Massachusetts Law Review

Employee Noncompetition Agreements: Recent Developments and Trends

Laurence H. Reece, III
Laurence H. Reece, III is a principal in the Boston trial firm of Reece & Associates, P.C. where he concentrates in business and employment litigation. He graduated from the Massachusetts Institute of Technology in 1974 and the University of Virginia School of Law in 1978.


CONTENTS

I. Introduction

II. General Principles

III. Recent Developments and Trends

A. Contract Defenses

1. Ambiguity

2. No consideration

3. No competition

4. Novation

5. Material breach

6. Duress

B. Other Defenses

1. No legitimate business interest

2. Not reasonable in scope

3. Not consonant with public interest

4. Professional exemption

5. Broadcaster exemption

C. Special Issues

1. Choice-of-law

2. Inevitable disclosure

3. Chapter 93A

4. Liquidated damages

5. Appeals

6. Contempt

D. Other Types of Restrictive Covenants

1. Nonsolicitation clauses

2. Anti-piracy clauses

3. Compensation for noncompetition clauses

IV. Conclusion

I. Introduction

Employee noncompetition agreements are common features of many employment relationships and they frequently lead to disputes and litigation. Employers argue that such agreements are essential to protect their trade secrets and customer good will. Employees, on the other hand, argue that such agreements unduly restrict their ability to earn a living. Courts are often required to balance the competing claims of employer and employee in these challenging and fact-intensive cases.

Twelve years ago a comprehensive article on employee noncompetition agreements and related restricted covenants appeared in this journal.1 Since that time, there have been more than 100 decisions by trial and appellate courts in Massachusetts addressing disputes in this area. This article will review the developments and trends reflected in these decisions.

First, the article will review decisions dealing with contract and other defenses that often are raised in employee noncompetition disputes. Second, the article will discuss special issues that sometimes arise in these disputes, including choice-of-law, the inevitable disclosure doctrine, and the applicability of Chapter 93A. Finally, the article will address other types of employee restrictive covenants, including nonsolicitation clauses and anti-piracy clauses.

During the past 12 years, Massachusetts appellate courts have made a number of significant rulings that have clarified the law regarding employee noncompetition agreements. The Supreme Judicial Court has enforced prohibitions against noncompetition agreements with respect to doctors and lawyers.2 The Appeals Court has ruled that continued employment, standing alone, constitutes sufficient consideration to support a noncompetition agreement,3 and that Chapter 93A is inapplicable to suits by former employers against former employees to enforce noncompetition agreements.4 Single justices of the Appeals Court have rejected the "public interest" defense to suits to enforce nonsolicitation clauses against financial advisors.5

Most of the decisions during the past decade, however, have been at the trial level. Two federal district court decisions are notable. In one case, the court rejected the parties' choice-of-law provision and applied California law in denying the requested preliminary injunction to enforce a noncompetition clause.6 In another case, the court applied the doctrine of novation to rule that an employee noncompetition agreement was not enforceable.7 In Massachusetts trial court decisions, courts have addressed a variety of important issues, including the inevitable disclosure doctrine,8 liquidated damages,9 and defenses based upon the absence of competition10 and the former employer's failure to demonstrate that a legitimate business interest is at stake.11

Because a preliminary injunction is often the single most important remedy in a case seeking enforcement of a noncompetition agreement, many of the decisions involve applications for preliminary injunctive relief. As a result, much of this article will focus on trial level decisions by judges faced with the difficult task of balancing the competing claims of employer and employee in these fact-intensive cases.

II. General Principles

Employee noncompetition agreements are enforceable in Massachusetts so long as they are: (1) necessary to protect a legitimate business interest of the employer; (2) supported by consideration; (3) reasonably limited in time, space and subject matter; and (4) consonant with the public interest.12 Legitimate business interests are the protection of an employer's trade secrets, confidential business information or good will.13 Protection of the employer from ordinary competition, however, is not a legitimate business interest.14

The standard for enforcement of a noncompetition agreement depends upon the type of agreement involved. Noncompetition agreements arising from the employer-employee relationship are scrutinized carefully by the courts and are strictly construed against the employer.15 Courts adopt a more relaxed standard for the enforcement of other types of noncompetition agreements. For example, where an employee noncompetition agreement is signed in connection with the sale of a business, courts will adopt a more liberal standard for enforcement.16 In this situation, there is more likely to be equal bargaining power between the parties, and the parties often agree to the payment of a premium for the noncompetition obligation.17 Moreover, in this situation legitimate business interests are not limited to the protection of trade secrets, confidential business information or good will.18 Courts will generally enforce a noncompetition agreement ancillary to the sale of a business so long as the agreement is reasonable in time, space and product line and is not contrary to the public interest.19

Massachusetts courts have not adopted the "blue pencil" approach that is used by courts in some states to simply strike overly broad noncompetition provisions. Instead, if a noncompetition agreement is too broad in time, geography or any other respect, Massachusetts courts will enforce it only to the extent it is reasonable.20 Nevertheless, it is good practice to draft a noncompetition agreement which, on its face, is reasonable in scope. Some judges may be inclined to reject enforcement of a noncompetition agreement that is patently overbroad and unreasonable.21

III. Recent Developments and Trends

A.Contract Defenses

Like other contracts, noncompetition agreements may be unenforceable if the agreement is unduly ambiguous, consideration is lacking, the terms of the agreement are not satisfied or another contract defense is applicable. During the past decade, Massachusetts courts have considered a number of contract defenses to the enforceability of employee noncompetition agreements.

1. Ambiguity

The strict scrutiny applied to employee noncompetition agreements is illustrated by several recent decisions in which courts have rejected enforcement of noncompetition agreements that are ambiguous or vague. For example, in Lanier Professional Services, Inc. v. Ricci, the United States Court of Appeals for the First Circuit held that an undefined phrase in a noncompetition agreement - "facilities management services" - was ambiguous as a matter of law, and the phrase was construed against the former employer who had drafted the agreement.22 In FLEXcon Co. v. McSherry,23 where the terms "territories" and "Activities" were not defined, the federal district court denied a preliminary injunction because the noncompetition clause was "ambiguous and poorly drafted." In Clerico v. Great Road Floors, Inc., the Superior Court ruled that a noncompetition agreement was ambiguous and not enforceable against an individual in a sale of business case because the parties' agreement did not reflect an intention to bind the individual in addition to his company.24 More recently, in Hurwitz Group, Inc. v. Ptak,25 the Superior Court denied a preliminary injunction where the noncompetition agreement was overly broad - "legal draftsmanship run amok" - and failed to reasonably advise the employee of what he may and may not do.

In Norton Co. v. Hess, the Superior Court considered the enforceability of a clause that prohibited a former employee from working on a product or process in which he had "access" to confidential information while employed.26 The court rejected an overly broad interpretation of "access" that would have included virtually all of the former employer's confidential information and instead limited it to confidential information that was "actually gained or utilized by Hess in some direct manner."27

2. No consideration

It is well-established that a noncompetition agreement must be supported by consideration in order to be enforced.28 If a noncompetition agreement is executed prior to or at the commencement of employment, it is uniformly held that the agreement is supported by consideration.29 When a noncompetition agreement is signed several months or years after the commencement of employment, however, the issue sometimes arises as to whether there is consideration to support the enforcement of the noncompetition agreement.30 Is continued employment, standing alone, sufficient consideration?

A number of older decisions by the Supreme Judicial Court appear to support the view that continued employment is sufficient consideration.31 Since 1991, at least three Superior Court judges have squarely held that continued employment is sufficient consideration.32 In IKON Office Solutions, Inc. v. Belanger, however, a magistrate-judge in the Unites States District Court held otherwise.33

A recent Appeals Court decision appears definitively to have resolved this issue. In Wilkinson v. QCC, Inc., the Appeals Court considered whether an employer's requirement that an employee sign a noncompetition agreement after the employee had commenced his employment violated the covenant of good faith and fair dealing.34 The Appeals Court held that there was no breach of the covenant. The court expressly ruled that its decision in Sentry Insurance v. Firnstein35 "does not suggest that imposition of a noncompetition covenant on an already employed at-will employee is unenforceable. . . . To the extent new consideration was required, continued employment was the consideration."36

Nevertheless, prudent employers will provide employees with additional consideration - a pay raise, a bonus, a promotion, stock or stock options - whenever an employee is asked to sign a noncompetition agreement several months or years after commencement of employment. Such additional consideration will undercut any argument that the signing of the noncompetition agreement was "unfair" or the result of "duress."

3. No competition

In many cases, the former employee will argue that he or she is not in competition with the former employer and therefore the noncompetition agreement should not be enforced. In Cereva Networks, Inc. v. Lieto, the Superior Court considered whether two companies in the computer storage industry were in "direct competition" within the meaning of a noncompetition agreement.37 The former employer argued that it was in direct competition with the new employer because both companies sold products that were designed to provide improved data management and control as well as incremental data stability and because both companies targeted the same markets. The new employer argued that there was a substantial difference in price between the products offered by the two companies - $50,000 to $200,000 vs. $1 million to $4 million - and that the products were quite different in size and shape - 1 foot high vs. 7 feet high. Despite these differences, the court concluded that the two companies were in direct competition, noting that "courts have focused on the customer and to whom the product is marketed in determining the meaning of 'direct competition.'"38

In Cambridge Tech. Partners (Massachusetts), Inc. v. Sims, the Superior Court considered whether two companies that assisted clients with developing business plans for the "New Economy" were competitors.39 The court concluded that, although the two companies used similar language to describe their purpose and offerings, "that language fails to demonstrate that both companies actually provide similar services to their clients." After "careful scrutiny" of the two companies' activities, the court concluded that the plaintiff failed to demonstrate actual competition and therefore denied the requested injunction.40 In Marcam Solutions, Inc. v. Sweeney, the Superior Court concluded that two software companies were competitors.41 Although "the two companies may take different approaches to software for the process manufacturing market," the court noted that trade publications "strongly indicate" that, in the industry, both companies are considered to be competitors.42 In EMC Corp. v. Allen, the Superior Court held that two companies in the computer data storage industry were in "direct competition" because both companies were attempting to "fulfill the same need in the same marketplace."43

In C.R. Bard, Inc. v. Intoccia, the United States District Court considered whether a defendant "competed" with his former employer even though the subject products - oxygenators for use in open heart surgery - were in development and were currently not offered for sale.44 The court concluded that the parties "are engaged in a race for the development and Federal Drug Administration approval of the next generation of oxygenators and are, in that respect, in competition with each other."45

The former employee's conduct may fall outside the scope of the noncompetition agreement in other ways. For example, in EMC Corp. v. Gresham, the Superior Court denied a preliminary injunction to enforce a noncompetition clause because the former employee's work as an outside consultant for a direct competitor was not expressly barred by the noncompetition clause.46 In Gresham, the employee was barred under his noncompetition clause from competing with EMC for 12 months after termination, except that the employee would not be considered to be competing with EMC unless he had "an officership, directorship or other policy-making position with the competing enterprise."47 EMC argued that the consultant position was merely a "sham." The court, however, concluded that such an argument remained "unproved" and that "[c]ontracts drafted by employers to limit the employment prospects of former employees - even those at a very high level - must be construed narrowly against the employer."48

