Non-Compete Agreement, and Going Directly from One Vendor to the Customer
My question involves labor and employment law for the state of: Ohio and Virgina. (non-compete, confidentiality, plus a non-solicitation with the other company)
I was the sub on a federal contract (supposed to be the prime or a TEAM, but that is a separate issue.) Because the prime was violating our agreement/contracr, I was told by the customer that I should pull my people off of the contract and it would be re-awarded in a few weeks. (the prime did not have the ability to service this customer and the customer knew that my company has a strong competitive advantage in the specific skill set. in fact in less than 2 years we have gone 1 employee to 10 employees all but one in this specific skill set.) I found out after a couple of weeks that my employee(s) never left. In fact the day I told them that we needed to stop work - and would hopefully start back in less than a month, and offered to help them financially during the off-time - they immediately were hired by the prime (with whom my company had a non-solicitation agreement!). The govt manager informed me of this and stated "they stole YOUR competitive advantage", It seems to be to be so blatantly obvious that this violated the non-compete with the employee(s) and tortious interference with the other company. (the other company claimed to not know, but the employees testified that the other company knew and said "so what".)
Finally the non-compete is under the laws of the state of Ohio, very narrowly drawn - 1 year and ONLY restricting the employees from working for customer when I placed then (which means 1customer (on the oneproject) they can work anywhere else). the tortious interference case is for Virginia (where the other company is based.)
I am looking for cases when the employee of one contract company decides to cut his vendor out of the picture. (I have seen others do this, but always have been too ethical to screw anyone else in this manner. ) I hear of cases that deal with slightly different situations. One example stated the the violated set up shop 'almost literally across the street". . . well in this case they are doing the EXACT same job sitting at the same desk,just giving away to my competitor what I spent decades building.
Also rather than just using the term "trade secrets" I am looking for example cases where the term "competitive advantage" have been used as the basis.
I believe that the ohio cases Polyone v Papadopolous and LMI v Bourgeois seem on point. the LMI case is the most recent and on point. (the other side is cherry-picking phrases out of an older case - Brentlinger - which is not only older but not on point.)
Can anyone advise? (it appears that judges in other states have proclaimed that they don't like non-compete and they ignore the fact that the contract state that Ohio law applies.)
Thanks !
Re: Non-Compete - Going Directly from One Vendor to the Customer (Prime)
so you tried to steal the contract from the primary contractor with collusion from an employee of the customer, and instead you ended up losing your employees to the primary contractor because they wanted to keep working?
is that correct?
also "competitive advantage" is not property
Re: Non-Compete - Going Directly from One Vendor to the Customer (Prime)
Nice. NO I did not try to steal it. It was my proposal and all of my past performance. By the time the proposal went in it was 50-50; but the other company fraudulently changed the wording the night before the proposal was submitted. They were going to make 2.4 million dollars off of my past performance and proposal. Then they stole nearly a million dollar of work, violated the agreement.contract and had not paid for services while I was still paying (timely) my employees.
In fact, since you so kindly assume that I am the bad guy, they were advertising to replace all my people with their own. AND they used my employees to interview (without my knowledge) their people to try to get at least one of their own people who had any relevant knowledge. (So my employee - the one who first violated the non-compete and confidentiality agreement- helped them steal nearly a million dollars, before I even spoke to the govt - and I was unaware) In fact before I pulled out, the other party had made it clear that they intended to force us out all together in less than a month (there were still four years to go on the contract.). My employees were going to be replaced by the other company (which was the point of changing the wording at the last minute).
Are you implying that if someone steals a MILLION dollars of your business and is going to force you totally off a contract, that you would say - no problem?
AND we are talking about a NON-COMPETE so Competitive advantage IS exactly what is being addressed.
Other than trying to justify a scumbag who is not satisfied with a "gift" of 2.4 MILLION DOLLARS, can we address CASES?
(and how do you justify the collusion between MY employee - who signed a contract with my company - and the other company was going to replace him until they decided they could make even more by breaching the non-solicitation as well
(one more point - what you called "collusion". The owner of the system TOLD me to pull my people off, since they knew that the other company did not supply the people with the skills I promised in the proposal. This same person told me of the collusion between our emps and the other company. AND this same person not only told me to sue them, but that they had intended to give the other company a scathing review in the past performance system. As a tax payer do you want your money to go to unqualified companies to unjustly enrich them for their duplicity.)
Re: Non-Compete - Going Directly from One Vendor to the Customer (Prime)
Quote:
Quoting
Cheyann
I was the sub on a federal contract (supposed to be the prime or a TEAM, but that is a separate issue.) Because the prime was violating our agreement/contracr, I was told by the customer that I should pull my people off of the contract and it would be re-awarded in a few weeks.
