Posts tagged with "potential clients"

What is the enforceability of an employment contract in Connecticut?

In Connecticut, the enforceability of an employment contract is based on general contract principals. This contract can be verbal, written or a combination of the two. In addition, employment contracts in Connecticut can be either express or implied. An employment contract is an express contract if it is written and signed by both parties. A valid express employment contract will contain wording that describes the job duties, working conditions, compensation, benefits and other employment details.

If, alternatively, an employment contract is implied, the terms of the contract would come from the conduct of the parties, verbal promises made before employment started, information stated in an employee handbook, promises made in an offer letter, and other sources.

Today, most employers have their employees sign a document agreeing to at-will employment as opposed to a defined term in an employment contract. This way, either the employer or the employee may end the employment relationship at any time, and usually for any reason.

In any case, Connecticut courts regularly find employment contracts enforceable against both parties. Such agreements will be upheld by Connecticut courts as long they do not violate any laws and were not entered fraudulently, under duress, or by mistake of the parties. If valid, both parties to the contract will be held responsible for abiding by its terms and liable for any breach. Frequently, allegations of breach of an employment contract involve issues of compensation and termination of employment.

If you are interested in drafting an enforceable employment contract, or interested in determining whether an employment contract you have already signed is binding, please feel free to call the Employment Law Group of Maya Murphy, P.C. in Westport, CT at 203-221-3100 or email Ask@mayalaw.com today.

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Enforceability of Non-Solicitation Agreement for Potential Clients of Former Employer

Webster Financial Corporation v. McDonald, 2009 Conn. Super. LEXIS 169

USI Insurance Services of Connecticut, Inc., formerly Webster Insurance, Inc., employed Mr. William McDonald as a senior vice president at its Westport, CT office. The company had Mr. McDonald sign an employment agreement dated February 11, 2003 that contained non-compete and non-solicitation clauses in the event of his termination. The agreement prohibited Mr. McDonald from soliciting any of USI’s contacts that had been clients or potential clients in the twelve months prior to his termination and established a geographical limit of twenty-five miles within USI’s Westport office. As for the time limitation, the covenant was applicable for the great period of two years following Mr. McDonald’s termination or as long as he received benefits from a deferred compensation plan. Mr. McDonald resigned on September 21, 2007 and began to work at Shoff Darby, Inc., an industry competitor well within the prohibited twenty-five radius of USI’s Westport office. At his new firm, Mr. McDonald proceeded to solicit and sell insurance products to USI’s former and current clients. Additionally, he contacted several USI employees and urged them to leave the company to seek employment with Shoff Darby.
USI sued Mr. McDonald and asked the court to enforce the provisions of the restrictive covenant. Mr. McDonald presented two defenses to the court, arguing that the agreement was overly broad and therefore unenforceable. He claimed that the prohibition of potential clients and the potential unlimited duration made the non-compete agreement unreasonable and unenforceable. USI asserted the validity of the agreement and emphasized to the court that it contained a “blue pencil” provision that authorized the court to amend the time and/or geographical limitation in order to comply with Connecticut law. Mr. McDonald countered this argument stating that this legal procedure would require the court to essentially rewrite the non-compete contract, an act forbidden under Connecticut law.
The court found in favor of USI with regard to the issue of the agreement’s enforceability with its holding stating, “taking the covenant as whole, nothing on the face of the contract renders the covenant unenforceable as a matter of law”. While deliberating about the claim that the prohibition on potential clients was unreasonable, the court stated that there is no direction or precedent from the Connecticut Appellate Courts and that the Superior Courts throughout the state were divided on the issue. This court took the approach used in Cuna Mutual Life Ins. Co. v. Butler (2007 Conn. Super. LEXIS 1623) that such limitations on potential clients are reasonable so long as they are “readily identifiable and narrowly defined”. The court concluded that the potentially unlimited applicable duration of the agreement was not “per se unreasonable” because the agreement as a whole contained several other definitive restrictions such as the twenty-five radius from the Westport office and the limited group of clients for the anti-solicitation clause.

