Business Law
The case I have chosen is Meras Engineering, INC., et al. (Plaintiffs) V. CH20, INC., et al., (Defendants). Meras Engineering is a provider of water treatment solutions. They develop products that treat industrial and agricultural water applications. CH20 is a similar company that provides clients with chemicals that control the biological fouling in cooling towers. Rich Beriner and Jay Sughroue were employed by CH20 and signed a non-compete agreement during their employment. They both left CH20 and went to work for Meras. According to their non-compete agreement from MERAS v. CH2O, INC Northern District of California (2013) “after they ceased working for CH20 they would not work for “any business of similar nature to that of [CH20] which is in competition with [CH20]” for the period of three years”
When Beriner and Sughroue went to work for Meras they violated their non-compete agreement by not waiting the specified three years before taking employment. The case is actually not about the dispute of the non-compete agreement, but based on the fact that Beriner and Sughroue worked in California. Non-compete agreements are illegal in California with the exception of enforceable partnerships and when someone is selling their ownership interest in a company. According to section 16600 “every contract by which anyone is restrained from engaging in a lawful procession, trade of business of any kind is to that extent void.” (Kindsvaters, ESQ. 2010)
CH20 was incorporated in Washington and therefore was subject to the rules and regulations of the state of Washington; however Beriner and Sughroue argued that because they lived in California the case should be heard in California. They moved the case first to Federal court, and then moved to dismiss, stay or have it transferred to the Northern District of California under the first-to-file rule. What is an interesting side note is that the contract had a mandatory arbitration rule but neither party raised that
When Beriner and Sughroue went to work for Meras they violated their non-compete agreement by not waiting the specified three years before taking employment. The case is actually not about the dispute of the non-compete agreement, but based on the fact that Beriner and Sughroue worked in California. Non-compete agreements are illegal in California with the exception of enforceable partnerships and when someone is selling their ownership interest in a company. According to section 16600 “every contract by which anyone is restrained from engaging in a lawful procession, trade of business of any kind is to that extent void.” (Kindsvaters, ESQ. 2010)
CH20 was incorporated in Washington and therefore was subject to the rules and regulations of the state of Washington; however Beriner and Sughroue argued that because they lived in California the case should be heard in California. They moved the case first to Federal court, and then moved to dismiss, stay or have it transferred to the Northern District of California under the first-to-file rule. What is an interesting side note is that the contract had a mandatory arbitration rule but neither party raised that
References: About CH2O International. (n.d.). CH2O 's WEB. Retrieved April 14, 2013, from http://www.ch2o.com/company/aboutch2o.htm Case3:11-cv-00389-EMC Document87 Filed01/14/13 Page1 of 21. (2013, January 14). http://www.tradesecretslaw.com. Retrieved April 14, 2013, from www.tradesecretslaw.com ESQ, B. K. (2002, November 21). California Non-Compete Agreements. California Non-Compete Agreements. Retrieved April 14, 2013, from www.andersenalumni.net Meras Engineering. (n.d.). Meras Engineering. Retrieved April 14, 2013, from http://www.merasengineering.com/ Milligan, R., & Chuchla, G. (n.d.). California Federal Court Dismisses California Employee 's Challenge Of His Non-Compete Agreement Based Upon Enforceable Forum Selection Provision | Trading Secrets. Trading Secrets | Trade Secrets Lawyers & Attorneys | Seyfarth Shaw | Computer Fraud, Confidentiality Agreements, Corporate Espionage. Retrieved April 14, 2013, from http://www.tradesecretslaw.com/2013/02/articles/restrictive-covenants/california-federal-court-dismisses-employees-challenge-of-his-non-compete-agreement/