Following a week-long trial that concluded on August 6, a Colorado jury found that two former managers of a company had not only breached their fiduciary duties to their employer (the plaintiff), but had also violated their non-compete agreements by acquiring a competing business and poaching both former co-workers and customers away from the plaintiff, their former employer.
This case, United Subcontractors, Inc. v. Cotten and Gott, had an interesting twist that might have led to a different result under New York law, however. One of the defendants, who had been working as a manager for plaintiff, was actually fired before he went to work for a competitor, and began soliciting some of his former co-workers and clients from when he worked at United.
"Why should that matter?" you ask.
Because under New York law, if you've been fired, and it's not "for cause," the general rule is that your non-compete agreement is no longer enforceable. On the other hand, in this case the plaintiff apparently produced a large amount of evidence that the defendants were up to no good while still in their employ, as one of them ordered “hundreds of thousands of dollars in insulation products” from an unapproved supplier at a price higher than the company would have paid. but repeatedly violated and disregarded United’s policies.
Given the timing of everything else involved, it is entirely possible that a jury would have still considered all of this pre-meditated by the defendants in an effort to make the transition to the new company more difficult to track and attack, leading to the same result.