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Retention of Confidential Information is a Clear Breach of Non-Compete According to Connecticut Court

Retention of Confidential Information is a Clear Breach of Non-Compete According to Connecticut Court
TyMetrix, Inc. v. Szymonik, 2006 Conn. Super. LEXIS 3865

Mr. Peter Szymonik worked for TyMetrix, Inc. from July 2002 to March 10, 2005 as the Director of Client Services and then as Vice President of Technical Operations beginning in January 2004. TyMetrix was a technology company that provided web-based systems for its clients in order to implement electronic invoicing, performance management metrics, matter & document management, budgeting, forecasting, and generating other business reports. The company’s typical clients included the legal departments of Fortune 500 companies, law firms, and insurance companies. The company operated within the United States but at the time had potential clients in the United Kingdom and Australia. Mr. Szymonik signed an employment agreement in July 2002 and the document contained several post-employment restrictive covenants. The non-compete agreement prohibited him from: 1) retaining, using, or disclosing any confidential information, 2) working for a competing enterprise for two years following termination, 3) soliciting TyMetrix’s clients (current or prospective) during those two years, and 4) soliciting or hiring any TyMetrix employee during those two years.
TyMetrix terminated Mr. Szymonik on March 10, 2005 and he proceeded to form a new company, SpectoWise, Inc., on July 5, 2005 where he served as its president. In his capacity as the president of the new company, he solicited several TyMetrix clients and employees to join his firm and even hired at least one former TyMetrix employee. TyMetrix also asserted that Mr. Szymonik retained copies of some of the company’s confidential information. He claimed that he was only retaining the information to assist in litigation with TyMetrix and had not used its content in connection with the business operations of his new company or for any other personal gain. TyMetrix sued Mr. Szymonik in Connecticut state court and asked the court to grant injunctive relief by enforcing the provisions of the July 2002 non-compete agreement.
The court found in favor of TyMetrix, concluded that Mr. Szymonik had indeed breached a valid non-compete agreement, and ordered the covenant enforced. Mr. Szymonik presented several defenses that the court ultimately rejected in its legal analysis. He asserted that his new company, SpectoWise, offered very different services from TyMetrix and further argued that the non-compete was unenforceable because the company wrongfully terminated his employment. As for the claim that the companies were vastly different, the court analyzed SpectoWise’s marketing material and discerned that it was abundantly clear the companies essentially offered the same services to their clients. Furthermore, the court held that Mr. Szymonik’s termination was not in bad faith and did not go against public policy. He failed to present any evidence to demonstrate that TyMetrix had violated any “expressed statutory or constitutional provision or judicially derived public policy” when it terminated his employment. The court also held that Mr. Szymonik’s retention of TyMetrix documents was unlawful on its face and was a clear breach of the non-compete agreement. It was irrelevant why Mr. Szymonik retained the documents because the mere fact that he still possessed the confidential information was a violation of the employment agreement.
The court’s legal analysis of the dispute indicated that there was in fact a breach of the non-compete agreement and that TyMetrix was likely to succeed on the merits of its claim. These two factors led the court to find in favor of the employer (TyMetrix) and ordered the enforcement of the restrictive covenant that the parties had executed in July 2002.
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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Ambiguous “General Release Agreement” and Global Restrictions Invalidate a CT Non-Compete

Ambiguous “General Release Agreement” and Global Restrictions Invalidate a CT Non-Compete
Connecticut Stone Supplies, Inc. v. Fresa, 2002 Conn. Super. LEXIS 4141

