Adjunct Law Prof Blog

Editor: Mitchell H. Rubinstein
New York Law School

Saturday, November 29, 2008

Poaching Lawsuits On The Rise

Poaching Lawsuits Aim To Stifle Talent Raids is an interesting Nov. 24, 2008 National Law Journal article. What is poaching? When one company hires an executive from another company, usually a competitor. This article reports that these this is increasing because of the poor economy and as a litigation concerning non-compete agreements that executives may have signed is also increasing. Search firms (aka head hunters) are also being sued. As the article states:

  Poaching lawsuits are on the rise as employers, fighting to stay alive during turbulent economic times, are using litigation to keep competitors from snatching away top talent — along with trade secrets.

Lawyers across the country say they are being inundated with calls from employers facing poaching problems. Noncompete agreements are being ignored, they allege, and exiting employees are often wooing many others to leave as well.

JPMorgan Chase & Co. is suing an executive search agency for allegedly poaching several of its employees, including a top executive, and sending them to a competitor. JPMorgan Chase Bank v. The IDW Group, No. 08 CV 9116 (S.D.N.Y.).

International Business Machines Corp. (IBM) is suing a former executive who recently left to work for Apple Inc. to oversee its iPod and iPhone operations, in alleged violation of a noncompete agreement. International Business Machines Corp. v. Papermaster, No. 08-CV-9087 (S.D.N.Y.).

I do not buy the premise of the article that such lawsuits are increasing because of the economy. I am also question whether such lawsuits are really on the increase. These lawsuits are nothing new to employment lawyers. We even cover this topic in my employment law class.

Mitchell H. Rubinstein

Employment Law | Permalink

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In light of this economy and the unfortunate layoffs that have occurred, and those that will occur, it is time to reexamine the negotiation of these agreements. Perhaps top-talent at I-Banks, corporations, etc would be wise to negotiate non-compete agreements that cut both ways. If an employer can put a vise on an employee from working at a competitior, then that employee should be able to hamstring the employer from being able to replace said employee with an employee from another corporation.

Presumably, non-compete clauses at competing ventures would mitigate this worry. However, I, and many employees, would welcome any change that gives added support to the employee side of the ledger.

Posted by: Sujan Vasavada | Dec 1, 2008 1:34:51 PM

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