Illinois cannabis companies in legal battle over chemist, non-compete agreements

Via the Chicago Sun-Times: 

Cresco Labs and Green Thumb Industries have been fierce rivals since Illinois issued its first licenses to grow and sell medical marijuana in 2014.

Now, as the two River North-based firms battle for market share in states across the country, Cresco has filed a lawsuit accusing GTI of poaching a high-level employee who allegedly violated a non-compete clause in his contract when he switched sides this year.

...The lawsuit states that Christopher Tonge, a chemist who served as Cresco’s director of technical services, notified the company in May that he was resigning. He then took what’s believed to be a similar job at GTI. Tonge had signed an employee agreement with Cresco that “barred him from working for a substantially similar company” for a year.

Tonge was integral to developing “a unique process” to extract cannabis oil from pot plants that “helps drive revenue while enabling significant cost savings,” according to the suit. “The process provides such value to Cresco that it has applied for two patents on it, on which Mr. Tonge is a co-inventor,” the suit notes.

Tonge was allegedly recruited to GTI by Matt Ingram, its senior vice president of operations. Ingram previously worked at Cresco and has knowledge of the firm’s manufacturing operations and its contractual non-compete provisions, the suit states. 

Meanwhile, Ingram has been reaching out to other Cresco workers “and urging them to resign to work for GTI, despite knowing that these employees are subject to covenants not to compete,” the suit holds. Cresco CEO Charlie Bachtell even confronted his GTI counterpart, Ben Kovler, in April and warned him that Ingram was attempting to hire “multiple senior-level employees” from Cresco.

It'll be interesting to see how this lawsuit plays out - I imagine that someone thinks they've got a pretty solid case here. 

(I'm broadly against non-compete agreements in that it seems like they're good for the employer, bad for the employee (and I think) the economic understanding is that it's bad for sectors for there to be lack of labor mobility. In this case, it seems like it's reasonable for an employer to attempt to lock an employee in - I guess doing with incentives ('we'll pay you more') is better than 'we're chaining you to us.') 

Jimmy John's employees and non-compete agreements

Via the Huffington Post, I see that the sandwich shop Jimmy John's is requiring non-compete agreements:

Employee covenants and agrees that, during his or her employment with the Employer and for a period of two (2) years after … he or she will not have any direct or indirect interest in or perform services for … any business which derives more than ten percent (10%) of its revenue from selling submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches and which is located with three (3) miles of either [the Jimmy John's location in question] or any such other Jimmy John's Sandwich Shop.

I presume that this agreement has never been enforced, but it is funny/sad nonetheless. 

Are non-compete agreements becoming more common?

Via WBUR in Boston, a couple of good stories about non-compete agreements (emphasis mine): 

BOSTON — Massachusetts lawmakers are considering a ban on noncompete agreements. Those are the clauses in employment contracts that bar an employee from working for a competitor, sometimes for several years... 

...Last month, James Mitchell gave his two weeks notice. The 32-year-old told the Boston Web marketing company he worked for he was leaving to join a startup. And he was sure that he was not violating the noncompete clause in his contract. 

“I have a list of 37 companies that I’m not to go work for,” he said. “The company I chose wasn’t on it. My actual boss who I resigned to hadn’t even heard of the company I was going to. And then all of a sudden in the legal documents I got it became a competitor.” 

Mitchell’s first day at his new company, set for last week, never came to be. His previous employer decided to enforce his noncompete agreement. Mitchell said he can fight his work ban in court, but it could cost tens of thousands of dollars and take months, if not years... 

...Colette Buser, 19, has worked for the last three summers at LINX, a camp for kids in the Boston suburbs. Buser said the part-time job paid minimum wage, and this summer, she wanted to work for another camp. But LINX evoked her one-year noncompete agreement. The head of the company told The Boston Herald the techniques and training are proprietary. 

That's a really crummy thing for a summer camp to do... "You will never teach the other kids our secret camp song with its proprietary clapping rhythm!"

It sounds like (according to this very similar New York Times article) that non-compete agreements may be becoming more common. This Wall Street Journal article from 2013 mentions more lawsuits stemming from them (up 60% over the last decade.)

We've talked about this issue before and no one has ever raised the issue -- are there non-compete agreements in academia*? If so, how long are they? Also, have they ever been enforced, or tested in the courts? (How would you even define a competitor -- in the case of a university, wouldn't it be any other university?) Readers, what do you think?

*A brief Google search seems to indicate that there are often non-compete agreements between university hospital systems and their clinical faculty. This article by a Virginia lawyer seems to say that one Virginia university (Old Dominion) doesn't have them with their faculty. 

Non-compete agreements in the chemical industry?

A respected commenter writes in with a set of questions (with a [redaction] by CJ):

[The poaching thread] has me wondering, what do other non-competes look like in the chemical industry, and how many of us are bound by them? Furthermore, has anyone actually been sued because of their non-compete? 

I recently had a conversation with a family member who is [a medical professional]. She pointed a job out to me that was with a company that is essentially a competitor to my current employer. I told her that I was uncomfortable applying for that job, and explained that while I am a good fit for the position, accepting a job at that company would open me up to liability.  

During the conversation, I explained that a non-compete has always been part of the employment paperwork that I sign. Then, I began to realize that it was a little odd that when you start becoming an expert in a (sub)field, you may have to completely abandon it if you want to change jobs, for fear of being sued.

I'll be honest and say that I've never been important enough to merit a non-compete, although I've been bound by a number of non-disclosure agreements. (My favorite part of my last day at the Blue Pill Factory was being handed a copy of the NDA I had signed on my first day. Well played, paperwork folks, well played.)

I suspect that non-competes are rarely enforced, but I assume that threats of lawsuits are quite common. (It seems that employers will play all sorts of tricks to claim legal territory that is not technically theirs. 'Twas ever thus.) Here's a blog dedicated to non-competes (there's a blog for everything!) and an article that argues that they hurt employees (surprise!)

I don't think Big Pharma uses them at any level, but I don't know about the broader chemical industry. Readers?