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Seagate Says Ex-Employee Can't Work For Competitor

Posted by simoniker on from the knows-too-much dept.

deweller writes "According to a story at MacCentral, Hard drive maker Seagate Technology LLC is seeking a court injunction to prevent a former employee, Pete Goglia, from going to work for Western Digital Corp. any time in the next 2 years, saying Goglia knows too much about Seagate's hard-drive reading and writing technology to work for a competitor."

17 of 585 comments (clear)

  1. Did he sign an NDA or not? by garcia · · Score: 3, Interesting

    When I read about this story when it broke on Friday I found nothing that mentioned that Goglia had signed an NDA *but* he had been working there for seventeen years and was the executive director of the Recording Head Division.

    Now, if Seagate hadn't had the man sign some sort of NDA that specifically stated he wouldn't work for a competitor for two years then I really don't think that they have too much to stand on until WD comes out with a strikingly similar product (which inevitably they will).

  2. Non-Competes.... by Hanna's+Goblin+Toys · · Score: 5, Interesting

    These exist on the very fringe of legal contract law. I would be very surprised if any of them have withstood a jury trial. Can a legal agreement which prevents a worker from working to feed his family be legal? Non-competes are valid even if you are fired, meaning they can fire you and prevent you from working for a competitor, which is basically contractually enforced unemployment. This would seem to be highly UnAmerican(tm) and I think the courts would frown on it.

    What is the case law precendent?

    1. Re:Non-Competes.... by Aneurysm9 · · Score: 3, Interesting

      I can't cite precedent right now, but I can tell you that non-compete clauses are generally valid and have survived both jury trial and appellate review. That said, such clauses must typically be appropriately limited in scope. They cannot prevent employment for excessive time periods, two years is likely to be found not to be excessive. They cannot prevent employment in businesses unrelated to the former company's core business. Since Seagate and WD both make hard drives, I don't think that one will be a problem either. As for such clauses being UnAmerican, nothing could be further from the truth. It's a classic example of American thinking, use your power to prevent the competition from horning in on your resources, human or natural.

      --
      There was Cowboy Neal at the wheel of a bus to never-ever land.
    2. Re:Non-Competes.... by hendrik42 · · Score: 5, Interesting

      In Germany, this kind of contract is valid but your former employer has to pay the difference between the salary in your old job and the one in your new job for the 2 years. So, if you have a contract like that - be happy, quit your job and go back to school :-) If the contract does not contain a salary-difference clause like that, you can either sue the company into paying it anyway or you can just ignore the whole thing and work for anyone.

    3. Re:Non-Competes.... by Aneurysm9 · · Score: 5, Interesting

      Actually, I think in most states continued employment is not sufficient consideration for a non-compete clause. The theory is that it's unduly coercive because of the unequal bargaining power of the parties when one party controls the ability of the other to earn a living. Now, if you don't already have a contract and are employed at will, then your employer certainly could require a contract as a condition of continued employment and a non-compete clause as a condition of a contract, but if you already have a contract then some additional consideration is required for a non-compete to be valid and refusal to agree to a non-compete will not likely be viewed as justification for the employer to breach the existing contract and terminate your employment.

      --
      There was Cowboy Neal at the wheel of a bus to never-ever land.
    4. Re:Non-Competes.... by abb3w · · Score: 5, Interesting
      Non-competes are valid even if you are fired, meaning they can fire you and prevent you from working for a competitor, which is basically contractually enforced unemployment.

      I crashed a college engineering class where a contract lawyer was giving a guest lecture on the subject of NDAs and non-competes. He presented a compromise that several of his clients have used to modify the non-compete agreement to be more equitable to both sides. (I've got the boilerplate handout somewhere in my papers.)

      In the event an employee leaves his job, voluntarily or involuntarily, the non-compete kicks in. But the company must continue to pay his full salary so long as he submits to the company each month:

      1) Proof that the ex-employee is actively seeking employment in their chosen profession.
      2) Evidence (EG, a job offer from a competitor) that the non-compete agreement is the only thing keeping the employee from current employment.
      Each month you're looking for work and the non-compete keeps you from taking it, the company must send you your a check. If they decide they're sick of paying you, they may opt to include with the check a letter releasing you from your non-compete. You spend the month surfing in Australia instead of looking, you don't get paid for that month, but the checks resume afterwards.

