*. Maybe you shouldn't be, consult a lawyer in your state.
posted by Invoke at 5:41 PM on December 18, 2009
However, I have personally seen non-competes be thrown out of court with the admonition "If you ever try this again, I will hold you in contempt of court" to the litigant. However, it *went to court*. Note that. It still cost time and money. Yes, it was humiliating to the litigant, but they still did it. It was still painful to the person being sued.
Personally, I ignore them. I am fearless about non-competes *in my state*. Maybe you shouldn't be, consult a lawyer in your state.
posted by Invoke at 5:41 PM on December 18, 2009
Nthing to go hire an employment lawyer. Do not listen to anyone who says non-competes are never enforceable . I've seen that advice a few times on MF, but that's going to entirely depend on the state, the agreement, and the circumstances. For example, in Texas (where I practice) non-competes are enforceable, although in practice disfavored.
Also, even where a non-compete may not be enforceable, it may be accompanied, for example, by a confidentiality agreement that allows a company to seek injunctive relief + damages upon breach of that agreement: not a covenant not to compete, but potentially as effective as one. There are also other clever ways to restrict competition without (or in addition) to using a non-compete -- I imagine that's what happens in states where non-competes are disfavored by the courts*.
Also, what Invoke said: a major reason why companies use non-competes is to act as a hammer -- if there's a breach, they can send a nasty letter and cite the non-compete, or file an application for a temporary restraining order, or whatever. Sure, the judge may eventually throw it out, but that's after the employee has spent $15,000.00 fighting it and responding to discovery and after the company that's now hired the employee is potentially sued for interference with contract or some other malarkey The employee's lawyer knows this and will advise the employee to come to some agreed judgment. Was it an enforceable covenant not to compete in the first place? Probably not, but it doesn't matter, the company got what it wanted.
Be suspicious. There's a reason why Massachusetts law is invoked. It probably has to do with an attempted workaround of California law or just with making things hard for a competing former employee by suing in Mass.
*Also, remember that while California surely has the most employee-friendly laws in the nation, things change, and an agreement that isn't enforceable may become enforceable with a court decision or a changed statute. It was comparatively much harder to enforce covenants not to compete in Texas 3-4 years ago. Two court cases, and the technical requirements are a breeze.
posted by seventyfour at 6:22 AM on December 19, 2009
Also, even where a non-compete may not be enforceable, it may be accompanied, for example, by a confidentiality agreement that allows a company to seek injunctive relief + damages upon breach of that agreement: not a covenant not to compete, but potentially as effective as one. There are also other clever ways to restrict competition without (or in addition) to using a non-compete -- I imagine that's what happens in states where non-competes are disfavored by the courts*.
Also, what Invoke said: a major reason why companies use non-competes is to act as a hammer -- if there's a breach, they can send a nasty letter and cite the non-compete, or file an application for a temporary restraining order, or whatever. Sure, the judge may eventually throw it out, but that's after the employee has spent $15,000.00 fighting it and responding to discovery and after the company that's now hired the employee is potentially sued for interference with contract or some other malarkey The employee's lawyer knows this and will advise the employee to come to some agreed judgment. Was it an enforceable covenant not to compete in the first place? Probably not, but it doesn't matter, the company got what it wanted.
Be suspicious. There's a reason why Massachusetts law is invoked. It probably has to do with an attempted workaround of California law or just with making things hard for a competing former employee by suing in Mass.
*Also, remember that while California surely has the most employee-friendly laws in the nation, things change, and an agreement that isn't enforceable may become enforceable with a court decision or a changed statute. It was comparatively much harder to enforce covenants not to compete in Texas 3-4 years ago. Two court cases, and the technical requirements are a breeze.
posted by seventyfour at 6:22 AM on December 19, 2009
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posted by Oktober at 9:59 AM on December 18, 2009