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Multi-million dollar high tech settlement of anti-poaching case provides lessons to even much smaller employers

Apple, Adobe, Google, and Intel had a $415 million settlement approved last week to settle the terms of a lawsuit brought by software engineers alleging that the companies had violated wage and anti-trust laws by agreeing not to recruit or “poach” each other’s employees.

The case began in 2009 when the U.S. Department of Justice Antitrust division investigated the employment and recruitment practices of the companies. Then, in 2011, software engineers sued the companies for damages, claiming the companies had agreed to provide each other notice whenever one made an offer to another’s employee.  They also alleged the companies agreed …

Introducing Porter Wright’s newest blog – Antitrust Law Source

We wanted to take a moment to announce Porter Wright’s newest endeavor, Antitrust Law Source. Antitrust Law Source is a new site designed for visitors to quickly and easily learn about developments in this growing arena. The site primarily will focus on providing news and legal updates in the antitrust arena in a podcasting format. The podcasts will feature a variety of insights, educational offerings, discussions and interviews with thought leaders across a variety of industries.  For those of you who are frequent readers of this blog you may recall two recent blog posts by Jay Levine (editor of …

Federal judge rejects the proposed settlement for tech companies who allegedly violated antitrust law by agreeing not to solicit each other’s employees

We previously discussed here the antitrust case involving several high-tech companies who allegedly entered into bilateral agreements in which they agreed not to solicit each other’s employees. These companies settled with the U.S. Department of Justice and were subsequently sued by a class of software engineers. Early on, Intuit and Pixar/Lucasfilm settled, and recently the plaintiffs and the remaining tech companies reached an agreement to settle the case for $324.5 million. Or maybe they thought they had, but guess what? The federal judge overseeing the case rejected that settlement, finding that it did not provide adequate monetary compensation.

U.S. District …

Tech companies can’t escape antitrust liability for agreeing not to solicit competitors’ employees

Sometimes, the worlds of antitrust law and employment law intersect. For example, as most businesses know, it is generally permissible under federal, state, and local law for employers to enter into non-recruitment or non-competition agreements with their employees that are reasonably tailored to prevent unfair competition. A non-recruitment agreement typically prohibits an employee from stealing co-workers for another company. Similarly, a non-competition agreement typically prohibits an employee from working for the employer’s competitor both during employment and for a reasonable period of time thereafter. What happens, however, when employers simply bypass these employee agreements and instead enter into agreements with …

Facebook Posts Not “Solicitation” Under Former Employee’s Restrictive Covenant Agreement

Describing it as a “rather novel issue,” a federal court recently held that a former employee’s public posts on his personal Facebook page did not constitute solicitation of his former co-workers under the terms of his non-solicitation agreement with his former employer. [See Pre-Paid Legal Services, Inc. v. Cahill, No. 12-CV-346, Doc. 31 (Jan. 22, 2013), Report and Recommendation affirmed and adopted, Doc. 32 (Feb. 12, 2013)] The court further noted that invitations sent to former co-workers to join Twitter were not solicitations under the agreement because the invitations did not request the co-workers to “follow” the former employee, …

Ohio HB 417 May Mean the End of Physician Non-Solicitation Agreements

There has always been a tension between a health care employer’s desire to protect its patient relationships and a physician’s obligation not to abandon patients when a physician either resigns or is terminated from employment. In Ohio, physician non-compete agreements are legal so long as they (1) are no broader than necessary to protect the employer’s business interests; (2) do not unreasonably restrain the physician’s ability to practice in the future; and (3) are not injurious to the public. As a result, many physician employment agreements contain post-employment non-competition and non-solicitation provisions. While reasonable non-competition provisions remain viable, recently enacted …

United States Supreme Court: A Challenge To The Enforceability Of A Non-Competition Agreement Must Be Presented To The Arbitrator, And Not A Court, If The Contract Contains An Arbitration Provision

In Nitro-Lift Technologies, L.L.C. v. Howard, the U.S. Supreme Court this week held that if a contract contains an arbitration provision and there is a challenge to the validity of the contract, it is for the arbitrator and not a court to hear that challenge. The case is important for employers because the challenge was to the validity of a non-competition agreement. More specifically, the Supreme Court held that if a contract contains an arbitration provision, it is up to an arbitrator, and not a court, to determine whether the non-competition provision of the contract runs afoul of a …

Ohio Supreme Court Partially Reverses its Acordia Non-Compete Decision

This past May, we reported that the Ohio Supreme Court ruled in Acordia of Ohio, L.L.C. v. Fishel that following a merger, the surviving company may not be able to enforce employees’ non-compete agreements, where the agreements failed to contain an assignment clause, and the time period of the employees’ non-competes began to run as of the date of the merger. The Court reconsidered its decision, and issued a new decision today. Upon quick review, the bottom line seems to be that the Court has decided that it mis-read earlier precedent regarding corporate mergers. Here is part of the

State Tort and CFAA Claims Survive Motion to Dismiss In Ohio Employee Cyberhacking Case.

In a case that vividly demonstrates how employers are vulnerable to insider cyber attacks, a recent federal court decision out of the Southern District of Ohio addressed the scope of federal statutes designed to address such activity. In Freedom Banc Mortgage Services, Inc. v. O’Harra, the plaintiff’s complaint alleged that an employee began remotely downloading software programs on 27 of the employer’s computers and five servers. Through these programs, O’Harra, with the assistance of others, allegedly was able to access the employer’s employees’ email accounts, deleted hundreds of email from these accounts, uninstalled the employer’s security camera, deleted pictures …

Ohio Supreme Court Rules On The Enforcement of Non-Compete Agreements By The Surviving Company In A Merger

The Ohio Supreme Court ruled 4-3 on May 24, 2012, that following a merger the surviving company may not be able to enforce employees’ non-compete agreements where the agreements fail to contain an assignment clause and the time period of the employees’ non-competes began to run as of the date of the merger.

