You’ve just been sued by your former employer. They’re trying to stop you from working for your current employer or to shut down your new business. They’re trying to stop you from earning a living—and providing for your family—for the next year (or several years). What can you do?
The action in non-compete, non-solicitation, and non-disclosure cases is fast and furious. Blink and there’s a Court order forcing you to stop working at your current employer or shutting down your new business within days of your former employer filing, which is why you should seek experienced legal representation immediately.
In Michigan, the first thing your former employer will likely do is file a motion with the Court for a temporary restraining order. A temporary restraining order is a court order preventing a party from engaging in certain conduct—such as violating non-compete, non-solicitation, or non-disclosure agreements (hereinafter “agreements”)—for up to 14 days. In other words, if the temporary injunction is granted, you will be prevented from working in any way that violates the court order for up to two weeks—though it can sometimes be extended beyond two weeks if certain criteria are met. The idea behind a temporary restraining order is that it quickly stops any action your former employer claims will cause it immediate and irreparable harm—such as a former employee violating a non-compete, non-solicitation, or non-disclosure agreement. Your former employer can file this motion at the same time it files the lawsuit. A temporary restraining order may be issued without notice to the opposing party (which is you), but only if certain criteria are met.
Next, your former employer will likely file a motion asking the Court for a preliminary injunction. A preliminary injunction is a court order preventing a party from engaging in certain conduct—such as violating a non-compete, non-solicitation, or non-disclosure agreement—from the time it is issued until the final resolution of a lawsuit. In other words, the preliminary injunction will prevent you from working in any way that violates the court order from the time it is issued until the time the lawsuit is either settled or there is a trial on the merits of the lawsuit. Usually, your former employer will try to set a preliminary injunction hearing within the first month or two after the case is filed. The longer your former employer waits to file a motion or a preliminary injunction, the tougher it becomes for your former employer to prove that it will suffer irreparable harm if you are permitted to keep working at your current employer or new business. The Court will ask your former employer: if the harm is truly irreparable, why didn’t you act sooner to stop it?
After a preliminary injunction hearing is held, your former employer will likely engage in formal discovery—requesting documents, asking you written questions, conducting depositions, etc. Your former employer will generally request discovery it can use to prove you are violating the agreement at your new employer or company (e.g., a list of customers you currently service, a job description of the type of work you are now doing, etc.). You are also allowed to engage in your own discovery. Typically, you will request discovery to prove that your former employer’s legitimate interests can be adequately protected by a much narrower agreement. For example, you may request documents showing that 95% of your former employer’s customers come from a 5-mile radius of their business (e.g., the business is in downtown Detroit and 95% of their customers are located within 5 miles of downtown Detroit). These types of documents help prove that the statewide non-compete you signed (e.g., one that stops you from working anywhere in Michigan) is broader than necessary to protect your former employer’s legitimate business interests, and the Court should re-write the agreement so that the non-compete only covers a 5-mile radius (e.g., some that it only stops you from working at a competing business within 5 miles of downtown Detroit).
After discovery is completed, you can seek to have the case dismissed. This is called a Motion for Summary Disposition (called a Motion for Summary Judgment in other states) and it is labor-intensive. At the Motion for Summary Disposition phase, both parties present their best possible case to the Judge, who then reviews the evidence and the case-law and decides whether your former employer has discovered sufficient evidence for the case to proceed to trial. If the case is dismissed, then the preliminary injunction (if one was in place) will terminate and you will be free to work for your current employer or at your new business. If the case isn’t dismissed, it will proceed to trial.
At all stages of litigation, the parties can and should engage in settlement negotiations. These negotiations may lead to a narrowing of the agreements. For instance, the parties may agree to limit, among other things:
- The geographic scope (e.g., limit the non-compete to a single county instead of state-wide).
- The temporal scope (e.g., limit the non-compete to 6 months instead of two years).
- The line of business (e.g., limit the non-compete to truck sales instead of auto sales more generally).
- The types of customers the former employee can solicit (e.g., limit the non-solicitation to just the customers the former employee had contact with at his former employer instead of all customers and potential customers of the former employer).
In short, there are many variables the parties can negotiate over to craft an agreement that both protects the former employer’s interests and permits the former employee to continue earning a living.
If your former employer is suing you to enforce a non-compete, non-solicitation, or non-disclosure agreement, or if you need an attorney to review these types of agreements prior to signing, contact Michigan non-compete, non-solicitation, and non-disclosure attorney William Cantrell at 1-877-858-6868 or by email at wcantrell@caklegal.com.