Here, where EMC, a sophisticated and knowledgeable entity, chose to embody its relationship with its key employees in a detailed and carefully crafted written instrument, perhaps more than in other situations, it is entitled to and should be held to the contractual language it chose.49

Similarly, in State Street Corp. v. Barr, the Superior Court denied a preliminary injunction to enforce a noncompetition clause because the former employee's new employment fell outside the scope of the noncompetition clause.50 The court held that the new employer was not a "Top Five" financial institution within the meaning of the parties' agreement.51

4. Novation

In AFC Cable Systems Inc. v. Clisham, the former employee argued that the noncompetition agreement was not enforceable because it had effectively been rescinded by the parties and that the parties' new employment relationship was not subject to a noncompetition covenant.52 Although the employee had previously signed a noncompetition agreement in 1992 when he was employed by the plaintiff as an independent contractor, his duties and status changed in 1994 when he became a full-time employee and assumed the position of sales manager. Moreover, there was evidence that the former employer believed that a new noncompetition agreement was required because it made repeated, and unsuccessful, attempts to get the employee to sign a new agreement. Relying upon the Supreme Judicial Court's decision in F. A. Bartlett Tree Expert Co. v. Barrington,53 the United States District Court entered summary judgment in favor of the former employee, finding that the parties' conduct demonstrated that the 1992 noncompetition agreement had been voided and that defendant had entered a new employment relationship with the employer.54

In Woodbury and Co., Inc. v. Copeland, the Superior Court reached a similar conclusion.55 Although the former employee had signed a valid noncompetition agreement with the plaintiff in 1966, this obligation was extinguished by plaintiff's letter in 1991 that rescinded the earlier agreement and offered the defendant new terms of employment. The court found the new agreement to fulfill the requirements of a valid novation.56

More recently, in IONA Technologies, Inc. v. Walmsley, the Superior Court considered a case where an employee returned to a different position after a five-month leave of absence, was provided a new offer letter, and was not asked to sign a new noncompetition agreement.57 Although the court denied the preliminary injunction application based upon the lack of irreparable harm, it stated, in dicta, that the previously signed noncompetition agreement did not carry over to the new employment relationship established after the employee's leave of absence.58

5. Material breach

In several cases, Massachusetts courts have refused injunctive relief where the former employee demonstrated a material breach of the contract by the former employer. In Lantor Inc. v. Ellis, the plaintiff sought a preliminary injunction against its former employee and his new employer, alleging that the defendants were in violation of the former employee's noncompetition agreement.59 The Superior Court denied the motion for a preliminary injunction, ruling that the plaintiff had committed a material breach of the employment agreement when it unilaterally changed the terms of employment by imposing a new bonus scheme.60 Similarly, in Karns v. Folio Exhibits, Inc., the Superior Court refused a requested injunction where the former employer had announced a unilateral change in the commission structure by reducing the commission rate and imposing a sales quota.61 In Darwin Partners, Inc. v. Signature Consultants LLC, however, the Superior Court rejected the former employees' claim that the employer had materially breached their contracts.62 The court found that the nonpayment of wages complaints filed by the employees with the Massachusetts Attorney General's Office had been resolved and that the employer had subsequently paid the employees commissions totaling less than $1,500.63

6. Duress

Defendants in noncompetition cases often allege that the restrictive covenant was the product of duress or unfair pressure by the former employer. This defense has met with mixed results. In Browne v. Merkert Enterprises, Inc., the court considered the enforceability of a noncompetition agreement against a former employee of a brokerage service for manufacturers of goods and foods.64 The agreement was signed by the employee several years after he had commenced employment, but after he had been promoted and given a raise. The former employee claimed that he had signed the noncompetition agreement under duress, alleging that he was told that his continued employment required that he sign the noncompetition agreement and that the agreement would not be enforced unless he attempted to pirate other employees. The court rejected the duress defense and entered a preliminary injunction enforcing the noncompetition agreement, finding that the employee had consulted an attorney and negotiated the terms of the agreement and that it seemed "unlikely" that the employer represented that the agreement would not be enforced.65

In HealthDrive Corp. v. Chall, the court also rejected a duress defense and entered a preliminary injunction against a former employee enforcing a noncompetition agreement.66 A significant factor in the court's reasoning was the fact that the defendant remained at the company for five years after signing the noncompetition agreement.

In some cases, however, the duress defense has succeeded. In First Eastern Mortgage Corp. v. Gallagher, the court concluded that the noncompetition agreement "was imposed upon the employee under what might be found to be 'practical duress,'" because the employee was pressured to sign the agreement long after he had commenced employment.67 The court declined to issue a preliminary injunction enforcing the agreement.68 In New Boston Systems, Inc. v. Joffe, the court denied a motion for a preliminary injunction, in part, because of alleged duress.69 The former employee claimed that she was not advised of the need to sign a noncompetition agreement until her first day of employment - after she had moved from St. Louis to Boston and rented an apartment in Boston.70 Similarly, in FLEXcon Company, Inc. v. McSherry, the United States District Court denied a motion for a preliminary injunction, in part, because the noncompetition agreement was not included with the employee's original offer letter, was presented as "routine paperwork," and was signed three days after the employee commenced employment.71 This result can easily be avoided by ensuring that the prospective employee is advised of the noncompetition agreement before accepting employment.72

B. Other Defenses

1. No legitimate business interest

An employee noncompetition agreement is enforceable only to the extent it protects the employer's trade secrets, confidential business information or customer good will. If none of these interests is present, the noncompetition agreement is unenforceable.73

In several recent cases, the Superior Court has refused to enforce noncompetition agreements because they did not protect a legitimate business interest. In Lajoie Investigations, Inc. v. Griffin, the court denied a requested preliminary injunction against a private investigator who had previously worked for an investigation firm.74 The court found that the former employer had failed to demonstrate that trade secrets, confidential information or good will were involved. Instead, the court concluded that "this noncompetition agreement appears aimed at impermissibly protecting Lajoie from the ordinary competition of the marketplace."75 Similarly, in Danieli & O'Keefe Associates, Inc. v. Braverman, the court found that a registration manager did not possess trade secrets or confidential information from her former employer - a business that provided planning services for conferences and meetings - and therefore refused to grant injunctive relief enforcing a noncompetititon agreement.76

A recurring issue in employee noncompetition cases involves who is entitled to the customer good will.77 Three distinct situations arise. First, the case may involve customers that the employee serviced before commencing employment with the employer. As to these customers, the employer has no good will interest. This is because the objective of a reasonable noncompetition agreement is to protect the employer's good will, not to appropriate the good will of the employee.78 A prudent employee will amend any noncompetition agreement at the commencement of employment to exempt any pre-existing customers.79

Second, the case may involve customers that had established relationships with the employer before the employee commenced employment with the employer or the customers may have been introduced to the employee by the employer during the course of his or her employment. As to these customers, the employer has a clear good will interest.80

Finally, the case may involve customers developed by the employee during his or her employment. Here, there is often a sharp dispute as to whose good will is at stake. Some courts have held that in this situation the employer has no good will interest since the good will involved was of the employee's own making.81 Most courts, however, have held that this good will belongs to the employer.82

2. Not reasonable in scope

If the noncompetition agreement is too broad in time, geography or subject matter, it will be enforced only to the extent that it is reasonable.83 In the past decade, Massachusetts courts have regularly enforced employee noncompetition agreements of one or two years duration.84 Some recent New York decisions, however, have suggested that in the Internet industry one year is too long.85

Given the explosive growth of the Internet and the fast pace of business today, courts are likely to examine the duration of noncompetition agreements more closely. The traditional advice that noncompetition agreements of one to two years duration are "reasonable," may need to be reexamined in particular industries and businesses. In determining whether a time restriction is reasonable, the following factors should be considered: the nature of the employer's business, the character of the employment, the situation of the parties, the necessity of the restriction for protection of the employer's business, the right of the employee to work and earn a livelihood, and the length of noncompetition agreements for similar employees.86

In the case of a salesperson, the appropriate geographic area is generally the salesperson's former sales territory.87 For many employees in businesses that are national or international in scope, however, the geographic limitation might be much broader. In recent decisions, the Superior Court has enforced noncompetition agreements extending throughout the United States or even the world. For example, in Cereva Networks, Inc. v. Lieto, the court enforced a noncompetition covenant worldwide in scope.88 Similarly, in Philips Electronics North America Corp. v. Halperin, the court enforced a noncompetition covenant covering the entire United States.89

3. Not consonant with public interest

The Supreme Judicial Court has long recognized that the public has an interest in "every person carrying on his trade or occupation freely" and that contracts restraining freedom of employment can be enforced only when they are "not injurious to the public interest."90 The precise contours of this "public interest" defense are, however, somewhat ill-defined. Indeed, in McFarland v. Schneider, the court noted the difficulty in identifying the "public interest" and questioned whether this factor "ought to have a significant role in judicial analysis of these kinds of agreements."91

The "public interest" defense has often arisen in cases involving financial advisors and their attempts to take their existing clients with them when they switch firms.92 Initially, this defense met with some success. In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. DeForest, the court denied a motion for a preliminary injunction because, in part, "[t]here is a strong public interest in allowing customers to have a financial consultant of their choice."93 The judge, however, later reversed her decision without elaboration.94 A few years later, in American Express Financial Advisors Inc., v. Walker, the court rejected enforcement of a one-year noncompetition covenant against a financial advisor, holding that four months was "the longest period of time reasonable for a blanket prohibition against a financial advisor doing business with a former client when that client had not been previously advised of the existence of such a prohibition."95 While recognizing that the relationship between a financial advisor and his or her client "may not be as intimate as that of a doctor and patient or attorney and client," the court concluded that this "valuable and important personal and financial relationship" should be afforded some protection.96

In other decisions, however, courts have rejected the "public interest" defense as applied to financial advisors. In McFarland v. Schneider, a case involving a portfolio manager for institutional investors, the "public interest" defense was rejected, and it was noted that there was no evidence that "there is a limited national pool of talented, energetic and able portfolio managers."97 Moreover, the court explained that the relationship between a fund manager and investment advisor, although requiring trust and confidence, did not require the kind of intimacy associated with doctor-patient and lawyer-client relationships.98

In two recent decisions, single justices of the Appeals Court have rejected the "public interest" defense and enforced nonsolicitation clauses against financial advisors.99 For example, in Salomon Smith Barney, Inc. v. Wetzel, the single justice held that "a stock broker relationship is more akin to a sales person than a lawyer or doctor and that an employer is entitled to have protected as his or her good will a customer base which an employee has developed or acquired through the training and resources provided by the employer."100 These decisions have been followed by a number of Superior Court decisions in which nonsolicitation clauses have been enforced against financial advisors.101

