SW Legal studies in Business

Non-Competition Agreements Are Not Binding on Employees When Employer Purchased
Description Appeals court held that the non-competition agreements signed by employees were extinguished when their employer firm was purchased by another firm. Since the agreements are personal service contracts, they are not assignable without the employees' consent or ratification.
Topic Employment Law
Key Words Non-Competition Agreement; Successor Corporation
C A S E   S U M M A R Y
Facts Corporate Express (CE) sued three former employees and their new employer for breach of non-compete agreements the employees had signed. The employees had all agreed not to compete against their employer or solicit the employer's customers for one year following the termination of employment. The employees had signed the agreement when they worked for Ciera, which was purchased by CE. The employees quit to go to work for a competitor a couple years after CE bought Ciera. The trial court issued a preliminary injunction against the employees and their new employer. The employees appealed.
Decision

Reversed. "In Florida, non-compete agreements are considered personal services contracts and are generally not assignable without the parties' consent or ratification. When a corporation is dissolved and a new one created, the employee's continued employment cannot in and of itself be construed as sufficient knowledge and consent to conclude that the assignment was consented to or ratified by the employee." Hence, the successor corporation, CE, has no right to enforce the non-compete agreements obtained by Ciera. The agreements did not contain any language binding the employees to the employer's successors or assigns, and the employees did not consent to or ratify assignment to CE.

Citation Phillips v. Corporate Express Office Prod., Inc., 2001 WL 929902 (Dist. Ct. App., Fla., 2001)

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