Posts tagged with "terminated"

Retrial on Charges at Heart of Jury Deadlock Did Not Violate Double Jeopardy

In a criminal law matter, the Appellate Court of Connecticut rejected a petitioner’s post-conviction claim of double jeopardy, holding that he was subject to a continuing prosecution, not successive prosecutions.

Case Background

In this case, the petitioner was charged with five counts of risk of injury to a minor child, as well as one count for each of the following: reckless endangerment, criminal possession of a firearm, carrying a pistol without a permit, attempted assault, attempted murder, and possession of narcotics. He was acquitted of attempted murder and convicted of narcotics possession, but the jury deadlocked on the remaining charges.

The judge declared a mistrial, and the petitioner was sentenced to five years’ incarceration. The prosecution subsequently charged the petitioner with the same charges on which the jury had hung. Though he was acquitted of attempted assault, he was convicted on the other charges. The petitioner was sentenced to fifteen years’ incarceration, consecutive to his previous sentence, along with eight years’ special probation.

The petitioner engaged in a series of appeals, during which he argued, in part, that the two trials amounted to successive prosecutions in violation of the Fifth Amendment prohibition against double jeopardy. He claimed that controlling precedent “applied to bar the state from prosecuting him in a second trial for the charges on which the jury could not come to a unanimous verdict in the first trial.”

Double Jeopardy Under the U.S. Constitution

The Fifth Amendment of the U.S. Constitution states, “No person shall… be subject for the same offense to be twice put in jeopardy of life or limb,” a principle referred to as double jeopardy. To determine whether two offenses charged instead constitute a single offense, courts must determine “whether each provision requires proof of a fact which the other does not.” This so-called Blockburger test applies “not only to charges brought in a single prosecution but to charges in successive prosecution cases as well.”

However, the U.S. Supreme Court has held, “[A] trial court’s declaration of a mistrial following a hung jury is not an event that terminates the original jeopardy to which [the defendant] was subjected.” As the Court elaborated:

The double-jeopardy provision of the Fifth Amendment… does not mean that every time the defendant is put to trial before a competent tribunal he is entitled to go free if the trial fails to end in a final judgment. Such a rule would create an insuperable obstacle to the administration of justice in many cases in which there is no semblance of the type of oppressive practices at which the double-jeopardy prohibition is aimed.

The Court’s Decision

Richardson v. United States, 468 U.S. 317 (1984). Rather, the Court noted the possible occurrence of unforeseeable circumstances, such as a hung jury, and denying the State the power to retry a defendant under such a scenario would frustrate the protective purpose of our laws.

With these principles in mind, in this case the Appellate Court of Connecticut held that “the state’s retrial of the petitioner on charges that deadlocked the jury” did not violate double jeopardy. As the Court explained, “the declaration of a mistrial due to the jury’s failure to agree on the remaining charges was not an event that terminated jeopardy as to those charges.” Therefore, the judgment was affirmed.

Written by Lindsay E. Raber, Esq.


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.

Connecticut Non-Compete Prohibits Client Solicitation in Investment Services Industry

In Robert J. Reby & Co. v. Byrne, 2006 Conn. Super. LEXIS 2115, Mr. Patrick Byrne worked at Robert J. Reby & Co., a financial firm in Danbury, Connecticut, as a registered investment advisor from June 2005 to July 2005.  The company advises high net worth individuals and families in the areas of trusts, wealth management, and taxation.  Mr. Byrne signed an employment contract with Robert J. Reby & Co. wherein it contained a non-compete agreement that stipulated he be prohibited from soliciting the company’s clients or disclosing any of its confidential information in the event of his termination.

Following Mr. Byrne’s short employment with Robert J. Reby & Co. he began to work at Aspetuck Financial Management, LLC, a wealth management firm based in Westport.   Robert J. Reby & Co. alleged that Mr. Byrne solicited its clients for his new firm, Aspetuck, in direct violation of the non-compete agreement.  Mr. Byrne countered that the provisions of the non-compete were unreasonable in the sense that it placed an excessive restraint on his trade and prevented him from pursuing his occupation.

