On January 14, 2010, the Eighth District Court of Appeals (Cuyahoga County, Ohio) issued an opinion upholding a jury’s verdict awarding an employer $500,000.00 plus attorneys’ fees for breach of a non-compete contract.
Marketing Associates, Inc. v. Gottlieb, 2010-Ohio-59.
In that case, Mr. Gottlieb was hired by Astrokam as a manufacturers’ representative, which involved marketing various manufacturers’ products for buyers for retail stores. During his years of employment, Mr. Gottlieb signed a covenant not to compete which precluded Mr. Gottlieb from leaving Astrokam and taking a customer with him, from working for one year for an Astrokam competitor in Astrokam’s geographic territory, and permitting Astrokam to seek reimbursement of all attorneys’ fees associated with enforcing the covenant not to compete.
Mr. Gottlieb left Astrokam and opened his own office in Chicago. His new company’s primary customer was Astrokam’s former customer, which customer terminated Astrokam to be represented by Mr. Gottlieb’s new company.
This case went to a jury, which returned a verdict finding that Mr. Gottlieb had breached his covenant not to compete and awarded Astrokam $500,000 in damages, plus legal fees (amounting to approximately $100,000).
The Appellate Court, in upholding the jury’s verdict, noted that Mr. Gottlieb acknowledged the covenant not to compete, and understood that the “covenant not to compete protected [Astrokam] if an employee left and took business with [him].” Mr. Gottlieb argued that he had “nurtured” the relationship with the customer and had a very close relationship the customer, hence the reason the customer left Astrokam for Mr. Gottlieb’s new company. The Court , however, found it compelling that Astrokam, essentially, “funded” the development of relationship between Gottlieb and Astrokam’s customer, which relationship took four years to develop before realizing any sales on Astrokam’s behalf.
Each and every non-compete case is different, and there is no guarantee of results similar to this case—and this result occurred after years of litigation, a jury trial, and an appeal. That, however, should not discourage employers from entering into non-compete agreements with key employees. LNL attorneys are available to draft covenants not to compete in order to protect your business and its interests.
Moreover, there are many steps that can be taken in an attempt to resolve the disagreement and/or breach before costly litigation, but sometimes litigation is, as in Astrokam’s case, simply unavoidable. LNL attorneys are very experienced in litigating non-compete agreements, as well as negotiating settlements prior to going to litigation over these agreements. For further information, please contact
Gregory Melick at 614-229-4414.