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Total Articles: 16

California AG Seeks to Further Amend State’s Data Breach Notification Law

Yesterday, California Attorney General Xavier Becerra and Assemblymember Marc Levine (D-San Rafael)announced Assembly Bill 1130 which is intended to strengthen California’s existing data breach notification law. In short, AB 1130 would amend the existing law to include passport numbers and biometric information (e.g., fingerprint and retina scan data) in the definition of personal information, so that, if breached under the law, notification to consumers would be required.

Second California Court Adopts Position that Employee Non-Solicitation Clauses are Invalid Restraints on Trade

On January 11, 2019, a California federal district court issued a decision bolstering the argument that employee non-solicitation clauses are unenforceable under California law. In Barker v. Insight Global, the judge declined to interpret narrowly another recent California state court of appeal decision finding that a clause restraining former employees from soliciting former co-workers constituted an unenforceable restraint on trade, and was therefore invalid. In light of these decisions, employers need to carefully consider eliminating such clauses from their employment contracts for employees located in California.

Contractual Employee Non-solicitation Provisions Under Attack: Employer Loses Battle in Case Involving Unique Facts

California’s prohibition against contracts that restrain a person’s ability to engage in a lawful business, profession, or trade is well-established and well-known. Ten years ago, in Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, the state Supreme Court confirmed that the only exceptions to that rule – Business & Professions Code section 16600 -- are statutory exceptions, and rejected the “rule of reasonableness” that some courts had used to uphold the validity of non-competition covenants. The enforceability of employee non-solicitation contractual provisions was not at issue in Edwards, but the California Court of Appeal in San Diego recently had the opportunity to weigh in on that issue. In AMN Healthcare, Inc. v. Aya Healthcare Services, Inc., the appellate court, in a published decision, invalidated the former employer’s employee non-solicitation provision on the ground that it restrained the former employees from practicing their chosen profession. While this ruling may, at first glance, create some doubt about the continued viability of such contractual provisions, a close look at the facts of the AMN Healthcare decision reveals that the outcome depended on very specific circumstances that are not present for most employers using these provisions.

Irvine Attorneys Discuss No-Rehire Clauses in Settlement Agreements

n their bylined article for Today’s General Counsel titled “How a No-Rehire Agreement Unraveled,” Irvine Partner Usama Kahf and Associate David Rashe examine the Ninth Circuit decision in Golden v. California Emergency Physicians Medical Group, discussing the legality of no-rehire clauses in settlement agreements. Usama and David review the Golden decision, as well as two other appellate decisions addressing the issue. They conclude their article by encouraging employers to review and update their settlement agreements in light of the Golden decision.

Non-Compete News: Is a Non-Solicitation of Employees Provision Enforceable in California?

Executive Summary: Last month, California’s Fourth District Court of Appeal issued AMN Healthcare, Inc. v. Aya Healthcare Servs., Inc., 28 Cal. App. 5th 923 (Cal. Ct. App. 2018), a decision calling into question the validity of non-solicitation of employees a/k/a anti-piracy provisions in California. Prior to this decision, California’s Supreme Court had left open the issue of whether anti-piracy provisions were enforceable. Arguably, there now exists a split in authority in California with regard to the enforcement of these provisions, although this recent decision may be construed narrowly to its context: staffing companies.

California Non-Compete Law Renders Surgeon Settlement Agreement Unenforceable

Answering a question left from a previous appeal in the same case, a divided panel of the U.S. Court of Appeals for the Ninth Circuit has concluded that a settlement agreement provision between a physician and his former employer, the California Emergency Physicians Medical Group (“CEP”), constituted a “restraint of a substantial character” on the physician’s medical practice and therefore violated California’s non-compete provision, Cal. Bus. & Prof. Code § 16600. As a result, the entire settlement agreement was void and unenforceable. Golden v. California Emergency Physicians Med. Grp., No. 16-17354 (9th Cir. July 24, 2018).

9th Circuit: Claims proceed in California despite French forum selection clause

A federal appeals court has held a forum selection clause in a non-disclosure agreement does not cover trade secret misappropriation and related claims that are not based on the agreement. In re Orange, S.A. v. United States District Court, 2016 U.S. Ap. LEXIS 648 (9th Cir. 2016).

Arbitrator’s Decision Enforcing Alleged Non-Compete Agreement Is Not Subject to Judicial Review

On October 21, 2015, the California Supreme Court ordered the publication of SingerLewak LLP v. Gantman underscoring the importance of utilizing arbitration agreements to enforce what a California court might consider to be an unenforceable covenant-not-to compete.

