La.: Former Employee Bites Back, Files Suit Against Employer for Threatening to Enforce Noncompete

By Susan F. Desmond, © Jackson Lewis Feb 10, 2015
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Louisiana has strict requirements for enforcement of non-compete agreements which are not “favored” in the Pelican state. In a recent case, Boudreaux v. OS Restaurant Services, LLC, a former employee in Louisiana preemptively filed a lawsuit claiming a violation of Louisiana’s unfair trade practices statute and intentional interference with business relations after his former employer sent a letter stating its intent to enforce a noncompete agreement. The district court held that the complaint alleged sufficient facts to support the two claims and survive dismissal.

The plaintiff, Boudreaux, managed the operations of Outback Steakhouse in Houma, Louisiana. He signed an employment contract that prohibited him from engaging in a competing business that was within a radius of thirty miles of any Outback Steakhouse. After his termination, Outback sent a letter warning Boudreaux that Outback would be “aggressive” in enforcing the non-compete provision of the agreement.

After receiving the letter, Boudreaux went on the offensive by filing a suit against Outback for violation of Louisiana’s unfair trade practices statute and for intentional interference with contractual relations. Outback filed a motion to have the case dismissed for failure to stating a claim.

Unfair Trade Practices

Under Louisiana law, a party can be found to have engaged in unfair trade practices if it is shown that alleged conduct “offends established public policy and . . . is immoral, unethical, oppressive, unscrupulous, or substantially injurious.” Essentially, a party must show egregious acts that involve fraud, misrepresentation, or other unethical conduct. Here, the court held it was sufficient for Boudreaux to allege that Outback knew that the agreement was unenforceable at the time it sent the “cease and desist” letter to provide a basis to state a claim for unfair trade practices.

Intentional Interference with Business Relations

To state a claim for intentional interference with business relations, a plaintiff must show that the defendant acted with malice that is demonstrative of spit or ill will. On the one hand, the court here noted that this tort is rarely appropriate in commercial disputes since business conduct is driven by profit motive, not bad feelings. Nevertheless, the court decided that the allegation that Outback acted maliciously and intentionally by trying to enforce an invalid noncompete was sufficient to state a claim of intentional interference with business relations.

Lessons Learned

The Boudreaux case may be the first time a court in Louisiana has allowed claims to proceed against a former employer for sending a “cease and desist” letter regarding a noncompete. It is not altogether unheard of, however, for allegations of tortious interference to be lobbed back by employees in such circumstances in other states. Employers should always be careful when crafting and sending cease and desist letters, and keep them professional and properly grounded under the law and the facts presented.

Susan F. Desmond is an attorney in the New Orleans office of Jackson Lewis. Republished with permission. © 2015 Jackson Lewis. All rights reserved.
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