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Zachary
Zachary, Lawyer
Category: Employment Law
Satisfied Customers: 3928
Experience:  Contracts, Wrongful termination and discrimination
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I used to work for a company that I am still an equity owner

Resolved Question:

I used to work for a company that I am still an equity owner of. It was a very hostile relationship and they even attempted to sue me for breaching the non-compete clause. We settled out of court. However, I feel that the non-compete agreement is too restricting - 2 years and all of North America. I would like to challenge the non-compete and I would like to do so in my home state of Pennsylvania. The governing law clause in the agreement is Vermont but I would like to get them on my turf.
Submitted: 1 year ago.
Category: Employment Law
Expert:  Zachary replied 1 year ago.
Hi,

Thank you for your question.

There are two issues here that we need to address to begin with regarding your proposition.

The first is that you are stating that they attempted to sue you for the non-compete agreement, and you settled. If you have truly settled the non-compete issue, then you would be precluded from challenging it.

Did you enter into a written settlement agreement with them?

If so, do you have a copy of that agreement and would you mind either scanning it and attaching it to your answer; or putting it up on a public viewer on drop box; or emailing it toXXX@XXXXXX.XXX attn: zdnlaw re: http://www.justanswer.com/employment-law/7tlwn-used-work-company-equity-owner.html?mode=qa


The second issue is that you want to sue them in Pennsylvania. Where you can sue a party is determined by whether or not the court has jurisdiction over that party. It may also be determined by a contractual agreement to make one state the venue for any dispute. So, the questions here are:

(1) does the contract specify that all disputes will be brought in a specific jurisdiction?

(2) Were you employed with this employer in Pennsylvania?
Customer: replied 1 year ago.

Yes, I settled, in writing, but I prefer not to post online. They claimed I was competing, I argued I wasn't, they bullied me a bit, end of story. The agreement states that the jurisdiction is Vermont, but for all 7 years I worked for the company, I worked in Pennsylvania, another employee still works here in Pennsylvania and I am an equity owner of the company, still located in Pennsylvania.


 


Are you saying by settling, I cannot go to court and request a reduction in the time (2 years vs. 1 year) on the non-compete?

Expert:  Zachary replied 1 year ago.
Without reading the actual settlement agreement I cannot confirm that for you, but most likely it states that all disputes regarding the non-compete agreement are waived/released (or something similar thereto). This would prevent you from challenging the clause.

Also, if the agreement states that the jurisdiction for disputes is Vermont, then any challenge would have to take place in Vermont.

I would agree with you that most likely on its face, the geographic area of the non-compete agreement is overly broad. Your employer may be able to establish that North America in its entirety is truly its territory and that it would be harmed by your competition in it. This would be a question of fact for a Vermont jury to settle in a Declaratory Judgment Action (if you brought the lawsuit).

In regard to the time limitation, 2 years has been held by all courts in the US to be a reasonable period of time for non-competes, and they will enforce an agreement with this term if all the other parts of the clause are reasonable.

Thus, if you did not waive your ability to challenge the clause in the signed settlement agreement, you may still be able to challenge the clause in a Declaratory Judgment Action as it is overly broad geographically. It would be a good idea to take both the non-compete and the settlement agreement to an employment lawyer for a quick consultation.

Please let me know if you have any further questions. Please also kindly consider rating my answer positively so that I am compensated by the website for my work on your question. Rating positively does not cause an additional charge and does not prevent us from further discussing your questions.

Best Regards,
ZDN


Zachary, Lawyer
Category: Employment Law
Satisfied Customers: 3928
Experience: Contracts, Wrongful termination and discrimination
Zachary and 4 other Employment Law Specialists are ready to help you

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