      If what you and what you know are worth squat, your salary is worth the slight expense to keep you and your knowledge out of the hands (or brains) of the competition. If the company is worth squat, they'll be willing to pay this as reasonable compensation.

      Not all will--refusals generally come from the same ones whose HR trolls make you sign over every idea you've ever had or will have on anything relevant or irrelevant. Ethical companies will accept, or make a reasonable counter-offer-- so avoid the slimeballs, stick with the ethical companies.

      --
      //Information does not want to be free; it wants to breed.
    5. Re:Non-Competes.... by Rumor · · Score: 5, Interesting

      That doesn't mean that such clauses are not legally enforceable in Canada, or in the UK. There's a solid foundation of case law supporting the validity of non-competition clauses in both countries. Put very simply, the restrictions must be for a reasonably limited time, and must restrict using the specific knowledge gained from the former employer, but typically not restrict a person from using their general expertise in the area of research/development.

      The fact that your former employer dropped the suit could mean a lot of things, such as: they didn't think it was worth following through, even if they thought they could win; or, they realized there was a good chance a judge would find your non-competition clause to be unreasonable.

      But that doesn't mean it can't be done at all. These kinds of contracts do exist and may be legally enforceable.

    6. Re:Non-Competes.... by WCMI92 · · Score: 4, Interesting

      "As for such clauses being UnAmerican, nothing could be further from the truth. It's a classic example of American thinking, use your power to prevent the competition from horning in on your resources, human or natural."

      Such clauses are VERY Anti-American. They give the employer TOTAL power over the employee and violate the spirit of capitalism. Indeed, noncompetes are in many ways a SOCIALIST idea...

      With a noncompete, an employee has no guarantee of employment at that company, yet, has his ability to find other work limited.

      It's a classic case of the corporation wanting to have it both ways... The same capitalist corporation that will, without any qualms, outsorce to India, lay off 5,000 workers, etc to increase their profits suddenly becomes DEVOUT MARXISTS when the EMPLOYEE wants to "fire the company" to do much the same...

      This is one reason why we in IT need to organize.

      Not to form a union, but perhaps an association that we can use to lobby Congress as a large group with some clout to get such things as noncompetes made illegal.

      The last time I was asked to sign a noncompete, I asked how much they were going to pay me to not work... That ended the issue.

      Noncompetes are also on shaky ground legally, despite what you said. Most have language in them that is clearly illegal.

      Not only do most noncompetes violate the law, they are most often imposed on the employee as a condition of employment, AFTER becoming an employee. You never get to see it until after accepting the job, quitting your old one, and being more or less forced to sign.

      Also, under contract law something of value must be granted to both parties to be legal. "Sign this or you lose your job" has been found most of the time to be ILLEGAL, as a contract signed under duress is not consensual.

      Here are legal reforms needed to regulate noncompetes:

      1. Noncompetes must be disclosed to prospective employees during the INTERVIEW process, and furnished in hard copy so that the interviewee can review it with an attorney off site.

      2. Noncompetes become null and void if the employee is fired or laid off.

      3. Noncompetes cannot be used to prevent the employee from working in their field.

      4. The noncompete, if invoked, requires the employer to pay the former employee their previous salary during the time in which they cannot get work. This is in the State's best interest, as otherwise the employee would be drawing unemployment, a burden being unfairly shifted from corporation to taxpayer...

      5. No noncompete can have more than a 6 month duration.

      6. The employer is liable for all legal expenses related to litigating a noncompete, including paying the employee's expenses should they prevail. They should also have to post bond as guarantee of this payment PRIOR to the court accepting any complaint from an employeer with regard to an employee.

      7. Noncompetes that have ANY language in them that would be found in violation of the law would become null and void in their entirety.

      --
      Corporatism != Free Market
  3. Not as standard as you think. by CrypticSpawn · · Score: 3, Interesting

    I worked for a company for a while without one. Soon I was working on projects which were bringing in millions a month, then they wanted me to sign one. I told them I would let my lawyer look it over, I ended up leaving the company before I had to sign, went ot a competitor ;).

  4. Comment removed by account_deleted · · Score: 4, Interesting

    Comment removed based on user account deletion

  5. Re:Non-Compete Agreement by OrangeTide · · Score: 4, Interesting

    Some states do not allow non-compete agreements, usually if the state has some sort of Right-to-Work legislation. I believe California is a right to work state, at least it has other properties of RtW, like not requiring advanced notice that of termination or resignation. I was not able to figure out from the article alone what state this is taking place in. Although since Seagate is mostly located in California, it has to be california. Maybe someone more familiar with CA RtW laws could enlighten us?

