California Employment Law Update

Category Archives: Non-Competition Covenants

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California Employee Required to Challenge Non-Compete Clause in Indiana

Despite California’s prohibition against non-compete agreements, a federal court in the Eastern District of California recently ruled that a California resident may be subject to the non-compete covenant in his employment agreement due to a provision in the agreement identifying Indiana as the parties’ choice of forum and that state’s law as the parties’ choice … Continue Reading

Post-Employment Non-Compete Covenant Could Not Be Enforced Against Seller/Employee Of Company

Fillpoint, LLC v. Maas, WL 3631266 (Cal. Ct. App. 2012) Michael Maas sold his stock in Crave Entertainment Group, Inc. to Handleman Company and signed a stock purchase agreement that contained a three-year covenant not to compete. Maas signed a separate employment agreement with Crave that contained a one-year covenant not to compete, which would … Continue Reading

Injunction Upheld Prohibiting Former Employee from Competing

NewLife Sciences, Inc. v. Weinstock, 197 Cal. App. 4th 676 (2011) NewLife terminated the employment of Ronald Weinstock, the purported inventor of a Therapeutic Magnetic Resonance Device (“TMRD”), which NewLife had purchased approximately one year before the termination. In connection with its purchase of the TMRD, NewLife had obtained a non-compete covenant, which prohibited Weinstock … Continue Reading

Non-Compete Agreements Were Unenforceable

Asset Marketing Systems, Inc. v. Gagnon, 542 F.3d 748 (9th Cir. 2008) Kevin Gagnon, doing business as “Mister Computer,” alleged that his former customer, Asset Marketing Systems (“AMS”), infringed his copyright in six computer programs that he wrote for AMS by continuing to use and modify them without his consent and that AMS misappropriated trade … Continue Reading

Customer Non-Solicitation Covenants Violate Public Policy Against Non-Competes

Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008) CPA Raymond Edwards II was hired in 1997 as a tax manager for the Los Angeles office of the now defunct accounting firm Arthur Andersen LLP (“Andersen”). As a condition of his employment, Edwards was required to execute a noncompetition agreement that prohibited his (1) … Continue Reading

Non-Compete Covenant Was Not Too Broad To Be Enforced

Alliant Ins. Services, Inc. v. Gaddy, 159 Cal. App. 4th 1292 (2008) Alliant Insurance Services purchased a competing insurance brokerage company from G. Scott Gaddy for $4.1 million and then employed him under a senior management agreement. Both the purchase and employment agreements contained covenants whereby Gaddy agreed not to compete with Alliant or to … Continue Reading

Employer Was Entitled To Terminating Sanctions Against Former Employee

Computer Task Group, Inc. v. Brotby, 364 F.3d 1112 (9th Cir. 2004) Computer Task Group (CTG) sued William Brotby for breach of a non-solicitation/non-disclosure agreement that he signed while he was working as an information technologies consultant. CTG succeeded in obtaining an injunction prohibiting Brotby from working for Alyeska Pipeline Service Company, one of CTG’s … Continue Reading

Employee Terminated For Refusing To Sign Customer Non-Solicitation Covenant States Claim

Thompson v. Impaxx, Inc., 113 Cal. App. 4th 1425 (2003) David Thompson’s employment was terminated after he refused to sign a customer non-solicitation agreement that his employer, Impaxx, required him to sign. The covenant in question stated that “[f]or a period of one year following the termination of employment, I will not call on, solicit, … Continue Reading

California Court May Not Enjoin Employer From Seeking To Enforce Non-Competition Covenant In Minnesota

Advanced Bionics Corp. v. Medtronic, Inc., 29 Cal. 4th 697 (2002) Mark Stultz was employed in Minnesota as a senior product specialist for Medtronic, a manufacturer of implantable neurostimulation devices, before resigning his employment and going to work for Advanced Bionics Corporation, one of Medtronic’s competitors located in Sylmar, California. Upon accepting employment with Medtronic, … Continue Reading

Federal Court May Not Bar Tennessee Court From Enforcing Non-Compete Agreements

Bennett v. Medtronic, Inc., 285 F.3d 801 (9th Cir. 2002) Medtronic, Inc. sued three of its former California employees and their new employer, NuVasive, in Tennessee following the employees’ resignation from Medtronic and acceptance of employment with NuVasive, one of Medtronic’s competitors in the business of designing and manufacturing spinal surgery devices. Among other things, … Continue Reading
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