James Mcglothen Case Summary
Case 1 James McGlothen versus Heritage Environmental Service LLC, 705 2d 1069 (1999)
James McGlothen worked as a project manager and interior division manager for Heritage Environmental Service, LLC from 1992 to 1998. In 1998, he was assigned to a sales job. However since he did not like the assignment, he decided to resign and work for the company’s competitor. While there, he began to solicit Heritage’s customers and even enticed one of the employees to join him in his new organization. When Heritage learned about McGlothen’s activities, Heritage filed a case to enforce the terms of a covenant not to compete for one year since James retained confidential information and was contacting both customers and employees of Heritage. McGlothen appealed since this was unreasonably detrimental to him since he was made employed for that period. Upon McGlothen’s employement with Heritage, he signed an agreement stipulating provisions not to compete. But Heritage was able to produce evidence that McGlothen has in his custody sensitive documents which were stamped “confidential”.
The court ruled that McGlothen breached the contract since he had proven to divulge confidential information and had showed detrimental to the goodwill of Heritage. The trial court determined that the information that McGlothen took was confidential …show more content…
information in which Heritage had a “protectable interest” (Twomey & Jennings, 340). Moreover, Heritage was deemed to be entitled to contract to protect the good will of its business. The evidence found with McGlothen had direct contact with customers and that these customers were repeat customers. This has been recognized by the court as “protectable goodwill” (Twomey & Jennings, 340). These repeat customers could not have been tapped by the competition if it were not for McGlothen’s actions and that McGlothen at the time that he was with Heritage was perceived by customers as one with Heritage. The court correctly decided that McGlothen had breached the agreement not to compete. Additionally, Heritage had shown reasonable grounds for claiming there was a breach.
Case 2: Grace Hunt IT Solutions LLC versus SIS Software LLC (Massachusetts Law, 2012) Three employees of Grace Hunt IT Solutions LLC were asked to sign a non-competing agreement at the time of their employment.
However, one of them did not sign the contract. Over the course of their employment with Grace Hunt LLC, a purchase of the company was made to its successor Grace Hunt. The three employees became dissatisfied with their employment under Grace Hunt. The first two decided to resign and move to SIS Software LLC. The other employee followed suit. Finding out that they were connected with a new company, their old clients at Grace Hunt followed. Grace Hunt filed a case of violation of employment contract and business interference for
SIS. One of the three employees were considered not to breach the employment contract as he did not sign the contract. The other two were spared because the contract was by and between Grace Hunt LLC and not just Grace Hunt. It was deemed that a new contract should have been made since there had been revisions to the contract. Meantime, SIS was regarded to be guilty of tortious business interference in the contractual relationship of the three employees because SIS intentionally induced the breaking of the relationship of the three employees with Grace Hunt. However, this is no longer the scope of an agreement not to compete. The court ruled correctly over the case particularly to the one employee who has not signed the contract. As for the other two employees, since the modifications to the contract have not preserved the offers as contained therein due to the changes in remuneration and the nature of the offerer, the court decided to rightfully deny the preliminary injunction.
Case 3: Papermaster versus IBM (Fortune, 2009)
A former employee of IBM, Mark Papermaster, was hired by Apple, Inc. Labeled as an IBM veteran at 25 years old, IBM filed a case for a breach on non-competing contracts as Papermaster knew a lot of confidential information regarding the company. Although Papermaster was assigned at the iPod division, IBM felt that this was just a tactic to end the duration of Papermaster’s non-competing agreement. IBM anticipated that he was to be placed at Apple’s latest technological pursuits, which seemed to threaten the business future for IBM. Papermaster argued that businesses for the two technological firms are dissimilar, and thus there is no competition. Moreover, since he was in Texas when with IBM and California with Apple, he stressed that the agreement is not in effect as these states do not observe them. However, the US court judge issued a preliminary injunction for Papermaster to quit Apple. Papermaster filed a counterclaim.
Negotiations were held between Papermaster and his old employer. The courts judged that instead of the 12 month duration, a 6-month period was provided.
The court in this case may have weighed against reasonable arguments on how long this person should be restricted from gaining full employment. Being classified veteran in the field, perhaps his gainful employment could have been only made possible through this field. Under this assumption, there is agreement that the duration would have sufficed for reasonable time restriction. Moreover, despite that Papermaster argued that Texas and California state laws do not observe the noncompeting agreement. The Uniform Commercial Code may have been the basis for defining his infraction. Papermaster’s argument that the industries are dissimilar is also uncertain since there is no clear line of the product offers for the two companies. They are still perceived to be competing firms.
Insights and Conclusions Contrary to the requirements of the agreement that offers need to be certain and definite, the agreement not to compete does provide uncertainties and indefiniteness. Considering that the states vary in their interpretations and regard specifically for what constitutes unreasonable harm to either of the parties, I am of the opinion that the thin, hazy line to determine reasonableness shall remain undetermined. Furthermore, the increasing complexity of business set-ups brought about by the scope of technology also does not prove to clarify the restrictions whether geographically or temporally. The issues shall remain under the agreements not to compete. It is important to regard that the employee has the freedom to live, to find a living and to be allowed to use the most of one’s knowledge and abilities. On the other hand, businesses may have the means to continue and to survive for it has its machinations and resources. In the end, trade secrets only remain secrets when if nobody really knows.