The Court’s Decision

The court held that the non-compete agreement between Mr. Byrne and Robert J. Reby & Co. contained reasonable terms and was enforceable.  It failed to see any merits in Mr. Byrne’s claim that the agreement was too broad and created an insurmountable occupational hardship.  The provisions of the agreement only restricted a very small segment of Mr. Byrne’s occupational activities.

The terms he agreed to only prevented him from soliciting the specific and limited group of people that were clients of Robert J. Reby & Co..  The court held that the covenant was not a pure anti-competitive clause because it did not prevent him from engaging in the investment services industry as a whole.  This limited scope with regard to the prohibition levied upon Mr. Byrne caused the agreement to be reasonable and therefore enforceable.

The court also took time to discuss the public policy behind finding the non-compete agreement enforceable and establishing the legitimacy of the agreement.  Companies, according to the court, have a legitimate interest in protecting their business operations by preventing former employees from exploiting or appropriating the goodwill of its clients that it developed at its own, and not the employees’, expense.

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

Court Uses Connecticut Law to Supersede Massachusetts Law in Application of Non-Compete Agreement

In Custard Insurance Adjusters v. Nardi, 2000 Conn. Super. LEXIS 1003, Mr. Robert Nardi worked at Allied Adjustment Services’ Orange, CT office beginning in September 1982 as the vice president of marketing, overseeing the adjustment of claims for insurance companies and self-insurers.  The company had Mr. Nardi sign non-compete and confidentiality agreements as a term of his employment.

The Employment Agreements

The agreements established that he could not solicit or accept claims within a fifty-mile radius of Allied’s Orange office for a period of two years following his termination.  The agreements further specified that the names and contact information of Allied’s clients were the company’s confidential property.  The choice of law provision stated that Massachusetts law would be controlling (Allied had its headquarters in Massachusetts).  On September 1, 1997, Allied sold its business and all its assets, including its non-compete agreements, to Custard Insurance Adjusters.

Mr. Nardi became increasingly worried about future employment at Custard when the company restructured its compensation format, allegedly decreasing his annual income by 25%.  At this point, Mr. Nardi began to inquire about employment at other companies and in particular contacted Mr. John Markle, the president of Mark Adjustment, with whom he had a previous professional history.  He also arranged meetings between Mr. Markle and four other current Custard employees to discuss switching companies.  While the companies are competitors in the insurance industry, Mark’s business was restricted to the New England region while Custard operated nationally.  Custard terminated Mr. Nardi and asked the court to enforce the non-compete agreement.

Determining the Choice of Law Provision

The court first sought to tackle the issue of the choice of law provision since it designated Massachusetts law as controlling but this lawsuit was brought in Connecticut state court.  The court asserted its authority over the issue and case because it could not ascertain any “difference between the courts of Connecticut and Massachusetts in their interpretation of the common law tort breach of fiduciary obligation brought against a former officer of a corporation”.

The court emphasized that above all else, the legal issue at hand was that of contractual obligations and a company’s business operations.  It asserted its authority in this respect by stating it believed “that the Massachusetts courts interpret the tort of tortious interference with contractual and business relationships the same way our [Connecticut’s] courts do”.  Additionally, the court cited that the application of Massachusetts law would undermine Connecticut’s policy to afford legal effect to the Connecticut Unfair Trade Practices Act (CUTPA) and Connecticut Uniform Trade Secrets Act (CUTSA), two-state statutes used by Custard to sue Mr. Nardi.

