Market Position Protected
Our client purchased a product line in a transaction that included the assignment of numerous contracts, including a non-compete covenant that applied to our client’s major competitor.
The competitor, brought a lawsuit to have the covenant invalidated and sought an immediate injunction against our client to prevent it from realizing the full benefit of the product line it had purchased.
Not only were we able to defeat the competitor’s request for an injunction against our client, we successfully obtained preliminary injunctive relief against the competitor, preventing it from continuing to violate the non-compete during the pendency of the lawsuit. Discovery was expedited, and the case went to trial within five months of being filed.
The back-story: The line of business our client bought had been previously owned by the competitor, and the competitor had sold the product line to the company our client purchased it from. The non-compete covenant and assignment of contracts had been part of that earlier deal.
The issues at trial:
- Was the non-compete covenant enforceable?
- Who owned the customer contracts that had been assigned to our client?
The question on the contracts boiled down to whether the customers were customers of our client or customers of the competitor.
The competitor argued that its contractual relationship (with the company we purchased from) “had evolved” by virtue of a course of dealing, such that the customers had become the competitor’s customers. We argued, and the Court agreed, that contracts do not “evolve.” We convinced the court to enforce and honor the integrity of the contracts. Further, the court declined on technical grounds to invalidate the non-compete covenant.
Several Haynsworth Sinkler Boyd litigators played key roles in this decisive victory for HSB’s client in preserving its market position. Don Sellers was the lead attorney from the outset, with Jay Matthews stepping in as lead trial counsel due to Mr. Seller’s unavailability. Joey Bondurant was also involved throughout the entirety of the case, taking the depositions and otherwise assisting with case preparation, development, and presentation.