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A Well-Crafted Non-Compete May Not Be Enough
Having a clear non-compete agreement may not be enough to prevail in court, according to an article on the Lexology website. A plaintiff must show that the agreement is necessary to protect “legitimate business interests,”
A recent case in point, ABM Industry Groups, LLC v. Palmarozzo, demonstrated that this is not always easy to do. Joseph Palmarozzo was a branch manager for ABM Industry Group, a janitorial and maintenance services company. In connection with his job, Palmarozzo signed a non-compete agreement.
Palmarozzo eventually left ABM to become the General Manager of Compass Facility Services, a much smaller janitorial services firm. ABM filed suit and moved for a preliminary injunction to prevent Palmarozzo from competing against ABM and soliciting its customers.
ABM did not win its case, but got key lessons for the future, including the fact that a non-compete will not be enforceable if its only purpose is to protect against “ordinary competition.” Such agreements only will be enforceable to the extent necessary to protect company trade secrets, confidential information, and goodwill, the article said.
Read the full article here.
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