Posts tagged with "disadvantage"

Defining “Marketing” in Connecticut Non-Compete Agreements

Express Scripts, Inc. v. Sirowich, 2002 Conn. Super. LEXIS 3444
Case Background

Ms. Patricia Sirowich worked as a broker at Express Scripts, Inc. (ESI) offering pharmacy benefit management products and services to employers, unions, and third-party administrators.  ESI had Ms. Sirowich sign a contract in connection with her employment with the company wherein she agreed to a restrictive covenant.  The March 1, 1990 document contained a non-compete agreement that prohibited her from marketing services similar to ESI’s for a competitor for two years to any ESI client in New England (defined as Maine, Vermont, New Hampshire, New York, Connecticut, Massachusetts, and Rhode Island).

Ms. Sirowich voluntarily terminated her employment with ESI on December 31, 2000 and started her own company, Pharmacy Benefit Intermediary (PBIrx).  In response to her actions at her new company, ESI alleged that Ms. Sirowich “marketed competitive products and services to its clients in violation of the parties’ non-competition agreement”.  In particular, ESI alleged that Ms. Sirowich marketed products to Diversified Group Brokerage and Group insurance, two of its clients.

The Court’s Decision

ESI sued Ms. Sirowich for breach of the non-compete agreement and sought to enjoin further violations through December 31, 2002.  Ms. Sirowich claimed that she had not violated the covenant because her activities were not marketing, but merely introducing clients to National Medical Health Card (NMHC), a direct competitor of ESI.  She claimed that she did not do any presentation or consummate the sale between the parties.  The court however rejected Ms. Sirowich’s defenses and held that she had indeed violated the covenant by marketing similar products as ESI, triggering the lawful enforcement of the agreement.

“Marketing”, according to the court, included not only the actual sale of products/services but also any efforts to promote and effectuate a sale of products/services.  Facilitating a deal through arranging a meeting between prospective parties amounted to “marketing” as prohibited in the non-compete agreement.  The court held that “the entire thrust of the defendant’s [Sirowich’s] efforts was the replacement of pharmacy benefit management services and products of the plaintiff [ESI] with those of its competitor [NMHC]”.

The general purpose of a non-compete agreement is to prevent former employees from using privileged information and favored relationships with clients acquired during their time as an employee of the company to the disadvantage of the company upon termination.  This case is a prime example of legitimate reasons for the enforcement of the agreement in order to safeguard the operations of the employer from the detrimental actions of a former employee.

 

If you have any questions relating to your non-compete agreement or would to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

What to Know About Your Non-Compete Agreement

In the current economic environment, understanding your obligations under a non-compete agreement could be essential to finding new employment. In uncertain times, an employee may not understand that not all non-compete agreements are enforceable. Here are seven (7) important things to know about non-compete agreements.

(1)        Courts do not view all non-compete agreements equally:

Courts view non-compete agreements ancillary to the sale of a business or between partners differently than they view non-compete agreements between an employee and employer. “When an employee agrees to be subjected to future work restrictions, he or she does so in order to obtain employment and ordinarily gets nothing in return for giving up this important freedom.  Thus the employee is at a great bargaining disadvantage.”  CT Cellar Doors, LLC v. Stephen Palamar, 2010 Conn. Super. LEXIS 3247, J.D. of Waterbury, Docket No. UWY-CV-10-5016075-S (2010). Therefore, the courts will view such a non-compete with great scrutiny.

(2)        Reasonableness requirement:

By definition, a non-compete is a restrictive covenant that prevents employees from competing with their former employers after termination, thereby creating a restraint on the free market. Given this, Connecticut courts may find that these covenants are against public policy. Consequently, non-compete agreements are only enforceable if the restraint imposed is reasonable.

(3)        Courts consider multiple factors in evaluating the reasonableness of a non-compete:

In deciding whether a particular non-compete agreement is reasonable, the court will look to the following factors: “(1) the length of time the restriction operates; (2) the geographical area covered; (3) the fairness of the protection afforded to the employer; (4) the extent of the restraint on the employee’s opportunity to pursue his occupation; and (5) the extent of interference with the public’s interests.” Robert S. Weiss and Associates, Inc. v. Wiederlight, 208 Conn. 525 (1988). The Connecticut Appellate Court has instructed that “the five pronged test is disjunctive; a finding of unreasonableness in any one of the criteria is enough to render the covenant unenforceable.” New Haven Tobacco Co., Inv. v. Perrelli, 18 Conn. App. 531 (1989).

(4)        Involuntarily termination not required:

A prevalent feeling among employees is that if “let go,” a non-compete should not apply.  However, this is not the law. When reviewing a non-compete agreement for reasonableness, the Court will not look to whether the employee left his position voluntarily or involuntarily.

(5)        Geography:

“The general rule is that the application of a restrictive covenant will be confined to a geographical area which is reasonable in view of the particular situation.” Scott v. General Iron, 171 Conn. 132 (1976) (upheld statewide restriction). Geographic restrictions should be “narrowly tailored to the plaintiff’s business situation.” Robert S. Weiss & Associates, Inc. v. Wiederlight, supra, 208 Conn. at 531. In CT Cellar Doors, LLC v. Stephen Palamar, supra, the Court held that a three-year restriction that covered the entire State of Connecticut was unenforceable, unfair and an unreasonable restraint of trade and was contrary to public policy.