Determining the Enforceability of the Non-Compete Agreement

Next, the court addressed the enforceability of the non-compete agreement signed by Mr. Nardi and Allied.  Mr. Nardi contended that the provisions of the agreement were only binding upon the signatory parties (himself and Allied) and that Custard lacked the authority to enforce its provisions.  He asked the court to deny Custard’s request to enforce the non-compete because it was “based on trust and confidence” between the signatory parties and “was thus not assignable”.  The court rejected this train of thought because the non-compete explicitly contained an assignability clause and it held that the non-compete covenant was properly and legally transferred to Custard under Massachusetts law.

Mr. Nardi based a substantial portion of his defense on the claim that Custard violated, and therefore invalidated, the agreement when it modified his compensation format.  He alleged that he was the victim of unjustified reductions in his professional responsibilities and compensation following Custard’s acquisition of Allied in 1997.  Mr. Nardi however was still an executive at the new company despite a reduction in rank and he himself had expressed excitement about becoming an executive at a national, instead of a regional, company.

The Court’s Findings

The court ultimately found the non-compete to be valid and enforceable, therefore granting Custard’s request for injunctive relief.  It assessed the facts of the case and Mr. Nardi’s current position to amend the time restriction of the agreement, however.  Taking into account that he was starting a family and had a young child in conjunction with estimates that the full restrictions could amount to a 60-70% loss of business for Mr. Nardi, the court reduced the time limitation from two years to six months.  The court concluded that while the provisions were reasonable at face value, they could have unforeseen consequences that would have severely impaired Mr. Nardi’s ability to make a living in order to provide for his family.


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.

When is A Non-Compete Geographical Limitation Unreasonable?

In Braman Chemical Enterprise, Inc. v. Barnes, 2006 Conn. Super. LEXIS 3753, Ms. Valerie Barnes worked as an exterminator for Braman Chemical Enterprises, Inc. from November 5, 1990, to April 26, 2006.  On October 24, 1990, in preparation for Ms. Barnes beginning to work, the parties executed a non-compete agreement titled “Restriction Against Other Employment After Termination of Work With Braman Chemical Enterprises, Inc.” where it stated that Ms. Barnes was prohibited from working at any branch of a pest control business within fifty miles of the Hartford City Hall for a period of six months.

Case Details

The company provided pest control services to commercial and residential customers in approximately ninety percent of Connecticut’s towns and cities.  Ms. Barnes worked the majority of her career with Braman servicing the area defined as east of New Haven, west of Guilford, south of Meriden, and north of the Long Island Sound.  She received training for her operator’s license while employed by Braman but obtained her supervisor’s license on her own time and at her own expense.

On April 26, 2006, Ms. Barnes voluntarily terminated her employment at Braman and formed a Connecticut limited liability company called “Bug One, LLC” based in Hamden that provided substantially identical services as her previous employer.  Braman sued Ms. Barnes in Connecticut state court to enforce the non-compete and enjoin her from further violations of the restrictive covenant’s provisions.  Ms. Barnes asserted that the geographical limitation in the agreement was unreasonable and provided an unnecessary amount of protection for Braman.

The Court’s Findings

The court found Ms. Barnes’ argument to be meritorious and denied Braman’s request to enforce the agreement.  A non-compete agreement is analyzed in its entirety but a single unreasonable provision can be sufficient to invalidate the entire agreement and prevent enforcement.  Connecticut courts have traditionally tended to apply greater scrutiny to a non-compete agreement that creates a general restriction on a geographical area than agreements that focus simply on doing business with the employer’s clients.

Employers are legally allowed to protect themselves in a “reasonably limited market area” but may not overreach to the degree that the restriction prevents the former employee from practicing his or her trade in order to make a living.  While Braman contended that the geographical limitation was reasonably tailored to meet its legitimate business needs, the court held that the provision went well beyond the “fair protection of plaintiff’s [Braman’s] interests”.

The geographical area of fifty miles from Hartford City Hall placed an unreasonable restraint on trade for Ms. Barnes.  The court notes that the prohibited area covered roughly two million potential customers and an area of 7,850 square miles, covering parts of Connecticut, Massachusetts, Rhode Island, and New York.  To put this in perspective, the entire state of Connecticut is only 5,018 square miles.  This area as defined in the non-compete agreement was thus an unreasonable limitation and sufficient cause to invalidate the entire agreement.

