Legal Question in Business Law in California

Re: Non-Compete Agreement

Generally an agreement not to compete is governed by whatever agreement you signed. Covenants not to compete are enforceable, but only if they are reasonable. For instance, if your agreement said you could never engage in the type of business your former employer carrys on in the State of California, that would probably not be enforceable. However, if the agreement said that you could not compete for a year or two within a two-mile radius of your former employer, that would probably be enforceable.

You should really have an attorney look at the agreement you signed to get an idea whether it might be enforceable.

Re: Non-Compete Agreement

If the agreement is under California law, I respectfully disagree with Mr. Hoffman. An August 2008 case virtually did away with enforceability of non-competition agreements except in limited circumstances such as the sale of a business where they protect goodwill. That does not appear to be the case based on the facts you described. To be certain your circumstances do not fall in any exceptions to this recent decision, and to procure an informed response letter to the C&D letter you received, please consult with an attorney.

Re: Non-Compete Agreement

I agree with Ms. Cowin. Contracts that restrain anyone from pursuing any lawful business, trade or occupation are void to the extent of the restriction, if not entirely void. Further, this is nothing new; it is so provided in Business & Professions Code section 16600, adopted in 1941. There is an exception set forth in B&P 16601 for situations involving the sale of a business with goodwill; in such a case, the seller can give a non-compete clause in favor of the buyer to protect the buyer's interest in the goodwill he has just purchased.

You should note, however, that the absolute right to go into competition with your former employer does not give you a right to misappropriate its trade secrets. Customer lists can be regarded as trade secrets if the information is not readily available to the public, and thus has independent economic value to the compiler-possessor of the info. For example, you can leave your old boss, but you can't steal his Rolodex or Xerox his secret hot sauce recipe.

If this client contacted you, you probably didn't misappropriate info about the client's existence, location and needs. On the other hand, if you are out there soliciting the former employer's client list, the question could arise where you got the list and whether it was considered and kept more or less secret and confidential.

Some kinds of potential clients are easy to find in trade literature, on line or in the Yellow Pages, or by driving around. This would include businesses like wineries - their names and locations are matters of public record. However, property owners who need management services can't be "looked up" as far as I know, so the clients of a property manager are much more likely to be trade secrets than are the clients of a cork or bottle vendor.

Re: Non-Compete Agreement

Some people after receiving such a letter would look for free advice that such the agreement is unenforceable, and keep doing what they are doing. I would not advise this course of action. An ounce of prevention might be better than a pound of cure. Let me know if I may help.

Regards,

D. Bakondi

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