On March 31, 2010 the Northern District of Ohio Federal Court held that Kenneth Bryant was in violation of a non-compete agreement with his former employer, Century Business Services, Inc. (“CBIZ”). The employer had legitimate business interests to protect, which resulted in Bryant paying the cost for violating the non-compete agreement.
CBIZ provides business services to small companies throughout the US. In 1997, CBIZ bought an accounting firm, where Bryant worked. Bryant became an executive employee at the new CBIZ-owned accounting firm, SR Business Services (“SRB”), which did not, itself, provide attest services. (Attest services provide a report or assertion about subject matter that is the responsibility of another party. For example, a company that has concerns about possible misstatements of financial information provided by various divisions would want to request attest services for all of those divisions.) When the merger was completed, Bryant signed an agreement with a non-compete clause.
The non-compete clause prohibited Bryant from engaging in any business in competition with SRB during a two year period following employment with CBIZ. Less than two years after his resignation from SRB, Bryant formed a competing business and solicited CBIZ customers to move their businesses from CBIZ to his new business.
Bryant admits to soliciting customers, specifically Security Properties, Inc., to leave CBIZ and to doing their attest work after his resignation. Bryant also admits that he convinced his fellow employee, Christine Allen, to leave SRB with him and then had her do the labor on the attest engagements for Security Properties, Inc.
It didn’t matter that Bryant provided services that were different from the services that he provided with his former employer. The fact that he was competing at all was enough to violate the non-compete agreement, which was broadly written. The court ordered Bryant to pay $1,339,457 to his former employer.
While many non-compete agreements may not be enforceable – because they are too broad in geographic scope or length or time, or because they do not protect a legitimate business interest – this particular agreement was enforceable because a legitimate business interest existed for the former employer to protect. Bryant interfered with the employer’s established business relationship with a customer. The mistake on the part of Bryant, the former employee, was in blatantly disregarding the non-compete agreement by interfering with the business relationship.
This case provides an important lesson for executive employees – even if you think you might be able to get around your non-compete agreement, know that in doing so you are taking a very expensive risk. In some cases, you may be able to avoid the non-compete, or it may not be enforceable against you. It is best to consult with a non-compete attorney to review your non-compete agreement to determine whether it is enforceable.
Crumpton Law LLC is a Columbus Small Business Law Firm, practicing Ohio non-compete law. LLC and corporate formation, and entertainment law, with attorney Matthew Crumpton serving as managing member and lead attorney.
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