Injunctions and TROs Category Archives — Page 2 of 2 — The Virginia Business Litigation Blog Published by Virginia and Washington, D.C. Litigation & Appeals Attorney

March 7, 2011

How IronClad Is Your Non-Compete Agreement?

In Virginia, employers who wish to restrict their employees from competing with them in a new job need to write restrictive covenants tightly and narrowly and should define all the key terms in their noncompete and nonsolicitation agreements carefully – or the courts will not enforce the covenants and former employees will be free to disregard the restrictions. That’s one of the messages of a ruling handed down recently by Judge Frederick B. Lowe of the Virginia Beach Circuit Court in a case involving a nurse practitioner who left a medical group to set up her own competing practice.

Ameanthea Blanco was a family nurse practitioner employed by Patient First Richmond Medical Group, LLC, which provided primary and urgent care to patients. She signed an employment agreement in January 2010 that contained non-competition and non-solicitation provisions. In August 2010, she resigned from Patient First, and a little over a month later, she opened her own practice nearby. Patient First sued Blanco for an injunction to enforce the non-competition and non-solicitation provisions, but the circuit judge declined to issue an injunction, finding the relevant portions of the agreement to be unenforceable.

The noncompete agreement barred Blanco, for two years after she left the company, from performing medical services of the type that she performed at Patient First in the previous 12 months, anywhere within a seven-mile radius of any Patient First center at which she “regularly provided medical services.” She was restricted from doing so as an “agent, officer, director, member, partner, shareholder, independent contractor, owner or employee,” and the prohibition applied if she did so “directly or indirectly.”

August 9, 2010

Protect Your Trademark in Virginia Through the ACPA

by Lee E. Berlik

Lawyers around the country have come to learn of the Eastern District of Virginia’s legendary “rocket docket.” With divisions located in Alexandria, Norfolk, Richmond, and Newport News, Virginia’s federal court is known as the most efficient in the country for handling intellectual property cases and complex business litigation. Also known for being friendly to business, trademark owners around the country often look for ways to establish venue in Virginia instead of a location closer to home where cases move at a slower pace. In the context of protecting trademark rights, one such opportunity can be found in the Anticybersquatting Consumer Protection Act.

The ACPA provides for a cause of action against those who register or use a domain name confusingly similar to, or dilutive of, the trademark of another. Enacted in 1999, the ACPA was designed to address the practice of “cybersquatting,” which generally involves the practice of registering a domain name containing somebody else’s name or trademark with the intention of either profiting from the resulting confusion or of selling the domain name to the less-Internet-savvy trademark owner. You could sue the individual in the jurisdiction of his residence, but what if that person lives in the District of Minnesota, one of the slowest federal courts in the country? Or what if the registrant took steps to shield his identity when registering the domain name and you can’t determine whom to sue?

One option available to you is to sue the domain name itself. And because VeriSign–the world’s largest registry and operator of the .com and .net top-level domains–is located in Dulles, Virginia, which falls within the jurisdiction of the Eastern District of Virginia, there is a good chance you can bring that action in the Rocket Docket, regardless of where the actual registrant resides.

March 28, 2010

Enjoin Wrongful Foreclosure Before It Is Too Late

by Lee E. Berlik

Those considering retaining a Virginia law firm to help stave off a wrongful foreclosure should keep this useful fact in mind: your lawyer’s job will be a lot easier if you take legal action before the bank forecloses on your property. Seek legal advice when you begin to fall behind on your mortgage or when workout negotiations seem to be faltering. Don’t wait until the trustee enforces the deed of trust and kicks you out of the house before going to an attorney, on the assumption that your smart lawyer will be able to “undo” an unfair foreclosure. In the vast majority of cases, Virginia courts will not set the foreclosure aside.

This reality is aptly illustrated by a recent case out of the United States District Court for the Eastern District of Virginia, Horvath v. Bank of New York, (E.D. Va. Jan. 29, 2010). The plaintiff, John Horvath, found himself unable to keep up with his mortgage payments–an unfortunate predicament all too common these days–and the defendants foreclosed on his house. Mr. Horvath admitted he had fallen behind on his mortgage, but asserted a number of different legal theories revolving around the argument that Bank of New York and other companies with an interest in his mortgage acted improperly and did not adhere to the law when servicing his mortgage, foreclosing on his house, and eventually evicting him. The court shot each argument down, one by one, and dismissed the case for failure to state a legally cognizable claim.

The first count was for a declaratory judgment declaring the foreclosure “void.” The court ruled that declaratory relief would serve “no useful purpose” since the foreclosure sale had already taken place. The court noted that declaratory judgments are reserved for “forward looking actions.”

July 25, 2009

Employer Denied Injunction to Enforce Non-Solicitation Agreement

by Lee E. Berlik

In the consolidated cases of Bank of America Investment Services, Inc. v. Michael A. Byrd and Gregory F. Harris, Judge Davis of the Eastern District of Virginia (Norfolk division) denied Bank of America’s motion for a preliminary injunction or temporary restraining order seeking to enjoin its former brokers from contacting clients with whom they had established personal relationships.

Both defendants were financial advisors in Norfolk who left Bank of America in March to join Wells Fargo Advisors. After switching employers, both defendants placed telephone calls to their former Bank of America clients and informed them of their departure and provided new contact information. Bank of America contended that this conduct violated their respective non-solicitation agreements, which provided that the employee:

“will not directly or indirectly solicit, invite, encourage or request any client or customer of the Company…for the purpose of: obtaining that client or customers’ business for himself or herself or any other person or entity, causing such client or customer to discontinue doing business with the Company or otherwise interfering with the relationship between such clients or customers and the Company.”