The "customer" being the employee of the federal agency who was overseeing the work? Or what?
Why wasn't the contract canceled?
Quote:
Quoting Cheyann
(the prime did not have the ability to service this customer and the customer knew that my company has a strong competitive advantage in the specific skill set....)
Do you mean that they would not have been able to complete the contract without utilizing you as a subcontractor, or hiring people (such as the employees at issue) to perform the tasks you were subcontracted to do?
Quote:
Quoting Cheyann
It seems to be to be so blatantly obvious that this violated the non-compete with the employee(s) and tortious interference with the other company.
The noncompete is between you and the employees? You didn't include any sort of noncompete or nonsolicitation agreement in your contract with the client company? What is the actual language of your noncompete clause?
Quote:
Quoting Cheyann
(the other company claimed to not know, but the employees testified that the other company knew and said "so what".)
Testified - so this has already been to court? Tell us about that.
Quote:
Quoting Cheyann
Also rather than just using the term "trade secrets" I am looking for example cases where the term "competitive advantage" have been used as the basis.
Do you believe that term holds some sort of talismanic value? It's easy enough to search for specific phrases on free sites such as Google Scholar, or paid sites such as Lexis, WestLaw, or a discount case law research site.
Quote:
Quoting Cheyann
I believe that the ohio cases Polyone v Papadopolous and LMI v Bourgeois seem on point. the LMI case is the most recent and on point. (the other side is cherry-picking phrases out of an older case - Brentlinger - which is not only older but not on point.)
If you want people to comment on cases I suggest providing proper citations and, when possible, links.
Quote:
Quoting Cheyann
Can anyone advise? (it appears that judges in other states have proclaimed that they don't like non-compete and they ignore the fact that the contract state that Ohio law applies.)
Is this contract being carried out in Ohio? If not, where?
Quote:
Quoting
Cheyann
By the time the proposal went in it was 50-50; but the other company fraudulently changed the wording the night before the proposal was submitted.
Explain that better.
Quote:
Quoting Cheyann
They were going to make 2.4 million dollars off of my past performance and proposal. Then they stole nearly a million dollar of work, violated the agreement.contract and had not paid for services while I was still paying (timely) my employees.
If you can plausibly claim damages in the six to seven figures, you should be talking to your business lawyer.
Quote:
Quoting Cheyann
In fact before I pulled out, the other party had made it clear that they intended to force us out all together in less than a month (there were still four years to go on the contract.)
So you breached the contract, but you're trying to claim some form of anticipatory breach?
Quote:
Quoting Cheyann
(and how do you justify the collusion between MY employee - who signed a contract with my company - and the other company was going to replace him until they decided they could make even more by breaching the non-solicitation as well
If you breached your contract and tried to pull your employees off of the job, they could plausibly argue that you created an urgent need for them to hire employees to do the work your firm had contracted to perform, and that (assuming you can prove they knew about the noncompete agreements) even with the violation they were simply mitigating their damages in what would otherwise have been a massive breach of contract claim against your firm. These are issues that cannot be discussed in the abstract, as the detailed facts can significantly affect interpretations and outcomes - you will need to discuss the details with your lawyer.
Quote:
Quoting Cheyann
(one more point - what you called "collusion". The owner of the system TOLD me to pull my people off, since they knew that the other company did not supply the people with the skills I promised in the proposal.
This was a federal contract. So what is "the system", who is "the owner of the system" and what is the difference between "the owner of the system" and "the customer"?
Quote:
Quoting Cheyann
This same person told me of the collusion between our emps and the other company. AND this same person not only told me to sue them, but that they had intended to give the other company a scathing review in the past performance system. As a tax payer do you want your money to go to unqualified companies to unjustly enrich them for their duplicity.)
Again, if this company is so awful, why were they able to keep the contract after you quit and attempted to pull your employees off of the job?
Re: Non-Compete - Going Directly from One Vendor to the Customer (Prime)
Sorry for the length but trying to address all of Mr Knowitall's questions/points - and apparently I had no idea hiw to handl the quotes ( so I changed fonts
Quote:
Quoting
Mr. Knowitall
The "customer" being the employee of the federal agency who was overseeing the work? Or what?
>>> Several people - in the contract and small business areas, and then I was told directly by the System owner who is a govt employee (he called from a personal number, wanting to apparently help but not get in trouble by going around them, "unofficial") This manager had met me when this started and clearly knew that they selected our "team" based on MY prop and my company's skills.
Why wasn't the contract canceled?
>>> All had said that "as long as the work is being performed" they felt obligated - but all said that "as long as YOUR people are there the work is being performed". And once they stole my people, the work would still be performed. Though I am still ticked as a tax payer that they kept the sleazes
Do you mean that they would not have been able to complete the contract without utilizing you as a subcontractor, or hiring people (such as the employees at issue) to perform the tasks you were subcontracted to do?
