Cases from Alabama

United States District Court for the Southern District of Alabama
Court Rejects Pre-Employment Non-Compete Agreement

Defendant Ameritox is a provider of specialized services for healthcare providers. In 2011, Plaintiff Dawson negotiated an employment contract and began working as an Assistant Director for Ameritox. As part of the employment agreement, Dawson agreed to both a non-solicitation, as well as a non-compete agreement prior to his employment. In the agreements Dawson acknowledged that he would have access to confidential information, and agreed that he would not solicit Ameritox clients or work for competitors for one year following his employment. In late 2013, Dawson left the company to accept a position with Millenium, a direct competitor of Ameritox. After Dawson filed this action to seek a declaratory judgment invalidating the non-compete agreement, Ameritox removed the case to federal court and moved to preliminarily enjoin Dawson from working for Millenium.

On January 6, 2014, the U.S. District Court for the Southern District of Alabama issued an order denying the injunction, on grounds that a non-compete agreement signed prior to employment is invalid in the state of Alabama. The court went on to consider whether the non-compete agreement constituted more than a partial restraint on the plaintiff’s trade, and whether non-solicitation agreements were barred by the Alabama statute, but ultimately rested its opinion on the pre-employment nature of the contract.

United States District Court for the Middle District of Alabama Northern Division
Fruit of the Loom and Russell Brands stipulate to dismiss (with prejudice) the action against a former employee for breach of a non-compete clause

Fruit of the Loom, Inc. (Fruit of the Loom) and Russell Brands, LLC (Russell) sued Lonnie Bishop, a former employee, for violating a Trade Secrets and Non-Competition Agreement that he signed in July 2010. Bishop served as manager of a Russell distribution center in Alabama and helped develop a system of managing inventory. According to the Agreement, Bishop would not work for a competitor of Fruit of the Loom or Russell Brands for twelve months after his employment terminated. Shortly after resigning from his position at Russell’s in November 2010, Bishop went to work for Gildan Activewear, Inc. a competitor of the plaintiffs.

On January 21, 2011, Fruit of the Loom and Russell’s motion for a preliminary injunction was denied. Although a denial of a preliminary injunction is typically considered outcome determinative, often resulting either in settlement or withdrawal of the complaint, Fruit of the Loom and Russell persisted. However, the parties stipulated to dismiss the case with prejudice on May 12, 2011.