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County.  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.

I Was Laid Off Due to Restructuring, but My Position Was Filled Two Days Later. I Was Forced to Sign a Separation Agreement. Can I Sue for Compensation in Connecticut?

An at-will employee can be terminated for any lawful reason in Connecticut.  For example, if you are an at-will employee, your company can terminate you for “restructuring,” even if they fill your same position days later.  Technically, an at-will employee is owed no explanation for termination.   Regardless, there are exceptions to an employment at-will termination.  You may not be terminated in any such way that violates your civil rights.

An example of this would be if you were terminated for your age, gender, or race.  Whether you have been terminated for any one of these reasons would rely heavily on the specific facts of the case.  To determine whether you may sue for compensation it would be important to sit down with an experienced employment attorney to go through every fact and circumstances of your employment.


In the same respect, you may have a claim for compensation if you were forced to sign the separation agreement under fraud or misrepresentation.  Again, it is important to describe to an employment attorney every detail about the separation agreement to determine your case.

Investigatory Meeting Even With Possible Consequences Not an Adverse Employment Action

Employees sometimes find themselves summoned to an internal investigation and informed that they could be terminated depending upon the results of the investigation.  As long as the employer is merely (and reasonably) enforcing its preexisting disciplinary policies, such circumstances (however unsettling) do not support even a prima facie case of employment discrimination.

In order to establish a prima facie case and put an employer to its proof that there was a legitimate, non-discriminatory reason for its challenged action, an employee must demonstrate that he suffered an “adverse employment action.”  This means “a materially significant disadvantage with respect to the terms of [a plaintiff’s] employment.”  While each situation must be assessed under the totality of the particular circumstances, there must be “a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.”

Merely being called into an investigatory meeting and informed of its potential consequences does not constitute an adverse employment action, particularly where no discipline or other negative consequence follows.  In the absence of an adverse employment action, an employee’s case will likely be dismissed via summary judgment without the need for a trial on the merits.

The employment law attorneys in the Westport, Connecticut office of Maya Murphy, P.C. have extensive experience in the negotiation and litigation of all sorts of employment-related disputes and assist clients from Greenwich, Stamford, New Canaan, Darien, Norwalk, Westport and Fairfield in resolving such issues. Please contact our offices at 203-221-3100.

Role of Consideration in a Connecticut Non-Compete Agreement

J. M. Layton & Co. v. Millar, 2004 Conn. Super LEXIS 2226
Case Background

Mr. Reid Millar worked at J. M. Layton & Co., a Connecticut commercial insurance brokerage firm, for close to twenty years until he voluntarily terminated his employment on December 3, 2003.  During his career at Layton, Mr. Millar developed and maintained client relationships and the company even sent him to seminars in Florida on how to engender customer loyalty.  In January 1994, the company’s ownership transferred to an ‘Employee Stock Option Plan” scheme wherein Mr. Millar and the other employees became the new owners of the brokerage firm.  Mr. Millar signed an employment agreement later that year in August.

Mr. Millar signed this agreement in response to a memo from the company’s president stating, “The value of the stock in the company would increase when all employees/shareholders signed employment agreements”. The employment agreement contained non-compete and non-solicitation clauses prohibiting Mr. Millar from performing any service provided by Layton for a period of two years to any entity or person that was a client of Layton in the two years prior to termination.

Four years later, in 1998, the employee-owners sold the firm to SIG Acquisition Co. for $5.59 million.  Mr. Millar terminated his employment on December 3, 2003 and began to work for a competitor, Shoff Darby, soon after this decision.  Several clients made the switch with Mr. Millar and he provided them with services they previously received from Layton.  Layton sued Mr. Millar to enforce the terms of the restrictive covenant to which Mr. Millar presented a defense that there was not adequate consideration for the agreement to be enforceable.

