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Nevada Cease and Desist Letter Under Noncompete Clause Citing Camco Decision

Posted by: on Tue, Jan 13, 2015

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This letter is written on behalf of NE LLC (“Ne” or your “Former Employer”), with
respect to that certain At Will Employment Agreement (“Employment Agreement”)
which you executed with your Former Employer on or about July 21, 2014, and
also with respect to that certain Severance Agreement (the “Severance
Agreement”) which you executed with NE on or about November 18, 2014.

The Severance Agreement included the following provisions, which not only
acknowledged certain of your existing obligations to NE under the Employment
Agreement, but which also restated those obligations as new and separate
promises made by you, and detrimentally relied upon by NE in entering into the
Severance Agreement with you:

Employee acknowledges and agrees that the Written Employment Agreement contains certain Non-competition provisions which are binding during employment, certain
non-solicitation of Employer Client provisions which survive termination of
employment and remain effective for 12 months following the termination of
employment
and certain non-solicitation of Employer employees provisions
which survive and remain effective for two years after termination of
employment (all of which dates shall be deemed to begin to run, hereunder, no earlier than January 1, 2015) and certain provisions regarding confidential information, Trade Secrets and ownership of inventions which survive termination of employment for an
unlimited period of time, together with other provisions which survive
termination of employment, and Employee expressly agrees to continue to abide by all of said terms of the Written Employment Agreement pursuant to the terms thereof including during the remainder of his employment, and thereafter.  Employee also expressly agrees
that he shall not be entitled to solicit the business of any client or customer
of Employer, on his own behalf or on behalf of any other person or entity,
unless he receives the express written permission of Employer, executed by JG,
prior to initiating any action whatsoever to do so, for a period of one (1)
year after December 31, 2014
. Severance Agreement at ¶8 [emphasis added].

The non-solicitation obligations you agreed to, with respect to existing NE
clients, are fully enforceable under Nevada law.  Indeed, a much broader restriction against
any post-employment competition for a certain time period, would be enforceable
in this State.  Camco, Inc. v. Baker, 936 P.2d 829 (Nev. 1997).  Hence, NE acted in reasonable good faith in seeking only a less restrictive covenant from you, solely as to the
solicitation of its existing customers.

In violation of these terms, on January 5, 2015, you reached out to MP, an officer
of PLA (hereinafter the “Pla”), the entity which operates the Pla Hotel, an
existing customer of NE, on behalf of a company known as SK, with the intent to
arrange a meeting between principals of the Pla and SK, and with the further
intent of selling SK products and services to the Pla, including products
identified in your communication and described in advertising material for said
products attached thereto.  SK provides products and services which compete directly with the products and services provided by NE, including managed information technology (“IT”) services.  You engaged in this conduct in violation of the surviving provisions of your Employment Agreement, and without the prior permission of JG, as required in your Severance Agreement.

This conduct on your part was a breach of the promises you agreed upon in executing
those agreements.  Based thereon, this letter is written to demand that you immediately cease and desist from taking any further action in violation of your obligations to NE under those
agreements.  For example, you are to immediately cease any further communications with the Pla, or any agent or employee thereof, on behalf of Ska, or on behalf of any other entity which
provides any IT products or services, including any such products or services
which compete with those offered by NE, such as cloud computing, offsite server
hosting, managed services, IT troubleshooting and repair, etc.  We also hereby demand that you immediately inform Ska, or any other person or entity on whose behalf you are performing
any services, either independently or as a full time in-house employee, of your
obligations to NE.

Your intentional actions are in direct violation of NE’s rights and give rise to
numerous and substantial claims against you personally.  Indeed, intentionally interfering with your Former Employer’s business and willfully competing with its customers in a
manner maliciously calculated to cause it economic harm, would potentially be
actionable even without the breaches of contract involved in this case.  These actions give rise to numerous claims, including, but not limited to:  (i) fraud, (ii) intentional interference with prospective economic advantage, (iii) intentional interference with contractual relations, (iv) breach of contract, (v) breach of the implied covenant of good faith and fair dealing, (vi)
injunctive relief; and (vii) punitive damages.

Without waiving any of its rights in law or equity, all of which it expressly reserves,
NetEffect hereby demands that you:

(1)
Immediately cease all contact with NE customers;

(2)
Within twenty-four (24) hours from the date of this letter provide a list of all NE
customers you have contacted, and any and all products or services you have
arranged to be provided to such customers, and any and all emails, texts,
written communications, bids, proposals, or invoices you have submitted to such
customers;

(3)
Within three (3) business days from the date of this letter turn over all proceeds you
have gained from your activities, together with any severance payments you
received during December 2014 in bad faith; and

(4)
Within twenty-four (24) hours from the date of this letter, confirm in writing that
you have ceased and will not resume contact with your Former Employer’s
customers.

(5)
Unless it receives immediate written confirmation that you will comply with the
above demands, NE will be forced to assume that you do not intend to
voluntarily take the necessary actions outlined above.  In that event, NE reserves the right to
pursue all of its available legal and equitable remedies in the appropriate
forum, including via the commencement of formal legal action against you without
further notice
.

(6)
Because your promises to NE were utilized to induce NE to promise to pay you certain
severance moneys, including moneys which would otherwise remain due and owing
hereafter, and because those obligations on the part of NE were contingent and
conditioned on your remaining in compliance under the Severance Agreement, any
moneys due and owing to you from NE as and for post-employment pay, are hereby
subject to being forfeited, unless and until this matter is timely resolved in
a manner fully satisfactory to NE.  You should also be aware that, in the event NE is required to seek injunctive relief against any ongoing breaches by you of the non-solicitation provisions
of the Employment Agreement or Severance Agreement, that it will be seeking its
costs and attorneys’ fees from you for being required to engage in any such
litigation.  Please immediately respond to the undersigned (or have your counsel so respond), so that a determination may be made with respect to whether this matter can be resolved in a manner which prevents such adverse outcomes.

(7)
This letter is not intended and should not be treated as a full statement of the
facts or of the applicable law, an admission of any fact, or a waiver or
limitation of any of NE’s rights or remedies, all of which are specifically
retained and reserved.

Thank you for your attention to the foregoing.

 

Very truly yours,

 

ALBRIGHT, STODDARD, WARNICK & ALBRIGHT

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah.  Our firm’s practice includes a strong emphasis on construction law, contracts and litigation in the jurisdictions where we are licensed.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services.  Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation.  Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

 

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on personal injury accidents. Call us at 702-384-7111.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.