New Employment Agreement Superseded Stock Purchase Agreement Non-Competition Covenants
In the employment law, business/commercial litigation appellate case of Diskriter, Inc. V. Baker, PICS Case No. 14-1245 (Pa. Super. August 1, 2014), the Honorable John T. Bender, writing on behalf of the Pennsylvania Superior Court, held that the trial court erred in finding that the non-competition agreement plaintiff sought to enforce against former employee was superseded by a subsequent agreement.
Joansville acquired Diskriter pursuant to a stock purchase agreement. A confidentiality and non-competition agreement was executed in conjunction with the stock purchase agreement. Baker, the former president and chief executive officer of Diskriter was party to an employment agreement with Diskriter. After execution of the stock purchase agreement, Baker terminated his existing employment agreement and entered into new employment agreement with Diskriter. The new agreement contained non-competition and non-solicitation covenants and an integration clause. Baker’s employment at Diskriter ended, he went to work at Key-strokes and solicited work from one of Diskriter’s clients. Diskriter and Joansville sued alleging violation of the stock purchase agreement non-compete. The trial court denied the requested injunctive relief and Diskriter appealed.
The trial court reviewed the agreements at issue and found that the new employment agreement, through its integration clause, superseded any prior agreements between Baker and Diskriter regarding non-competition and non-solicitation. The trial court additionally found that Diskriter had failed to establish a clear right to injunctive relief pursuant to the stock purchase agreement non-compete. Diskriter argued that the trial court misinterpreted the text of the agreements with regard to certain terms and that the new employment agreement did not supersede the stock purchase agreement non-compete which remained enforceable against Baker.
The plain language of the new employment agreement stated that it “supersedes all prior agreements” and it contained non-competition and non-solicitation covenants. Thus, the trial court’s finding that the stock purchase agreement non-compete was superseded by the new employment agreement was supported by the record and the trial court did not err in determining that Diskriter failed to demonstrate a clear right to relief.
Reference: Digest of Recent Opinions, Pennsylvania Law Weekly, 37PLW (August 19, 2014)
Filed Under: Business Litigation; Commercial Litigation; Employment Contracts; Non-Competition Agreement; Injunctive Relief
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