A restrictive covenant that is in force during a vesting period for securities granted as part of an employee incentive program may present an issue for enforcement, if not tied to to the protection of an employer’s legitimate interest. A court considering a preliminary injunction request blue-penciled the duration of…
Restrictive covenants that limit the ability of former employees to compete have been the subject of legislative limits in a number of states, including Maine, Maryland, Massachusetts, New Hampshire, Rode Island, Virginia and Washington. Bills that would limit the enforceability of restrictive covenants in New…
An email from the sole owner of a limited liability company announcing that employees had become partners with a profit interest was not sufficient to constitute admission as a member of the LLC. The fact that the party claiming an equity interest in an LLC had refused to execute an…
Accounting firm is compelled to repurchase the equity of departing shareholder who moved practice to competitor firm. A shareholder agreement that is integrated and intended to be the parties’ complete agreement may preclude a claim for breach of corporate by-laws. A shareholder in an accounting firm organized as a professional…
Although a former executive was bound by a restrictive covenant, the fact that his duties after joining a competitor were directed to a different market made the scope of the restrictions unreasonable. A restrictive covenant that is not narrowly tailored to protecting specific interests of the former employer at stake…
An executive with national responsibilities may be subjected to a broad geographic restriction in an employment restrictive covenant. Courts can and will enjoin a former executive from working for a competitor to prevent irreparable harm to the executive’s former employer when the restriction is reasonable. Misappropriation and use of a…
Physicians are subject to reasonable restrictions on post-employment activities that will limit their competition with a previous employer. A restrictive covenant that prohibits competition must protect a legitimate interest, impose not undue hardship on the former employee and not injury the public interest. Restrictive covenants must be narrowly tailored so…
Managers of a limited liability company owe to the company fiduciary duties of loyalty and care, must act in good faith, and refrain from reckless or unlawful conduct. A member who seeks information about a manager-managed limited liability company must state the purpose for the request under the Uniform Limited…
An agreement to arbitrate that is contained in the governance documents of a business, e.g, an operating agreement or shareholder agreement, may result in multiple proceedings when the dispute ripens into litigation. A party may seek to stay a pending federal court action based on a collateral arbitration proceeding that…
A case in which a restrictive covenant was enforced against an accountant who happened to be beneficiary under her deceased former employer’s will is among recent business divorce cases worthy of note. Restrictive Covenant Given in Purchase Agreement Survives Death A covenant not to compete given in connection with the…