Wednesday, January 20, 2010

How much is a non-compete worth?

According to one Ohio appellate court, $500,000. Marketing Associates v. Gottlieb (1/14/10) [pdf] upheld a half-million dollar jury verdict against an employee who breached a non-compete by resigning and targeting his former employer’s largest client after opening his own shop.

Non-competition cases tend to follow a pattern. An employee resigns, the ex-employer’s attorney sends out a cease-and-desist letter if competitive activities are threatened or suspected, a lawsuit is filed, and injunctive relief is sought trying to prevent the employee from competing, soliciting customers and employees, and using trade secrets and other confidential information.

Separate from the injunctive relief, though, non-competition agreements have a value. Employees who compete against a former employer in the face of a non-compete not only run of the risk of a court entering an injunction and putting them out of work, but also that any money earned in violation of the non-compete will be paid over to the former employer as damages. And, if the employer can show that an employee breached a duty of loyalty while still employed (misappropriating files or information or diverting customers, for example), that damage figure will only go up.

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or