Here’s my very brief editorial on this case:  any reduction in the ability of parties to settle cases works against the supposed public policy in favor of settlement, clogs the courts, and makes us lawyers richer and everyone else poorer.  Sure, you can’t waive “indemnity” rights

The Court disapproved a line of oft-cited Ninth Circuit cases upholding the so-called “narrow restraint” rule relative to B&P 16600.  This provides clarity if not leniency.  You just can’t do anything to stop someone from being able to do their job after they leave, more or less.

Part II essentially says that there’s nothing wrong with waiving “any and all” rights, as that is not meant to include unwaivable rights.  The Concurring opinion disagreed on that point and suggests that it was an independent wrongful act for an employer to sign employees to language that might make them think they were waving something they couldn’t waive.

What does this mean? The concurrence only had two votes, but there is a line of cases that supports that basic thinking, if not in the case of a business tort for wrongful interference.  It will be picked up.  It also (you’d think) wouldn’t apply to contracts reviewed by attorneys.

So, employers need to once again review the kinds of contracts they are having people sign.  Plaintiffs lawyers should get their clients’ employment contracts out of the file too. Time to amend?

Second District Case No. B198253

Gregory Chudacoff was an attorney who represented Maxsecurity, Inc.  When Mark Neville left his employment with Maxsecurity, Chudacoff wrote a letter to Maxsecurity’s customers accussing Neville of various torts and advised them not to do business with Neville unless they wanted to be involved with the litigation.

Maxsecurity sues Neville, Neville sues Chudacoff.  Chudacoff anti-SLAPPs Neville’s Complaint against him.

Will this become standard practice now?  Forget convenants not to compete! We can just send letters saying we’re going to sue.  The Court upheld this argument.  Here’s how it gets around the idea that this kind of tactic will be used to stifle competition:

Relying upon Herzog v. “A” Company, Inc. (1982) 138 Cal.App.3d 656 (Herzog), Neville asserts that the Letter could not have been sent in good faith because it was, in effect, an attempt to prevent Neville from competing with Maxsecurity in violation of Business and Professions Code section 16600 (section 16600).  Section 16600 declares void “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind . . . .”  The Letter did not constitute a covenant not to compete, nor did it accuse Neville of violating a covenant not to compete.  The Letter accused Neville of improperly soliciting Maxsecurity’s customers.  Section 16600 does not authorize employees to compete with former employers by stealing their confidential customer information.  (See Board of Trustees v. Roche Molecular Systems (N.D. Cal. 2007) 487 F.Supp.2d 1099, 1115 [section 16600 permits enforcement of agreement to the extent necessary to protect trade secrets and prevent unfair competition]; Thompson v. Impaxx, Inc. (2003) 113 Cal.App.4th 1425, 1429-1430; Robert L. Cloud & Associates, Inc. v. Mikesell (1999) 69 Cal.App.4th 1141, 1150 [“acts of solicitation of the former employer’s customers and the misuse of confidential information are acts of unfair competition that may be enjoined”].)  Neither section 16600 nor Herzog is relevant here.
We also reject Neville’s argument that the Letter is not protected because it was addressed to Maxsecurity’s customers, against whom Maxsecurity had no claim, rather than to Neville.  Although many anti-SLAPP cases involving prelitigation communications concern demand letters or other statements to adverse parties or potential adverse parties (e.g., Flatley, supra, 39 Cal.4th at pp. 307-309; Rohde, supra, 154 Cal.App.4th at pp. 36-37; Blanchard v. DIRECTV, Inc. (2004) 123 Cal.App.4th 903, 918-919), there is no such requirement in the text of section 425.16, subdivision (e)(2).  That provision has been held to protect statements to persons who are not parties or potential parties to litigation, provided such statements are made “in connection with” pending or anticipated litigation.

The problem with this analysis is that section 16660 is not normally construed that narrowly.  Courts have interpreted it as expressing a strong public policy.  While the court may have looked askance at the personal attack on the lawyer, and while we can’t argue that in the context of an anti-SLAPP motion, if something meets the CC section 47 tests, we think this decision, if it becomes good law, will effectively destroy section 16600, increase litigation, and hurt employee mobility.

Does Neville have a remedy against Maxsecurity itself in another context? That doesn’t seem to be addressed.   It seems plain to me that a lawyer, who is sworn to defend his client’s interests, not those of others, warning his client’s customers that they could become entwined in a lawsuit if they do business with Neville is highly suspect.

The question is, whether Neville really did misappropriate information from Maxsecurity.  If it turns out later that he did not, this decision will look poor.