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Why Injunction Isn't Automatic, Even When Noncompete Says So


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6/17/2015
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A recent decision from an Arizona appeals court in  Security Pest & Termite Systems v. Reyelts, No. 1 CA-CV 14-0237 (May 14, 2015) serves as a great reminder of an under-reported principle:

Just because a clause in your agreement purports to grant you a certain right doesn't mean a court will be obliged to enforce it.

And this rule is particularly important when considering the context of non-compete agreements.

"Why?" you ask.

Because these agreements typically contain boilerplate language in the (former) employer's favor whereby the employee (supposedly) acknowledges that she has been granted access to all kinds of confidential intellectual property and client information, and that in the event that she were to wrongfully take such information, that would inherently constitute "irreparable harm" that would entitle the employer to injunctive relief.

In other words, there is a significant chance that this boilerplate clause may not be worth the paper it was printed on.

So, here's the follow-up question:

"Why not?"

Because the fundamental premise underlying this clause may be absolutely untrue.

Simply put, it is rare to find an instance where a plaintiff whose property has been wrongfully taken cannot be made whole through an award of money damages. As a result, the plaintiff will often fail to meet one of the key, threshold requirements for obtaining a restraining order, i.e., that there is no adequate monetary remedy for his particular legal issue.

The takeaway for an employer here is fairly obvious:

Don't assume that you will automatically be entitled to an injunction if a disloyal employee violates her non-compete clause; you may end up sorely disappointed.

 



Category: Non-Compete & Employment Agreements

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

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