The United States District Court for the District of Maryland, in TEKsystems, Inc. v. Jonathan Bolton, granted relief to an employer who filed suit to enforce a non-compete provision contained in an employment contract of a key employee. Operating in the New York region, Mr. Bolton resigned from TEKsystems and began working for a similar job placement service in the same region. TEKsystems sued Mr. Bolton to enforce a provision in his contract that prohibited him from working for a competing company within 50 miles of its New York office for a period of 18 months. The Court held that the the scope of this non-compete provision was reasonable and that it is enforceable against Mr. Bolton. It rejected Mr. Bolton's argument that even if reasonable in scope the contract provision should not be enforced because it would cause him undue hardship by requiring him to work outside of the New York region.
The Court, however, denied TEK's request to award liquidated damages in an amount equal to the profits generated by Mr. Bolton during his employment with the competing business. The Court held that this liquidated damages provision was triggered only if TEK could show that Bolton generated profits from TEK's existing clients or customers, and that the profits generated by Mr. Bolton were shown to be from businesses who were not clients or customers of TEK. The Court did, grant, however, injunctive relief requiring Mr. Bolton to adhere to the non-compete provision for a period of 18 months from the date of the Court's decision. A copy of the decision can be read here.
This case provides an informative analysis of restrictive covenant law in Maryland, and could serve as helpful guidance in assessing and litigating these types of claims. It also provides guidance on critical issues to consider when drafting and negotiating non-compete provisions in employment contracts.
If you would like guidance or counsel in handling and litigating claims involving non-compete agreements and other employment contract provisions, please contact Eric Gunderson and/or visit the Farrell & Gunderson website.
The Court, however, denied TEK's request to award liquidated damages in an amount equal to the profits generated by Mr. Bolton during his employment with the competing business. The Court held that this liquidated damages provision was triggered only if TEK could show that Bolton generated profits from TEK's existing clients or customers, and that the profits generated by Mr. Bolton were shown to be from businesses who were not clients or customers of TEK. The Court did, grant, however, injunctive relief requiring Mr. Bolton to adhere to the non-compete provision for a period of 18 months from the date of the Court's decision. A copy of the decision can be read here.
This case provides an informative analysis of restrictive covenant law in Maryland, and could serve as helpful guidance in assessing and litigating these types of claims. It also provides guidance on critical issues to consider when drafting and negotiating non-compete provisions in employment contracts.
If you would like guidance or counsel in handling and litigating claims involving non-compete agreements and other employment contract provisions, please contact Eric Gunderson and/or visit the Farrell & Gunderson website.
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