Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Former employees lacked standing for injunction absent likelihood of continuing harm from non-compete agreements, (Dec 4, 2013)

By Linda O’Brien, J.D., LL.M.

The federal district court in San Francisco has vacated its order granting summary judgment to former employees of a water purification chemical manufacturer over the company’s purported efforts to enforce non-compete agreements in violation of California’s Unfair Competition Law (UCL) (Khan v. K2 Pure Solutions, LP, December 2, 2013, Orrick, W.).

K2 Pure Solutions, LP required employees to sign a noncompetition and confidentiality agreement that prohibited employees, for one year after their employment ended, from competing with K2 in the manufacture, processing, or distribution of bleach and related chemical products to commercial customers within 300 miles of any existing K2 plant. The agreement also prohibited former employees from encouraging current employees to leave K2.

Four former employees sought equitable relief related to the non-compete agreements and claimed violations of the UCL. In granting the former employees’ motion for summary judgment, the court concluded that K2’s use of the agreement violated the UCL and enjoined K2 from seeking to enforce the agreements in any manner. K2 moved the court to reconsider its order.

The court held that, to be entitled to injunctive relief, the former employees failed to show a sufficient likelihood that they would be wronged in a similar way in the future. K2 conceded that the non-compete provisions were void and unenforceable in California and declared that it would not attempt to enforce the non-compete provisions or pursue any damages from the plaintiffs in the present suit or any other action. Additionally, all of the non-compete agreements expired after the granting of summary judgment and issuance of the injunction. Finally, past harm from illegal conduct did not demonstrate a present case or controversy regarding injunctive relief without the likelihood of continuing harm. Thus, the court concluded that the plaintiffs’ lacked standing to pursue injunctive relief and vacated its order granting summary judgment and the accompanying injunction.

The case is No. 12-cv-05526-WHO.

Attorneys: Amy Todd-Gher (Valdez Noor Todd & Doyle LLP) for Imtiaz Khan. Brian C. Boyle (Fulbright Jaworski LLP) for K2 Pure Solutions, LP.

Companies: K2 Pure Solutions, LP

Cases: StateUnfairTradePractices CaliforniaNews