>> 1. They never stood a chance w/o my proposal or past performance or knowledge. The old incumbent said that they were shocked that I was able to put together such a strong proposal and price plan (and the govt rated my tech prop as the only OUTSTANDING prop). It is a twindling technology and my company is one of very few small businesses with the capabilities. The other company also had no knowledge to hire anyone (during proposal phase they could not find ANY one with the correct skills - until they had MY employee (who breached the non-compete/confidentiality) help them hire someone else into my company's slot.
The noncompete is between you and the employees? You didn't include any sort of noncompete or nonsolicitation agreement in your contract with the client company? What is the actual language of your noncompete clause?
>>>> Non-Compete and Confidentiality with employee and Non-solicitation with other company
During the term of this Agreement and any renewals thereof, and for one year after the expiration of the initial and renewal periods, CONSULTANT agrees that it will not provide or attempt to provide (or advise others of the opportunity to provide), directly or indirectly, any services to any client to which CONSULTANT has been assigned through COMPANY-NAME or through any client for which CONSULTANT has performed services under this Agreement.
and
“Neither party shall solicit personnel from the other party.”
Testified - so this has already been to court? Tell us about that.
CLuster... we happened to draw same judge who heard their change of venue, who called their management the "MOST evasive people to ever appear in his court" and found against them on the motion stating that he didn't believe anything they said. SO we were hopeful when he was the judge. But the other side wisely kept the one totally out of the courtroom and limited the other - the put on almost no defense other than to interrupt every time I was trying to answer. (it was almost year from the earlier hearing.)
Judge stated that he was bored (multiple time), had started to fall asleep a couple times, and said hurry up or we'd get no rebuttal. The other atty then stalled with irrelevant ?s. The other atty files a brief as his defenseclaiming Ohio does not uphold non-competes - and when my atty tries to respond the judge states don't bother he doesn't like non-competes. (but the trial was not on the "charge of non-compete" that is a separate case in another state. It was on unjust enrichment, tortious interference, fraud, and breach of contract between my company and the company who stole my people and now approaching SIX MILLION dollars (half of which was supposed to be my revenue.)
Judge made rulings against (or with NO) evidence. I have phone records and other evidence to show perjury, but judge accepts perjured testimony by the former employee I am also suing (huh, no reason to lie there). Despite no proof, judge claims I acquiesced to the other company stealing nearly a million dollars of billing (about a third) - although I have proof that I did not. (seriously who would?)
Do you believe that term holds some sort of talismanic value? It's easy enough to search for specific phrases on free sites such as Google Scholar, or paid sites such as Lexis, WestLaw, or a discount case law research site.
>> my point is that I am looking for rulings based on stolen competitive advantage - I see trade secrets - but it is more like stolen capabilities (and a fraudulently stolen prop) - the Ohio Court had ruled in the LMI case:
"The court’s statement shows why both damages and injunctive relief are
necessary in some trade secrets cases. If recovery is limited solely to damages, the
misappropriator can simply buy the stolen secret."
"If recovery is limited solely to an injunction, on the other
hand, enjoining a misappropriated secret will not compensate the holder of the secret for any
unfair economic advantage the misappropriator derived from taking the secret in the first
place."
As in this case - there is NO doubt that the party violated the non-compete - he put it in writing and as to the tortious interference - both former employees testified that they TOLD the new company about the non-compete and the other party stated not to worry about it (although in depos, the other company claimed they did not know ??
From the LMI case "The evidence produced by LMI at trial convincingly showed that individual
defendants breached the terms of their noncompetition agreements." (which is the same here - I don't get the unequal application of the law?
And finally what seems to be the most damning on point (and FINALLY where I see Competitive Advantage used):
"We also find that the court erred by concluding that any harm caused by the
violation of the noncompetition agreements occurred only when Excelas opened for business
and that future competition by Excelas would be “ordinary and fair.” Each day when the
individual defendants worked in violation of their noncompetition agreements was a day in
which Excelas gained an unfair competitive advantage. These employees were specifically hired away from LMI because they brought a wealth of knowledge, gained from LMI, that
allowed Excelas to go from being a start-up to a direct competitor in a fraction of the time it
might take without such information. Without the knowledge that the defendants brought to
Excelas, it is highly unlikely that Excelas could have so quickly become a serious competitor
to LMI."
If you want people to comment on cases I suggest providing proper citations and, when possible, links.
Sure I didn't know if this was okay:
http://tsi.brooklaw.edu/sites/tsi.br...s-decision.pdf
http://cp.cuyahogacounty.us/internet...AyAC4AcABkAGYA
Is this contract being carried out in Ohio? If not, where?