    In any case, non-compete clauses should be illegal (but NDAs are okay) because where else is a hard drive expect going to work other than another hard drive company? In a fair market employees should have a right to seek better pay, better location or better management. If you are locked into a non-compete agreement then you have to break into some other industry for your next job.

    A company should be forced to continually improve it's technology to maintain a competitive advantage. I think we can assume that seagate has had suffiecent time to develop and produce whatever secret technology Mr. Goglia has worked on and Seagate should have a pretty significant headstart on their competitors.

    --
    “Common sense is not so common.” — Voltaire
  6. Strange... by Hanna's+Goblin+Toys · · Score: 5, Interesting

    When you say "horning in on your resources", do you mean that when GM fires a CAD engineer, they have the right to keep that CAD engineer from doing CAD for the next two years, thereby ruining his resume?

    That seems odd... thanks for the case law info though!

  7. Re:Do they have a no-compete by proj_2501 · · Score: 3, Interesting

    they can say things like "oh, then you won't be needing this severance package/continuing healthcare/unemployment insurance"

  8. Re:In a related story... by lspd · · Score: 4, Interesting

    I don't see what the big deal is - if you want to work developing ultra-bleeding-edge technology, it seems reasonable that the entity funding that research restrict what you're allowed to do after the fact.

    No, they have the right to restrict the ex-employee from disclosing trade secrets. Sure, in the company's view the best way to keep him from disclosing company trade secrets is to require that he commit suicide when fired...I mean stop working when fired.

    Isn't this the same sort of nonsense that SCO has been bitching about? It's right in the contract. If you ever had access to AT&T source code you must die when you lose access to that source code. It's the only way to be sure that a secret stays a secret.

  9. Non-Competes vs IP? by MachDelta · · Score: 4, Interesting

    Really? Thats interesting.

    I wonder... The company I work for here in Canada had me sign an agreement when I was hired that basically said that if I came up with any brilliant, million-dollar ideas related to the industry for two years (IIRC) after I left the company, they'd basically "own" those ideas. I thought it was kind of strange to try and claim someone elses "IP" like that, and wondered to myself if they had ever tried to enforce it. Anyone know? I sincerely doubt its ever happened, since the company is primarilly shipping and logistics... not a whole hell of a lot of room to drastically innovate, unless you happen to invent a teleporter or something... but now i'm curious if these kinds of agreements are legal in Canada too, seeing as how the competition-employment ones are (apparently) not.

    Quick! Where's a 'IAAL' on Slashdot when you need one!? (Oh, wait...)

  10. Re:Non-Competes.... completely wrong by Sique · · Score: 3, Interesting

    You both are wrong. There is a decision from the European Court declaring such non competing clauses void because they are contradicting the free choice of the workplace as laid down in the European Contracts.

    Of course you are not allowed to take trade secrets with you, and if someone can prove that you did, you are in deep trouble. There are lots of contracts with non competing clauses in Europe. But the fact that the clauses are there doesn't make them enforceable throughout the European Union.

    (There is another argument why those clauses are void: As soon as your contract ends, all clauses within the contract end too. All your former company has to enforce certain things to you are laid down in law, not in contract.)

    --
    .sig: Sique *sigh*
  11. Re:Non-Competes.... completely wrong by Tony+Hoyle · · Score: 4, Interesting

    Contracts say all sorts of bullshit.

    I've got into the habit of 'correcting' any contracts I get before signing. Typically the employer countersigns without even reading my corrections. Their loss.

    My last one tried to stop me working:
    1. For any suppliers (so mcdonalds is out!)
    2. For any clients
    3. For any company in related (ie. computing) work
    4. For any company *at all* for 6 months after leaving the company.

    It also said *any* innovation, work related or not, was property of the company even if I came up with it in at the weekend.

    Even though it's highly likely it was unenforcable (restraint of trade and all that... despite what some posters have implied these kind of contracts get voided all the time) I crossed out the offending paragraphs before sending it back. Never heard a whimper out of them.

    (Their latest trick was to get us to sign a contract giving the unlimited power of attourney. I crossed *that* out about 5 seconds after getting the agreement.)