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What Courts May Do To An Employee Who Violates a Non-Compete


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2/5/2015
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Image: FreeDigitalPhotos.net

In case you ever wondered, "What's the worst that can happen if the court finds that we violated our non-compete agreement?" a recent case out of Texas serves as an excellent example.

In this case, Plaintiff M-I LLC – an oil/gas drilling equipment producer - sued two of its former employees and their new employer, competitor Argus Green, for violating their noncompete agreements, misappropriating trade secrets, and tortious interference with prospective advantage.

The plaintiff won big at trial, securing a verdict awarding them not only compensatory damages, but punitive damages as well, and the court further entered an order barring the defendants from competing in certain areas, and directing the defendants to return plaintiff's intellectual property immediately.

That certainly sounds bad enough.

But it gets worse - at least for one of the defendants.

All of the defendants appealed the verdict, and while the appeals were pending, all but one settled out with the plaintiff. That lone wolf made some serious procedural blunders, like failing to post a bond to stay the judgment pending the appeal.

Plaintiff's counsel then filed a motion for contempt based upon this individual defendant's failure to abide by the court's ruling.

For the uninitiated, as a general rule, civil contempt requires three elements:

  1. that a court order was in effect,

  2. that the order required certain conduct by the respondent, and

  3. that the respondent failed to comply with the court's order.

In this case, it was a no-brainer. As a result, the court had the U.S. Marshal take this defendant into custody for one day and every day continuously thereafter until this defendant fully and completely complies with the court's orders.

And that wasn't all.

The court also sanctioned this defendant $12,000, payable within 30 days, to recompense the plaintiff's reasonable attorney's fees incurred in bringing the contempt motion.



Category: Non-Compete & Employment Agreements

Jonathan Cooper
Non-Compete, Trade Secret and School Negligence Lawyer

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