James McGlothen worked as a project manager and interior division manager for Heritage Environmental Service, LLC from 1992 to 1998. In 1998, he was assigned to a sales job. However since he did not like the assignment, he decided to resign and work for the company’s competitor. While there, he began to solicit Heritage’s customers and even enticed one of the employees to join him in his new organization. When Heritage learned about McGlothen’s activities, Heritage filed a case to enforce the terms of a covenant not to compete for one year since James retained confidential information and was contacting both customers and employees of Heritage. McGlothen appealed since this was unreasonably detrimental to him since he was made employed for that period. Upon McGlothen’s employement with Heritage, he signed an agreement stipulating provisions not to compete. But Heritage was able to produce evidence that McGlothen has in his custody sensitive documents which were stamped “confidential”.
The court ruled that McGlothen breached the contract since he had proven to divulge confidential information and had showed detrimental to the goodwill of Heritage. The trial court determined that the information that McGlothen took was confidential …show more content…
information in which Heritage had a “protectable interest” (Twomey & Jennings, 340). Moreover, Heritage was deemed to be entitled to contract to protect the good will of its business. The evidence found with McGlothen had direct contact with customers and that these customers were repeat customers. This has been recognized by the court as “protectable goodwill” (Twomey & Jennings, 340). These repeat customers could not have been tapped by the competition if it were not for McGlothen’s actions and that McGlothen at the time that he was with Heritage was perceived by customers as one with Heritage. The court correctly decided that McGlothen had breached the agreement not to compete. Additionally, Heritage had shown reasonable grounds for claiming there was a breach.
Case 2: Grace Hunt IT Solutions LLC versus SIS Software LLC (Massachusetts Law, 2012) Three employees of Grace Hunt IT Solutions LLC were asked to sign a non-competing agreement at the time of their employment.
However, one of them did not sign the contract. Over the course of their employment with Grace Hunt LLC, a purchase of the company was made to its successor Grace Hunt. The three employees became dissatisfied with their employment under Grace Hunt. The first two decided to resign and move to SIS Software LLC. The other employee followed suit. Finding out that they were connected with a new company, their old clients at Grace Hunt followed. Grace Hunt filed a case of violation of employment contract and business interference for
SIS. One of the three employees were considered not to breach the employment contract as he did not sign the contract. The other two were spared because the contract was by and between Grace Hunt LLC and not just Grace Hunt. It was deemed that a new contract should have been made since there had been revisions to the contract. Meantime, SIS was regarded to be guilty of tortious business interference in the contractual relationship of the three employees because SIS intentionally induced the breaking of the relationship of the three employees with Grace Hunt. However, this is no longer the scope of an agreement not to compete. The court ruled correctly over the case particularly to the one employee who has not signed the contract. As for the other two employees, since the modifications to the contract have not preserved the offers as contained therein due to the changes in remuneration and the nature of the offerer, the court decided to rightfully deny the preliminary injunction.
Case 3: Papermaster versus IBM (Fortune, 2009)
A former employee of IBM, Mark Papermaster, was hired by Apple, Inc. Labeled as an IBM veteran at 25 years old, IBM filed a case for a breach on non-competing contracts as Papermaster knew a lot of confidential information regarding the company. Although Papermaster was assigned at the iPod division, IBM felt that this was just a tactic to end the duration of Papermaster’s non-competing agreement. IBM anticipated that he was to be placed at Apple’s latest technological pursuits, which seemed to threaten the business future for IBM. Papermaster argued that businesses for the two technological firms are dissimilar, and thus there is no competition. Moreover, since he was in Texas when with IBM and California with Apple, he stressed that the agreement is not in effect as these states do not observe them. However, the US court judge issued a preliminary injunction for Papermaster to quit Apple. Papermaster filed a counterclaim.
Negotiations were held between Papermaster and his old employer. The courts judged that instead of the 12 month duration, a 6-month period was provided.
The court in this case may have weighed against reasonable arguments on how long this person should be restricted from gaining full employment. Being classified veteran in the field, perhaps his gainful employment could have been only made possible through this field. Under this assumption, there is agreement that the duration would have sufficed for reasonable time restriction. Moreover, despite that Papermaster argued that Texas and California state laws do not observe the noncompeting agreement. The Uniform Commercial Code may have been the basis for defining his infraction. Papermaster’s argument that the industries are dissimilar is also uncertain since there is no clear line of the product offers for the two companies. They are still perceived to be competing firms.
Insights and Conclusions Contrary to the requirements of the agreement that offers need to be certain and definite, the agreement not to compete does provide uncertainties and indefiniteness. Considering that the states vary in their interpretations and regard specifically for what constitutes unreasonable harm to either of the parties, I am of the opinion that the thin, hazy line to determine reasonableness shall remain undetermined. Furthermore, the increasing complexity of business set-ups brought about by the scope of technology also does not prove to clarify the restrictions whether geographically or temporally. The issues shall remain under the agreements not to compete. It is important to regard that the employee has the freedom to live, to find a living and to be allowed to use the most of one’s knowledge and abilities. On the other hand, businesses may have the means to continue and to survive for it has its machinations and resources. In the end, trade secrets only remain secrets when if nobody really knows.