Non-Competition Agreements and Trade Secrets
By Craig W. Trepanier, Trepanier MacGillis Battina P.A. and
Laura A. Pfeiffer, Winthrop & Weinstine, P.A.
Minnesota HF 506 (Feb. 11, 2013)
On February 11, 2013, HF 506 was introduced in the Minnesota House of Representatives and
referred to the Labor, Workforce, and Regulated Industries Committee. The bill would have
voided non-compete agreements except in three situations: (1) the sale of a business’ goodwill;
(2) the dissolution of a partnership; and (3) the dissolution of a limited liability company. No
companion bill was introduced in the State Senate and no hearing was held in the House
committee. The 2013-2014 Legislature adjourned sine die without any action taken on HF 506.
The Legislature convened for a new Legislative Session on January 5, 2015. As of January 28,
2015, a similar bill to HF 506 had not be introduced in the House or Senate. It remains unclear
whether such a bill will be reintroduced in the current legislative session. Given the current
political climate and lack of action on the original bill, it seems unlikely that such legislation will
be passed in the State of Minnesota at this time.
Role of Attorney’s Counsel in Avoiding Tortious Interference Claim
Sysdyne Corp v. Rousslang, No. A13-0898, 2014 WL 902713 (Minn. Ct. App. Mar. 10, 2014):
Appellant sued its former employee for breaching a non-compete contract and his new
employer for tortious interference with contractual relations and tortious interference with a
prospective business relationship. The district court blue-penciled the employment agreement
to exclude the employee’s pre-existing customers from the non-competition clause. The court
of appeals affirmed.
The district court also dismissed Appellant’s claims against the new employer because it was
“justified in interfering with the non-compete agreement because, based on its attorney’s
advice, it ‘honestly believed the [non-compete agreement] was unenforceable.’” The court of
appeals affirmed, holding that Respondent Xigent made “a reasonable inquiry before hiring
[the employee], which provided justification for interfering in the contract.” The court of
appeals noted that Xigent provided its attorney with the individual’s employment contract and
its own offer letter to him. Xigent testified that he viewed the attorney “as an expert in the
area of non-compete clauses” and “routinely had [the attorney] review non-compete clauses.”
Based on this testimony, the court of appeals upheld the district court’s finding that Xigent had
justification for interfering with the contract.