I don't understand why the golden parachute payout when combined with a non-compete doesn't take the form of continued "employment". Keep the guy on the payroll making $6million/year for 5 years.
The lump sum "thanks for all the fish" payout just seems like you are forcing yourself to sue, rather than just fire the guy.
In this case, it's because HP was dumping Hurd because of the controversy. You can't sever ties with someone but keep them on the payroll for 5 years. Even if it amounts to the same thing.
This piece is probably right, but in a purely sociopathic sort of way, Hurd did the rational thing: take the $23m for signing the confidentiality agreement, then worry about actually keeping that money later. A bird in the hand...
The saying is not "A bird in hand AND the two in the bush." If he was following that expression he would stay with his millions and ride it for a year or two.
He knew he could lose his "bird in hand" by joining Oracle. This just makes me wonder exactly what Oracle was offering him.
You don't get hired as a big wig in 1 month. That process takes quite a while, so the one month was probably just the ending part, the culmination of many months or even a year of recruitment effort.
That he took the $23m anyway just means that he would rather have a chance at keeping it than no chance of keeping it, which is rational.
Plus, that amount of money makes enough interest to pay for its own legal defense, so he really had no down side to accepting it with every intention of breaking the agreement then getting sued for doing so.
If he loses, he breaks even, if he wins he gets $23m. Makes sense.
No, I agree that it's rational. Just that the saying doesn't fit. ;-)
Also, in this case, there wasn't a long recruitment duration. He was kicked out by the board somewhat abruptly due to a scandal and Larry Ellison went on record saying he thought it was a stupid move. Within weeks he was hired.
I think Larry respected the guy, didn't care about his scandal, saw an opportunity, and jumped on it.
And, if he loses, Oracle and Hurd will have damages to pay. By violating his confidentiality agreement and going to work to a direct competitor (Oracle acquired Sun after all) he will cause irreparable damage to HP's business.
It's unethical for Hurd to accept the job and unethical for Oracle to offer it. I am not surprised.
He could have easily balanced the two. If Oracle offered to beat the amount and pay legal fees, he could easily go to Oracle. I don't think he simply decided to break the agreement without considering things.
Here's what I don't get. If the agreement he violated only required him to protect HP's trade secrets and such, how can merely taking a job violate it? Even if it's likely that he would reveal these secrets at some point in the future, is that enough to constitute violating this agreement? Wouldn't they need proof that he has already released sensitive information to Oracle?
This. If he hasn't actually revealed any trade secrets yet, why are they suing them? Because he may reveal trade secrets? I understand HP's interest and need to protect themselves, but they are doing it preemptively. As of yet, he hasn't done anything wrong.
Because the day he starts working at Oracle he will start having to answer questions and make decisions that will be based on confidential information he learned at HP. The risk of that damaging HP's business is high enough that HP feels it's necessary to sue him.
I just find this highly unlikely... Managers at large multinational companies just are just a few levels deep into management tend to know jack about 'trade secrets' or what the actual secret sauce is much less have their hands on it via separation of duties policies. I don't see the real "threat" here.
The non-compete is not a non-disclosure agreement. The second he gives a command to someone at Oracle he is using his knowledge of HP's competitive position to inform his decision making process. It is impossible for him to perform his role at Oracle without competing with HP.
EDIT Although, upon closer inspection they are saying it isn't a non-compete agreement and are calling it a "confidentiality pact" whatever that is.
There's no such thing as a "non-compete" or an "NDA" per se; they're all just contracts with terms. It's for this reason that you need to have a lawyer you can send contracts to before signing them; you'd be surprised how often you find non-compete and IP assignment clauses in "NDA's".
I think the argument is more that Hurd is in a decision-making and strategy forming position. He is privy to all the inside information that HP has to date, and as such, he is in a unique position to make decisions that can do serious damage to HP. As an co-president of Oracle, he has a duty to make decisions that benefit Oracle, as ex-CEO of HP (and with a non-compete), he has an obligation to not make decisions based on information he attained during his tenure that would harm HP. This is a decisive and likely unresolvable conflict of interest.
What is most interesting is the politics of it all. Oracle's CEO (Ellison) is a friend of both Mark Hurd and Steve Jobs. What if this farce is designed to undermine HP's foray into the tablet space with WebOS, which may compete with Apple? There is probably a lot of scheming beneath the surface.
