A Minnesota food and service sales company, Supervalu Inc., is suing to keep a former executive from allegedly sharing confidential trade secrets with a competitor.
The executive worked for Supervalu as its president of independent business, overseeing sales to about 2,200 independent grocers nationwide, including Lunds, Byerly’s and Kowalski’s Markets here in the Twin Cities. In recent months, however, Supervalu has been attempting to sell some of its many supermarket retail chains. In this case, the executive resigned after 15 months, stating in a letter to the CEO that he had lost confidence in the company’s revival efforts.
About two months later, the executive accepted a new position as senior vice president of sales at Unified Grocers Inc. — one of Supervalu’s largest competitors. Supervalu responded to the news with a lawsuit, accusing the executive of violating the confidentiality and non-compete provisions in his employment contract.
In Minnesota and across the country, many states have laws limiting the extent to which an employer may impose non-compete agreements upon prospective employees or as part of the severance agreements of separating employees. For example, most states do not allow a blanket prohibition against competition. Rather, many states limit the scope of non-compete agreements to solicitation, trade secrets, the dissolution of a partnership, or the sale of a business’ goodwill.
In these tough economic times, however, more employers are relying on such agreements, and also enforcing the terms in existing non-compete agreements. Enforcement of a non-compete agreement usually begins with a cease-and-desist letter from a worker’s former employer. The letter may advise a new employer of the specific activities which allegedly implicate a claim of tortious interference. Unfortunately, sometimes just the treat of a lawsuit can have a deterrent effect, preventing a worker from getting a new job.
In this case, the executive has a powerful ally on his side: his new employer. Unified Grocers has sued to invalidate the non-compete agreement. Far too often, however, non-compete agreements have a devastating impact upon an employee’s future job prospects.
If presented with a non-compete agreement at the time of a job offer, workers may benefit from having an attorney review the contract, instead of automatically signing it. Many employers might also be amenable to limiting the scope of a non-compete agreement. Taking time at the front-end of the process may save you from a potential lawsuit down the road, in the event you change jobs in a few years.
Source: www.bizjournals.com, “Supervalu sues executive who defected to rival,” Jim Hammerand, Dec. 11, 2012