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The Courts

Non-Compete Clauses Thrown Out In California 375

Posted by kdawson
from the what-thou-wilt dept.
drfuchs writes "If you signed an employment agreement in California, any non-compete clause in it is null & (void*), says the state Supreme Court of California (ruling PDF). Better still, the San Francisco Chronicle opines that the US Federal courts are likely to fall in line with the decision in the way they interpret California law. (Most other states still have non-compete laws on the books and it's not clear this ruling will affect them.) Turns out it wasn't a high-tech case at all, but a CPA who had worked for the accounting firm Arthur Anderson (now disgraced due to their complicity in the Enron case)."
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Non-Compete Clauses Thrown Out In California

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  • Federal Courts (Score:5, Informative)

    by DragonWriter (970822) on Friday August 08, 2008 @11:52AM (#24526435)

    Better still, the San Francisco Chronicle opines that the US Federal courts are likely to fall in line with the decision in the way they interpret California law.

    Federal courts are obligated, when applying state law, to follow the highest court of the State (though, of course, they can rule that that law is unenforceable because it conflicts with superceding provisions of federal law.)

  • by John Hasler (414242) on Friday August 08, 2008 @11:57AM (#24526529) Homepage

    > ...the San Francisco Chronicle opines that the US Federal courts are likely to fall in
    > line with the decision in the way they interpret California law.

    Of course they will. The California Supreme Court is the ultimate authority on California law.

    > Most other states still have non-compete laws on the books...

    No. They do not have anti-non-compete laws on the books.

    > ...and it's not clear this ruling will affect them.

    It is perfectly clear how this ruling will affect them: not at all. They are not California.

  • by tepples (727027) <{tepples} {at} {gmail.com}> on Friday August 08, 2008 @12:00PM (#24526611) Homepage Journal

    There's probably going to be someone who interprets that as including NDAs instead of just "non-compete" clauses.

    The doctrine connecting non-disclosure agreements to covenants not to compete is called inevitable disclosure [ivanhoffman.com].

  • Re:Null = Void (Score:1, Informative)

    by Anonymous Coward on Friday August 08, 2008 @12:09PM (#24526797)
    in the database world, NULL is the absence of a value which is not 0, but a placeholder to indicate either an unknown or missing value. It extends into math and boolean operations too... x + null = null. x AND null = null. true OR null = true. false OR null = null.
  • by krlynch (158571) on Friday August 08, 2008 @12:10PM (#24526809) Homepage

    Better still, the San Francisco Chronicle opines that the US Federal courts are likely to fall in line with the decision in the way they interpret California law.

    This sentence reflects a fundamental misunderstanding of the way the US Federal system operates. In matters of interpreting State laws and constitutions, the State court system has the final say. Federal courts have no authority to independently interpret State laws and constitutions once the State Supreme Court has spoken; they have to take State rulings as uninterpretable "fact". The exceptions are quite limited, and involve preemption by Federal law and disputes under the US Constitution.

    In this case, if there are no implicated Federal Statutes, the Federal Courts have to abide by the holdings of the State Supreme Court decision, whether they like it or not.

  • Re:Not a Surprise (Score:5, Informative)

    by CodeBuster (516420) on Friday August 08, 2008 @12:15PM (#24526921)
    They can put whatever they want in their employment contract and their lawyers can try to scare you into believing that they can sue you and enforce it in court but it is really nothing more than a bluff on the part of the employer to prevent spineless and ignorant former employees from "violating the agreement". They are hoping that they can scare people into giving up their rights.
  • Re:Finally (Score:2, Informative)

    by larry bagina (561269) on Friday August 08, 2008 @12:15PM (#24526923) Journal
    No... conservative justices are more likely to defer to state law since it's not a federal matter. Liberal justices are more likely to claim "interstate commerce" or "general welfare" give them the responsibility to decide what's best. Eg: California medical marijuana.
  • by br00tus (528477) on Friday August 08, 2008 @12:16PM (#24526947)

    You speak of free contracts between labor and companies, but you don't speak of the laws business has put on the books. Such as the Taft-Hartley Act of 1947. It allows states to forbid companies and unions to agree to contracts that a union will exclusively provide labor to a company. So a private company can sign an exclusive agreement with another company, but a union can't. A union can't have a secondary boycott - meaning they can't refuse to say handle packages delivered to businesses still doing business with a targeted business. A union has to give a 60 day notice before a strike, and the president of the US can force workers back to work if there is a "national emergency", with the definition of that begin very vague - Bush made West Coast dockworkers back to work because he said there was a "national emergency", and so have other presidents.

    There are tons of laws passed due to the lobbying of big business that prevent workers from working when they want, working with who they want, or coming to a free contract between themselves and a company. These laws stay on the books, yet the only laws you seem to have a problem with are those to the advantage of people who work - the laws which protect lazy heirs like Paris Hilton collecting their dividend checks you seem to have no problem with.

  • Re:Null = Void (Score:5, Informative)

    by DigitalReverend (901909) on Friday August 08, 2008 @12:28PM (#24527213)

    I beg to differ. If something is voided, it means whatever it is exists, but is no longer in effect. If something is nullified, it means that whatever is was no longer exists. So declaring it null and void means, that it no longer exists and is no longer in effect.

