Source: https://trellis.law/ca/issue-type/non-solicitation-clauses-207
Timestamp: 2020-07-15 01:04:21
Document Index: 339628951

Matched Legal Cases: ['§17200', '§ 16600', '§ 16600', '§ 16600', '§16600', '§16600', '§ 16600', '§ 16600', '§ 16600', '§ 16600']

Non-solicitation Clauses or “Anti-raiding Covenants”
A contractual provision preventing a departing employee from “raiding” his former employer’s employees is “not void on its face under Business and Professions Code section 16600.” Loral Corp. v. Moyes, 174 Cal.App.3d 268, 280 (1985). The Rutter Group explained that these types of agreements were enforceable. “Solicitation as Breach of Contract (“Anti-Raiding Provisions”): A contract may prohibit employees, upon termination of their employment, from soliciting other employees to join a new business (so-called “anti-raiding covenants”). Id. Such provisions may be valid and enforceable even in the absence of trade secret misappropriation or unfair competition. (Loral Corp. v. Moyes (1985) 174 CA3d 268, 280, 219 CR 836, 844). See also, Cal. Prac. Guide Employment Litigation, section 14:416.
California courts have carved out an exception to the general prohibition on noncompetition contractual provisions where former employees engage in unfair competition by the unauthorized use of trade secrets and/or confidential, protected information. (See Metro Traffic Control, Inc. v. Shadow Traffic Network (1994) 22 Cal. App. 4th 853; Scott v. Snelling and Snelling, Inc. (1990) 732 F. Supp. 1034.)
The subsequent case, Edwards v. Arthur Andersen LLP (2008) 44 Cal. 4th 937, 942, does not overrule Loral. The Supreme Court held “that Business and Professions Code section 16600 prohibits employee noncompetition agreements unless the agreement falls within a statutory exception.” The ruling in Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937 made clear the “settled legislative policy in favor of open competition and employee mobility” (Id.)
Non Solicitation Clauses After the AMN Healthcare, Inc. Ruling
AMN Healthcare, Inc. v. AYA Healthcare Servs., Inc. (2018) 28 Cal.App.5th 923 further clarified California law regarding restrictive covenants in employment contexts. In keeping with “California's strong public policy of protecting the right of its citizens to pursue any lawful employment and enterprise of their choice” (Advanced Bionics Corp. v. Medtronic, Inc. (2002) 29 Cal.4th 697, 706) the court in AMN Healthcare found “undisputed evidence in the record... that, if a former AMN recruiter (i.e., individual defendants) was barred for at least one year from "soliciting or recruiting any travel nurse listed in AMN's database, that would [likewise] restrict the number of nurses with whom a recruiter could work with while employed by his or her new staffing agency"; that if a former AMN recruiter was barred from "soliciting or inducing to leave AMN's employment any AMN current travel nurse with whom he or she had worked with as an AMN recruiter, that would [likewise] restrict the number of nurses with whom a recruiter could work with while employed by his or her new staffing agency"; and that "[n]ot being permitted to contact travel nurses who currently work for AMN could limit the amount of compensation a recruiter would receive with his or her new agency after leaving AMN. (AMN Healthcare, Inc. v. AYA Healthcare Servs., Inc.(2018) 28 Cal.App.5th 923, 936-37.)
“In addition, the undisputed evidence show[ed] travel nurses typically were assigned by AMN for 13-week periods.” (Id.) “Although such assignments were sometimes extended, the point is the assignments were temporary.” (Id.) “As such, a one-year, posttermination restriction preventing a former AMN recruiter from contacting and recruiting a travel nurse on a 13-week assignment with AMN at a minimum equates to a period of four such assignments for a given nurse.” (Id.) “The undisputed evidence thus shows section 3.2 of the CNDA restricted individual defendants' ability to engage in their "profession, trade, or business.” (AMN Healthcare, Inc. v. AYA Healthcare Servs., Inc.(2018) 28 Cal.App.5th 923, 936-37.)
