Online auction giant under fire over noncompete agreement

On Behalf of Dunlap Fiore, LLC |

Baton Rouge readers may be interested to learn that internet auction giant eBay finds itself at the center of both state and federal lawsuits alleging that a reciprocal agreement with financial services software developer Intuit violates laws against anticompetitive business practices. The lawsuit centers on a mutual noncompete agreement between the two firms that would prohibit each company from hiring the other’s employees.

While disputes over noncompete agreements typically arise in the context of employment litigation, suits filed at both the state and federal levels assert that the agreement between the companies amounts to a per se violation of antitrust laws. An attorney representing the United States Justice Department said that the agreement hurt employees of the software firm by depriving them of higher paying job opportunities with the online auction firm.

The federal lawsuit names only the auction company as a defendant, but a separate lawsuit brought by the state of California also names the software firm as a co-conspirator. The state relies heavily on the high-tech industry and its Attorney General says that the state cannot allow anticompetitive practices if it wants to maintain its status as a global technology leader.

Although the current lawsuits focus on the industry-wide impacts of the noncompete agreement, the pending litigation may set the stage for future employment law actions by individual employees. In general, the enforceability of a noncompete agreement will depend on factors such as the extent to which it limits an employee’s opportunity to seek similar employment across a geographical area or professional field and the duration of its term. If the courts in this case find that the noncompete agreement between the two technology firms violates antitrust laws, any employees who lost out on more lucrative job opportunities may have a good chance at recovering damages in a future civil suit.

Source: Huffington Post, Gov’t sues eBay over noncompetition agreement,” Pete Yost, Nov. 16, 2012