The public interest is sometimes used as a reason for enforcing a noncompetition agreement. As the United States District Court held in Shipley Co., L.L.C. v. Kozlowski: "It is in society's best interest to recognize and enforce agreements which were voluntarily entered into and accepted. Allowing an individual to disregard such a promise would result in behavior which should not be condoned or encouraged."102 This view has been echoed in a recent Superior Court decision.103

4. Professional exemption

In Massachusetts, physicians, nurses and lawyers are exempt from employee noncompetition agreements. Massachusetts General Laws chapter 112, section 12X prohibits the imposition of a noncompetition agreement on a physician who leaves an established practice.104 Chapter 112, section 74D prohibits the imposition of a noncompetition agreement on a registered or licensed practical nurse. Pursuant to the Massachusetts Rules of Professional Conduct, a lawyer may not participate in a partnership or employment agreement that restricts the right of a lawyer to practice law after the termination of a relationship created by the agreement.105

In Falmouth Ob-Gyn Associates, Inc. v. Abisla, a medical practice argued that a compensation for competition clause - which required a departing physician to compensate his former medical practice by the payment of liquidated damages - was not a restrictive covenant barred by the Massachusetts statute.106 The medical practice claimed that liquidated damages in the amount of $250,000 were a reasonable approximation of its loss of good will. The Supreme Judicial Court rejected these contentions. The court reasoned that Massachusetts General Laws chapter 112, section 12X prohibited the imposition of "any restriction" on the right of a physician to practice medicine in a particular geographic area. Although a compensation for competition clause does not constitute an absolute bar to a physician's ability to practice in a particular location, it had the same "inhibitory effect." Noting that the statute favors the "strong public interest" in allowing patients to consult the physician of their choice, the court held that the compensation for competition clause was unenforceable.107

More recently, in Pettingell v. Morrison, Mahoney & Miller, the Supreme Judicial Court considered whether it should enforce a forfeiture for competition clause contained in a law firm's partnership agreement.108 The clause provided that, if a partner withdrew from the firm and competed with it, the partner would forfeit certain payments. The court explained: "An enforceable forfeiture-for-competition clause would tend to discourage a lawyer who leaves a firm from competing with it. This in turn would tend to restrict a client or potential client's choice of counsel."109 Finding that the law should provide "the fullest possible freedom of choice to clients," the court followed the "strong majority rule" and held that the subject forfeiture clause was unenforceable under the predecessor to Rule 5.6.110 The court noted, however, that such forfeiture provisions were not per se unlawful, suggesting that such a clause might be upheld if a law firm could demonstrate that its survival and well-being justified such a clause.111

5. Broadcaster exemption

In 1998, the Massachusetts General Court added an additional exemption for individuals in the broadcasting industry, including television stations and radio stations. Massachusetts General Laws chapter 149, section 186 prohibits the enforcement of noncompetition agreements in the broadcasting industry where (1) the employer terminates the employee, (2) the employment relationship is terminated by mutual agreement, or (3) the employee's contract expires. It does not prohibit the enforcement of a noncompetition agreement where the employee voluntarily terminates employment prior to the expiration of his or her employment contract. To date, there have been no reported decisions applying this statute.

C. Special Issues

1. Choice-of-law

Because many companies have offices throughout the United States, it is often necessary to consider choice-of-law in resolving employee noncompetition disputes. This can be a particularly vexing issue since noncompetition law can vary substantially from state to state. For example, California generally prohibits the enforcement of employee noncompetition agreements.112 Analysis of disputes in this area requires several steps.

One must initially determine whether the parties' agreement contains a choice-of-law provision. Where parties have agreed that the contract will be governed by the law of a specified state, Massachusetts courts will generally give effect to such an agreement.113 However, the United States District Court held in Shipley Co., Inc. v. Clark that:

The parties' choice-of-law provision will not be honored, however, where its application "would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which . . . would be the state of the applicable law in the absence of an effective choice of law by the parties."114

This statement of the law is consistent with the Restatement.115

A recent decision in the United States District Court illustrates these principles. In Roll Systems, Inc. v. Shupe, the former employer sought to enforce a noncompetition agreement against a former employee who lived and worked in California.116 The employer relied upon the choice-of-law provision contained in the employee's employment agreement. Applying the principles described in the Shipley case, however, the court disregarded the choice-of-law provision and applied California law. It found that (1) California had a fundamental policy against the enforcement of restrictive covenants, (2) California had a materially greater interest than Massachusetts in resolving the parties' dispute, and (3) California law would apply in the absence of a choice-of-law provision. Accordingly, the court ruled that California law should apply and denied the requested preliminary injunction to enforce the noncompetition clause.117

In Aware, Inc. v. Ramirez-Mireles, a more recent employee noncompetition case from the Business Law Session of Suffolk Superior Court, the court concluded that the parties' dispute would be governed by California law despite a Massachusetts choice-of-law provision in the parties' agreement.118 The judge explained that Massachusetts courts will invalidate a choice-of-law provision "(1) when it conflicts with the fundamental policy of another state, (2) when that other state has a materially greater interest than does Massachusetts in the determination of the particular issue, and (3) when the law of the other state would apply in the absence of an effective choice-of-law clause."119 The court found that there was a strong public policy against employee noncompetition agreements in California, that defendant's employment history with plaintiff was "essentially wholly in California," and that defendant was to be employed by a California company in California. Citing Roll Systems, the court concluded that, under these circumstances, California law should govern the parties' dispute.120

If the parties' agreement does not contain a choice-of-law provision, one must determine the applicable law by applying the appropriate choice-of-law rules. Massachusetts does not apply a specific choice-of-law doctrine, but instead employs "a functional choice-of-law approach that responds to the interests of the parties, the States involved, and the interstate system as a whole."121 In a contract case, in the absence of a choice-of-law provision, the parties' rights "are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties."122 The Restatement identifies the following contacts to be taken into account in conducting this analysis: "(a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicil, residence, nationality, place of incorporation and place of business of the parties."123

2. Inevitable disclosure

A hot topic these days is the so-called "inevitable disclosure" doctrine. A Seventh Circuit decision, PepsiCo, Inc. v. Redmond,124 has revived interest in this theory and has prompted numerous judicial decisions and substantial legal commentary.125 The inevitable disclosure doctrine states that the court may enter a noncompete injunction where it is established that (1) the plaintiff owns trade secrets, (2) the plaintiff has disclosed trade secrets to its employee in confidence, (3) the employee has left the former employer and joined a direct competitor, (4) the former employee is working in an identical or substantially similar position, and (5) it appears "inevitable" that the former employee will use or disclose the trade secrets of his or her former employer.126 Under the doctrine, a court may enter a noncompete injunction even if the employee never signed a noncompetition agreement.

Some courts have expressly rejected the inevitable disclosure doctrine,127 while other courts have rejected application of the doctrine to the particular facts of a case.128 Still other courts have embraced the inevitable disclosure doctrine and used it to preclude a former employee from working for a competitor even in the absence of a noncompetition agreement.129 In Massachusetts, however, the law in this area is still developing.

To date, no Massachusetts appellate court has ruled on the viability of the inevitable disclosure doctrine, and the few Massachusetts trial court decisions dealing with the doctrine have been decidedly lukewarm about it. In Unitrode Corp. v. Linear Technology Corp., the Superior Court denied a motion to dismiss a claim of misappropriation of trade secrets that was based upon an inevitable disclosure theory.130 The court noted: "While there may not be Massachusetts cases which have yet recognized the inevitable disclosure rule, none of the cases relied on by the defendants actually rejects it."131 In Intertek Testing Services NA, Inc. v. Curtis-Strauss LLC, the court, citing to the PepsiCo case, explained that plaintiff had not asserted inevitable disclosure of trade secrets and that "even if Massachusetts law were to permit a claim of breach to be premised on a theory of inevitable discovery, no such theory has been presented here."132

More recently, in CSC Consulting, Inc. v. Arnold, the court considered a claim by a former employer that a high-level executive would "inevitably" use and disclose confidential and proprietary information for a competing firm.133

CSC contends that Arnold's mere acceptance of a similar position at a competitor company makes it inevitable that she will use or disclose trade secret information. If this Court followed the plaintiff's reasoning, any employee who was exposed to confidential information during his or her employment would be barred from working for a competitor, regardless of contractual obligations, based on the mere threat of misappropriation. Even if Massachusetts law permitted a claim of breach to be premised on a theory of inevitable disclosure, the plaintiff has failed to adequately show that Arnold has threatened to disclose CSC trade secrets or that she will eventually do so.134

The court allowed the former employee's motion for summary judgment on the trade secret misappropriation claim, citing with approval the following quote from PepsiCo: "The mere fact that a person assumes a similar position at a competitor does not, without more, make it 'inevitable that he will use or disclose trade secret information' so as to 'demonstrate irreparable injury.'"135

The federal courts in Massachusetts have also dealt with the inevitable disclosure issue, although no clear rule has yet emerged. In the frequently-cited decision of Marcam Corp. v. Orchard, the court found that it would be "inevitable" that a software developer would use his former employer's confidential information.136 Marcam, however, involved enforcement of a noncompetition agreement and therefore the court did not need to decide whether or not the inevitable disclosure doctrine applied.

In Campbell Soup Co. v. Giles, the United States Court of Appeals for the First Circuit considered Campbell Soup's claim that a former sales manager would "inevitably" use or disclose the company's trade secrets in connection with his new employment in a similar sales position for a competitor.137 In affirming the district court's denial of a preliminary injunction, the First Circuit provided no real discussion of the inevitable disclosure doctrine. The court simply noted that the parties were in agreement that if the former employee was likely to use or disclose Campbell Soup's trade secrets "he could properly be barred from doing so."138 The court, however, found that the district court was warranted in finding that "Giles' knowledge of any confidential marketing information would not result in irreparable harm to Campbell."139

More recently, in Safety-Kleen Systems, Inc. v. McGinn, the United States District Court rejected application of the inevitable disclosure doctrine, ruling that "Massachusetts law provides no basis for an injunction without a showing of actual disclosure."140 The court based its decision on chapter 93, section 42A which requires that a former employee "has used" a trade secret improperly before injunctive relief may be awarded. The court also found that the former employee had not violated the noncompetition and nonsolicitation provisions in his agreement.141

3. Chapter 93A

A recurring issue in employee noncompetition cases involves the potential applicability of Massachusetts General Laws chapter 93A, the Massachusetts "baby FTC Act" that proscribes "unfair and deceptive" acts and practices and "unfair competition." In Informix, Inc. v. Rennell,142 the Appeals Court resolved this issue - at least as to one class of claims - by holding that a former employer does not have a Chapter 93A claim against its former employee arising from the violation of a noncompetition agreement. This holding was a natural extension of the general rule that employer-employee disputes are outside the scope of Chapter 93A.143 The Informix holding has been followed in a number of Superior Court decisions.144

Does a former employer have a Chapter 93A claim against the new employer for interference with contractual relations arising from the former employee's violation of a noncompetition agreement? In Intertek Testing Services NA, Inc. v. Curtis-Strauss LLC, the Superior Court ruled that the former employer does not because the interference claim "arose from the employment relationship."145 Moreover, the court reasoned that, because of the uncertainties inherent in the enforcement of employee noncompetition agreements, liability under Chapter 93A would be unfair.

