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Court Upholds $6.9M Verdict for Violation of Non-Solicitation Agreement

Recently the Pennsylvania Superior Court upheld a lower court opinion that found a Philadelphia corporation liable for tort claims and violations of non-solicitation agreements. Of the total $6.9M judgment, $2.4M was awarded for compensatory damages and $4.5M was awarded as punitive damages. The Court found that the Defendants lured employees and clients away from Plaintiff. The Court held that punitive damages were appropriate as there was evidence to support that Defendants knew about the employees’ non-solicitation agreements while courting them and their business, and the employees provided Defendants with information about Plaintiff’s clients and other trade secrets.

“When a company hires essentially all of the sales [and] marketing staff of one agency, the purpose in doing so is to induce the clients of that agency to move their business with that sales force,” the court stated. “[Defendants’] first year business revenue of approximately $300,000.00 was received all from [Plaintiff’s] clients. Based on the foregoing facts, we cannot conclude that the trial court abused its discretion in awarding punitive damages.”

It is noteworthy that before their departure, many of the workers who switched firms arranged details of their new employment while on Plaintiff’s time using Plaintiff’s computer, phones and other equipment. Before leaving, one of the workers even put together a list of Plaintiff’s clients and other trade secrets to take with him. At least two dozen of Plaintiff’s clients were ultimately solicited by their former employees after they joined Defendant’s company.

If you have a question about a non-compete or a non-solicitation agreement, please contact one of our attorneys.  (John McAneney, Esquire, October 2016)

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