Compare that to Robert S. Weiss and Associates, Inc. v. Wiederlight, supra, where the Supreme Court held that a two-year restriction that covered a 10-mile radius of Stamford, was narrowly tailored and therefore reasonable.  See also, Access America, LLC v. Mazzotta, 2005 Conn. Super. LEXIS 2597, J.D. of Middlesex, Docket  No. CV-O5-4003389 (2005)(15-mile restriction upheld); compare, Trans-Clean Corp. v. Terrell, 1998 Conn. Super. LEXIS 717, J.D. of Fairfield, Docket No. CV-97-0348039-S (1998) (60-mile restriction held unreasonable).

(6)        Duration:

Connecticut courts have frequently enforced non-compete periods of a year or more.  However, the courts have stated that the reasonableness of time and geographic restrictions in non-compete agreements are intertwined and “that broad geographic restrictions may be reasonable if the duration of the covenant is short, and longer periods may be reasonable if the geographic area is small.” Van Dyck Printing Company v. DiNicola, 43 Conn. Supp. 191 (1993), affirmed per curiam 231 Conn. 272 (1994) (one year);  Robert S. Weiss & Assoc. v. Wiederlight, supra (two years); Hart Nininger & Campbell Assoc. v. Rogers, 16 Conn. App. 619 (1988) (two years); Scott v. General Iron & Welding Co., 171 Conn. 132 (1976) (five years); Torrington Creamery, Inc. v. Davenport, 126 Conn. 515 (1940) (two years).

(7)        Forfeiture Clauses:

Forfeiture clauses differ from non-compete agreements in that the employee does not make an express promise not to compete, but rather agrees to a forfeiture of benefits if the employee engages in competition with its former employer. Despite this difference, the Connecticut Supreme Court has held that “a covenant not to compete and a forfeiture upon competing are but alternative approaches to accomplish the same practical result.” Deming v. Nationwide Mut. Ins. Co., 279 Conn. 745 (2006). Consequently, forfeiture clauses are subject to the reasonable requirement of non-compete agreements.

Conclusion

Before signing a non-compete agreement, speak to an attorney who is well versed in the law surrounding restrictive covenants and employment contracts.  If you have already signed the non-compete agreement, contact an attorney before pursuing a course of conduct that might violate a non-compete clause. A violation of a non-compete may result in legal action brought against you by your former employer, whether or not such agreement is enforceable.  Situations involving non-compete agreements are very fact specific, requiring case-by-case analysis.

If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com

Motion to Dismiss Denied Where Defendant Failed to Establish Due Process Violation from Pre-Arrest Delay

Written by Lindsay E. Raber, Esq.

In a criminal law matter, a Superior Court of Connecticut considered a defendant’s pre-trial motion to dismiss charges against her due to “unreasonable delay” in prosecutorial efforts.

Case Background

This case arose from an incident that occurred on November 29, 2006, in New Haven, CT. The defendant was involved in an automobile collision with a city bus, resulting in her month-long hospitalization before she returned to her residence, which she occupied prior to and after the accident. A detective prepared an arrest warrant, which was signed on December 14, 2006, but made only one attempt to serve it on the defendant, which was unsuccessful. Approximately fifteen months of inaction passed before the defendant “turned herself in,” indicating she became award of the arrest warrant.

The defendant was charged with second-degree assault with a motor vehicle (Connecticut General Statutes (CGS) § 53a-60d), operating under the influence (CGS § 14-227a), and evading responsibility (CGS § 14-224(b)). She filed a motion to dismiss, arguing that warrant was not served within a reasonable time and beyond the statute of limitations. She further claimed that the pre-arrest delay violated her constitutionally protected due process rights. In support of her motion, the defendant did not present any evidence of “the impact, if any, the fifteen-month delay had on the defendant’s ability to present a defense.”

What Constitutes an Unreasonable Delay?

Under CGS § 54-193(b), our statute of limitations law, the State can prosecute an individual for a crime resulting in a sentence in excess of one year within five years after the date of the offense. However, “the warrant must still be executed without unreasonable delay to preserve the primary purpose of the statute of limitations.” Where a defendant asserts due process violations stemming from pre-arrest delays, he or she must prove “both that (1) actual substantial prejudice resulted from the delay and (2) that the reasons for the delay were wholly unjustifiable, as where the state seeks to gain a tactical advantage.”

There is no per se rule regarding whether the length of a delay is unreasonable. In State v. Crawford, a decision rendered by Connecticut’s Supreme Court, the arrest warrant was not executed for more than two years after it was issued, yet this did not warrant a dismissal of the charges.

Court’s Ruling

In this case, the Superior Court found that the fifteen-month delay was not per se unreasonable, in large part referencing the longer and unexplained, yet permissible delay in Crawford. Even if the delay due to a lack of due diligence was found unreasonable, “[t]he evidence presented to this court did not demonstrate that the defendant has suffered any disadvantage.” The defendant did not provide any evidence of prejudice beyond “mere allegations,” and there was “no evidence in the record to support a claim that the state sought to gain a tactical advantage over the defendant by virtue of the pre-arrest delay.” Therefore, the Superior Court denied the defendant’s motion to dismiss.

When faced with a charge of evading responsibility, an individual is best served by consulting with an experienced criminal law practitioner. Should you have any questions regarding criminal defense, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County at 203-221-3100 or at JMaya@Mayalaw.com.