If c. 93A applied to these disputes, with its provision for treble damages and the allowance of attorneys fees, the delicate, uncertain balance that presently applies to these cases would be dramatically altered. A competitor who is contemplating hiring an employee with a non-compete agreement may find the financial risk of litigation so great that such employees may effectively be unable to find work in their field, regardless of the reasonableness of their non-compete agreement.146

This ruling has been followed by Judge van Gestel in the Business Law Session of the Superior Court.147

These decisions, however, appear to be at odds with the Supreme Judicial Court's ruling in Augat, Inc. v. Aegis, Inc.148 where the court made it clear that a former employer could sue a new employer for aiding and abetting breach of fiduciary duty by its former employees. Even though the breach of fiduciary duty claim arose from the employment relationship, this was not viewed by the court as a bar to a Chapter 93A claim against the new employer. Moreover, since Chapter 93A claims are tried to a judge, there would appear to be a low risk of multiple damage liability where the new employer has acted only negligently in its evaluation of the enforceability of the employee's noncompetition agreement.149

A former employee may have a Chapter 93A claim against his or her former employer for an abuse of process where the former employer filed the action with no reasonable investigation in order to impair its new competitor's business and cause economic harm.150

4. Liquidated damages

Liquidated damages provisions are often included in noncompetition agreements because of the difficulty in estimating damages in the event of breach. In BDO Seidman Financial Services v. Gorman, the court considered the enforceability of a liquidated damages clause in a noncompetition agreement for a financial advisor.151 The agreement prohibited the former employee from performing financial services for plaintiff's clients for an 18-month period after termination and, if the former employee did so, he was required to pay as liquidated damages 1-1/2 times the fees charged to each such client over the last full fiscal year.152 Applying New York law, the court enforced the liquidated damages clause. The court found that the damages arising from the former employee's solicitation and servicing of former clients "are not easily ascertainable because it is impossible to predict how long each client would have utilized the services of SFS."153 Moreover, the amount of damages were not unreasonable since, if defendant retained the clients over an extended period, "his profits will soon outweigh the amount of this compensation."154 The court rejected, however, plaintiff's claim for both actual damages and liquidated damages "because, by definition, liquidated damages are only enforceable when actual damages are indeterminable."155

5. Appeals

In state court, if the trial court denies or allows a request for a preliminary injunction, the losing party has two principal appellate routes: (1) an appeal to the single justice pursuant to Massachusetts General Laws chapter 231, section 118, paragraph 1; or (2) an appeal to the full Appeals Court pursuant to Massachusetts General Laws chapter 231, section 118, paragraph 2.156 In Abrams v. Liss, the Appeals Court considered whether a single justice had properly granted a preliminary injunction enjoining the defendants from opening a retail clothing store in competition with plaintiffs.157 Noting that the trial judge had denied the application for a preliminary injunction, the Appeals Court explained: "A single justice of this court has the authority to enter such an order, however rare the exercise of that power may be."158

While the chances of prevailing on a single justice appeal are decidedly slim - appellate judges being reluctant to becoming "morning after" motion sessions - appellants in employee noncompetition cases sometimes succeed. For example, in two recent noncompetition cases involving financial advisors that were appealed to a single justice, different justices of the Appeals Court reversed the Superior Courts' denials of preliminary injunctive relief.159

6. Contempt

If an individual fails to comply with an injunction enforcing an employee noncompetition agreement, a court may be asked to exercise its contempt powers. In Eldim, Inc. v. Mullen, the Appeals Court affirmed a finding of contempt against a defendant who had failed to comply with such a noncompetition injunction.160 The court noted that to find a violation of an injunction sufficient to justify an order of contempt, "there must be a clear and unequivocal command and an equally clear and undoubted disobedience."161 The court rejected defendant's claim that the injunction was not "clear and unequivocal." The terms of the injunction order "were taken essentially verbatim from the consulting agreement that the parties agreed upon at the outset of their business relationship."162 Moreover, where an injunction is in effect, the party bound by the order is responsible for ascertaining whether any proposed actions are among the proscribed activities.

It is not the plaintiff's obligation to police the decree but the defendant's obligation to make certain he does not violate it. Thus if the defendant saw the decree as ambiguous on the point in question, he could have sought clarification from the court before he engaged in the questionable conduct.163

The court found that the trial judge's findings of fact regarding contempt were not clearly erroneous and affirmed the award of lost profits and reimbursement of the noncompetition fees paid by the plaintiff to the defendant. Noting that attorneys' fees were "an appropriate element of a successful civil contempt proceeding," the court remanded the award of fees to the trial judge for further consideration.164

D. Other Types of Restrictive Covenants

1. Nonsolicitation clauses

A nonsolicitation clause is a narrower form of noncompetition clause and states that the employee will not solicit the employer's customers for a specified period of time. Such a clause may describe the particular customers who are not to be solicited or may describe them generally as the customers served by the employee during the term of his or her employment. Sometimes the nonsolicitation clause will prohibit conducting business with the customers as well as not soliciting them. Massachusetts courts have generally treated customer nonsolicitation clauses in much the same way as noncompetition clauses.165 For example, in Bowne of Boston, Inc. v. Levine, the Superior Court explained that an employer may enforce the terms of a nonsolicitation agreement with a former employee when it demonstrates that the agreement "(a) is necessary to protect a legitimate business interest of the employer, (b) is supported by consideration, (c) is reasonably limited in all circumstances, including time and space, and (d) is otherwise consonant with public policy."166

Because of the narrower scope of nonsolicitation clauses, courts are more likely to find them to be reasonable. In Modis, Inc. v. Revolution Group, Ltd., for example, the Superior Court enforced a 180-day nonsolicitation agreement, in part, because "each of the individual employees is still able to compete against their former employer immediately" and the employees "are in no way being forced out of their chosen line of work."167

The Appeals Court has noted that the difference between "indirectly soliciting" business and "accepting" business "may be more metaphysical than real."168 Nevertheless, courts are sometimes required to distinguish between the two activities. In Oceanair, Inc. v. Katzman, for example, the court found that defendant "accepted" but did not "solicit" new business.169 As a result, it ruled that the nonsolicitation clause had not been violated.170 A nonsolicitation clause may include terms in addition to "solicit" that a court may find overly broad. For example, in William Gallagher Associates Insurance Brokers, Inc. v. Everts, the court refused to enforce terms such as "call upon," "canvass" or "approach."171

In UBS Paine Webber Inc. v. Dowd, the court held that a "wedding-style" announcement sent by a stockbroker to his former clients did not constitute a "solicitation" within the meaning of a nonsolicitation clause.172 The court distinguished between a "wedding-style" announcement - merely notifying recipients that the broker has joined a new company and providing the broker's new contact information - and a communication asking the client to follow the broker to his new company, accompanied by a "signature-ready" account transfer form and postage pre-paid return envelope. The latter communication would constitute improper solicitation.173

2. Anti-piracy clauses

Employment agreements sometimes include a provision prohibiting a former employee, for a specified period of time after his or her employment terminates, from soliciting or hiring other employees to leave the former company. Such a provision is often referred to as an "anti-piracy" clause. No Massachusetts appellate cases have ruled on the enforceability of such clauses, although Massachusetts trial courts have often upheld them.174 Of course, even in the absence of an anti-piracy clause, a top managerial employee may not, before terminating his or her employment, solicit the departure of key employees to work for a competitor.175

3. Compensation for noncompetition clauses

To maximize the chances that courts will enforce a noncompetition agreement, some employers elect to compensate their employees during the noncompetition period.176 Such employers argue that the compensation eliminates any irreparable harm to the former employee because the employee is still receiving regular paychecks. Such a clause, however, has potential problems. If the employer's revenues are down and several employees depart at the same time, the financial burden of such a clause may be overwhelming - particularly to smaller companies. Also, if the compensation is based upon a percentage of salary, there can sometimes be disputes as to what constitutes salary within the meaning of the parties' agreement.177

IV. Conclusion

Although the legal principles governing employee noncompetition agreements are now generally established, these cases continue to pose challenges to judges and litigants alike. Cases often turn on fact-intensive inquiries regarding the circumstances of the signing of the agreement, the manner in which the employee terminated his or her employment, and the precise post-employment activities of the former employee. Judges are often required - many times with only a limited factual record - to promptly determine what is "reasonable" and to exercise their equitable powers in crafting preliminary injunctive relief. It is therefore not surprising that in many cases - particularly when the facts are in sharp dispute - it is difficult to predict with accuracy the outcome of a preliminary injunction hearing.

The successful litigation of these claims - whether one represents the former employer, former employee, or new employer - is based upon several factors.178 First, the attorney must understand the applicable law and be in a position to quickly evaluate how it relates to the particular facts of the case. Because of the typical focus on preliminary injunctive relief, there is often little time to learn the law from scratch. Second, the attorney must thoroughly investigate the facts by interviewing relevant witnesses and reviewing relevant documents. Again, there is often a need to conduct this investigation quickly - but without overlooking key evidence that could alter the result. Third, the attorney must evaluate the potential defenses to enforcement. There are over twenty different defenses that might apply and, whether one represents the plaintiff or the defendant, careful consideration of the various defenses is essential. Finally, the attorney must develop a litigation strategy that works for the particular case - whether it be a request for an immediate temporary restraining order, a request for expedited discovery prior to a preliminary injunction hearing, or some other strategy. A "one size fits all" approach is often not successful.

Predicting the results in a particular employee noncompetition case is often difficult. One can confidently opine, however, that employee noncompetition cases will remain a fertile field for litigation for some time to come.

END NOTES

* The author gratefully acknowledges the assistance of Judy S. Kawaf in the preparation of this article. Kawaf is an associate at Reece & Associates, P.C.

