Yesterday, John Smith, the president of ABC Bank, announced to the board of directors that he intended to resign to go work for XYZ Bank, a local competitor. Smith also intends to take some of the bank’s most important customers, and several top officers with him to XYZ Bank. Upset and panicked, the chair of the board contacted the bank’s employment attorney to determine what could be done to stop the president from leaving and taking customers and employees with him. “Send me a copy of John’s employment agreement,” the lawyer said. “Employment agreement? The board did not think John needed one. We never imagined he would quit.”
Continue Reading Why Not Having an Employment Contract With Bank Officers Will Hurt You

Jurisdiction

Jurisdiction may be the most important factor organizations should take into consideration when offshoring.  Some countries do not recognize certain U.S. legal doctrines, such as confidentiality agreements, and without proper jurisdiction an organization may be unable to enforce its contract with a vendor.

When selecting an offshore country, organizations should consider whether the country permits a choice of law provision which would allow courts to apply U.S. law.  If the country permits choice of law provisions, the provision should be well defined in the contract so that there is no ambiguity.  Organizations should also consider working with counsel in the offshore country to assist with legal intricacies, even if a United States choice of law provision is permissible.


Continue Reading Top Ten Considerations in Offshore Outsourcing

In Holton v. Physician Oncology Services, LP, et al., Case No. S13A0012 (May 6, 2013), the Georgia Supreme Court limited the use and application of the inevitable disclosure doctrine by declining to recognize it as an independent cause of action. 

The inevitable disclosure doctrine allows an employer to restrict former employees from working for a competitor by demonstrating that the former employees will necessarily rely upon knowledge of the employer’s trade secrets in performing their new job duties. 


Continue Reading Georgia Supreme Court Denies Application Of Inevitable Disclosure Doctrine As Stand-Alone Claim

Arbitration provisions are increasingly a focus in non-competition litigation these days and are being used in a variety of strategic ways to assist with the enforcement of non-competition clauses.  The United States Supreme Court recently held that an arbitrator, not a state court, should have decided the enforcement of non-competition clauses.  The employer filed for

Imagine the following scenario…  Twenty years ago, your Company was the employer at issue in a key Supreme Court of Virginia non-compete agreement case.  Your Company prevailed, with the Supreme Court holding that the Company’s standard non-compete agreement is enforceable under Virginia law.  Relying on that victory, your Company continues using identical non-compete language and

On June 24, 2011, the Texas Supreme Court wrote the next chapter concerning the enforceability of non-compete agreements in Texas.  A company’s provision of stock options to employees was deemed satisfactory consideration for a non-compete agreement in Marsh USA Inc. and Marsh & McLennan Companies, Inc. v. Cook, — S.W.3d —-, 2011 WL 2517019 (Tex., 2011).  The Court declared that stock options are reasonably related to the protection of a company’s goodwill, a business interest worthy of protection under the Covenants Not to Compete Act (CNCA).  Although goodwill is intangible, Texas law has long recognized that it is “a property and integral part of [a] business just as its physical assets are.” Marsh USA, Inc., 2011 WL 2517019 * 11. 


Continue Reading The Next Chapter In Enforcing Non-Compete Agreements In Texas

When asked on November 2, 2010, “Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements,” Georgia voters overwhelmingly answered “Yes.”

By this vote, the Georgia voters approved the Restrictive Covenants Act, a law that will dramatically alter Georgia’s legal landscape regarding non-compete agreements and other restrictive covenants.  The Act increases the enforceability of these agreements and allows courts to modify them to the extent reasonably necessary to enforce and protect legitimate business interests.  In order to become effective, Georgia residents had to amend the state Constitution — an event that happened three days ago during Georgia’s general election.  Although there is a question regarding when the Act actually will become effective, by its own terms, it became effective on November 3, 2010.  Below is a summary of some of the key provisions of the new law.


Continue Reading Georgia Voters Pass Constitutional Amendment Strengthening Enforceability Of Non-Compete Agreements And Restrictive Covenants