I'd have to see the text of Hurd's agreement to be sure, but if it is a confidentiality agreement, it might not prevent him from making decisions based on the inside information he had. My assumption when I see "confidentiality agreement" is that he is only forbidden from disclosing the information to someone else. He could, theoretically, do his job at Oracle without telling anyone anything about HP's plans.
You also mention the non-compete provision, but the article seems to imply that his agreement with HP didn't include a non-compete provision.
If he makes decisions based on his confidential information and those decisions can be observed by a third party he is, in effect, revealing that information.
You're right. Non-compete agreements are not allowed in California. We definitely wont be able to know until we see what the confidentiality agreement was.
Given that there is no "non-compete" and only a confidentiality agreement, I don't agree that HP is 'right' to sue seeking to bar his employment elsewhere. If they felt this way, it should've been negotiated in the severance agreement.
Perhaps HP can do what IBM did with Mark Papermaster when he went to Apple - make him check in with the courts from time-to-time to swear that he's not divulging confidential information.
If they felt this way, it should've been negotiated in the severance agreement.
That's their problem; what HP actually wants is illegal in California. So they are trying to get the same thing in a different way. (And will likely fail, because hey, it's illegal.)
Basically devastating: Hurd accepted over $30MM in an exit process that involved him signing an agreement the spirit (and likely the letter) of which enjoined him from accepting the role he appears to have taken at Oracle.
What's interesting about this to me is that it's a case where you can see a downside to California's policy against noncompetes. It's hard to argue that $30+MM(!) is inadequate consideration for an executive noncompete. Most people, even those who (like me) detest noncompete agreements, can grudgingly accept the notion that it's fair and reasonable for two parties to agree to set one up with two lifetime's worth of compensation in exchange for avoidance of competition.
So far as I can tell, none of the exceptions to the "noncompetes are invalid in California" policy cover Hurd, who isn't a partner at HP and hasn't accepted the noncompete as part of the sale of a huge chunk of HP stock. HP is left with the much fuzzier trade secret enforcement path to express a much simpler "don't go fuck us" agreement.
Oracle = hardware, remember Sun? HP = consulting. Oracle = consulting. They overlap in lots of areas. HP stupidly fired Hurd and now he has gone to the company most likely to eat their lunch in a lot of areas.
Strictly speaking, HP seems to want to enforce their confidentiality agreement as a "generally unacceptable" (FTA) non-compete. The two are separate entities, and although Hurd is trying to have his cake and eat it too, HP is doing the same.
The article outlines an array of superficial "flaws" in the argument that Hurd should be expected to work at a high-profile tech company.. given any real thought, the article's hard backing of HP's corner is obvious.
>CEOs get paid handsomely for this very reason; they are set for life, at the very least. So, if they are restrained from not working for a direct competitor for two years after leaving the firm -- sitting on $33+ million dollars, in Hurd's case -- so be it.
Hurd isn't restrained from working for any individual or party -- the confidentiality agreement is, again, NOT a non-compete.
>Mark Hurd also has many options. He may choose to work in the technology sector with a company that do not pose this strong a conflict of interest with HP. HP most likely would not object to companies such as some smaller tech firm, private equity, or venture capital, just to name just a few of the many options available within technology.
Hurd has plenty of options, yes, but in the absence of a non-compete, who is HP, or the author, to dictate his options? Why wouldn't they object to Hurd working ANYWHERE that might utilize his same knowledge?
>Moreover, many exiled CEO`s work as business consultants, advisors, teach classes at MBA programs, work for many diverse business organizations, etc. during this natural transition period.
And again, more mindless spectation. Hurd could have done any of the above options, but he likely chose the most profitable and beneficial. Who wouldn't?
I think Hurd is being thrown over a fire because HP is enforcing a confidentiality agreement as a de facto non-compete, and everyone seems to be going along with it. Even the author of the article himself states that Hurd is violating the 'spirit and intent' of the confidentiality agreement. If that 'spirit and intent' is non-competition, then the agreement should have been such.
This is a whole lot of PR spin on HP's part, and the legalities aren't being looked at. If Hurd doesn't violate the confidentiality agreement by divulging 'trade secrets' or .. per the agreement.. "confidential" practices, then he should absolutely be permitted to utilize his former work experience in a new position. Isn't that what all of us do when transitioning to a new employer?
I understand the spirit of the author's point in this piece (and, in fact, sympathize with it) but it really does not track the relevant California law.
