Wednesday, July 27, 2011

Noncompete Defamation Leads to Six-Figure Verdict

Today's post is a cautionary tale for employers. If you're going to enforce a noncompete... you'd better make sure the employee in question actually signed a noncompete. A $123,000 jury verdict from Pennsylvania drives the point home. Kitchen v. McGrath Technical Staffing, Inc., Case No. 09-06-01259 (Phila. Cty. March 2, 2011).

In that case, an employer terminated one of its employees, who then started working for a competitor. The employee/plaintiff alleged that his ex-employer began sending him, and his new employer, harassing letters claiming that the employee was bound by a noncompete. The president and HR director even signed an affidavit attesting to the fact that the employee signed a noncompete. The new employer then terminated the employee.

Well, there's just one problem... the employee never signed the noncompete. He testified that he was presented with one but refused to sign it. At trial, the HR director admitted that he never signed it but claimed that at the time they thought he had. That was enough for the jury to award the plaintiff six figures.

Sidenote: The plaintiff's claims were defined as Defamation, Interference with Contractual Relations, and Invasion of Privacy.

Source: Pennsylvania Jury Verdict Review & Analysis, Vol. 26, No. 6 (May 2011).

Posted by Philip Miles, an attorney with McQuaide Blasko in State College, Pennsylvania in the firm's civil litigation and labor and employment law practice groups.