1. Laurence H. Reece, III, Employee Non-Competition Agreements and Related Restrictive Covenants: A Review and Analysis of Massachusetts Law, 76 Mass. L. Rev. 2 (1991). [back]

2. Falmouth Ob-Gyn Assocs., Inc. v. Abisla, 417 Mass. 176, 178-79 (1994) (doctors); Pettingell v. Morrison, Mahoney & Miller, 426 Mass. 253, 258 (1997) (lawyers).[back]

3. Wilkinson v. QCC, Inc., 2001 WL 1646491 (2001) (order and unpublished memorandum under Rule 1:28).[back]

4. Informix, Inc. v. Rennell, 41 Mass. App. Ct. 161, 162-64 (1996). [back]

5. Salomon Smith Barney, Inc. v. Wetzel, No. 01-J-44 (Mass. App. Ct. Jan. 29, 2001) (Porada, J.); Salomon Smith Barney, Inc. v. Barcomb, No. 02-J-692 (Mass. App. Ct. Jan. 3, 2003) (Trainor, J.).[back]

6. Roll Sys., Inc. v. Shupe, 1998 U.S. Dist. LEXIS 3142, at *8-9 (D. Mass. Jan. 22, 1998) (O'Toole, D.J.).[back]

7. AFC Cable Sys. Inc. v. Clisham, 62 F. Supp.2d 167, 170, 173 (D. Mass. 1999) (Stearns, D.J.).[back]

8. E.g., CSC Consulting, Inc. v. Arnold, 2001 Mass. Super. LEXIS 391, at *8 (Mass. Super. Ct. July 12, 2001) (Houston, J.). [back]

9. BDO Seidman Fin. Servs. v. Gorman, 1994 Mass. Super. LEXIS 552, at *1-2 (Mass. Super. Ct. Apr. 8, 1994) (Lauriat, J.).[back]

10. E.g., Cereva Networks, Inc. v. Lieto, 2001 Mass. Super. LEXIS 435, at *7-16 (Mass. Super. Ct. Oct. 12, 2001) (Brassard, J.).[back]

11. E.g., Lajoie Investigations, Inc. v. Griffin, 1996 Mass. Super. LEXIS 518, at *4-6 (Mass. Super. Ct. Mar. 11, 1996) (Brassard, J.).[back]

12. Analogic Corp. v. Data Translation, Inc., 371 Mass. 643, 647 (1976); Marine Contractors Co. v. Hurley, 365 Mass. 280, 287-88 (1974); Speech Works Int., Inc. v. Cote, 2002 Mass. Super. LEXIS 390, at *8-11 (Mass. Super. Ct. Oct. 11, 2002) (van Gestel, J.); Philips Elecs. N. Am. Corp. v. Halperin, 2000 Mass. Super. LEXIS 574, at *8 (Mass. Super. Ct. Dec. 12, 2000) (Houston, J.); Browne v. Merkert Enterprises, Inc., 1998 Mass. Super. LEXIS 316, at *8 (Mass. Super. Ct. Mar. 30, 1998) (Doerfer, J.); IKON Office Solutions, Inc. v. Belanger, 59 F. Supp.2d 125, 128 (D. Mass. 1999) (Neiman, M.J.).[back]

13. New England Canteen Serv., Inc. v. Ashley, 372 Mass. 671, 674 (1977); Affinity Partners, Inc. v. Drees, 1996 Mass. Super. LEXIS 647, at *9-10 (Mass. Super. Ct. Jan. 6, 1996) (Cowin, J.). [back]

14. Richmond Bros., Inc. v. Westinghouse Broad. Co., 357 Mass. 106, 111 (1970); Speech Works Int., Inc. v. Cote, 2002 Mass. Super. LEXIS 390, at *9 (Mass. Super. Ct. Oct. 11, 2002) (van Gestel, J.).[back]

15. Alexander & Alexander, Inc. v. Danahy, 21 Mass. App. Ct. 488, 496 (1986); Sentry Ins. v. Firnstein, 14 Mass. App. Ct. 706, 707 (1982); Speech Works Int., Inc. v. Cote, 2002 Mass. Super. LEXIS 390, at *11 (Mass. Super. Ct. Oct. 11, 2002) (van Gestel, J.).[back]

16. Alexander & Alexander, Inc. v. Danahy, 21 Mass. App. Ct. 488, 496 (1986). For example, in Borden & Remington Corp. v. Banisch, 1999 Mass. Super. LEXIS 477, at *1, 13-14 (Mass. Super. Ct. Oct. 18, 1999) (Burnes, J.), the Superior Court enforced a five-year noncompetition clause that related to the sale of a business. [back]

17. Alexander & Alexander, Inc., 21 Mass. App. Ct. at 496.[back]

18. Wells v. Wells, 9 Mass. App. Ct. 321, 323-25 (1980).[back]

19. Whitinsville Plaza, Inc. v. Kotseas, 378 Mass. 85, 102-103 (1979).[back]

20. All Stainless, Inc. v. Colby, 364 Mass. 773, 778 (1974). Accord Ferrofluidics Corp. v. Advanced Vacuum Components, Inc., 968 F.2d 1463, 1469 (1st Cir. 1992).[back]

21. Hurwitz Group, Inc. v. Ptak, No. 02-2599 (Suffolk Super. Ct. June 27, 2002) (Billings, J.) ("there is a point beyond which it is unreasonable to expect the parties to submit themselves to the post-hoc judgment of a court of equity, as a substitute for their own bargain"). See also Ferrofluidics Corp. v. Advanced Vacuum Components, Inc., 968 F.2d 1463, 1470 (1st Cir. 1992) ("[t]he trial courts are charged to examine and consider all relevant circumstances, and only then to determine whether, in light of all those circumstances, it would be equitable to enforce the covenant in modified form." Id.); Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev. 625, 674 (1960).[back]

22. 192 F.3d 1, 4-5 (1st Cir. 1999).[back]

23. 123 F. Supp.2d 42, 44 (D.Mass. 2000) (Gorton, D.J.).[back]

24. 1999 Mass. Super. LEXIS 571, at *8, 10-13 (Mass. Super. Ct. Nov. 1, 1999). Similar results were reached in EPV Plastics Corp. v. Rocheux International of New Jersey, Inc., 1999 Mass. Super. LEXIS 63, at *2-3 (Mass. Super. Ct. Feb. 15, 1999) (Spurlock, J.) (allowed motion to dismiss, in part, because the noncompetition agreement did not apply to the individual who had signed the agreement on behalf of his corporation), and Grease Monkey Int'l, Inc. v. Ralco Lubrication Servs., Inc., 24 F. Supp.2d 120, 124-25 (D.Mass. 1998) (Lasker, D.J.) (denied a preliminary injunction, in part, because the noncompetition agreement did not clearly apply to the individual who had signed the agreement on behalf of his corporation).[back]

25. No. 02-2599 (Suffolk Super. Ct. June 27, 2002) (Billings, J.).[back]

26. 2001 Mass. Super. LEXIS 553, at *6 (Mass. Super. Ct. Sept. 27, 2001) (Fecteau, J.).[back]

27. Id. at *10-11. [back]

28. Stone Legal Res. Group, Inc. v. Glebus, 2002 Mass. Super. LEXIS 555, at *12 (Mass. Super. Ct. Dec. 17, 2002) (Burnes, J.).[back]

29. Id.[back]

30. In some jurisdictions, continued employment alone is not sufficient consideration. E.g. Reynolds & Reynolds Co. v. Tart, 955 F. Supp. 547, 553 (W.D.N.C. 1997) (applying North Carolina law); Midwest Sports Mktg., Inc. v. Hillerich & Bradsby of Canada, Ltd., 552 N.W.2d 254, 265 (Minn. Ct. App. 1996); Ruffing v. 84 Lumber Co., 600 A.2d 545, 548 (Pa. Super. Ct. 1991). [back]

31. Slade Gorton & Co., Inc. v. O'Neil, 355 Mass. 4, 6, 8-9 (1968); Econ. Grocery Stores Corp. v. McMenamy, 290 Mass. 549, 550, 552 (1935); Sherman v. Pfefferkorn, 241 Mass. 468, 472-73 (1922).[back]

32. HealthDrive Corp. v. Chall, No. 99-6361 (Middlesex Super. Ct. Feb. 9, 2000) (Burnes, J.); New England Circuit Sales, Inc. v. Glidden, No. 93-1907-C (Essex Super. Ct. Oct. 13, 1994) (Welch, J.); IME, Inc. v. Quaranto, No. 90-6258-F (Suffolk Super. Ct. Feb. 7, 1991) (Barrett, J.).[back]

33. 59 F. Supp.2d 125, 131 (D.Mass. 1999) (Neiman, M.J.) ("At bottom, the courts now appear to refuse to enforce non-competition and non-solicitation agreements when the only purported consideration is the employee's continued employment.").[back]

34. No. 99-P-1854 (Mass. App. Dec 21, 2001) (order and unpublished memorandum under Rule 1:28). [back]

35. 14 Mass. App. Ct. 706 (1982). The court in IKON Office Solutions, Inc. v. Belanger, 59 F. Supp. 2d 125, 131 (D. Mass. 1999), had expressly relied upon Sentry Insurance.[back]

36. Wilkinson, No. 99-P-1854 (Mass. App. Dec 21, 2001).[back]

37. 2001 Mass. Super. LEXIS 435, at *7-10 (Mass. Super. Ct. Oct. 12, 2001) (Brassard, J.).[back]

38. Id. at *15. See also Silbert v. Kerstein, 318 Mass. 476, 479 (1945) ("Competition exists only where both parties are soliciting purchasers of similar goods in the same territory at the same time."); Ar-Ex Prods. Co. v. Capital Vitamin & Cosmetic Corp., 351 F.2d 938, 940 (1st Cir. 1965) (defining "competition" as seeking the same customers). [back]

39. No. 00-1687 (Middlesex Super. Ct. Aug. 15, 2000) (Kern, J.).[back]

40. Id. See also IONA Techs., Inc. v. Walmsley, 2002 Mass. Super. LEXIS 163, at *9-10 (Mass. Super. Ct. Apr. 29, 2002) (Kern, J.) (stating in dicta that the two companies competed, "using an analysis focused on the customer and to whom the product is marketed in determining the meaning of 'direct competition,'" Id. at 10.). [back]

41. 1998 Mass. Super. LEXIS 39, at *2 (Mass. Super. Ct. Mar. 25, 1998) (Neel, J.).[back]

42. Id.[back]

43. 1997 Mass. Super. LEXIS 102, at *12 (Mass. Super. Ct. Dec. 15, 1997) (Kottmyer, J.).[back]

44. 1994 U.S. Dist. LEXIS 15368, at *2-3 (D. Mass. Oct. 13, 1994) (Zobel, D.J.).[back]

45. Id. at *7. [back]

46. 2001 Mass. Super. LEXIS 527, at *11-12 (Mass. Super. Ct. Nov. 14, 2001) (van Gestel, J.).[back]

47. Id. at *7-8.[back]

48. Id. at *10-11.[back]

49. Id. at *10. Compare EMC Corp. v. Allen, 1997 Mass. Super LEXIS 102, at *3-4 (Mass. Super. Ct. Dec. 15, 1997) (Kottmyer, J.) (former employee's new position with direct competitor fell within phrase "officership, directorship or other policy-making executive position with a competing enterprise").[back]

50. 1999 Mass. Super. LEXIS 432, at *9-12 (Mass. Super. Ct. Oct. 25, 1999) (Brassard, J.).[back]

51. Id.[back]

52. 62 F. Supp.2d 167, 170 (D. Mass. 1999) (Stearns, D.J.).[back]

53. 353 Mass. 585 (1968).[back]

54. AFC Cable Systems, Inc., 62 F.Supp.2d at 173. In Intertek Testing Servs. NA, Inc. v. Curtis-Strauss LLC, 2000 Mass. Super. LEXIS 354, at *20-21 (Mass. Super. Ct. Aug. 8, 2000), defendants relied, without success, on a similar argument. Judge Gants denied summary judgment, in part, because the facts were distinguishable from AFC Cable Systems, Inc. and because there were genuine issues of material fact in dispute. Id.[back]

