Recovering Damages for Breach of Covenants Not to Compete or Solicit, Confidentiality and Fiduciary Duty

Pursuing Lost Profits, Clawback Compensation, Inducement Payments, Loss of Good Will and Other Damages

Recording of a 90-minute CLE webinar with Q&A


Conducted on Thursday, October 4, 2018

Recorded event now available

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Program Materials

This CLE webinar will guide employment litigators for proving damages after a current or former employee breaches a covenant not to compete with the employer, solicits the employer’s employees or customers, or discloses the employer’s trade secrets or other confidential information. The panel will also discuss circumstances in which the breach of a restrictive covenant implicates the fiduciary duty of loyalty and potential resulting damages.

Description

Noncompete, non-solicitation and non-disclosure provisions are common restrictive covenants in employment agreements. When a current or former employee breaches any of these covenants, the employer may pursue monetary damages against the employee and sometimes against the new employer. Quantifying the damaging result of the breach of covenant on the business is difficult.

Lost profits are often the most significant source of damages for breach of restrictive covenants, one of the most challenging types of damages to prove, and are particularly susceptible to attack. Employers may need experts to calculate lost profits damages. An employer may also pursue clawback compensation, restitution, goodwill impairment damages and liquidated damages.

The Defend Trade Secrets Act of 2016 introduced a new avenue for damages for trade secret theft, permitting an employer to recover damages for actual losses caused by the theft of trade secrets, unjust enrichment damages, or a reasonable royalty. A court may double damages and award attorneys fees in the event of willful and malicious appropriation of trade secrets.

Employers can also pursue damages from a former worker’s new employer for breach of restrictive covenants, notably when the new employer “raided” the employer’s company for qualified workers. Evaluating whether and how to pursue damages against a new employer requires careful consideration of the likelihood of success and potential pitfalls.

Companies face additional challenges when attempting to enforce restrictive covenants when some or all of the actionable conduct takes place outside the U.S.

Listen as our authoritative panel discusses strategies and best practices for employers to pursue damages against a current or former employee and/or his new employer following a breach of a covenant not to compete, solicit or disclose confidential information. Our panel will offer drafting strategies to give companies the most robust platform for enforcing their contractual and fiduciary rights.

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Outline

  1. Potential causes of action following the breach of a restrictive covenant
    1. Breach of covenant
    2. Breach of fiduciary duty of loyalty
  2. Pursuing damages from the employee
    1. Lost profits damages
    2. Clawback compensation
    3. Restitution
    4. Goodwill impairment damages
    5. Liquidated damages
  3. Damages available under Defend Trade Secrets Act of 2016
  4. Pursuing damages from employee’s new employer
    1. Evaluating when to seek damages from a new employer
    2. Tortious interference with contract
    3. Aiding and abetting breach of fiduciary duty
  5. Tips on drafting enforceable restrictive covenants

Benefits

The panel will review these and other high priority issues:

  • What types of damages may employers pursue when a current or former employee breaches a restrictive covenant?
  • How does the Defend Trade Secrets Act of 2016 address damages for disclosing trade secrets?
  • What methodologies can be used to establish lost profits damages?
  • When can and should an employer go after a former employee’s new employer for damages for breach of a restrictive covenant?
  • What remedies and damages are available when the wrongdoing occurs outside the United States?
  • How can employers draft enforceable covenants to maximize potential damages and equitable remedies?

Faculty

Logan, Melissa
Melissa A. Logan

Atty
Baker & McKenzie

Ms. Logan focuses her practice on employment litigation in federal and state courts and administrative agencies...  |  Read More

Hawley, Alexis
Alexis Hawley

Atty
Baker & McKenzie

Ms. Hawley has extensive experience in litigating lawsuits arising out of various federal and state employment laws and...  |  Read More

Schoenstein, Richard
Richard C. Schoenstein

Partner
Tarter Krinsky & Drogin

Mr. Schoenstein has 25 years of experience handling business and employment disputes, through trials and appeals,...  |  Read More

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