Useful Rulings on Non-Solicitation Clauses
Momentous Insurance Brokerage, Inc. v. Grace Evelyn Neumann
Nature of Proceedings: Motion Compel Prod. of Docs & Further Resp. to First Set of Requests for Prod. of Docs; Compel Further Resp. to Form interrog. Motion to Compel Further Responses to Form Interrogatory No. 17.1 from Plaintiff Motion to Compel Production of Documents and Further Responses to First Set of Requests for Production of Documents from Plaintiff Ruling: The Court grants defendant...
..liable to pay defendant Chivaroli Premier Insurance Services, LLC a monetary sanction in the amount of $1,500, which they shall pay on or before December 16, 2016. The Court grants, in part, defendant Chivaroli Premier Insurance Services, LLC’s motion to compel further responses to requests for production of documents and the production of documents responsive thereto and orders plaintiff Momento...
AMN HEALTHCARE INC vs. Aya Healthcare Services Inc
Plaintiff AMN HEALTHCARE, INC.'S Objections to Evidence are OVERRULED.Defendants' and Cross-Complainants' OBJECTIONS TO EVIDENCE submitted in Reply are SUSTAINED (Sirkka Decl.).Plaintiff's AMN Healthcare, Inc.'s Request for Judicial Notice of the Declaration of Lou Cusanovich, attached as Exhibit "1" is DENIED. The Declaration is inadmissible to the extent Plaintiff seeks to have the Court take ju...
..is DENIED. Summary Adjudication is GRANTED as to the First Cause of Action in the Cross-Complaint for Declaratory Relief. The Motion is DENIED as to the Second Cause of Action for Business & Professions Code 17200.Plaintiff and Cross-Defendant AMN Healthc...
SHE BEVERAGE COMPANY, INC., A CALIFORNIA CORPORATION VS ANTHONY TODD FARMER, ET AL.
SHE Beverage Company v. Hydro Brand Inc., et al., 19STCV26724 Tentative decision on application for preliminary injunction: granted Plaintiff SHE Beverage Company (“SHE”) applies for a preliminary injunction against Defendants Hydro Brand Inc. (“Hydro”), Anthony Todd Farmer (“Farmer”), Legends IPTV LLC (“Legends”), Chyanne Jacomini (“Jacomini”), and Legends Basketball League, LLC (“LBL”)[1], enjo...
..019. The operative pleading is the First Amended Complaint (“FAP”) filed on August 15, 2019, which alleges causes of action for (1) unfair competition (Bus. & Prof. Code §17200), (2) breach of contract, (3) fraud in the sale of securities, (4) interference with prospective business relationships, and (5) imposition of constructive trust. The FAP alleges in pertinent part as follows. SHE is a Cali...
Physician's Surrogacy Inc vs Kenia German
Defendants' Demurrer is OVERRULED. First Cause of Action for Breach of Contract Defendants argue that the relevant Personal Information and Innovation Assignment Agreement ("PIIAA") is void and unenforceable under Bus. & Prof. Code, § 16600. This section generally prohibits non-competition contractual provisions. "Every contract by which anyone is restrained from engaging in a lawful profession,...
..lists or other trade secrets or not to solicit those customers is valid. Loral Corp. v. Moyes (1985) 174 Cal.App.3d 268, 274-280 With respect to specific provisions of the PIIAA, the paragraph Defendants quote prohibits employees, during employment and for one year thereafter from using Proprietary Information to (i) solicit or induce or attempt to induce any employee of the Company to leave the...
TEKSOFT VS. SYSTEMS AMERICA
HEARING ON MOTION TO STRIKE PORTIONS OF 1st Amended CROSS-COMPLAINT FILED BY TEKSOFT SYSTEMS, INC. * TENTATIVE RULING: * The court rules as follows on Teksoft’s motion to strike portions of SAI’s First Amended Cross-Complaint. Where the motion is granted with leave to amend, any amended cross- complaint shall be filed and served on or before May 9, 2019. 1. Paragraph 12 (a) – Denied. This para...
.., Teksoft has an implied obligation under the MSA to pay SAI the money that SAI would have earned had SAI billed the clients directly. This interpretation of the MSA is not clearly erroneous (see (Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal.App.3d 232, 239), so there is no basis to strike this allegation. 2. Paragraph 12 (c) – Denied. This paragraph alleges that Teksoft brea...