55. No. 92-1013 (Worcester Super. Ct. Dec. 28, 1992) (Volterra, J.). [back]

56. Id.[back]

57. 2002 Mass. Super. LEXIS 163, at *3-4 (Mass. Super. Ct. Apr. 29, 2002) (Kern, J.).[back]

58. Id. at *9-10. The court did not, however, nullify the original noncompetition agreement, but stated that the noncompetition period commenced when the employee began his leave of absence. Id. at *10. [back]

59. 1998 Mass. Super. LEXIS 560, at *1 (Mass. Super. Ct. Oct. 2, 1998) (Gants, J.).[back]

60. Id. at *23, 33.[back]

61. 2002 Mass. Super. LEXIS 140, at *3-6 (Mass. Super. Ct. Mar. 12, 2002) (Fecteau, J.). In some cases, however, an employer may be able to enforce a noncompetition agreement even if it is in material breach of a separate, independent employment agreement. Intertek Testing Servs. NA, Inc. v. Dash, 2001 Mass. Super. LEXIS 390, at *3-4 (Mass. Super. Ct. July 20, 2001) (Gants, J.). [back]

62. 2000 Mass. Super. LEXIS 614, at *9-10 (Mass. Super. Ct. Mar. 24, 2000).[back]

63. Id. at *9-10.[back]

64. 1998 Mass. Super. LEXIS 316, at *1-3 (Mass. Super. Ct. Mar. 30, 1998) (Doerfer, J.).[back]

65. Id. at *3-4, 8-10, 16. [back]

66. No. 99-6361 (Middlesex Super. Ct. Feb. 9, 2000) (Burnes, J.).[back]

67. 1994 Mass. Super. LEXIS 585, at *1-3 (Mass. Super. Ct. July 21, 1994) (Fremont Smith, J.).[back]

68. Id. at *3-4. The Court also relied upon the fact that the good will sought to be protected was the employee's, not the employer's. Id. at *2-3. [back]

69. 1993 Mass. Super. LEXIS 108, at *5-6 (Mass. Super. Ct. Nov. 28, 1993) (Volterra, J.).[back]

70. Id. at *5. [back]

71. 123 F.Supp.2d 42, 44-45 (D. Mass. 2000) (Gorton, D.J.).[back]

72. A good practice is to send the prospective employee a copy of the noncompetition agreement with the offer letter. E.g., Darwin Partners, Inc. v. Signature Consultants LLC, 2000 Mass. Super. LEXIS 614, at *5 (Mass. Super. Ct. Mar. 24, 2000) (Burnes, J.) (before hiring employees, employer sent each prospective employee an offer letter with a copy of the noncompetition agreement).[back]

73. National Hearing Aid Ctrs., Inc. v. Avers, 2 Mass. App. Ct. 285, 289-90 (1974) (noncompetition agreement unenforceable since no trade secrets, confidential information or good will involved).[back]

74. 1996 Mass. Super. LEXIS 518, at *1 (Mass. Super. Ct. Mar. 11, 1996) (Brassard, J.).[back]

75. Id. at *4-5.[back]

76. 1994 Mass. Super. LEXIS 247, *1, 4, 12-13 (Mass. Super. Ct. Jan. 20, 1994). See also Routhier Placement Specialists, Inc. v. Brown, 2002 Mass. Super. LEXIS 362, at *3-5 (Mass. Super. Ct. Sept. 26, 2002) (Agnes, J.) (noncompetition agreement unenforceable since no trade secrets, confidential information or good will involved). [back]

77. Judge van Gestel recently defined good will as follows: "Good will is a broad term and encompasses a variety of intangible business attributes such as the name, location and reputation, which tends to enable the business to retain its patronage. An employer's positive reputation or position in the eyes of its customers or potential customers is an element of good will. Good will is also generated by repeat business with existing customers." Speech Works International, Inc. v. Cote, 2002 Mass. Super. LEXIS 390, at *9-10 (Mass. Super. Ct. Oct. 11, 2002) (quoting Slate Co. v. Bikash, 343 Mass. 172, 173-76 (1961)) (internal quotations and citations omitted). See also Darwin Partners, Inc. v. Signature Consultants LLC, 2000 Mass. Super. LEXIS 614, at *11-12 (Mass. Super. Ct. Mar. 24, 2000) (Burnes, J.) In McFarland v. Schneider, 1998 Mass. Super. LEXIS 711, at *143-47 (Mass. Super. Ct. Feb. 17, 1998), Judge McHugh distinguished between "external" good will - relating to plaintiff's actual and potential relationship with its clients - and "internal" good will - relating to the close relationships among its own employees. This appears to be the only reported Massachusetts decision that identifies "internal" good will as a legitimate business interest to be protected by an employee nonsolicitation or noncompetition covenant. [back]

78. Sentry Ins. v. Firnstein, 14 Mass. App. Ct. 706, 708 (1982); Routhier Placement Specialists, Inc. v. Brown, 2002 Mass. Super. LEXIS 362, at *5 (Mass. Super. Ct. Sept. 26, 2002) (Agnes, J.); Hurwitz Group, Inc. v. Ptak, No. 02-2599 (Suffolk Super. Ct. June 27, 2002) (Billings, J.). But see Equipment & Sys. for Indus., Inc. v. Zevetchin, 864 F. Supp. 253, 256-57 (D. Mass. 1994) (Gorton, J.) (finding that injunction applies to customers brought in by former employee). [back]

79. See, e.g., BDO Seidman Fin. Servs. v. Gorman, 1994 Mass. Super. LEXIS 552, at *3-4 (Mass. Super. Ct. Apr. 8, 1994) (Lauriat, J.). [back]

80. Salomon Smith Barney, Inc. v. Wetzel, No. 01-J-44 (Mass. App. Ct. Jan. 29, 2001) (Porada, J.).[back]

81. E.g., Routhier Placement Specialists, Inc. v. Brown, 2002 Mass. Super. LEXIS 362, at *7-8 (Mass. Super. Ct. Sept. 26, 2002) (Agnes, J.) ("Any good will associated with a placement belongs to the person making the placement, not the company they work for."); William Gallagher Assocs. Ins. Brokers, Inc. v. Everts, 2000 Mass. Super. LEXIS 705, at *35-36 (Mass. Super. Ct. Sept. 6, 2000) (Hinkle, J.) ("While hiring an employee and providing him with an infrastructure necessary for him to do his job undoubtedly gives an employer significant rights to control the employee's conduct, this does not mean that the good will which develops belongs to the employer."); First Eastern Mortgage Corp. v. Gallagher, 1994 Mass. Super. LEXIS 585, at *2-3 (Mass. Super. Ct. July 21, 1994) (Fremont-Smith, J.) (good will "was the defendant's own making, which he had developed with customers as a result of his own enthusiasm, personality and abilities").[back]

82. Blackwell v. E.M. Helides, Jr., Inc., 368 Mass. 225, 229-30 (1975); Salomon Smith Barney, Inc. v. Wetzel, No. 01-J-44 (Mass. App. Ct. Jan. 29, 2001) (Porada, J.) ("In the case of employees who are sales persons, the good will belongs to the employer if the employer introduced the employee to the client or the relationship was cultivated while the employee was employed by the employer."); American Stop Loss Ins. Brokerage Servs., Inc. v. Prince, 2001 Mass. Super. LEXIS 68, at *7 (Mass. Super. Ct. Feb. 20, 2001) (Toomey, J.) ("The goodwill generated with respect to new and renewal clients developed by Prince while employed at ASL belongs to ASL."); W.B. Mason Co., Inc. v. Staples, Inc., 2001 Mass. Super. LEXIS 50, at *17 (Mass. Super. Ct. Jan. 18, 2001) (van Gestel, J.) ("neither Feldman nor Bartha individually developed and possessed any significant good will in or with those customers"); Darwin Partners, Inc. v. Signature Consultants LLC, 2000 Mass. Super. LEXIS 614, at *11-12 (Mass. Super. Ct. Mar. 24, 2000) (Burnes, J.) ("Soliciting a potential client company whose relationship has been developed by the individual defendants, while under the employ of Darwin, certainly would constitute an invasion of Darwin's goodwill."); Fortune Personnel Consultants of Boston, Inc. v. Hagopian, 1997 Mass. Super. LEXIS 52, at *6-7 (Mass. Super. Ct. Dec. 30, 1997) (Welch, J.) ("Taking a potential client who has been developed while under the employ of Fortune, certainly would constitute an invasion of Fortune's good will."); Bowne of Boston, Inc. v. Levine, 1997 Mass. Super. LEXIS 69, at *7-8 (Mass. Super. Ct. Nov. 25, 1997) (Burnes, J.) ("the goodwill generated with respect to . . . new clients retained by Levine while employed at Bowne, belongs to Bowne"); NECX v. Hirschman, 1995 Mass. Super. LEXIS 249, at *2-3 (Mass. Super. Ct. Aug. 1, 1995) (Welch, J.) ("The fact that some of the sales accounts have been developed by the defendant while employed by NECX makes little difference. After all, NECX was employing defendant Hirschman to develop such sales accounts on behalf of NECX."); IKON Office Solutions, Inc. v. Belanger, 59 F. Supp. 2d 125, 128 (D. Mass. 1999) (Neiman, M.J.). [back]

83. All Stainless, Inc. v. Colby, 364 Mass. 773, 778 (1974). See also W.B. Mason Co., Inc. v. Staples, Inc., 2001 Mass. Super. LEXIS 50, at *19 (Mass. Super. Ct. Jan. 18, 2001) (van Gestel, J.) ("A non-competition agreement, to be enforceable, also must be reasonable in geographical scope and length of time."); Bowne of Boston, Inc. v. Levine, 1997 Mass. Super. LEXIS 69, at *10-11 (Nov. 25, 1997) (Burnes, J.) ("If a covenant is too broad in space, time or any other respect, it will be enforced only to the extent that it is reasonable and to the extent that it is severable for the purposes of enforcement.").[back]

84. E.g., Cereva Networks, Inc. v. Lieto, 2001 Mass. Super. LEXIS 435, at *19 (Mass. Super. Ct. Oct. 12, 2001) (Brassard, J.) (one-year restriction reasonable); Philips Electronics North America Corp. v. Halperin, 2000 Mass. Super. LEXIS 574, at *10-11 (Mass. Super. Ct. Dec. 12, 2000) (Houston, J.) (two-year restriction reasonable); Bowne of Boston, Inc. v. Levine, 1997 Mass. Super. LEXIS 69, at *12-13 (Mass. Super. Ct. Nov. 25, 1997) (Burnes, J.) (two-year restriction reasonable). See also Ferrofluidics Corp. v. Advanced Vacuum Components, Inc., 968 F.2d 1463, 1469, 1471 (1st Cir. 1992) (affirmed district court's reduction of noncompetition period from five years to three years). But see IKON Office Solutions, Inc. v. Belanger, 59 F. Supp.2d 125, 129 (D. Mass. 1999) (Neiman, M.J.) ("the court does not believe that two years is categorically appropriate here when the time of employ, during which the restrictive covenants were in place, was only slightly greater than one year"). [back]