  • Re:Finally (Score:4, Informative)

    by krlynch (158571) on Friday August 08, 2008 @12:32PM (#24527315) Homepage

    No ... state court interpretations of state law are unreviewable by the federal courts in the absence of preempting federal law. The US Supreme Court can't overturn a state court ruling determined on state law grounds ... they don't even have jurisdiction to hear an appeal in those cases. This is at the heart of our federal legal system.

  • by slew (2918) on Friday August 08, 2008 @12:53PM (#24527671)

    Arthur Anderson should have had its corporate charter revoked and those involve should be sitting in jail. It was a travesty of justice that they got away with only a disgracing.

    Well, as I recall Arthur Anderson had their CPA licence revoked (federal and state), they lost all their clients, layed off 85,000 employees and are now just a series of zombie companies which are effectively dead (no clients). W/o a CPA licence and no clients, it's merely a technicality that their corporate charter isn't revoked (the government taskforce noted that it didn't want to waste it's money going the final step given the company was effectively defunct already).

    Perhaps you are one of those that probably are miffed that David Duncan (the lead auditor for Enron) isn't sitting in jail. For a while, it seemed like he would be, but the Supreme Court overturned the obstruction of justice conviction of the company. I think this was overturned by the Supreme Court citing among other things it didn't think it was actually illegal to shred documents unless there was a court order preventing it and he had a legal opinion in hand to that effect that backed him up.

    Yeah that's probably not justice, but the government didn't think it could win that case either given the laws in effect at that time. Now we have Sarbox, unless you are lobbying for ex-post facto laws, unfortunatly, we'll have to realize that's the problem with a linear time continuum... live and learn.

  • by MobyDisk (75490) on Friday August 08, 2008 @01:16PM (#24528089) Homepage

    That same logic works the other way around. If the workers banded together in the same way the companies did in your example, the companies would have no employees. Neither side has more power than the other - the difference is that one side is more organized than the other. It is easier to get a majority of evil CEOs to do the evil thing, than to get a majority of individuals to do the right thing.

    Now, this example won't apply to everyone, but I was faced with a non-compete clause with an employer, and I told my boss no way. It went back and forth with the CEO and various people, and in the end my boss decided to accept the contract I gave them that had the clause removed. It wasn't worth arguing over. (They even had the audacity to tell me that the clause was unenforcable, but they still wanted me to sign it). So you really do have power here, even as an individual. It helps to be someone they really need though.

  • by HiThere (15173) <charleshixsn&earthlink,net> on Friday August 08, 2008 @01:41PM (#24528555)

    I'll agree that he overstated his case...but then so did you. Force is involved. Not life-threatening, at least not immediately (usually), but still, force.

    What would you call it if a miner was told he had to work in an unsafe environment without air filters? Wouldn't it be reasonable to say that force of some sort must be used to get him to agree to put his life in danger in a very uncomfortable environment? Yet such is common.

    To claim that no force is involved in contract negotiations is ludicrously unreasonable. To ask what amount of force is fair is reasonable.

    To my mind, a non-compete agreement is unreasonable unless the company is willing to pay you your prior wage for the entire duration of the non-compete.

  • Re:Finally (Score:3, Informative)

    by Zordak (123132) on Friday August 08, 2008 @01:44PM (#24528615) Homepage Journal

    You don't understand the changes in American conservativism in the twenty years, then. At least three of the conservative justices will side with the corporations, regardless of principles.

    Which three? Name them, please. Thomas and Scalia are well established as Sates' Rights crusaders. Roberts and Alito are fairly new to the Court, so they don't have as much history to go on, but Alito is pretty similar to Scalia in his constitutional ideology. Roberts seems to be more of a practical conservative (though I'd like to see your evidence that he is an unprincipled corporate shill), but even the Chief still only counts for one vote. And Kennedy hardly counts as a conservative.

    Remember, in Kelo v. New London, it was the LIBERAL wing of the court (along with Kennedy) that said New London could forcibly take homes from private citizens and give the land to Big Pharma. Scalia and Thomas were the ones who nearly blew a gasket over it.

  • by geekoid (135745) <dadinportland@@@yahoo...com> on Friday August 08, 2008 @01:53PM (#24528773) Homepage Journal

    You have a sucky union.
    You can take action.

  • Severability (Score:2, Informative)

    by Thought1 (1132989) on Friday August 08, 2008 @02:29PM (#24529437)
    IANAL, but I do know legal contracts fairly well. What you're referring to is known as the "severability clause" placed in most legal contracts. Basically, it states that, if any portion of the contract is deemed unenforceable, then just that portion of the contract is void and the rest still stands.
  • Assault != Battery (Score:1, Informative)

    by Anonymous Coward on Friday August 08, 2008 @08:00PM (#24533577)

    Assault is NOT the same as battery! Battery is physically hitting someone. Assault does NOT require that.

    Whatever their origins, the legal meanings of those words have diverged, even if the common meanings have not.

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