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Judge Strikes Down Noncompete And Nonsolicitation Agreement As Overbroad

Published by on May 1, 2008

On April 15, 2008, Judge Gerald Bruce Lee of the U.S. District Court for the Eastern District of Virginia granted a motion to dismiss breach of contract claims relating to an employee noncompete and nonsolicitation agreement in Nortel Communications, Inc. v. Carl Lee-Llacer, No. 1:08cv127 (opinion here: nortec-comm-inc-v-lee-llacer).  The court granted the motion because the provisions of […]

On April 15, 2008, Judge Gerald Bruce Lee of the U.S. District Court for the Eastern District of Virginia granted a motion to dismiss breach of contract claims relating to an employee noncompete and nonsolicitation agreement in Nortel Communications, Inc. v. Carl Lee-Llacer, No. 1:08cv127 (opinion here: nortec-comm-inc-v-lee-llacer).  The court granted the motion because the provisions of the agreement at issue were not limited to the performance of the same work the employee had done for the company and because key terms were undefined.  This opinion highlights the changing law regarding noncompete agreements in Virginia during recent years.  Employers using such agreements in Virginia would be well advised to have them reviewed and updated for continued viability.

The employer in this case was involved in information technology consulting.  The employee had signed a standard noncompetition and nonsolicitation agreement, which provided he could not perform services for clients of the company or work for a competing business, among other things.  After leaving the company and alleging performing services for a customer, the employer brought suit.

On the employee’s motion to dismiss, the court looked at the scope of the noncompetition and nonsolicitation clauses.  The court noted that such clauses are upheld “only to the extent that the proscribed functions are the same functions as were performed for the former employer.”  The court found the agreement wanting for a number of reasons:

“There is no regard for whether his employment with a current Nortec client in any way relates to his prior employment with Nortec and involves the use of any skills or knowledge acquired by Mr. Lee-Llacer in his former position.  Nowhere in the agreement does Nortec define what constitutes a ‘product or service offered.’  Additionally, it does not require that the employment be related to a product or service offered by Nortec to that client.”

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