Opinion ID: 169708
Heading Depth: 3
Heading Rank: 1

Heading: Protocol to Prevent Future Disputes

Text: U.S. Foodservice (USF) distributes food and food-related products to restaurants, schools and other facilities. Shamrock is also a foodservice distributor and one of USF’s competitors. As a condition of their employment and/or to partake in employee incentive programs, many USF and Shamrock sales employees sign contracts in which they agree, inter alia, (1) not to solicit their former employer’s customers for one year after their termination/resignation and (2) not to use or disclose their former employer’s confidential information after their termination/resignation. In 2002, several lawsuits arose between USF and Shamrock concerning the hiring of employees who had signed non-solicitation and non-disclosure agreements with the other entity (their former employer). 1 In late September 2002, the parties settled the lawsuits. The settlement agreement contained a “Protocol to Prevent Future Disputes” (Protocol) in which the parties agreed to honor each other’s non-solicitation and non-disclosure agreements and established procedures to prevent future disputes between them. (R. App. at 81.) One of the procedures required: 1 Two of the cases arose in Arizona and one in California. Two of the cases involved Alliant Foodservice, Inc., which USF later acquired. -2- On any occasion where the former employer informs the hiring party that the former employer has information that causes it to believe that a former employee employed by the hiring party is violating his/her agreement with the former employer, the hiring party shall (I) instruct the employee to comply with the contract, (ii) in good faith conduct a prompt and thorough investigation of the allegation, and (iii) advise the former employer of the results of its investigation and the specific remedial steps if any, it has taken. (Id. at 83.) The Protocol also contained a fee-shifting provision: In the event that the hiring party’s investigation and remedial measures do not cure the violation and the former employer commences and prevails in a lawsuit to enforce its rights, the hiring employer shall be liable to the former employer for the former employer’s costs and expenses, including reasonable attorneys’ and investigators’ fees, incurred in investigating and pursuing such violation, together with damages and such other and further legal and equitable relief as the Court may grant. Otherwise, the prevailing part(ies) shall recover its costs and expenses, including reasonable attorneys’ and investigator’s fees incurred in defending against the claim(s) of violation, together with damages and such other and further legal and equitable relief as the Court may grant. (Id. at 85.)