The Court’s Decision

The court found in favor of Mr. Millar and held that the agreement between Layton and himself lacked the adequate consideration required to make the covenant legally binding on the signatory parties.  The court rejected Layton’s contentions that continued employment and increased value of stock in the firm were adequate forms of consideration for the agreement.

Consideration is a crucial contract law principle wherein each party must receive a benefit and/or a detriment from the agreement to make it legally valid and enforceable.  In the absence of consideration, an executory promise is generally unenforceable.  Courts have determined that continued employment alone is not adequate consideration for a restrictive covenant.  Past decisions have permitted it to qualify as adequate consideration when it accompanied by another defined benefit such as a change in compensation.

Likewise, the court held that the “increase in stock value” argument was without merit and did not constitute adequate consideration.  There was a timeline disconnect with the issuance of the stock, the employment agreement, and any increase in value that prevented adequate consideration in this form.  Mr. Millar received the stock seven months prior to signing the employment agreement and the increase in its value (if any) occurred four years after the agreement’s execution.

These components lacked a coherent connection that would unite them in a manner as to represent the adequate consideration needed to make the agreement enforceable.  The court concluded that the possible increase in stock value was far too “imprecise, indefinite, and self-serving, to be adequate consideration” and it denied Layton’s request for enforcement of the non-compete agreement.

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.

Veterinary Doctor’s Non-Compete Invalidated When Terms Unreasonably Favor Employer

Merryfield Animal Hospital v. MacKay, 2002 Conn. Super. LEXIS 4099
Case Background

Dr. Morgan MacKay worked as a doctor of veterinary medicine at Merryfield Animal Hospital, a clinic owned by Dr. Engstrom, from May 15, 2000, to April 16, 2002.  There were two employment contracts between Dr. MacKay and Merryfield that described employment from May 15, 2000, to May 15, 2001, and a second covering May 1, 2001, to April 30, 2002.  Each contained restrictive covenants and was supported by adequate consideration, specifically the second agreement listed a substantial pay increase.  The non-compete agreement prohibited Dr. MacKay from owning or working at another veterinary facility within seven miles of Merryfield for a period of two years.

Dr. MacKay voluntarily terminated his employment in a letter to Dr. Engstrom dated April 16, 2002 stating that he “could no longer tolerate the veterinarian service practices that were occurring at Merryfield”.  Following this decision, he began to work at New Haven Central Hospital, a veterinary facility located 6.2 miles from Merryfield, clearly within the seven-mile radius prohibited area as defined in the non-compete covenant.

Merryfield sued Dr. MacKay to enforce the terms of the non-compete agreement and curtail further employment at New Haven Central Hospital.  Dr. MacKay however contended that the terms of the agreement afforded Merryfield an unnecessary and unfair amount of protection, to the degree that it rendered the covenant unreasonable and unenforceable.

The Court’s Decision

The court found in favor of Dr. MacKay and held that the terms of the non-compete agreement “afforded greater protection to the plaintiff [Merryfield] than is reasonably necessary and the non-compete is unenforceable”.  The court supported its ruling with the argument that it had the obligation to ensure that the agreement should only afford a fair degree of protection to the interest of the employer while also safeguarding the interests of the employee himself.  The agreement went well beyond creating reasonable protections for Merryfield and unnecessarily restricted Mr. MacKay’s career opportunities and his ability to earn a living.

The language of the restrictive covenant was so broad and general that it prohibited several activities that Merryfield did not engage in.  For instance, the agreement prohibited Dr. MacKay from delivering veterinary care to horses, cattle, sheep, or swine even though Merryfield did not treat those types of animals.

Additionally, the wording of the agreement was so vague that it would have even prevented Dr. MacKay from working as a meat inspector.  Even the finite restriction of a seven-mile radius was deemed unreasonable given the specific circumstances of the veterinary industry in the area.  The language of the agreement would prevent Dr. MacKay from bringing in animals to New Haven Central Hospital if he was employed at a clinic that lacked surgical facilities, as was the case with the vast majority of the veterinary facilities outside the seven mile prohibited radius.

