Declaratory Judgment Action
It is a common scenario for an employer to threaten an employee or former employee with litigation in the event the employer discovers information that shows or suggests the employee is violating a non-compete agreement. Often, the employee being threatened receives legal counsel that the non-compete is unenforceable for one or more reasons (e.g., the lack of a protectable interest; the prior material breach of the employer, etc.). In such cases, the former employee can, in effect, exercise some control over the course of the dispute by preemptively filing a declaratory judgment action seeking a court order that the non-compete agreement is unenforceable.
Filing a declaratory judgment action may achieve several objectives. For example, there are instances in which a former employer threatens litigation over a non-compete that is not likely to be enforced, but the former employer nevertheless takes an unacceptable position in negotiations over the employee’s post-employment activities. In such a case, the filing of a declaratory judgment action forces the hand of the former employer, who must decide between a settlement and a potentially adverse court decision holding its non-compete agreement unenforceable (which could lead to much greater damage to the employer). Finally, and importantly, filing the declaratory judgment action gives the former employee control over the selection of the forum and puts the employee in the position of being the plaintiff rather than a defendant. Once a declaratory judgment action is filed, it is often the case that the former employer files a counterclaim for breach of the non-compete agreement and a motion for TRO to enforce the agreement. Our attorneys know these and many other considerations that impact how a non-compete issue or dispute is handled, whether its through a declaratory judgment action or pursuit of a TRO.
If you are seeking a better understanding of how to file or defend against a declaratory judgment action, contact our office directly to review the situation. We may be reached at (314) 645-4100 or by email at firstname.lastname@example.org.