Damages Non-Solicitation Agreement

On August 20, 2018, the Quebec Court of Appeal rendered an interesting decision in the case of Lemieux v Aon Parizeau Inc.1 concerning the damages that can be invoked by a former employer in cases where a clause prohibiting dismissal and debauchery as well as the worker`s duty of loyalty have been violated. During the process of completing the original project, the new company was warned that each of the employees was subject to restrictions prohibiting debauchery in their employment contracts. Despite this knowledge, the new company extended offers to all balmer sales and marketing agents, who represented all Balmer employees except the owner himself. Prior to hiring, several of the employees recorded confidential information and trade secrets, including customer lists and details about the insurance policy. Shortly after receiving the job offers, all employees resigned from Balmer and used the confidential information and trade secrets to transfer requests from customers and/or to the new company. The Horizon decision seems prudent for employers (and indeed also for workers) who claim damages in the event of loss of future income due to breaches of contract. All future revenue projections contain assumptions, but it is important for parties who want to recoup future revenue to give juries and judges some concrete evidence on which these assumptions can be based. Although Horizon called an expert to testify about its future shortfall, the expert`s opinions were based on Horizon`s evidence. As soon as the court discovered that this evidence base was fragile, the power of the expert`s testimony – and Horizon`s case for loss of profits – collapsed. After a trial, a Texas jury concluded a number of its claims in Horizon`s favor. The jury awarded Horizon millions in damages for future shortfalls resulting from executives` failure to comply with their non-compete and no-debauchery agreements and more than $50,000 for the stolen documents.

When the former employer was able to win, the amounts were $7,313.72 (Hagerty, Lockenvitz, Ginzkey & Associates v. Ginzkey); $49,322.50 against former employees who started their own business using trade secrets and client lists of former employers (Cherne Indus, Inc. Grounds & Associates); $138,000 under a lump-sum indemnification clause in a professional services business (BDO Seidman v. Hirshberg); and $15,000 to $25,000 under a lump-sum compensation clause in a clinic (Raymundo v. Hammond Clinic Ass`n). The amounts can be much higher or lower depending on the loss that the former employer can justify. But let`s turn the example. If the landlord paid me $200,000, but I hadn`t built the house, what would be the contractual damage? The law would not force me to build the house (called the “specific benefit”) and the refund of the money would not automatically be the $200,000 the landlord paid me.

The damage would be the amount of money that the owner would have to pay to another contractor to build the same house. If the landlord got a good deal with me, I might have to pay $250,000 for my default if another contractor asked for it. The court didn`t even give Horizon the chance to try again with more or less evidence. Instead, it pronounces a verdict on this issue for the accused. In addition, the court ordered the lower courts to reduce punitive damages in order to approximate the compensation damages that were upheld — only $55,000 for the stolen documents, not the more than $4 million awarded by the jury for lost profits. We don`t know what the final amount will be, but rest assured that it won`t be seven-figure. You might feel safe in your legal position. However, no one can predict how a court might decide, so you need to think about what damages your former employer could recover in court.

`liquidated damages` means a term used to describe a certain amount of money agreed upon by the parties as the amount of damage to be recovered by one party for infringement by the other party, whether that amount exceeds or exceeds the damage actually suffered. . . .