85. EarthWeb, Inc. v. Schlack, 71 F. Supp.2d 299, 313 (S.D.N.Y. 1999); Doubleclick Inc. v. Henderson, 1997 N.Y. Misc. LEXIS 577, at *23 (N.Y. Sup. Ct. Nov. 5, 1997). [back]

86. Richmond Bros., Inc. v. Westinghouse Broad. Co., Inc., 357 Mass. 106, 110 (1970); Bowne of Boston, Inc. v. Levine, 1997 Mass. Super. LEXIS 69, at *11 (Mass. Super. Ct. Nov. 25, 1997) (Burnes, J.).[back]

87. All Stainless, Inc. v. Colby, 364 Mass. 773, 779-81 (1974).[back]

88. 2001 Mass. Super. LEXIS 435, at *19-20 (Mass. Super. Ct. Oct. 12, 2001) (Brassard, J.).[back]

89. 2000 Mass. Super. LEXIS 574, at *11 (Mass. Super. Ct. Dec. 12, 2000) (Houston, J.). See also Sentient Jet, Inc. v. Lambert, 2002 Mass. Super. LEXIS 491, at *14-15 (Mass. Super. Ct. Nov. 18, 2002) (van Gestel, J.) (enforced noncompetition covenant that was effectively unlimited in geographic scope); EMC Corp. v. Allen, 1997 Mass. Super. LEXIS 102, at *3 (Mass. Super. Ct. Dec. 15, 1997) (Kottmyer, J.) (enforced noncompetition covenant worldwide in scope); Marcam Corp. v. Orchard, 885 F. Supp. 294, 299 (D. Mass. 1995) (Lindsay, J.) (enforced noncompetition covenant covering the United States). But see Speech Works Int'l, Inc. v. Cote, 2002 Mass. Super. LEXIS 390, at *10-11 (Mass. Super. Ct. Oct. 11, 2002) (van Gestel, J.) ("An unlimited or world-wide area is not acceptable. At most, Cote should not be restrained from any area except that which he covered for Speech Works.").[back]

90. Woolley's Laundry, Inc. v. Silva, 304 Mass. 383, 387 (1939). Accord Banner Industries v. Bilodeau, 2003 Mass. Super. LEXIS 51, at *4 (Mass. Super. Ct. Feb. 27, 2003) (Agnes, J.) ("The public policy of the Commonwealth of Massachusetts favors the right of an employee to move from job to job unencumbered by restrictions that are not narrowly tailored to protect an employer's interests in the goodwill of a business, a trade secret, or confidential business information."); Routhier Placement Specialists, Inc. v. Brown, 2002 Mass. Super. LEXIS 362, at *3 (Mass. Super. Ct. Sept. 26, 2002) (Agnes, J.) ("There is a public policy in favor of every person carrying on his trade or occupation freely."); Bowne of Boston, Inc. v. Levine, 1997 Mass. Super. LEXIS 69, at *13 (Mass. Super. Ct. Nov. 25, 1997) (Burnes, J.) ("It is in the public interest to allow an individual to participate in his or her trade freely and without monopolization.").[back]

91. 1998 Mass. Super. LEXIS 711, at *150 n.71 (Mass. Super. Ct. Feb. 17, 1998) (McHugh, J.). The court suggested that perhaps the Legislature was "in the best position to determine where that interest lies and to create a mechanism for its enforcement." Id. [back]

92. In UBS Paine Webber Inc. v. Dowd, 2001 Mass. Super. LEXIS 576, at *1-2 (Mass. Super. Ct. Nov. 29, 2001), Judge van Gestel provides a somewhat critical view of the familiar pattern of behavior by the various parties in stockbroker cases. [back]

93. No. 94-6784 (Suffolk Super. Ct. Dec. 23, 1994) (Quinlan, J.).[back]

94. 1995 Mass. Super. LEXIS 636, at *1 (Mass. Super. Ct. Jan. 10, 1995).[back]

95. 1998 Mass. Super. LEXIS 577, at *25 (Mass. Super. Ct. Oct. 28, 1998) (Gants, J.). The court, however, enforced the one-year nonsolicitation of clients provision because "it is reasonable for American Express contractually to oblige its financial advisors to wait at least one year after their termination before they are allowed to solicit that client's business." Id. at *27. The court's ruling on the noncompetition claim has effectively been superseded by NASD Rule 2110-7, made effective on Dec. 21, 2001, that generally prohibits interference with "a customer's request to transfer his or her account." [back]

96. Id. at *23.[back]

97. 1998 Mass. Super. LEXIS 711, at *152 (Mass. Super. Ct. Feb. 17, 1998) (McHugh, J.).[back]

98. Id.[back]

99. Salomon Smith Barney, Inc. v. Barcomb, No. 02-J-692 (Mass. App. Ct. Jan. 3, 2003) (Trainor, J.); Salomon Smith Barney, Inc. v. Wetzel, No. 01-J-44 (Mass. App. Ct. Jan. 29, 2001) (Porada, J.). [back]

100. No. 01-J-44 (Mass. App. Ct. Jan. 29, 2001) (Porada, J.).[back]

101. E.g., Prudential Ins. Co. of America v. Tracia, 2002 Mass. Super. LEXIS 467, at *5-6 (Mass. Super. Ct. Nov. 12, 2002) (Lauriat, D.J.).[back]

102. 926 F. Supp. 28, 30 (D. Mass. 1996). Accord New England Circuit Sales, Inc. v. Randall, 1996 U.S. Dist. LEXIS 9748, at *9 (D. Mass. June 4, 1996) (Harrington, D.J.).[back]

103. Philips Elecs. North America Corp. v. Halperin, 2000 Mass. Super. LEXIS 574, at *11-12 (Mass. Super. Ct. Dec. 12, 2000) (Houston, J.).[back]

104. Ell Pond Med. Assocs., Inc. v. Lipski, 1998 Mass. Super. LEXIS 292, at *2-3 (Mass. Super. Ct. Jan. 29, 1998) (Zobel, J.) (summary judgment in favor of physician; held that statute barred enforcement of nonsolicitation covenant); Plastic Surgical Servs. of New England, P.C. v. Hall, 1993 Mass. Super. LEXIS 86, at *3 (Mass. Super. Ct. Sept. 22, 1993) (Volterra, J.) (noncompetition proision contained in employment contract with doctor "is void and unenforceable under Massachusetts law"); Parikh v. Franklin Med. Ctr., 940 F. Supp. 395, 408 (D. Mass. 1996) (Ponsor, D.J.) (forfeiture for competition clause in physician's contract violated Massachusetts statute).[back]

105. S.J.C. Rule 3:07, Mass. R. Prof. C. 5.6; Meehan v. Shaughnessy, 404 Mass. 419, 431 (1989).[back]

106. 417 Mass. 176, 178-80 (1994).[back]

107. 417 Mass. at 182 (quoting Meehan v. Shaughnessy, 404 Mass. 419, 431 (1989)).[back]

108. 426 Mass. 253, 254 (1997).[back]

109. Id. at 257.[back]

110. Id.[back]

111. "There may be situations in which, although a forfeiture is inappropriate, some reasonable recognition of a law firm's loss due to the departure of a partner should be recognized." 426 Mass. at 258.[back]

112. Cal. Bus. & Prof. Code §16600.[back]

113. Morris v. Watsco, Inc., 385 Mass. 672, 674-75 (1982). See, e.g., GeoSonics, Inc. v. Hicks, 2001 Mass. Super. LEXIS 639, at *4-5 (Mass. Super. Ct. Dec. 5, 2001) (Donohue, J.) (applied Pennsylvania choice-of-law provision); Norton Co. v. Hess, 2001 Mass. Super. LEXIS 553, at *3 (Mass. Super. Ct. Sept. 27, 2001) (Fecteau, J.) (applied Pennsylvania choice-of-law provision); American Express Fin. Advisors Inc. v. Walker, 1998 Mass. Super. LEXIS 577, at *12 (Mass. Super. Ct. Oct. 28, 1998) (Gants, J.) (applied Minnesota choice-of-law provision); TKO, Inc. v. Gentle, 1997 Mass. Super. LEXIS 399, at *10-11 (Mass. Super. Ct. April 11, 1997) (Ball, J.) (applied Connecticut choice-of-law provision); BDO Seidman Fin. Servs. v. Gorman, 1994 Mass. Super. LEXIS 552, at *5-7 (Mass. Super. Ct. Apr. 8, 1994) (Lauriat, J.) (applied New York choice-of-law provision). See also Ferrofluidics Corp. v. Advanced Vacuum Components, Inc., 968 F.2d 1463, 1467-68 (1st Cir. 1992) (district court improperly nullified parties' contractual choice of Massachusetts law and applied New Hampshire law, but error was harmless since Massachusetts and New Hampshire law lead to the same result). [back]

114. 728 F. Supp. 818, 825 (D. Mass. 1990) (Tauro, D.J.) (quoting Restatement (Second) of Conflict of Laws § 187(2)(b)(1971).[back]

115. Restatement (Second) of Conflict of Laws §187(2)(b) (1971).[back]

116. 1998 U.S. Dist. LEXIS 3142, at *1-2 (D. Mass. Jan. 22, 1998) (O'Toole, D.J.).[back]

117. Id. at *5-9, 17. Accord SG Cowen Securities Corp. v. Messih, 2000 U.S. Dist. LEXIS 6697, at *8-12 (S.D.N.Y. May 17, 2000), aff'd, 224 F.3d 79 (2d Cir. 2000) (California law applied to employee noncompetition dispute despite New York choice-of-law provision). Compare Shipley Co., L.L.C. v. Kozlowski, 926 F. Supp. 28, 29-30 (D. Mass. 1996) (Harrington, D.J.) (applied Massachusetts choice-of-law provision). [back]

118. No. 01-1134-BLS (Suffolk Super. Ct. Mar. 28, 2001) (van Gestel, J.). [back]

119. Id.[back]

120. Id.[back]

121. Bushkin Assocs., Inc. v. Raytheon Co., 393 Mass. 622, 631 (1985).[back]

122. 393 Mass. at 632 (internal quotations omitted).[back]

123. Restatement (Second) of Conflicts of Laws §188(2) (1971).[back]

124. 54 F.3d 1262 (7th Cir. 1995).[back]

125. E.g., Jennifer L. Saulino, Locating Inevitable Disclosure's Place in Trade Secret Analysis, 100 Mich. L. Rev. 1184 (2002); Jonathan O. Harris, The Doctrine of Inevitable Disclosure: A Proposal to Balance Employer and Employee Interests, 78 Wash. U. L. Q. 325 (2000); Harvey, Inevitable Trade Secret Misappropriation after PepsiCo, Inc. v. Redmond, IP Litigator 7 (July/Aug. 1999).[back]

