Tag: unfair competition

Jury Awards Employer $7.5M for Violation of Restrictive Covenant and Unfair Competition After a long and complex case before the U.S. District Court for the District of Maryland, an employer has received a jury verdict of nearly $7.5 million for violations of its restrictive covenant agreements, among several other charges. These violations were allegedly performed by the employer's former partner, a sales manager, and four salespeople, as well as multiple new companies these individuals had formed. The employer filed a lawsuit against these six individuals as well as the three businesses which they had formed alleging breach of contract, unfair competition, civil conspiracy, unjust enrichment, breach of the duty of loyalty, tortious interference with contract and prospective business relations, conversion, as well as certain violations of the Computer Fraud and Abuse Act. The plaintiff, in this case, was a company specializing in providing insurance restoration. The general manager of the company brought an old friend into the business as a third partner in 2015 to help grow the company. However, this individual would later deny being a partner despite splitting profits equally with the other two partners and holding himself to be a partner on contracts and other financial documents during the period of his relationship with the company. In 2018, this newest partner began planning with the business's sales manager to start their own business to compete with the employer while continuing to work for them. During this period, the employer alleges that the two stole information and documents from the company and gave an outside consulting company access to its computer systems. In addition, the employer alleges that the two solicited its employees to perform work for their new venture and performed work off of the employer's books. Early in 2019, the majority of the defendants left the employer, devastating its profits. However, the partner remained for months after the others left while hiding his involvement in the multiple competing companies. During this period, the employer alleged that the partner continued to funnel information on new job candidates, customers, and other information to the new companies while deleting information from its own computer systems. Complicating the employer's case, however, was the fact that before the defendants left their employ, all but one of their restrictive covenants was destroyed. The employer had to prove through evidence of its regular practices, records of employees from the same period who still retained their agreements, eyewitness testimony of the defendants signing these agreements, and testimony from other employees who had signed these agreements themselves. In the end, the jury found this circumstantial evidence was sufficient and ruled against the defendants on the breach of contract claims in all but one instance. The court also granted the employer's request for sanctions against the defendants due to their destruction of evidence, including text messages and emails. The court instructed the jury to assume that this destroyed evidence would be unfavorable to the defendants. The jury deliberated for a day and emerged with a ruling awarding the plaintiff $6.1 million for lost profits, approximately $700,000 in other compensatory damages, as well as punitive damages amounting to $665,000. The verdict has not been appealed by the three companies, but the individual defendants have requested for the court to reconsider entering judgment against them due to certain issues. The court has not yet responded to this request. Stay updated on all the new rules of compliance with Pre-employs free news resources on employment eligibility. Contact a Sales Rep today for more information. STAY COMPLIANT WITH YOUR BACKGROUND CHECKS

Tag: unfair competition

Jury Awards Employer $7.5M for Violation of Restrictive Covenant and Unfair Competition

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