In this day and age, it is common for employees to part ways with companies to explore other opportunities. It is no longer the norm for people to stay with one corporate job their entire lives. However, companies fight against this by having their employees sign restrictive covenant agreements. These restrictive covenants often have non-compete provisions, non-solicitation provisions, and confidentiality provisions used in hopes of protecting companies’ valuable assets. This happened in a recent case that is still ongoing here in Arizona.
Story
American Express recently brought a claim against one of its former executives, Xiongwen Rui, for a breach in his contract, specifically a provision in the agreement that prohibited him from working for any competitor for a one-year-period after his last day of active employment. The claim was made in an effort to claw back over $1 million of Rui’s pre-resignation compensation. Rui resigned from AmEx in February 2017 to work for Ant Financial Services Group, a China-based financial services company.
The original agreement between AmEx and Rui contained a list of competitors for which future employment was forbidden; Ant Financial was not on the list at this time. The agreement allowed AmEx to revise the competitor list at its discretion at any time. As the list is revised, it becomes a part of the agreement, and a copy of the current list is available through the corporate security office.
The defendant claimed that Ant Financial was not on the competitor list when Rui signed the agreement and that it was later added without his knowledge. Thus, he did not have notice of the change, and the modification of the agreement made the agreement unenforceable because there was no “meeting of the minds as required for an enforceable contract.”
AmEx argued that, even if the addition of Ant Financial to the Competitor List could be considered a contract modification, the modification was supported because “Rui received consideration not only at the time of signing, but also through the rest of his employment, in the form of substantial compensation.”
Judge’s Decision
Rui filed a request with the Court to amend its affirmative defenses to include lack of consideration. As of May 2020, Judge Dominic W. Lanza granted the defendant’s motion for leave to file a second amended answer. Even beyond these defenses, American Express will still need to show that it has an enforceable non-compete agreement (link).
Contact Counxel Legal Firm
Are you an employee concerned that a non-compete agreement will stop you from excelling in your career if it is enforceable? Are you an employer seeking protection from employees who could take information and relationships they gained while working for you through a non-compete? Do you need help or have questions about a non-compete issue? You are in the right place. Counxel Legal Firm regularly drafts, reviews for enforceability, and litigates non-compete agreements.
We would love to help answer any questions you have about non-compete agreements. Contact us at (480) 744-6621 or at request@counxel.com. Don’t forget to check out the good things that others are saying about the services they received from Timothy Coons on Google.
This article is intended for informational purposes only and does not constitute legal advice for your specific situation. Use of and access to this article does not create an attorney-client relationship between you and Counxel Legal Firm. Please contact request@counxel.com or (480) 744-6621 to request specific information for your situation.
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