In Acordia of Ohio, L.L.C. v. Fishel et al., the Ohio Supreme Court ruled that a merger causes the original corporate party to non-compete agreements to cease to exist, while the surviving company takes ownership of the agreements. But where the non-compete agreement fails to contain …

Ninth Circuit En Banc Decision in Nosal Creates Federal Appellate Court Split On Scope of Computer Fraud and Abuse Act’s Reach to Protect Trade Secrets

In a much anticipated decision, the Ninth Circuit Court of Appeals held in an en banc decision in United States v. Nosal that the Computer Fraud and Abuse Act (“CFAA”) was not intended to cover employee misappropriation of trade secrets, violations of corporate computer use policies or violations of an employee duty of loyalty. The decision, which overrules a previous Ninth Circuit panel decision in Nosal, creates a conflict with the Fifth, Seventh and Eleventh Circuits, all of which have interpreted the CFAA broadly to include such employee misconduct. As a result, we can probably expect this issue …

Clearing the Backlog – September

More and more these days it seems like the obligations of being a lawyer, husband, father, son, sports fan, etc, get in the way of blogging. As a result, I end up accumulating a number of worthwhile topics for blog posts that end up in the discard pile. Twitter helps keep the backlog to a minimum, but I really don’t know how many of you actually follow me @briandhallesq (hint, hint). So, while I am by no means committing to make this a regular feature of Employer Law Report, I will now clear – in no particular order — my …

Ohio Supreme Court to Address Assignability of Noncompetes During Mergers and Acquisitions

Yesterday the Ohio Supreme Court agreed to hear an appeal that addresses the extent to which a corporate merger may impact the surviving company’s ability to enforce restrictive covenants that its predecessor companies entered into with their employees.

In Acordia of Ohio LLC v. Fishel et al., several Acordia employees (called the "Fishel team") left the company in 2005 and began working with a competitor, Neace-Lukens. These employees had previously signed noncompete agreements with Acordia’s predecessor companies, prohibiting them from competing with the predecessors for two years after termination. They did not sign new agreements with the surviving company. …

My Summer Camp Adventure

It’s hard to believe that fewer than 10 years ago, there was widespread concern that our computers were all going to blow up and there would be anarchy in the streets. Since the clock struck midnight on January 1, 2000, we have seen an unprecedented technology boom that has had a widespread impact on the workplace. Remember the anxiety caused by cameras on our cell phones due to their impact on protecting trade secrets and our privacy in the locker rooms? Since then, we have grown comfortable with workers using laptops offsite though we still need to concentrate better on …

California Stands Firm in Rejecting Non-Compete

With the economy down, many well-known employers in virtually every industry across the country have increased their efforts to protect their customer relationships, market share, and confidential business information by bringing no-compete and/or trade secret misappropriation litigation against former employees and competitors. These lawsuits have included:

  • Bear Stearns suing a former executive director who joined a competitor in Massachusetts;
  • Motorola suing a former executive in Illinois who joined Apple;
  • Clear Channel suing a former vice president who joined The Tribune Co. in Illinois;
  • Wachovia suing Banc of America and three former Wachovia employees in Virginia;
  • Countrywide suing an ex-manager in

Recent Court Decision Highlights Non-Compete Drafting Issues

In Ohio, courts have the discretion to redraw an overly broad non-competition agreement so that its restrictions are no greater than are needed to protect the employer’s legitimate business interests. As a result, Ohio employers often cavalierly draft the terms of their employee non-competition agreements as broadly as possible, believing the worst case scenario is that a court will rein in and “re-draft” the terms if necessary to make them reasonable and enforceable. Unfortunately, a federal district court in Illinois and the Seventh Circuit court of appeals clearly were unwilling to endorse this somewhat common Ohio employment practice despite analyzing a non-competition agreement’s …

A Case of Mind Control: Ohio Employers Can Stop Former Employees From Using Memory to Misappropriate Trade Secrets

In a unanimous decision debunking the common misunderstanding that former employees can use information they retain through memory (as opposed to information contained in materials pilfered from former employers) without violating trade secret law, the Ohio Supreme Court ruled that a company’s confidential customer list is a protected trade secret even if a former employee accesses it strictly from memory.

In Al Minor & Assoc., Inc. v. Martin, 2008-Ohio-292, Martin, a pension analyst, signed neither a non-competition nor a non-solicitation agreement during his employment with Al Minor. When he resigned to establish a competing business, Martin contacted and successfully …

2008 Will Bring Important Trade Secrets Ruling From Ohio Supreme Court

If a Franklin County Court of Appeals decision is upheld, Ohio employers may reap the benefits of even greater protection against former employees who engage in competing business endeavors. For this reason, the Ohio Supreme Court’s ruling will be closely watched by employers and employees alike.

“In the absence of a no-compete agreement between an employer and its former employee, does the employee’s compilation from memory and competitive use of a list of his former employer’s customers constitute a violation of Ohio’s Uniform Trade Secrets Act?” That is how the Ohio Supreme Court framed the issue pending before it in Al Minor