Thursday, September 12, 2019

Two Maryland Non-Compete Clauses And A Magic Blue Pencil.

Aerotek filed suit in Maryland against a former employee alleging she violated a non-compete agreement.  Aerotek v. Obercian, 377 F. Supp. 3d 539 (D. Md. 2019).  The employee had significant customer contact while working for Aerotek.  The agreement contains two non-compete clauses that generally prohibit this employee, for 1 year post-termination, from:  (1) performing business similar to that which she performed at Aerotek and (2) working for any business that is engaging in a business similar to Aerotek's.

Can you guess which clause the Court found enforceable and which it found was not?

The Court found Clause 1 facially enforceable because it is plausibly directed at a legally protectable interest.  That interest, according to the Court, is ensuring that a departing employee does not steal the employer's customers.  

The Court found Clause 2 facially unenforceable because it prohibited Aerotek's former employee from working for a competitor, even if she was not doing competitive work.  This is sometimes called the, "janitor test."  Clause 2 is unenforceable because it prevents Aerotek's former employee from working as a janitor for a competitor.  

When a non-compete agreement contains two or more divisible clauses, the Court use a magic "Blue Pencil."   That means, the Court can re-write the Agreement to excise unenforceable clauses and keep the enforceable ones.  And, that is what the Court did.

But the Court also ruled that it was not clear whether the employee's work at her new job is competitive to the work she performed for Aerotek or whether she stole any Aerotek customers.  As such, the Court denied Aerotek.'s motion for summary judgment.  A jury will now decide the dispute.    (A jury will also decide whether this employee violated a non-solicitation clause and whether she is entitled to damages on a counter-claim she filed for a bonus).

(Updated to note:  this case settled before trial).

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