June 30, 2009

Norfolk Kmart Sued for Disability Discrimination

by Lee E. Berlik

The Equal Employment Opportunity Commission (EEOC) claims a Kmart Super Center in Norfolk, Virginia, fired a store greeter because he used a cane, in violation of the Americans with Disabilities Act (ADA). In a lawsuit filed in the United States District Court for the Eastern District of Virginia, the EEOC alleges that the employee used a cane to walk and stand due to his spinal stenosis, a physical impairment of his back. His back problems did not prevent him from performing his duties as a greeter. Nevertheless, the suit claims, when he was observed using the cane, Kmart terminated his employment.

Prior to terminating the employee, Kmart allegedly refused to allow him to use the cane, even though his condition made it difficult to stand or walk without one, and his job required both. The EEOC filed the lawsuit only after Kmart refused to settle.

The EEOC is seeking most of the remedies permitted under the ADA, including reinstatement of the employee’s job (or placement into a substantially equivalent position), back pay, compensatory damages, and punitive damages for intentional discrimination. The EEOC is also seeking an injunction (as it usually does in the ADA cases it brings) prohibiting discriminatory practices and compelling Kmart to adopt and execute a variety of policies, practices, and training programs to clarify to their employees and the general public that Kmart will takes steps to ensure it does not discriminate against persons with disabilities.

June 3, 2009

EchoStar and DISH Network Held in Contempt for Violating Injunction

by Lee E. Berlik

TiVo won its patent infringement case against EchoStar, DISH, and affiliated companies back in 2006, obtaining a ruling that EchoStar’s digital video recorder (“DVR”) violated certain claims of U.S. Patent No. 6,233,389, owned by TiVo, and obtaining an injunction against future patent violations. In response to the ruling, EchoStar developed a supposed “workaround.” On June 2nd, 2009, the court held that the workaround did not cure the infringement. The court held them in contempt of court for violating the injunction and again ordered them to stop using TiVo’s technology.

EchoStar, the company behind the DISH Network satellite television service, designs digital video recorders that it provides to customers who subscribe to its satellite T.V. service. TiVo’s ‘389 Patent relates to a similar system that allows for simultaneous storage and playback of television signals from sources such as cable and satellite providers.

At the conclusion of the 2006 trial, the jury found that EchoStar’s DVR receivers infringed nine claims of the ‘389 Patent, either literally or under the doctrine of equivalents. After the verdict, EchoStar and its engineers went to work redesigning their DVR machines to avoid infringing the ‘389 Patent. Two years later, TiVo moved to hold EchoStar in contempt, arguing that the redesigned DVR’s continued to infringe TiVo’s patent.

May 13, 2009

Injunctions in Virginia

by Lee E. Berlik

Filing a lawsuit against another company or individual in Virginia is not always about money. Sometimes, it is necessary to get a court order compelling the defendant to take some desired action (like perform a contractual obligation to purchase real estate) or restraining the defendant from acting in a manner that would harm your business (like sharing trade secrets with a competitor). The injunction remedy does not award money damages to the injured party, but protects property and other rights from irreparable injury by prohibiting or commanding acts that would (or are likely to) result in such injuries.

When time is of the essence, Virginia courts will allow a plaintiff to move for a temporary, preliminary injunction to restrain or compel the conduct at issue at the outset of a case, pending further investigation and trial. The purpose of a preliminary injunction is to preserve the relative positions of the parties (i.e., the “status quo”) either while the suit is pending or for some shorter period of time determined by the court. In certain emergency situations, it may be possible to obtain an injunction at a hearing of which the defendant is not notified. This is sometimes necessary when there is a legitimate fear that the defendant would take the feared action (or inaction) upon learning of the lawsuit or motion.

An injunction is considered an “extraordinary” remedy and is generally more difficult to obtain than an award of money damages. Of the different types of injunctions available, the form that compels another party to perform an act (as opposed to merely preserving the status quo and prohibiting certain actions) is considered the most extraordinary and is the most difficult to obtain in court.

April 28, 2009

Herndon Company Unable to Obtain Preliminary Injunction Against Breach of Non-Compete

by Lee E. Berlik

Herndon-based Deltek, Inc., surely thought it would have little trouble enjoining its former employees from forming a competing company in direct violation of their employment contracts. After all, the defendants admitted that they were competing with their former employer in a manner that would fall under the noncompete provisions of their respective employment agreements. However, in a written opinion issued on April 20, 2009, by Judge Trenga of the United States District Court for the Eastern District of Virginia (Alexandria Division), the court denied the requested injunctive relief.

Uncontested evidence demonstrated that three former Deltek employees, a Managing Director, Consulting Manager, and Services Coordinator, all of whom had access to information considered by Deltek to be confidential, proprietary, and trade secret information, left Deltek and joined Iuvo Systems, Inc., in Chantilly, Virginia. Iuvo’s business involves providing consulting and application management services relating to Deltek’s proprietary accounting and financial software. All three employees had signed noncompetition and nondisclosure agreements with Deltek.

The relevant noncompete language provided that the employees could not, for a period of two years after the termination of their employment, “directly or indirectly be engaged as an employee or consultant of any firm or corporation engaged in a business which is in competition with [Deltek].” The agreements also prohibited the use or disclosure of “Confidential Information” or “Confidential or Proprietary Information” both during and after employment.