126. Redmond, 54 F.3d at 1268-71.[back]

127. E.g., Schlage Lock Co. v. Whyte, 101 Cal. App.4th 1443, 1464 (2002); Del Monte Fresh Produce Co. v. Dole Food Co., 148 F. Supp.2d 1326, 1336 (S.D. Fla. 2001); Gov't Tech. Servs., Inc. v. IntelliSys Tech. Corp., 1999 Va. Cir. LEXIS 502, at *2 (Va. Cir. Ct. Oct. 20, 1999). [back]

128. E.g., AMP Inc. v. Fleischhacker, 823 F.2d 1199, 1207 (7th Cir. 1987); PADCO Advisors, Inc. v. Omdahl, 179 F. Supp.2d 600, 611-12 (D. Md. 2002); Tactica Int'l, Inc. v. Atlantic Horizon Int'l, Inc., 154 F. Supp.2d 586, 608 (S.D.N.Y. 2001).[back]

129. E.g., Procter & Gamble Co. v. Stoneham, 747 N.E.2d 268, 270-73 (Ohio Ct. App. 2000); Lumex, Inc. v. Highsmith, 919 F. Supp. 624, 634, 636 (E.D.N.Y. 1996); Merck & Co. v. Lyon, 941 F. Supp. 1443, 1460-61, 1464 (M.D.N.C. 1996) (Botsford, J.).[back]

130. 2000 Mass. Super. LEXIS 62, at *15-16 (Mass. Super. Ct. Feb. 17, 2000).[back]

131. Id. at *15.[back]

132. 2000 Mass. Super. LEXIS 354, at *23 n.8 (Mass. Super. Ct. Aug. 8, 2000) (Gants, J.).[back]

133. 2001 Mass. Super. LEXIS 391, at *4 (Mass. Super. Ct. July 12, 2001) (Houston, J.).[back]

134. Id. at *8.[back]

135. Id. at *8.[back]

136. 885 F. Supp. 294, 296-97 (D. Mass. 1995) (Lindsay, D.J.).[back]

137. 47 F.3d 467, 468 (1st Cir. 1995).[back]

138. Id. at 470 n.4.[back]

139. Id. at 471.[back]

140. 233 F. Supp.2d 121, 124 (D. Mass. 2002) (Lasker, D.J.).[back]

141. Id.[back]

142. 41 Mass. App. Ct. 161, 163-64, 1353-54 (1996).[back]

143. Manning v. Zuckerman, 388 Mass. 8, 14 (1983) (contractual disputes between an employer and employee do not constitute "trade" or "commerce" within the meaning of Chapter 93A because they are principally "private in nature").[back]

144. William Gallagher Assocs. Ins. Brokers, Inc. v. Everts, 2000 Mass. Super. LEXIS 705, at *43 (Mass. Super. Ct. Sept. 6, 2000) (Hinkle, J.); Cambridge Internet Solutions, Inc. v. Avicon Group, 1999 Mass. Super. LEXIS 387, at *9 (Mass. Super. Ct. Sept. 21, 1999) (Quinlan, J.); Harvard Translations, Inc. v. Heuberger, 1999 Mass. Super. LEXIS 363, at *4-6 (Mass. Super. Ct. Sept. 9, 1999) (Brassard, J.); Burgess v. McLaughlin Transp. Sys., Inc., 1998 Mass. Super. LEXIS 53, at *5 (Mass. Super. Ct. June 10, 1998) (Doerfer, J.). Compare Descartes Sys. Group, Inc. v. Celarix, Inc., 2001 Mass. Super. LEXIS 245, at *5-7 (Mass. Super. Ct. June 20, 2001) (Brassard, J.) (refused to dismiss former employer's Chapter 93A claim against former employee for trade secret misappropriation arising from trade secrets the former employee acquired after the termination of his employment).[back]

145. 2000 Mass. Super. LEXIS 354, at *35 (Mass. Super. Ct. Aug. 8, 2000) (Gants, J.).[back]

146. Id. at *36-37.[back]

147. Oceanair, Inc. v. Katzman, 2002 Mass. Super. LEXIS 60, at *29 (Mass. Super. Ct. Jan. 22, 2002).[back]

148. 409 Mass. 165, 172 (1991). See also Hanover Ins. Co. v. Sutton, 46 Mass. App. Ct. 153, 174 (1999). [back]

149. To be sure, the new employer may be liable for attorneys' fees if the Chapter 93A claim is successful, but many noncompetition agreements already include such fee-shifting provisions, and courts have not suggested that they are unenforceable against a former employee because of the "delicate, uncertain balance" that must be made in these cases by employees. [back]

150. Ecolab, Inc. v. Coyle, No. 97-54-RM-0029 (Dedham Dist. Ct. Feb. 24, 1999) (Martin, J.).[back]

151. 1994 Mass. Super. LEXIS 552, at *1-2 (Mass. Super. Ct. Apr. 8, 1994) (Lauriat, J.).[back]

152. Id. at *1. Such arrangements are common in the accounting and financial services industries.[back]

153. Id. at *12.[back]

154. Id. at *12. [back]

155. Id. at *13.[back]

156. In federal court, one may file an appeal pursuant to 28 U.S.C. §1292(a)(1).[back]

157. 53 Mass. App. Ct. 751 (2002).[back]

158. Id. at 752.[back]

159. Salomon Smith Barney, Inc. v. Barcomb, No. 02-J-692 (Mass. App. Ct. Jan. 3, 2003) (Trainor, J.); Salomon Smith Barney, Inc. v. Wetzel, No. 01-J-44 (Mass. App. Ct. Jan. 29, 2001) (Porada, J.).[back]

160. 47 Mass. App. Ct. 125, 128-29 (1999). See also Gymnastics Learning Ctr., Inc. v. Hetu, 1997 Mass. Super. LEXIS 369, at *7 (Mass. Super. Ct. July 9, 1997) (Wernick, J.). [back]

161. Eldim, Inc., 47 Mass. App. Ct. at 128 (quoting Demoulas v. Demoulas Super Markets, Inc., 424 Mass. 501, 565 (1997) (internal quotations omitted)).[back]

162. Eldim, Inc., 47 Mass. App. Ct. at 128.[back]

163. 47 Mass. App. Ct. at 128 (quoting Demoulas v. Demoulas Super Markets, Inc., 424 Mass. 501, 569 (1997)).[back]

164. Eldim, Inc., 47 Mass. App. Ct. at 130-31. See also Interstate Coffee Servs. Co. v. Premier Coffee Co., 2001 Mass. Super. LEXIS 404, at *2-3 (Mass. Super. Ct. Oct. 5, 2001) (Volterra, J.) ($947,000 in civil fines for violation of court order that included noncompetition obligations).[back]

165. Alexander & Alexander, Inc. v. Danahy, 21 Mass. App. Ct. 488, 498-99 (1986); Salomon Smith Barney, Inc. v. Barcomb, No. 02-J-692 (Mass. App. Ct. Jan. 3, 2003) (Trainor, J.); PC-Plus Techs., Inc. v. Gokani, 1999 Mass. Super. LEXIS 221, at *2-4 (Mass. Super. Ct. Apr. 14, 1999) (Fecteau, J.); American Express Fin. Advisors Inc. v. Walker, 1998 Mass. Super. LEXIS 577, at *13-29 (Mass. Super. Ct. Oct. 28, 1998) (Gants, J.); McFarland v. Schneider, 1998 Mass. Super. LEXIS 711, at *128-36 (Mass. Super. Ct. Feb. 17, 1998) (McHugh, J.).[back]

166. 1997 Mass. Super. LEXIS 69, at *5-6 (Mass. Super. Ct. Nov. 25, 1997) (Burnes, J.).[back]

167. 1999 Mass. Super. LEXIS 542, at *25 (Mass. Super. Ct. Dec. 29, 1999) (Welch, J.).[back]

168. Alexander & Alexander, Inc. v. Danahy, 21 Mass. App. Ct. 488, 499 (1986).[back]

169. 2002 Mass. Super. LEXIS 60, at *16-18 (Mass. Super. Ct. Jan. 22, 2002) (van Gestel, J.).[back]

170. Id. at *17-18.[back]

171. 2000 Mass. Super. LEXIS 705, at *29-32 (Mass. Super. Ct. Sept. 6, 2000) (Hinkle, J.).[back]

172. 2001 Mass. Super. LEXIS 576, at *7-9 (Mass. Super. Ct. Nov. 29, 2001) (van Gestel, J.).[back]

173. Id. at *4, 7-8. Judge van Gestel also commented on the "shameless" nature of the solicitation and retention of stockbrokers that frequently occurs. "This is not a clean-hands business on either side." Id. at *2.[back]

174. E.g., Filmore & Stern, Inc. v. Frankel, 2002 Mass. Super. LEXIS 415, at *4 (Mass. Super. Ct. Sept. 17, 2002) (Fecteau, J.) (two-year anti-piracy clause enforced); Cambridge Tech. Partners (Massachusetts), Inc. v. Sims, No. 00-1687 (Middlesex Super. Ct. Aug. 15, 2000) (Kern, J.) (two-year anti-piracy clause enforced); State St. Corp. v. Barr, 1999 Mass. Super. LEXIS 432, at *12-14, 23 (Mass. Super. Ct. Oct. 25, 1999) (Brassard, J.) (one-year anti-piracy clause enforced); Browne v. Merkert Enter., Inc., 1998 Mass. Super. LEXIS 316, at *16-17 (Mass. Super. Ct. Mar. 30, 1998) (Doerfer, J.) (six-month anti-piracy clause enforced).[back]

175. Augat, Inc. v. Aegis, Inc., 409 Mass. 165, 171-74 (1991).[back]

176. E.g., Marcam Solutions, Inc. v. Sweeney, 1998 Mass. Super. LEXIS 39, at *1 (Mass. Super. Ct. Mar. 25, 1998) (Neel, J.) (employer agreed to pay former employee difference between (1) 110% of salary offered by competitor and (2) lesser income earned by employee from suitable alternative employment); Marcam Corp. v. Orchard, 885 F. Supp. 294, 296 (D. Mass. 1995) (Lindsay, D.J.) (same). See also Affinity Partners, Inc. v. Drees, 1996 Mass. Super. LEXIS 647, at *9 (Mass. Super. Ct. Jan. 6, 1996) (Cowin, J.) (former employee's continuing draw of $50,000 and health premiums for six months "helps to render the circumstances of the termination reasonable"). [back]

177. For example, in Marcam Corp. v. Orchard, 885 F. Supp. 294, 298-99 (D. Mass. 1995) (Lindsay, D.J.), the former employee claimed that the former employer had failed to offer 110% of his salary with the new company and therefore argued that he was relieved of his noncompete obligation. [back]

178. For a more detailed discussion of litigation strategy, see Reece, Negotiating, Drafting and Enforcing Noncompetition Agreements 25-64 (MCLE 1997).[back]

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