Sears’ Lands’ End unit is sparring with Limited Brands’ Bath & Body Works over the hire of senior executive Nicholas P.M. Coe as Bath & Body Works’ new CEO last week. The dispute is shaping up to be a fairly contentious one, as Coe has filed a preemptive lawsuit challenging the enforceability of his non-competition agreement in Wisconsin, while Sears has now filed a lawsuit in Cook County, Illinois seeking to enforce that same agreement and claiming that Limited Brands and Bath & Body Works have intentionally interfered with that agreement.
According to Coe’s lawsuit in Iowa County, Wisconsin, Bath & Body Works is not a competitor of Sears or Lands’ End because (1) neither of his former employers sells personal care products, and (2) Bath & Body Works does not sell apparel, appliances, electronics or automotive services, unlike Sears and Lands’ End. In contrast, Sears claims in its lawsuit that Limited Brands is a direct competitor and that Limited Brands is one of the companies specifically listed in Coe’s non-compete agreement as a company for whom Coe is prohibited from working.
The proverbial “race to the courthouse” is particularly common in trade secret cases, especially in high profile disputes over senior executives because the choice of forum and law may prove critical in the context of a temporary restraining order. In these cases, the party that can get the first ruling tends to prevail. For example, in the dispute between former executive David Donatelli and EMC two years ago, the parties each filed lawsuits within hours of the other in an effort to seize the more advantageous forum. EMC ultimately prevailed upon a Massachusetts court to limit Donatelli from performing any work for his new employer’s storage device unit, although he was allowed to continue working for his new employer, HP. By the time Donatelli was able to get his case considered by the California court, however, it was too late; as that court elected to defer to the ruling by the Massachusetts court under principles of comity.
It will be interesting to see who can get a court to rule first, as that may prove to be the decisive ruling in both cases.