Wanke, Indus., Commercial, Residential, Inc. v. Superior Court, 209 Cal. App. 4th 1151 (2012)

In an underlying lawsuit, Wanke sued its former employees Scott Keck and Jacob Bozarth for misappropriation of trade secrets, among other things. That lawsuit was settled, and the parties agreed to a stipulated injunction pursuant to which Keck, Bozarth and their company WP Solutions (collectively, “WP Solutions”) would not contact or solicit certain specified Wanke customers. When WP Solutions contacted Con Am Management (one of Wanke’s customers), Wanke filed an application for an order to show cause requesting the trial court to hold WP Solutions in contempt for having violated the terms of the stipulated injunction. The trial court acquitted WP Solutions and denied Wanke’s motion to enforce the settlement agreement after determining that the stipulated injunction was invalid under Cal. Bus. & Prof. Code § 16600 (which prohibits non-compete covenants).

The Court of Appeal held that the double jeopardy clauses of the Fifth Amendment to the United States Constitution precluded reexamination of the court-decreed acquittal of WP Solutions. However, the Court held that the trial court had erred in failing to enforce the stipulated injunction with respect to WP Solutions’ solicitation of Wanke’s customers – “WP Solutions may not stipulate to an injunction that identifies certain customers whom they will not solicit, in order to resolve claims that they misappropriated Wanke’s trade secrets, then proceed to violate the stipulated injunction and defend against its enforcement by claiming that Wanke’s customer list is not a trade secret.”