California Court of Appeals Awards Attorneys' Fees to Defendant For Misappropriation of Trade Secrets Claim Brought in Bad Faith

A California appellate court recently affirmed the trial court’s ruling in Cypress Semiconductor Corporation v. Maxim Integrated Products, Inc. that the defendant (“Maxim”) was entitled to attorney’s fees under California Civil Code section 3426.4 even after the plaintiff (“Cypress”) voluntarily dismissed the action without prejudice. Section 3426.4 awards reasonable attorneys' fees and costs to a prevailing party if a claim of misappropriation of trade secrets is made in bad faith. The appellate court supported its finding on the basis that: (1) Cypress accused Maxim of nothing more, and Maxim did nothing more, than attempt to recruit the employees of a competitor, which Maxim was entitled to do under California law, and (2) Maxim was the prevailing party after Cypress dismissed the suit to avoid an adverse determination on the merits.

Ninth Circuit Decision Challenges Enforceability of "No Future Employment" Provisions in Employment Separation and Settlement Agreements

To resolve employment disputes, whether in litigation or at a separation, typically, the parties wish to go in separate directions and not cross paths in the future. Consequently, separation or settlement agreements provide compensation and employees often agree not to seek future employment with their former employer and agree that should they unexpectedly come to work for their former employer due to an acquisition, merger or other incident that cause will exist to terminate that employee. The viability of such "no future employment" provisions has been called into question by the Ninth Circuit’s decision earlier this week in Golden v. California Emergency Physicians. In Golden, the Ninth Circuit overturned a District Court’s order finding a "no future employment" provision enforceable. The Ninth Circuit extended the reach of Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (2008), and Cal. Bus. & Prof. Code § 16600, to settlement agreements in a case of first impression by a 2-1 decision over Judge Kozinski’s dissent. The Ninth Circuit was not moved by the fact that the plaintiff was being paid a large sum of money, in part, to move on and give up his right to work for or seek employment with his former employer. Nor was it convinced by Judge Kozinski’s dissenting conclusion that the California Supreme Court would uphold such an agreement. The Court directed the lower court to re-examine the agreement to make a determination as to whether the provision constitutes a substantial restraint on the plaintiff’s trade, in order to determine whether the provision was enforceable. California employers should continue to monitor this case on remand before the district court and consider the impact of this decision in conjunction with preparing separation and settlement agreements arising out of employment to make every effort to ensure enforceability of any "no future employment" provision.

Noncompete News - Speculation is not Enough to Support Trade Secret Misappropriation Claims in California

Executive Summary: The California Court of Appeal recently affirmed an award of over $400,000 in attorneys' fees in favor of a group of ex-employees in a trade secret misappropriation lawsuit filed by their former employer, finding that the lawsuit was filed in bad faith. This decision highlights the importance of considering carefully whether to bring a misappropriation claim where there is little or no evidence of actual misappropriation. See SASCO v. Rosendin Electric, Inc.

California Non-Competes: Are They Legal After All?

In an eye opening decision, the United States District Court for the Northern District of California recently granted a temporary restraining order partially enforcing a non-compete agreement. In Richmond Technologies v. Aumtech Business Solutions (copy available below), the Plaintiff provides software for financial services firms. The Plaintiff entered into a “Teaming Agreement” with the Defendant, pursuant to which the Defendant developed software for the Plaintiff. In the agreement, the Defendant promised not to (1) use or disclose the Plaintiff’s confidential information; (2) initiate contact with or solicit the Plaintiff’s clients; and (3) compete with the Plaintiff by using its technology. Requesting a temporary restraining order, the Plaintiff alleged a breach of each of these three provisions.

Cyber Privacy Wars: The Employer Strikes Back

Distinguishing Stengart v. Loving Care Agency, a California Appellate Court Holds That An Employee's E-mails With Her Personal Attorney Sent Through The Employer’s Workplace Computer Are Not Protected By The Attorney-Client Privilege.

California Courts Weigh In On Non-Compete Agreements.

In many states, restraints on the practice of a profession, business or trade (such as non-competition agreements) are considered valid, as long as they contain reasonable geographic and time restrictions. But that has not been true in California since 1872. In that year California settled public policy in favor of open competition, and rejected non-competition agreements. In the years since then, the law has evolved substantially, and two recent appeals court cases further refined the situation there.

California - California Supreme Court Invalidates Non-Compete Agreement.

In a unanimous decision, the state’s highest court recently ruled that a noncompetition agreement entered into between an employer and one of its former employees is unenforceable under California law. In so doing, the California Supreme Court upheld a longstanding state law restricting employers from using such agreements to restrain employees’ practice of their professions.

California Supreme Court Rules On Non-compete Agreements And On General Releases.

The California Supreme Court recently handed down a long-awaited and significant decision addressing the nature and scope of non-competition agreements in California. The ruling also addressed the enforceability of contract provisions requiring employees to release "any and all" claims. The case has important consequences for California employers.
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