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Connecticut Non-Compete Invalidated on Grounds of Unnecessary Protection Afforded to Employer

Sanford Hall Agency, Inc. v. Dezanni, 2004 Conn. Super. LEXIS 3574
Case Background

Ms. Lynne Dezanni worked for Sanford Hall Agency, an Avon, Connecticut based insurance company, from 1990 to 2004 where she served as a personal lines (primarily automobile and homeowners insurance) salesperson for clients whose last name started with “A” through “F”.  In 1994, Ms. Dezanni signed an employment agreement that included a non-compete covenant prohibiting the solicitation or attempted solicitation of Sanford Hall’s clients or the disclosure of the company’s confidential information.

In May 2004, Ms. Dezanni was contacted by a recruiter at Sinclair Insurance Group, a direct competitor of Sanford Hall based in Wallingford, Connecticut.  In the following weeks, Sanford Hall announced to its employees that it was engaging in a transaction to sell its assets.  Fearing that she would no longer have a job if the company were sold, Ms. Dezanni accepted employment at Sinclair on June 11, 2004.

The company was in fact sold to a New Jersey insurance company on November 1, 2004.  Sanford Hall commenced legal action alleging that Ms. Dezanni breached the written employment agreement and the non-compete covenant by soliciting its clients and disclosing confidential client information to Sinclair.

Court Ruling

Ms. Dezanni however argued that she was not in breach of the non-compete agreement because it contained unreasonable provisions and was therefore unenforceable.  Additionally, she argued that the employment agreement reserved the right for her to compete in the event that Sanford Hall sold its business.

The court in this case found in favor of Ms. Dezanni and held that the non-compete agreement was in fact unreasonable and unenforceable.  The court based this decision on the fact that Ms. Dezanni was not in a position at Sinclair to threaten Sanford Hall’s interests in its customer relationships and contracts.

Her job at Sanford Hall pertained to the initial contact with clients but her contact usually ended there.  She was not charged with entertaining, socializing with, or schmoozing clients over the phone or in person.  She would not review the contracts when they were due to expire, as the insurer and not the agent handled this business activity.  The court concluded, “Dezanni’s contact with the customers was too infrequent and irregular to pose any threat to the plaintiff’s relationship with its customers”.

The court also held that the agreement excessively restricted Ms. Dezanni from pursuing her occupation and instituted unnecessary limitations because it pertained not only to past and present clients, but to also future ones as well.  Ms. Dezanni was able to prove that the non-compete clause of the employment agreement afforded more protection to Sanford Hall than was reasonably necessary and as a result severely disadvantaged her and ran contrary to the interests of the public.  For these enumerated reasons, the court refused to enforce the non-compete clause of the employment agreement.

Contact Us

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.

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Enforcing a Non-Compete Agreement to Protect Software Company’s Confidential Information

Enforcing a Non-Compete Agreement to Protect Software Company’s Confidential Information

Weseley Software Development Corporation v. Burdette, 977 F. Supp. 137

Mr. Wesley Burdette worked for Weseley Development Corporation first as a Logistics Analyst and then as a Senior Logistics Analyst from May 1993 to September 16, 1996. Weseley was a software development company based in Shelton, Connecticut whose focus product was a transportation and logistics management program referred to as TRACS (Tactical Routing and Consolidation System). Mr. Burdette played a significant role in the development and testing of TRACS versions 3.0 and 3.1. He worked with “customers and potential customers to evaluate, develop, tailor, and implement Weseley’s products” during his approximately three years of employment. He gave Weseley his two weeks notice on August 29, 1996 and planned to switch companies to work for Manugistics for the marketing and sales of its product titled MTP. Management reminded Mr. Burdette of the non-compete clause in his employment agreement that he had signed.
The most important covenants that he signed in conjunction with his employment contract were those not to compete or disclose confidential information. The agreement was signed on January 14, 1995 after Mr. Burdette was allowed time to consult with an attorney regarding any and all of the agreement’s provisions. The non-compete clause stipulated that he could not work for a competitor for a period of six months following his termination with Weseley or disclose confidential information for an indefinite period of time. The company sued Mr. Burdette to enforce the non-compete and asked the court to enjoin him from further employment with Manugistics. Mr. Burdette countered that the agreement was unenforceable because its provisions were unreasonable and that Weseley had only signed the agreement once litigation began.
The court found in favor of Weseley and enforced the non-compete covenant, enjoining Mr. Burdette from working for Manugistics for a period of six months as stated in the language of the agreement. It validated the agreement because there was adequate consideration in the form of “continued employment, an articulated paid vacation entitlement, a new entitlement to severance benefits, and stock options”. Furthermore, it found the limitations to be reasonable such that they fairly balanced Weseley’s desire to protect its business and Mr. Burdette’s desire to still be able to pursue his career. It was paramount that the court protected the company’s interests since Mr. Burdette had a great deal of access to proprietary research & development information that could have severely disadvantaged Weseley should Mr. Burdette have shared the information with Manugistics. Although the court stated that there was no evidence that he had already disclosed confidential information, it held that he would inadvertently draw upon his knowledge gained while employed at Weseley and eventually disclose some amount, however small it may be in, in the course of his new employment with Manugistics.
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.

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