TROs in Non-Compete Cases A Mock Hearing. Presented By: Robert S. Gilmore Kirsten B. Mooney Kyle A. Hutnick

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1 TROs in Non-Compete Cases A Mock Hearing Presented By: Robert S. Gilmore Kirsten B. Mooney Kyle A. Hutnick

2 Agenda Overview of Non-Compete Agreements Considerations for Former Employer Considerations for New Employer Mock Hearing East Coast Eats v. Sally Smith and West Coast Wine Delivery

3 Overview of Non-Compete Agreements provision of a contract restricting a party from engaging in activities that are competitive with the other party Key Limitations: Scope Duration Geography

4 Overview of Non-Compete Agreements: the Former Employer Considerations for the Former Employer Carefully draft the non-compete clause Assess the violation What proof does the employer have to show violation occurred? What harm has the employee caused? What harm is the employee to cause in the future? Additional factors to consider: Include the new employer? Costs, business customers

5 Overview of Non-Compete Agreements: the New Employer Considerations for the New Employer Consider Potential Claims Against You Tortious interference Aiding and abetting breach of Piduciary duty Misappropriation of trade secrets Unfair competition During the interview process: Identify any post-employment contractual obligations of the candidate Assess the likelihood of litigation Consider IndemniPication of Candidate If you do hire, respond promptly to any Cease and Desist letter you receive (preserve docs)

6 East Coast Eats v. Sally Smith et al. Plaintiff: East Coast Eats Meal delivery service based in New York City Currently serves a majority of the east coast Active plans to expand across the United States within the next two years

7 East Coast Eats v. Sally Smith et al. Defendant: Sally Smith 45-year-old Female Vice President of Marketing for East Coast Eats Trusted Employee Employed by East Coast Eats since its founding in 2005 Has access to private and/or conpidential business information Well-educated with special knowledge for growth and expansion into new markets

8 East Coast Eats v. Sally Smith et al. Defendant: Sally Smith Signed non-compete as part of her employment agreement in 2005 Recently recruited by West Coast Wine Delivery for employment as its Chief Marketing OfPicer Informed East Coast Eats of her resignation on January 1, 2018 At the time of her resignation, does not tell East Coast Eats of her potential employment with West Coast Wine Delivery

9 East Coast Eats v. Sally Smith et al. Terms of the Non-Compete with East Coast Eats: One-year No competition anywhere in the United States Scope= same or substantially similar position Also includes: Blue-pencil provision which says it may be extended for any period of non-compliance Provision that bans the use of trade secret information forever

10 East Coast Eats Investigation In connection with a broader investigation, East Coast Eats discovers: Sally Smith began employment with West Coast Wine Delivery on February 1, Before leaving East Coast Eats, Sally Smith sent many of her network contacts (in NY) to her personal Sally Smith loaded a USB device with East Coast Eats highly conpidential documents, which included all of her personal notes on how to expand business nationally

11 East Coast Eats Piles a lawsuit and requests a TRO. Timeline of Events: Sally Smith resigns her position on January 1, Sally Smith is hired at West Coast Wine Delivery on February 1, While investigating other matters, East Coast Eats discovers Sally s new employment and her transfer of the company s conpidential and proprietary information to her personal and USB device. East Coast Eats sends a Cease & Desist letter to Sally Smith and West Coast Wine Delivery on February 20, The letter included a preservation notice. West Coast Wine Delivery investigates but fails to respond to the Cease and Desist letter in the required timeframe. However, Sally responds and denies any misconduct.

12 Intervention via a TRO For East Coast Eats = Kyle Hutnick For Sally Smith/West Coast Wine Delivery = Kirsten Mooney Presiding Judge= Robert S. Gilmore

13 Robert S. Gilmore RULING

14 Conclusion/Questions Please note that your materials have: Practice Tips TRO checklist

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JASON HUSGEN. St. Louis, MO office: JASON HUSGEN Senior Counsel St. Louis, MO office: 314.480.1921 email: jason.husgen@ Overview Clever, thorough, and with a keen knowledge of the law, Jason tackles complex commercial disputes as part of