Alphatec Spine Inc vs NuVasive Inc
TENTATIVE RULING:The Motion of Defendant NuVasive, Inc. to Dismiss or Stay Under CCP Section 418.10 is GRANTED.A forum selection clause is unenforceable when "the clause would be unreasonable under the circumstances of the case." (CQL Original Products, Inc. v. National Hockey League Players' Assn. (1995) 39 Cal.App.4th 1347, 1354.) "That is, that the forum selected would be unavailable or unable...
..ncorporated in Delaware. "The party opposing enforcement of a forum selection clause ordinarily 'bears the 'substantial' burden of proving why it should not be enforced.'" (Verdugo, supra, 237 Cal.App.4th at 147 [citation omitted].) Plaintiffs have not met their burden to show the Delaware cour...
Rulings on Non-Solicitation Clauses
O CONNOR & SONS INC VS HORNE
"The court concluded the covenant did not violate Business and Professions Code section 16600 to the extent it sought to prevent use of the firm's confidential information to compete and solicit the firm's labor-relations clients. Business and Professions Code section 16600 prohibits contracts restraining employees from engaging in a lawful profession. Misappropriation of trade secret information constitutes an exception to section 16600. (ReadyLink Healthcare v. Cotton (2005) 126 CA4th 1006, 1021-1022.
Judge Rocky Baio
CBIZ BENEFITS & INSURANCE SERVICES, INC. VS. GARRETT
The client nonsolicitation provision constitutes an unenforceable covenant not to compete under Business and Professions Code section 16600. It specifically restrains Garrett from engaging in his profession/trade for a period of two years following the termination of his employment with plaintiff, by prohibiting him from directly or indirectly soliciting or causing to be solicited any of plaintiff’s clients that Garrett may have serviced or received information about during his employment with plaintiff.
ROBERT HALF INTERNATIONAL, INC. A DELAWARE CORPOR VS. DONNA FARRUGIA ET AL
The covenant to protect the trade secrets is enforceable and does not run afoul of Business and Professions Code sec. 16600. The motion is granted with leave to amend as to the allegations relating to paragraph 11 of the contract [non-solicitation of employee clause]. A contractual provision preventing a departing employee from "raiding" his former employer's employees is "not void on its face under Business and Professions Code section 16600." Loral Corp. v. Moyes, 174 Cal.App.3d 268, 280 (1985).
Arthur Andersen LLP (2008) 44 Cal.4th 937 (affirming the invalidity of a noncompetition agreement that prohibited the employee, for an 18-month period, from performing professional services of the type he had provided while at the firm, for any client on whose account he had worked during 18 months prior to his termination and, for a year after termination, from soliciting any client of the firm's Los Angeles office. The only exceptions from section 16600 are those provided by statute. (Ibid.)
Here, Plaintiffs are challenging non-compete and non-solicitation clauses. "Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." (Bus. & Prof. Code, § 16600.) Plaintiffs do not cite to any explicit Legislative declaration that waiver of a plaintiff's rights under section 16600 is unenforceable. Labor Code Section 925 recently became effective, but does not retroactively apply to Mr.
The Court finds that, as a matter of law, these Non-Solicitation Covenants are unlawful restraints of trade that violate Cal. Bus. & Prof. Code, § 16600 that voids agreements "by which anyone is restrained from engaging in a lawful profession, trade or business of any kind." Edwards v. Arthur Anderson LLP (2008) 44 Cal.4th 937, 948. The Court agrees with the moving party that Edwards changed the landscape with respect to the analysis of Business & Professions Code 16600.
Arthur Andersen LLP (2008) 44 Cal.4th 937, 948 (Edwards) addressed an agreement which prohibited the employee from soliciting any client of the firm for a year after termination. The court found the agreement invalid and took an expansive view of Business and Professions Code section 16600, ruling that the only exceptions to its bar on noncompetition agreements were those expressly stated by statute.
PROTOCOL AGENCY INC VS MARSHALL HEALTHCARE STAFFING ET AL
The FAC adequately alleges facts demonstrating that Defendants purposefully and willfully retained Plaintiff’s trade secrets in an effort to improperly solicit Plaintiff’s customers and clients. Therefore, the motion to strike is DENIED as it relates to the allegations and request for punitive damages under CUTSA. Unless waived, notice of ruling by Plaintiff.