This case concerns Connecticut Stone Supplies’ (CSS) legal dispute with two former employees regarding the enforcement of their non-compete agreements. The company employed Ms. Amy Fresa from May 15, 2000 until April 4, 2002 as an Administrative Assistant. She began to work at the company as a temporary employee in connection with Reitman Personnel and the company officially hired her as a full-time employee on August 14, 2000. CSS had her sign an “Employee Confidentiality and Non-Competition Agreement” when it first hired her and then had her sign a “General Release and Settlement Agreement” when it terminated her employment. The restrictive covenant prohibited her from working at a competing company for a period of two years and additionally stipulated that she could not solicit CCS’s current of potential clients within a three hundred mile radius. She began to work for O&G, a company in direct competition with CSS, on August 2002. Mr. Travis Simms worked for the company from March 29, 2000 until January 22, 2011 at which time he also began to work for O&G. He signed a non-compete agreement in the same manner as Ms. Fresa but did not execute a General Release Agreement upon termination. CSS sued both former employees in Connecticut state court and sought to enforce their respective non-compete agreements.
Ms. Fresa and Mr. Simms argued that the non-compete agreements were not binding upon them because the covenants lacked consideration and their terms were unreasonable. Ms. Fresa additionally contended that the General Release Agreement “extinguished any rights that might exist under it [the non-compete agreement]”. The court found in favor of Ms. Fresa and Mr. Simms and held that their restrictive covenants with CSS were not enforceable. The court analyzed the General Release Agreement and found that it contained ambiguous language that created an unintended benefit for CSS. The company, according to the court, should not be allowed the benefit of enforcing the agreement merely because of an unintended, ambiguous clause in an employment agreement that it had drafted. The court used this analysis to determine that Ms. Fresa’s non-compete was unenforceable.
The court relied on a different analysis to conclude that Mr. Simm’s non-compete agreement with CSS was unenforceable. Here the court examined the restrictive provisions of the non-compete agreement to determine whether they were limited and reasonable in a manner that the agreement fairly balanced the interests of the parties involved. While there was a geographical restriction associated with the non-solicitation clause (three hundred miles), the non-compete clause did not have a geographical limitation and as such “means [the employee] cannot compete anywhere in the world against the plaintiff for a period of two years from termination”. The court found this to be completely unacceptable and held that the global prohibition on competitive employment was “patently and grossly unreasonable”. CSS stated that is conducted business all throughout the state of Connecticut but failed to offer any evidence that it carried out global operations or that a worldwide prohibition on competing employment was necessary to protect its legitimate interests. The court invalidated Mr. Simm’s non-compete agreement in light of the unreasonable and oppressive nature of the provisions contained in agreement that he executed with CSS.
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Enforcing a Non-Compete Agreement in the Connecticut Insurance Industry

October 25, 2011 · Print This Article
Enforcing a Non-Compete Agreement in the Connecticut Insurance Industry
Grayling Associates, Inc. v. Villota, 2004 Conn. Super. LEXIS 1859
Grayling Associates, Inc., an executive recruiting agency for large national insurance companies, employed Mr. Albert Villota from October 2002 to April 8, 2004. The parties executed a non-compete agreement at the start of Mr. Villota’s employment that prohibited him from working at a competing firm within a one hundred mile radius of Grayling’s Connecticut office for a period of two year after his termination. He began to work at a direct competitor, Park Avenue Group, Inc. (PAG), after he voluntarily terminated his employment with Grayling. The company sued Mr. Villota in Connecticut state court and sought the enforcement of the provisions contained in the non-compete agreement.
The court found in favor of Grayling and granted the company’s request for injunctive relief. It enjoined Ms. Villota from working at PAG or other companies in competition with Grayling until April 8, 2006, the end of the two-year period as stipulated in the non-compete agreement. The court went on to confirm that the time and geographical restrictions in the agreement were reasonable so that they properly balanced the interests of the parties.
The major point of contention in the case focused on the one hundred mile radius restriction. Grayling was based in Hartford, referred to by many in the business world as the “insurance capital of the world” and as such, the nature of its services was very dependent on its location and proximity to the city. Many of the nation’s most prominent insurance firms have their headquarters in Hartford and Mr. Villota’s actions within the vicinity of the city could negatively affect Grayling’s business interests and operations. Grayling noted that the non-compete agreement allowed for the application of the “blue pencil rule” that would allow the court to modify the terms of the geographical restriction. The court held that the restriction was enforceable as stated in the agreement and enforced the one hundred mile radius provision to protect Grayling’s legitimate interests.
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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