Non-Competes: Judge Sorokin Denies Drywall Co.’s Request for Injunction Against Former Asst.P.M.

In a case that is instructive in understanding when and where non-compete agreements may be enforceable in the construction industry, federal Judge Leo Sorokin denied Manganaro Northeast, LLC’s (“Manganaro”) request for an injunction against a former Assistant Project Manager (“APM”).

In this case, the APM left Manganaro to work for a competing drywall installer in a similar role, and that competitor quickly thereafter received a contract to perform work for one of Manganaro’s regular customers.

In denying the request for injunction, Judge Sorokin reasoned that even though the APM’s employment agreement expressly prohibited her from working for a direct competitor, the clause was not enforceable because it was overly broad in application.

Under Massachusetts law, non-compete clauses must be narrowly tailored to impose the least burden on the employee necessary to protect only the employer’s most critical legitimate business interests. In the construction industry, some bidding and pricing information and methods are generally considered trade secrets, which can be protected through enforceable non-compete and/or non-disclosure agreements.

In this case, however, Manganaro appears not to have disputed that the APM “had no involvement with marketing, no role in preparing or submitting bids, limited contact with customers… and no identified knowledge of trade secrets.”  Accordingly, Judge Sorokin found that the Manganaro did not have a reasonable likelihood of proving a legitimate business interest in prevent the APM from working for a competitor.

This case is a good reminder: To protect your critical business information, you need to implement a well-crafted company policy concerning trade secrets and narrowly-tailored and enforceable non-compete/non-disclosure agreements with your critical employees.

The new Massachusetts non-compete law (recently passed by the Legislature) was not enacted nor considered in this case.

You can read the entire decision here.

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