In April of 2024, the FTC announced a final version of its Non-Compete Clause Rule. The rule bans post-employment non-compete clauses between employers and their workers. Less than one month before the rule becomes effective on September 4, 2024, AMO Sales and Service, Inc., part of Johnson & Johnson’s Vision business unit, filed a complaint against its former Marketing Director alleging breach of her non-compete agreement with the company and demanding relief in the form of a permanent injunction prohibiting disclosure of confidential information, return of all confidential information and work product, compensatory damages, and more.
Non-compete agreements have long been controversial. Though purportedly intended to protect a company’s business interests, in recent years they have been misused in ways that have kept workers from seeking or accepting a new job or from operating a business and penalizing workers who attempt to do so. In response to a growing outcry about this practice, the FTC reviewed allegations of abuse and decided that non-compete clauses had come to represent unfair methods of competition. They banned the use of new non-compete agreements after September 4 and ordered that existing non-competes with workers other than senior executives are not enforceable after that date.
Despite this, three weeks before the ban goes into effect, Johnson & Johnson Vision’s AMO Sales and Service subsidiary filed a lawsuit to enforce the restrictive covenant in its former marketing director’s employment contract, noting that Ms. Schneider, who resigned after six years of employment, was leaving to join STAAR Surgical LLC, a direct competitor that the company claims has targeted its employees for recruitment and hiring over the last two years.
J&J’s filing claims that “STAAR aims to essentially hire the entire J&J Vision marketing team at a critical time for J&J Vision’s business and in the midst of its execution of its short-term and long-term strategic plans,” and that the company had already recruited and hired the company’s former VP of Marketing and Connected Commerce; its former Senior Marketing Director; and that the recruiting and hiring of Ms. Schneider was part of a “package deal” that included another former J&J Vision Marketing Director. The suit alleges that with the addition of Schneider, STAAR had “composed an entire marketing team headed by the top marketing leads from J&J Vision.”
The lawsuit specifies that Ms. Schneider’s possession of “confidential and competitively valuable information” and knowledge of “competitive marketing strategies for surgical and non-surgical refractive corrective solutions developed and acquired only through her employment within J&J Vision” presents an immediate threat to J&J Vision’s confidential and trade secret information, and that her assumption of a role at STAAR is an unequivocal breach of the Employee Secrecy, Intellectual Property, Non-Competition and Non-Solicitation restrictive covenants that she’d signed as part of her employment agreement with J&J Vision. That contract restricted her from going to a J&J Vision competitor or soliciting the company’s clients for 18 months following termination of her employment.
The lawsuit goes into significant detail about the direct knowledge of confidential plans that Ms. Schneider possessed when she left the company and accepted the position with STARR, as well as of STARR’s position as a direct competitor to J&J Vision. It indicates that after Ms. Schneider resigned from J&J Vision, STAAR’s attorney sent a letter to J&J Vision notifying her former employer that she had been hired to serve as Director of Product Marketing for the Americas.
Within a week of receipt of that letter, J&J Vision responded with concerns about her obligations under the non-compete agreement and indicated that they did not consent to her taking the new role. The company also requested the immediate return of her company-issued laptop and provided a prepaid FedEx box and label to do so, but the device was not returned until almost two weeks later. Mediation of the issue was attempted but was not successful, resulting in the filing of the lawsuit.
Ms. Schneider is a resident of North Carolina and was based there during her time with J&J Vision; her employment with STAAR will continue to be based in North Carolina. AMO Sales and Service is a Delaware Corporation with a principal place of business in California and is part of J&J Vision which is headquartered in Jacksonville, Florida. Still, the claim was filed in the United States District Court for the District of New Jersey because that was the jurisdiction agreed to under both Schneider’s Non-Compete Agreement and Long-Term Incentive agreement with J&J Vision.
The federal ban on non-compete agreements resulted from widely held beliefs that restrictive covenants were being used punitively, particularly against low-level employees with few options. The case against Ms. Schneider involves an employee in possession of high-level, highly-sensitive confidential information that J&J Vision claims if used by or diverted to a competitor would lead to irreparable harm, as well as accusations that STAAR has engaged in disproportionate targeting of J&J Vision’s employees to drive competition.
J&J Vision is seeking enforcement of the terms of Ms. Schneider’s Non-Compete Agreement and the post-employment covenants in her Long-Term Incentive plan. The company is also asking for the immediate return of all documents, records, and materials containing or reflecting confidential information or work products and access for a forensic vendor to any personal device and personal online storage account belonging to Ms. Schneider, at her expense. The company is also seeking compensatory damages, attorneys’ fees and costs of suit, and any other relief deemed appropriate by the court.
If you are facing legal action alleging a breach of an employment contract, the attorneys at Schorr & Associates are here to help. Contact us today to learn more about putting our knowledge and experience to work for you.