Can a non compete be enforced if your former employer is in a lawsuit for its own breach?

You work for company X which has locations all over the country. You sign a non compete. Some top level members feel things need to change and break off and form company Y (taking all things learned with them and teaching the same stuff). Some locations stay with X and some go to Y. You have no choice because your whole area went to Y. You sign a new non compete with Y. X sues Y for all kinds of breach and the lawsuit is still ongoing. Y has now fired you. Can the non compete with Y be enforced?

1 answer  |  asked Jun 6, 2015 1:01 PM [EST]  |  applies to Washington

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Answers (1)

Neil Klingshirn
If Ohio law applied to your non-compete (I am an Ohio lawyer), the fact that the other party to your non-compete agreement (Y) violated a separate agreement that it has with a third party (X) would not, in theory, alter how a court would enforce your non-compete with (Y). If Washington law is similar to Ohio law in that respect, then a Washington court would enforce the non-compete to the extent reasonable to protect Y's legitimate business interest.

The answer changes if Y breached its non-compete agreement with you. That could be the case, for example, if your non-compete agreement included a bonus payment that your employer failed to make. In that event, the other party's breach of its agreement with you could excuse your performance of your non-compete obligations under that agreement.

Legal theory aside, if Y is thumbing its nose at its agreement with X, a court will probably notice the hypocrisy and will give any argument that you have for not enforcing your non-compete a listen.

posted by Neil Klingshirn  |  Jun 8, 2015 07:07 AM [EST]

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