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Employment Law (Non-Solicitation Agreement): Late Case Mediation

Issue

How did mediation assist in resolving a lawsuit brought by a large enterprise against a former employee who took a small group of clients with him upon departure in alleged violation of a written non-solicitation agreement?

What Happened?

The employee defendant terminated his employment voluntarily.  Upon his departure, the plaintiff employer charged that the employee contacted a number of former clients and continued to service their financial needs in violation of plaintiff’s strict, “iron clad” non-solicitation agreement .  Defendant challenged the non-solicitation agreement as overly broad and unenforceable, denied violating its terms, and claimed the clients were either long time friends or had sought him out after his departure, insisting that he continue to represent them.

Special Considerations

    • The company owner and the defendant had been friends, regularly socializing with and confiding in one another which contributed to strong emotions on both sides.
    • The amount of revenue generated by the clients serviced by defendant was modest.  Less than half a dozen actually made purchases or paid for services.
    • Discovery was far from complete, yet each side had already expended tens of thousands of dollars on the litigation.
    • Plaintiff employed a large staff of representatives/agents all of whom signed identical non-solicitation agreements.

The parties made serious efforts to resolve their differences on their own prior to mediation, but were unable to reach an agreement.

How Did PREMi Help?

PREMI offered the litigators a list of mediators with experience in handling non-solicitation agreements in the employment context.  The PREMi mediator that the parties selected then:

  • Submitted a comprehensive and confidential written mediation agreement for the parties to sign before commencing the process.
  • Encouraged design of a mediation process where the parties could articulate their perspective in their own words directly to each other in a joint session.
  • Previewed party opening statements and persuaded defendant to replace a list of his personal grievances against plaintiff – a counter-productive strategy – with a heartfelt statement of regret at forcing plaintiff to initiate litigation and his good faith desire to resolve the dispute amicably.
  • Moved quickly to identifying underlying interests and needs, moving away from a more traditional focus on legal positions and case law.
  • Helped each side recognize its own needs and interests and understand the needs and interests of the other:
    • Plaintiff enterprise was most concerned about the 125 or so current employees who signed an identical non-solicitation agreement and were watching the litigation with interest. 
    • Plaintiff enterprise was not especially interested in a monetary settlement.
    • Defendant was most interested in ending the litigation, but concerned about settlement terms that might jeopardize his licensing.
    • Defendant was no longer interested in servicing the handful of clients formerly represented by plaintiff.
  • After needs and interests were understood on each side, the lawyers were brought back together in a joint session where a list of acceptable settlement terms was hammered out.
  • Listed each term on a flip chart as it was agreed to so that each side could see progress being made.
  • Encouraged each side to sign the flip chart until a formal Settlement Agreement and Release of All Claims could be drafted

What Was the Outcome?

Plaintiff’s president was moved by the sincere opening statement made by defendant, which included a remembrance of their long standing former mutual respect and friendship, now lost.

The parties entered into a global, WIN/WIN settlement agreement that achieved their litigation goals, ending the litigation without paying damages, incurring further attorney fees and costs or experiencing disruption or distress.  Plaintiff was able to announce to current staff that the validity of its non-solicitation agreement was acknowledged, and defendant was able to get on with his life.

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Disclaimer: This summary is illustrative of the types of cases and the manner in which the PREMI associate dealt with the matter. Care has been taken to avoid disclosure of sensitive or confidential information.