Arbitrator’s Decision Enforcing Alleged Non-Compete Agreement Is Not Subject to Judicial Review
On October 21, 2015, the California Supreme Court ordered the publication of SingerLewak LLP v. Gantman underscoring the importance of utilizing arbitration agreements to enforce what a California court might consider to be an unenforceable covenant-not-to compete.
SingerLewak LLP’s partners signed agreements to arbitrate future disputes. The agreement also provided a clause providing for the calculation of damages owed to SingerLewak if a former partner provided services to SingerLewak’s clients after leaving the firm.
In the ensuing arbitration, Gantman, the former partner, claimed that the agreement was an illegal covenant-not-to-compete. The arbitrator disagreed and ruled against him.
The Court of Appeal overturned the Superior Court’s decision to vacate the arbitrator’s award and the trial court’s conclusion that the agreement violated California’s non-complete laws holding that the arbitrator was within his powers to make the decision and following Moncharsh v Heily & Blasé 3 Cal.4th 1 (1992)’s directive that an arbitrator’s decision should not be disturbed, even if the arbitrator erred.
Therefore, any employer that utilizes employment agreements that might be viewed as restricting post-employment competition should consider the benefits of requiring arbitration to interpret post-employment contract disputes as courts are more likely to uphold an arbitrator’s decisions, whether the arbitrator’s decisions are correct or not.