NDA disputes re California companies can get interesting

On Behalf of | Oct 31, 2017 | Business Litigation |

One company is an established tech enterprise headquartered in Florida. The other is a just-coming-to-the-party California startup.

The following is their connected story, which is borne of acrimony and marked by contractual complexity.

The former company, Citrix, employs workers in Raleigh, North Carolina. So too does Egnyte, the latter entity.

Several Citrix employees recently left Citrix for a reportedly better deal at Egnyte.

As a recent Forbes article notes, “That didn’t sit well with their former employer.”

In fact, Citrix sent its ex-workers cease-and-desist workers, claiming that their new employment worked a violation of existing noncompete agreements.

Egnyte responded quickly to that, filing a lawsuit in California claiming that the agreements are unenforceable against the workers, given overly restrictive limitations on employment that are disallowed under California law.

In turn, Citrix followed up with its own lawsuit, which it filed in Florida. The complaint, which cites North Carolina law as governing the agreements, contends that all the workers who went to Egnyte breached their employment contracts with Citrix. The company claims that California law cannot logically apply to the matter.

Egnyte argues otherwise, saying that the limitations imposed on the workers that might be acceptable under the laws of another state are flatly unlawful under California law.

And they contend that is true regardless of where Egnyte’s employees are located and irrespective of the fact that they signed contracts prior to their placement with Egnyte. Given Egnyte’s status as a California enterprise, the company argues, any agreement relevant to worker restrictions must be decided pursuant to California law.

Notably, Egnyte beat Citrix to the courthouse, filing its lawsuit first. Forbes notes that its dispatch in the matter is a purposeful strategy “to establish California as the venue for its complaint.”

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