Conclusion

While the restriction of seven miles for two years is reasonable at face value, it becomes clear that it can easily transform into an incredibly unreasonable restriction in light of certain facts.  It was the use of vague language throughout the document and the unforeseen consequences that ultimately invalidated the restrictive covenant between Dr. MacKay and Merryfield.

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.

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

TyMetrix, Inc. v. Szymonik, 2006 Conn. Super. LEXIS 3865
Case Background

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.

Breach of Employment Agreement

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’s Decision

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.

 

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County.  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.

Connecticut & Missouri Laws Apply the Same Tests to Determine the Enforceability of Non-Compete Agreements

H & R Block Eastern Tax Services, Inc. v. Brooks, 2000 U.S. Dist. LEXIS 19369
The Employment Agreement

Mr. Donald Brooks worked for H & R Block Eastern Tax Services, Inc. as an Accounting Service Manager from December 30, 1996, when he sold his business assets to H & R Block until the company terminated his employment on May 31, 2000.  The closing of the Asset Purchase Agreement was contingent on the execution of an employment agreement.

Under the agreement, H & R Block employed Mr. Brooks on a year-to-year basis but had the authority to terminate him at any time without notice.  The employment agreement contained a covenant not to compete that prohibited Mr. Brooks for two years after termination from soliciting H & R Block’s clients and offering competing business services within a twenty-five mile radius of the company’s offices in the sales district where he worked.  The non-compete agreement also stated that Missouri law would govern the contract and any legal disputes.

Mr. Brook’s termination became effective on May 31, 2000 and he began providing accounting/tax services to former H & R Block clients.  The company sued him for breach of the covenant not to compete and requested that the court enforce the provisions of the agreement.  He claimed that the covenant was unenforceable and therefore his actions did not constitute a breach that entitled the company to any type of relief.  The federal district court found in favor of H & R Block and granted the company’s request for injunctive relief by enforcing the non-compete agreement executed by the parties at the beginning of Mr. Brooks’s employment.

The Court’s Analysis

In its legal analysis, the court evaluated whether to apply the choice of law provision and examined the reasonableness of the agreement.  The covenant designated Missouri law as the choice of law because that was the location of the company’s corporate headquarters.  The agreement stipulated that Missouri law would apply to disputes except when Missouri had no connection to the contract or when its law contradicted public policy of a state with a materially greater interest in the issue.  The court concluded that Missouri had similar laws and public policy with regard to contract, employment, and non-compete principles.

Both states (Connecticut and Missouri) enforce covenants that “impose reasonable restrictions” in order to safeguard the “protectable interests” of a former employer.  Furthermore, both states stress that enforcement of a restrictive covenant must balance the need to protect the employer from unfair competition without unnecessarily restricting the employee’s ability to secure future employment.  The court approved the use of Missouri law due to its similarities with Connecticut state law and the application of very similar tests to ascertain an agreement’s enforceability.

The Agreement’s Restrictions

Next, the court analyzed whether the provisions in the agreement were reasonable limitations and did not excessively restrict Mr. Brooks’s ability to pursue his occupation following his termination from H & R Block.  The court found that the restrictions were temporary and spatially limited.  The agreement specifically prohibited “soliciting, diverting, or taking” business away from H & R Block and the restrictions inserted into the employment contract reflect this objective.

The language and provisions of the covenant restricted competing activities in the Greater Hartford Area but left Mr. Brooks free to practice in the majority of the state of Connecticut and the rest of the country.  These restrictions thus protected H & R Block’s legitimate business interests and did not create excessive hardships for Mr. Brooks.  The court found that the covenant not to compete was enforceable under the laws of both Missouri and Connecticut.

 

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County.  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.