Palmer & Cay's Noncompete Dispute has Georgia on its Mind

Court Cases New Eleventh Circuit Ruling In PALMER & CAY Promotes Racing To The Courthouse In Noncompete Disputes

Sometimes it all depends on where you work. In the case of Palmer & Cay vs. Marsh & McLennan Companies, being located in Georgia makes all the difference. From HR.com...

On April 1, 2005, the 11th Circuit issued an opinion in Palmer & Cay, Inc. v. Marsh & McLennan Companies, Inc., that some commentators are interpreting as an open door to forum shopping. Although the full effect of this case is difficult to predict at this time and recognizing that the defendant filed a Petition for Rehearing En Banc on April 22nd, the debate it is creating among commentators is likely to focus more and more attention on the importance of winning the race to the courthouse.
The Eleventh Circuit Court of Appeals revised a trial court ruling that an employer’s noncompete agreement was unenforceable only in Georgia. The employee initiated the case in Georgia in order to use the pro-employee Georgia law. The Eleventh Circuit extended the unenforceability to any other lawsuit between the same parties, even if other lawsuits are filed outside of Georgia. (Palmer & Cay, Inc. v. Marsh & McLennan Companies, Inc., No. 03-16248, (11th Cir. Apr. 1, 2005)). Most importantly, this ruling may provide an avenue of escape from an otherwise valid noncompete to employees who can relocate to Georgia and are willing to rush to the courthouse before they are sued in another state. Employees may soon ask other states with anti-noncompete policies to extend their declaratory judgment protections in the same way.

Marsh & McLennan Companies, Inc. (MMC) bought the brokerage that employed James Meathe in 1997. Mr. Meathe sold his shares in the acquired brokerage and accepted employment with MMC, ultimately becoming Managing Director and Head of the Midwest Region of MMC. Mr. Meathe executed a 1997 stock sales agreement containing noncompete agreements (“NCAs”) and a 2002 employment-related NCA. In February of 2003, Mr. Meathe left MMC, relocated to Georgia, and joined Palmer & Cay in direct competition with MMC in both Georgia and his former Midwest territory.

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