On January 19, 2018, the Assistant Attorney General for Antitrust, Makan Delrahim, announced that in the coming months the Department of Justice (DOJ) expects to bring its first criminal antitrust charges involving agreements among competitors not to solicit each other’s employees – referred to as “no-poaching agreements.” Delrahim’s comments make it clear that going forward, the DOJ will treat wage-fixing and no-poaching agreements between competitors as per se criminal cartel activity; i.e., in the same way it traditionally treats price-fixing, bid-rigging and customer allocation agreements among competitor firms.
Articles Discussing Restrictive Covenants In The Workplace And Other Topics Relating To Unfair Competition.
Lead Antitrust Attorney Hints At Upcoming Prosecutions For No-Poach Agreements
The chief prosecutor in the U.S. Department of Justice’s Antitrust Division signaled last week that his unit expects to initiate criminal actions against multiple companies accused of entering unlawful pacts not to hire each other’s employees.
A Protocol On Life Support – Financial Industry Assesses The Aftermath Of Major Defections From Broker Recruitment Pact
In the fourth quarter of 2017, two major financial firms dropped out of an industry-wide Protocol for Broker Recruiting (the “Protocol”), an agreement designed to reduce litigation surrounding the movement of stockbrokers between competing firms. While those departures do not necessarily seal the fate of the Protocol, they do portend an increase in litigation to enforce customer non-solicitation covenants against departing brokers.
New Hampshire, Pennsylvania, Vermont May Restrict Use of Non-Compete Agreements in Employment
Proposals to restrict the use of non-compete agreements in employment have been introduced in New Hampshire, Pennsylvania, and Vermont.
Federal Court Interprets Florida and Pennsylvania Law To Endorse Protection Of Salon Services Company’s Customer Relationships And Specialized Information
In states that permit the enforcement of non-compete and other restrictive covenant agreements against former employees, companies must still demonstrate that the restrictions are designed to protect a legitimate business interest, and not to simply avoid ordinary competition.
6.8M Award for Theft of Company Trade Secrets
A dental technology company has obtained a $6.8 million judgment against a former employee accused of stealing the company’s designs. The federal district court in Central California entered the judgment after finding the defendant, Jian Lu, liable for stealing trade secrets. Sirona Dental Systems Inc., et al. v. Jian Lu, No. 2:15-cv-08777 (C.D. Cal. Oct. 19, 2017). This case highlights the importance of non-disclosure agreements, paying close attention to developments in your industry, as well as vigorously protecting your rights in court.
Review of Previously Opened Email May Violate SCA
In the midst of a heated litigation commenced by an employer against its former employee for alleged violations of a non-compete agreement, an employee returned the cell phone she used during her employment. Prior to returning the phone, she deleted all emails that were stored on the phone.
Non-Compete News – Third Circuit Says Tortious Interference with a Non-Compete Requires Actual Knowledge of the Agreement at Issue
Executive Summary: An employer hiring an individual known to be subject to a non-compete contract can expect to be accused of tortiously interfering with that contract. On the other hand, the hiring employer should be innocent of wrongdoing if it has no idea the new hire is bound by a restrictive covenant. In Acclaim Sys. v. Infosys, Ltd., 2017 U.S. App. LEXIS 2325 (3d Cir. 2017), the Third Circuit recently affirmed this common-sense approach by holding an employer lacking actual knowledge of a restrictive covenant cannot be liable for tortious interference with that covenant.
Lyft Drivers Allege Uber Spied on them for Competitive Edge
former Lyft driver filed a class action lawsuit in the Northern District of California against Uber, alleging Uber violated the Electronic Communications Privacy Act (“ECPA”), the California Invasion of Privacy Act (“CIPA”), and other common law invasions of privacy and unfair competition.
Non-Compete News: Using Defend Trade Secrets Act, California Court Stops Deletion of Misappropriated Confidential Information
Executive Summary: Having just celebrated its one-year anniversary, the Defend Trade Secrets Act (DTSA) triggered an uptick in federal litigation concerning the fight to protect corporate trade secrets. Though no court has issued the elusive ex parte civil seizure remedy which the Act allows, one recent decision came close. In OOO Brunswick Rail Mgt. v. Sultanov, 2017 WL 67119 (N.D. Cal. Jan. 6, 2017), the U.S. District Court for the Northern District of California used the DTSA to bar an individual defendant from accessing or modifying a laptop and cell phone received from his former employer, and to compel non-parties Google and Rackspace to preserve both individual defendants’ web-based email accounts.
State and Federal Trade Secrets Claims Upheld By Northern District of Illinois
A May 11, 2017 decision by Judge Chang, in the Northern District of Illinois, found misappropriation alleged under the Defend Trade Secrets Act (DTSA) and the Illinois Trade Secrets Act (ITSA), in a case where the employee downloaded files while still employed.
Despite recent scrutiny, carefully-considered non-competes logical choice in many situations
Last weekend, the New York Times published an article titled “How Noncompete Clauses Keep Workers Locked In.” The article focused on low and middle level workers who were sued or had a hard time finding new jobs because they had signed non-compete agreements with their former employers. One point made by the article is that when used with personnel who do not have significant executive, research and development (R&D), or sales responsibilities, non-competes provide little benefit for employers, can cause difficulties for employees (including limiting their mobility and ability to make higher wages), and hurt the economy.
New SEC ‘Risk Alert’ on Confidentiality Agreements
The Securities and Exchange Commission has announced that it considers illegal any employer-imposed limitation on employees’ ability to disclose confidential trade secret information to the SEC, if the employee wants to make disclosure in pursuit of whistleblower claims. Indeed, the SEC wants employers to affirmatively advise employees of their right to do so.
New DOJ, FTC Antitrust Compliance Guidance for Human Resources Attacks No-Poaching Agreements
Criticizing non-solicitation of employees — or “no-poaching” — agreements as an alleged factor in holding back wage growth, the U.S. Department of Justice and the Federal Trade Commission have issued antitrust guidance on human resources issues. This is consistent with and continues the White House’s recent attacks on post-employment restrictive covenant agreements. (See our article, White House Continues Attack on Non-Compete Agreements.)
White House Continues Attack on Non-Compete Agreements
“State Call to Action on Non-Compete Agreements” is the White House’s latest in a series of Executive Branch missives decrying the purported misuse of non-competition agreements by employers across the country.