Explain that better.
Tough issue: work in one state, my company is based in Ohio, the "prime" in VA, contracts people on DC (Violator of the non-compete, discovered his company (he works as a corp) was suspended before he started work - which SHOULD have meant he was not permitted to defend but that atty screwed up the filing and warned the guys atty ... /sigh
If you can plausibly claim damages in the six to seven figures, you should be talking to your business lawyer.
That is another long story - the atty in the non-compete, was just supposed to get a restraining order/injuction and made numerous errors (all of the other attys I am trying to discuss stated as much (major )
So you breached the contract, but you're trying to claim some form of anticipatory breach?
NO, while I was not happy with their power grab of 50%, I was willing to work it (and I would have taken that position for myself - better hourly rate than I would have anywhere else). But after they did NOT pay, would not give a written agreement/contract consistent with the oral, documents and proposal..AND stole a another position and nearly a million dollars of revenue. So they breached it and had committed fraud changing the wording , there was nothing anticipatory about it; it had already been breached by them.
SO when the system owner and all the small business advisers said GET AWAY FROM THEM and I at least had an excellent chance to not only get it back....
But seriously if someone got nearly SIX MILLION DOLLARS by stealing your history, proposal, employees and future opportunities (fed govt past performance) in a dwindling technological area, could anyone here really say that they would say OK take it? I'd have been happier had anyone else got it, if I couldn't than a person who said that they would mentor me and initially was going to get max of 4 to 5% markup on MY proposal - but then was not satisfied with THREE MILLION DOLLARS (off of MY skills and hard work)
>>> Oh , and before I pulled out, they sent a revised "contract" for me to sign, where they added an end date (in 3 weeks). All of the others had only a start date, plus in several places it said that I was bound to them as they were to the government... meaning that my company was suppose to be working the contract for all of the option years (this was consistent with emails and spreadsheets and the proposal, where my company would get half of the work and revenue).
If you breached your contract and tried to pull your employees off of the job, they could plausibly argue that you created an urgent need for them to hire employees to do the work your firm had contracted to perform, and that (assuming you can prove they knew about the noncompete agreements) even with the violation they were simply mitigating their damages in what would otherwise have been a massive breach of contract claim against your firm. These are issues that cannot be discussed in the abstract, as the detailed facts can significantly affect interpretations and outcomes - you will need to discuss the details with your lawyer.
This was a federal contract. So what is "the system", who is "the owner of the system" and what is the difference between "the owner of the system" and "the customer"?
I discovered that they had been advertising for (all of) my people's positions the whole time. The point was not only could they not have won without me, they could NOT have kept it without me and my people. (if your only way to keep a contract is to STEAL and breach non-solicitation and non-compete's, you have NO business on the contract in the first place, do you?)
It is a fed contract. WHen I used the term System Owner - I mean the top manager - who the COTR, PM, and CO report to, who led the solicitation and the proposal evaluation. He is the one who called and stated outright that I should pull my people and that the option would not be awarded. He also said that the other company would be ripped to shreds on the evaluation. Their PM (other company's) never read the solicitation or the (MY) proposal. If you are the customer - would you want to go through the trouble of evaluating length proposals, select one, and then have the chosen party send you people with no clue what the project even is?
Again, if this company is so awful, why were they able to keep the contract after you quit and attempted to pull your employees off of the job?
Re: Non-Compete - Going Directly from One Vendor to the Customer (Prime)
So, basically, you have already had your day in court, went to trial and lost. Which would normally mean that you appeal, or that you move on with your life.
Re: Non-Compete - Going Directly from One Vendor to the Customer (Prime)
The non-compete case has not been to arbitration (there is an arbitration clause) - and I am looking for information other than what I'd already found.
Yes I do want to appeal, but apparently there is no automatic right to appeal in VA. I believe there is also the right to request reconsideration.
Can I ask why it seem that some of the posts seem hostile? I have been screwed bg time. This was the best opportunity in my life nd someone stole (3 to 6 million dollars depending on how you look at it) and the biggest opportunity (and a once in lifetime one at that). I "have been an extremely generous boss and pay my people far greater shares than anyone I have worked with (or than my people have worked with.)
I got ripped off by her, the govt and the court so far, and have not had a lot of luck finding decent representation - there have been so many errors, the other company is getting a million and a half and I am having to fight this on a shoestring, but have been doing a lot of the leg work while working very very long days (in order to try to protect my company)
And BTW when does "your day in court" equate to a judge falling asleep, repeatedly saying how bored he is, essentially telling you to not put on your entire case because he will cut you off, and then ignoring the law? (he doesn't like non-competes? so even though the law says that a narrowly drawn non-compete should be enforced, he throws out my whole case - which was not the non-compete case, because he doesn't like them?)