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Elvis D. Gonzalez recently defeated an application for a preliminary injunction, which would have enforced a non-compete agreement against his client.
The case began when the former division head of a commercial landscape company started a competing business. When numerous large national property management companies followed Mr. Gonzalez's client, his former employer filed suit and sought a preliminary injunction to prevent further competition for the remainder of the lawsuit. To enforce non-competes based on customer relationships, employers must establish a number of things, including customer loyalty, a significant investment in developing customers, and long-standing relationships. In addition, if customers can be found through a telephone listing or other specialized directory, non-competes will generally not be enforceable.
Following a five-day hearing, Mr. Gonzalez showed that many of the elements necessary to enforce a non-compete were missing. Although each customer witness testified to the importance of relationships in choosing vendors, Mr. Gonzalez obtained admissions that significant differences in price could cause them to switch. He also effectively cross-examined the plaintiff's president, using its own financial statements to prove it did not spend the money it claimed on developing new business. Under cross-examination, another of the plaintiff's division general managers had to admit that he implemented basic sales techniques, including cold calling, and that the former employer used a commercially available database to identify potential customers.
As a result, the Court concluded that the customer relationships would not likely support the non-compete. It refused to enforce the agreement, and Mr. Gonzalez's client was free to continue competition.
About Elvis Gonzalez, Ltd.
Elvis Gonzalez, Ltd. is based in Chicago, Illinois, and provides quality litigation and general business counseling services to clients in a highly personalized, cost-effective manner. Its principal, Elvis D. Gonzalez, works with businesses and organizations of all types to solve the legal challenges they face, and more importantly, to avoid them in the first instance. For more information, please visit www.elvisgonzalezltd.com.
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