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If litigation occurs, NEWCO wants to minimize its potential exposure, both in terms of liability and the extent of damages.
OLDCO may assert a claim of tortious interference against NEWCO for violating any restrictive employment covenant.[7] The elements of a cause of action for tortious interference with a contract are: (1) the existence of a contract; (2) the interfering party’s knowledge of the contract; (3) intentional procurement of a breach; (4) lack of justification; and (5) damages.[8] NEWCO may also be required to indemnify OLDCO for attorney fees incurred by OLDCO in litigation to enforce the non-compete agreement.
This article and the related presentation will review NEWCO’s legal exposure and tough issues that it faces, highlight key legal defenses to OLDCO’s claims, and provide strategies and practical suggestions to help NEWCO accomplish its goals while minimizing its risks.
From a careful reading of this case, the author infers that the court may have been concerned about deception by the employee regarding his departure to a competing employer.
It is this author’s experience that, in a traditional employment setting (as compared to a sale-of-business setting), courts generally are reluctant to enforce non-compete agreements for periods longer than one year, unless it involves a high-level executive, a post-termination severance, deferred compensation, or similar pay-out package that also lasts longer than a year or other unique facts and circumstances.
Had the employee been more straightforward with his employer before he terminated his job, it is possible that the court would have viewed the 0 consideration differently.
The cases below demonstrate that consideration is an argument pressed—and won—by many former employees challenging the enforcement of a non-compete agreement.