Kring & Chung September Newsletter
The Kring & Chung, LLP newsletter is here, with articles on self insured retentions in construction defect cases, arbitration provisions in real estate purchase contracts, and franchise law.
Covenants Not to Compete
Q: Can I have my employees sign an agreement not to compete with my company if and when they stop working here?
A: The general rule is that covenants not to compete are void and unenforceable in California. The reason for this is because it is viewed as overly restrictive on a person’s ability to practice his or her vocation. The only time that a covenant not to compete may be enforced is if it is highly limited in scope. For instance, the court may enforce the non-compete if you place a reasonable geographical restriction on it (i.e. the employee agrees not to open a competing company within a 5 mile radius of yours).
The court is more likely to enforce a confidentiality agreement than a non-compete agreement. You can have your employees sign an agreement that they will maintain the confidentiality of your customer list and will not solicit your customers if they leave your employment. In order to make this kind of agreement enforceable, you will need to take reasonable steps to maintain the secrecy of your customer list. Also, you cannot take advantage of this type of agreement if your customers are already known or readily ascertainable by competitors.
Settlement
Sometimes clients are concerned that expressing an interest in exploring settlement will be perceived as a sign of weakness by the other side. My usual recommendation is that you put those concerns aside and make a good faith effort to settle the case.
The reason for this is because you control your own destiny when you settle. Trying cases is actually one of the aspects of my job that I thoroughly enjoy. However, there is no question that trying a case to a jury is a huge gamble. When you go to trial, you put your fate into the hands of twelve strangers off the street. Those twelve people would rather be just about anywhere else other than sitting through your trial. Jurors are often disgruntled with the parties for forcing them to take time off of their jobs and away from their families to decide the parties’ dispute for them.
The only way you can absolutely control the outcome of your case is by settling. Mediators often say that a good settlement means neither party comes away entirely happy, but they can live with the result.
You should also keep in mind that everything that is discussed in settlement negotiations is confidential and cannot be used against you at trial.
There really is no “down side” when you mediate a case, other than some mediation fees. However, these fees are negligible when you consider the cost of ongoing litigation. Even an unsuccessful mediation has an “up side” of learning what the other side feels are the strengths of its case.
Kring & Chung August Newsletter
The Kring & Chung LLP August newsletter is here, with articles about products liability prevention and Ponzi schemes.
