Non-compete agreements are a common source of business disputes that often lead to litigation and protective orders may be necessary. However, the Federal Trade Commission (FTC) recently issued a final rule that bans most non-compete agreements, including those currently in effect, except for those involving certain senior executives. While legal challenges to the rule are certain to occur, the change will significantly affect this aspect of commercial litigation in Arizona and nationwide.
Disputes involving non-compete agreements, as well as other types of business disputes, almost always involve discovery. The discovery process requires both parties to disclose certain information relevant to the dispute to one another. In some cases, the other party to the dispute may ask for sensitive or confidential information about your business that you may not want to disclose publicly. A protective order can be a useful tool in preventing the public disclosure of this information.
We have years of experience handling business disputes for various entities across various industries. An Arizona commercial litigation attorney at Provident Law® can advise you and your business of your legal rights during litigation concerning non-compete agreements and other common business disputes. Together, we can explore the legal options available to you, determine the best strategy to approach the situation and work to resolve the issue as effectively and efficiently as possible.
Non-Compete Agreements in Arizona
Historically, non-compete agreements in Arizona were governed by state law through statutes and court decisions. More specifically, Arizona courts require non-compete agreements to be reasonable in scope in terms of their length of time, geography, and activities to avoid any undue hardship on the employee. The agreements also must protect only the employer’s legitimate business interests, such as trade secrets or customer information. Finally, non-compete agreements must promote the public interest and be based on adequate consideration given by the employer in exchange for the employee’s agreement.
Under the FTC’s new rule, the only non-compete agreements remaining in effect are those with senior executives or workers who make more than $151,164 per year and are in policymaking positions. However, companies may not enter or enforce new non-compete agreements, even with senior executives.
As a result, if the FTC’s final rule remains in effect, the only litigation that may result from non-compete agreements will be related to agreements with senior executives. Any other non-compete agreements will be unenforceable. However, depending on the circumstances, litigation may still occur under different legal theories between employers and former employees concerning sensitive company information or trade secrets.
Protective Orders in Arizona Business Disputes
Whether you are facing a business dispute over a senior executive’s non-compete agreement or a different matter, your goal will always be to protect your business and any proprietary information unique to your company. This information is potentially usable by other individuals and companies to compete with your business and harm your bottom line. In this situation, you might consider the use of a protective order during litigation.
A protective order typically arises in the context of discovery, a crucial part of any lawsuit. After a party files a lawsuit, the discovery process begins. The attorneys for both sides of the dispute file requests to examine applicable documents, records, data, and other information from the other party. The parties also may question witnesses under oath during depositions and request documentary evidence from third parties. Parties to the lawsuit also may have to answer questions, or interrogatories, propounded by the opposing party.
In some cases, another party may request information about your company through discovery that is sensitive, constitutes a trade secret, or could be harmful to your business if it becomes public knowledge. Under the appropriate circumstances, your attorney can ask the judge for a protective order to protect the confidentiality and privacy of certain information about your company. A protective order can prevent public embarrassment or harassment of parties or organizations related to the lawsuit and protect your company from undue burdens or expenses posed by overzealous or overly broad discovery requests.
A protective order can use various methods to protect your company’s information. For instance, a protective order may allow your business to:
· Request oral depositions;
· Request written depositions or interrogatory responses be sealed and opened only with a court order;
· Exclude certain items or categories of information from discovery;
· Extend or limit the discovery process timeframe;
· Change the location of any physical discovery process;
· Place certain terms and conditions on some types of discovery, such as copying, inspecting, or examining certain physical items; and
· Restrict access to or exclude your business’s trade secrets and other proprietary information.
The court has discretion whether to grant or deny a protective order. If the court chooses to grant the protective order, it is up to the court to determine the terms and conditions of the protective order. However, even if the court denies the protective order, the court must ensure the integrity of the discovery process and that any information uncovered during the discovery process is used appropriately.
Contact Us for Assistance with Your Commercial Law Issue Today
The commercial litigation attorneys at Provident Law® have over 200 years of combined legal experience representing clients in commercial litigation matters. We are well-positioned to help you efficiently and economically resolve commercial business disputes. Contact a commercial litigation attorney today by calling (480) 388-3343 or reach out to us online to set up a time to see what we can do for you.