The North Carolina Court of Appeals decision in Aesthetic Facial & Ocular Plastic Surgery Ctr., P.A. v. Zaldivar highlights the unique impact of public policy considerations when determining the enforceability of a non-compete agreement against a medical doctor. To what extent are such agreements enforceable? At what point does the concern for the health of the general public outweigh the interest in enforcing the specific terms of an employment contract? Elements to Determine the Enforceability of Non-Compete Agreements A non-compete agreement restricts a former employee’s ability to work for a competitor of, or otherwise compete with, the employer. They are frequently contained in employment contracts. North Carolina recognizes…
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IN THE MARKET FOR TRADE SECRETS
In early March, retail grocery store company Aldi, Inc. filed a lawsuit in the Eastern District of North Carolina against two former employees who joined rival company Lidl US. The two former employees, Bruna Maraccini and Colleen Savory, are named as Defendants in the complaint. Both were involved in the company’s real estate strategy and acquisition efforts, and are alleged to have misappropriated trade secrets of their former company for the benefit of their new company. The complaint also alleges that Ms. Maraccini, who was a director of real estate for North Carolina and Virginia while at Aldi, violated confidentiality, non-compete, and non-solicitation agreements by accepting a similar position with…
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North Carolina Business Court Weighs in on Enforceability of Non-Compete and Confidentiality Agreements Post-Merger
It is well-settled law that adequate consideration is required to create binding restrictive covenants such as non-compete agreements. Generally, such agreements are entered at the start of an employment relationship, and the new employment itself constitutes consideration. In North Carolina, continued employment following a merger of two companies does not satisfy the consideration requirement. In a recent decision, the North Carolina Business Court (“NCBC”) confronted the very issue.[1] In January 2012, AmeriGas Propane, Inc., a propane company that services over two million residential and commercial customers nationwide, merged with Shaw L.P. Gas. Ermon Coffey, an employee of Shaw, and…
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Eastern District of North Carolina Predicts the North Carolina Supreme Court Will Apply the Doctrine of Inevitable Disclosure “Under Certain Circumstances.”
The Eastern District of North Carolina recently decided a case affirming that, while North Carolina courts have not yet adopted the doctrine of inevitable disclosure, North Carolina would adopt the doctrine under certain circumstances.[1] Spirax Sarco, Inc., (“Spirax”), alleged a claim for, among other things, injunctive relief under the doctrine of inevitable disclosure against one of its former employees. Spirax purported that defendant Bryan Johnson (“Johnson”) used his company issued laptop to download thousands of confidential computer files to personal devices without permission. Johnson resigned from Spirax on May 27, 2014 to work for SSI Engineering, Inc. (“SSI…
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NCBC: Fifty-Mile Customer Based Geographic Restriction Makes Non-Compete Agreement Unreasonable
In August, the North Carolina Business Court (“NCBC”) determined a non-compete agreement was unreasonable because of its overly broad geographic restriction, and denied Plaintiff’s motion for preliminary injunction to prohibit a former employee from competing with it.[1] In North Carolina, non-compete agreements are generally disfavored and strictly construed against the drafting party. A non-compete agreement must be (1) in writing; (2) made a part of the employment contract; (3) supported by consideration; (4) reasonable both as to time and territory; and (5) no broader than necessary to protect the employer’s interest.[2] In determining the reasonableness of such agreements, the…