WINFERY VS. THE ORIGINAL WINE CLUB, INC.
Code §16600 does not invalidate the Second Cause of Action for Breach of Contract. The statute provides that every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void. Cross-Complainant alleges that in violation of the contract, Cross-Defendants solicited Confidential Customers, who are alleged to be trade secrets. To that extent, Bus. & Prof. Code §16600 does not apply.
HALCYON FINANCIAL TECHNOLOGY, L.P. VS. VISTA EQUITY PARTNERS MANAGEMENT, LLC ET AL
Vista has not shown that the contractual anti-solicitation provision alleged in paragraph 12 of the complaint is unenforceable as a matter of law as an unlawful restraint on an individual's lawful profession, trade or business pursuant to Business & Professions Code ? 16600.
CAPITAL ASSET EXCHANGE & TRADING V. GRUBBS
It also requires Grubbs to “not use any Confidential Information” to dissuade plaintiff’s customers “or to solicit or influence” any new customers. (Id. ¶ 8.) These provisions are thus an unenforceable restraint on trade. (See Bus. & Profs. Code, § 16600; see also AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) 28 Cal.App.5th 923, 935-940; The Retirement Group v. Galante (2009) 176 Cal.App.4th 1226, 1235-1240; Dowell v. Biosense Webster, Inc. (2009) 179 Cal.App.4th 564, 575-579.)
FELDMAN V. GUY CARPENTER & COMPANY LLC
Plaintiffs showed they will likely prevail on their second cause of action for violation of B&P section 17200 Plaintiffs allege Defendants engaged in an unlawful business practice by violating section 16600 of the Business & Professions Code. Section 16600 provides that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” The use of a non-compete in violation of section 16600 is violation of section 17200.
NOVARTIS INSTITUTE FOR FUNCTIONAL GENOMICS INC VS. LI
This cause of action is deficient because no facts are alleged regarding how Defendant attempted to enforce the non-solicitation agreement, and how this attempt caused the alleged harm. Ultimate facts regarding the wrongful conduct and causation must be alleged. The fifth cause of action is exclusively premised on the attempt to enforce the non-solicitation provision. As alleged, this provision violates Business and Professions Code Section 16600.
MONTE NIDO RESIDENTIAL CENTER LLC VS TERRY EAGAN M D
It is not apparent from the pleadings how the non-solicitation provision prevents Eagan from performing these functions. That being the case, it is not apparent how the provision at issue restrains Eagan “from engaging in a lawful profession, trade, or business of any kind.” (Bus. & Prof. Code § 16600.) This is true regardless of whether one employs the common law rule of “reasonableness” or the broad, policy-based approach of Edwards.
JENNI RIVERA ENTERPRISES LLC VS PETE SALGADO ET AL
Unlawful Restraint on Trade (Business and Professions Code Section 16600) Salgado argues that the NDA is an unlawful restraint on trade under California law and is therefore unenforceable. The applicable statute provides, “… every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Bus. & Prof. Code § 16600.
NATIONS DIRECT MORTGAGE, LLC VS. ROYAL PACIFIC FUNDING CORPORATION
“Solicitation as Breach of Contract (“Anti-Raiding Provisions”): A contract may prohibit employees, upon termination of their employment, from soliciting other employees to join a new business (so-called “anti-raiding covenants”). Such provisions may be valid and enforceable even in the absence of trade secret misappropriation or unfair competition. [Loral Corp. v. Moyes (1985) 174 CA3d 268, 280, 219 CR 836, 844].” Cal. Prac. Guide Employment Litigation, section 14:416.
BOND MANUFACTURING VS. NEHLS
Although the 2004 Employment Agreement restrains competition, Plaintiff contends that these agreements are valid under the trade secret exception to § 16600. See Plaintiff’s Supplemental Brief at 1-2. According to this exception, “a former employee may be barred from soliciting existing customers to redirect their business away from the former employer and to the employee’s new business if the employee is utilizing trade secret information to solicit those customers.” The Retirement Group v.