This case will turn on what is known as the "inevitable disclosure" doctrine, which has been explicitly rejected in California, going back to the Schlage Lock case in 2002 (see http://library.findlaw.com/2003/Mar/18/132641.html) and most recently in Flir Systems, where the court found that a trade secrets case had been brought in bad faith because it was based on inevitable disclosure. (A recent article on why this case law makes HP's Hurd case an uphill fight appears here: http://www.law.com/jsp/article.jsp?id=1202471748471).
Basically, California law prohibits non-competes in a post-employment context unless coupled with a transfer of a goodwill interest (e.g., when your business is acquired) and, when an employer complains that a former employee will "inevitably" disclose valuable trade secret information by reason of his position with a new firm, the courts have rightly interpreted this position as an after-the-fact attempt by the employer to get what amounts to non-compete-style protection where the law otherwise forbids this.
At the same time, HP is not without arguments because California's adoption of the Uniform Trade Secrets Act does authorize courts to enjoin "threatened" violations of an employer's trade secrets. This usually means the employer has to present detailed evidence that the former employee's role in the new company poses a clear threat that this would happen. Of course, without additional evidence, the mere fact that the employee's new position poses such risks really amounts to "inevitable disclosure" (which the courts reject) and this means that a complaining party is not likely to win such a case unless it really does have some other evidence strongly suggesting that trade secrets are likely to be compromised. That is why it is such an uphill fight for the employer.
Inevitable disclosure cases are often upheld elsewhere in the U.S. but even then it most often happens when the departing executive is shown to have done suspicious things along the way (see, e.g., this piece summarizing why a guy who was one of a handful of people in the world to know the ingredients and processes by which Thomas' English muffins achieve their "nook and cranny" feel could legitimately be enjoined from joining a direct competitor, and where the evidence showed that he hung around for months after secretly accepting the competing employment and, in effect, gathered information from his old employer in anticipation of the move: http://chicagobreakingbusiness.com/2010/07/english-muffin-se...).
In my view of it, major egos are involved on both sides of this Hurd mess and that is likely what is driving this lawsuit. It will therefore be brutally fought and, if there is an ounce of anything in the law to support an injunction, HP will scrape for and find it. Given the well-settled California law, however, this effort is likely to amount only to a wild swing that is unlikely to land. This may mean that Mr. Hurd will get a windfall while HP is left with nothing but a black eye, but that is what is most likely to happen.
Very insightful, as always. You write "employer" and "employee" a lot here. Do you think it changes anything that the employee was the head of a multi-billion dollar corporation?
Whenever you fight in court, you have to take account of two aspects of how a court might rule: (1) the technical legal and (2) the "motivational."
The former is what I summarized above but the latter is what motivates a court to want to go one way or the other, as long as it can find a legal "hook" to go that way. As to this, it does matter that Mr. Hurd is head of a multi-billion dollar corporation and that he got a huge severance as part of leaving his employment. Given those facts, judges will be more motivated than otherwise to find a reason why he should be restricted in some fashion as part of his two-year confidentiality agreement. Thus, if the HP lawyers can come up with even a modicum of evidence to show "threatened" compromises of trade secrets, the court might go their way simply out of a sense of justice inspired by the background factors that are not technically relevant to the letter of the law.
So, yes, that factor can be relevant in the way just described.
By the way, this is why contingent lawyers never go into court with an "unattractive" plaintiff (meaning a "creep" and not physically unattractive) - even if you are technically right on the law, no judge or jury wants to out of their way to reward that which they regard as repulsive. This is always crucial to remember in assessing any case.
Does it make a difference that Hurd got a $33 million payment as part of the exit deal that included the non-compete? I believe the policy reasons behind prohibiting non-compete agreements is that (1) they are usually essentially forced upon the employee due to the great difference in bargaining power between the company and the employee, and (2) an employee could have a hard time making a living if he is excluded from his normal field for a couple of years.
Neither of these reasons seem to apply here. Hurd didn't have to agree to the exit package they offered. He could have simply quit like an ordinary worker quits--walked out the door with his last paycheck. The $33 million he got makes it so he has no need to "make a living" for the next two years.
If this were in another state that enforces post-employment non-compete agreements, and Mr. Hurd had signed such an agreement, then the $33 million would make a huge difference.
The problem here, though, is that the $33 million was presumably paid in connection with a broad settlement by which the parties mutually would have release all legal claims against one another. There is no formal non-compete obligation here (as this would be unenforceable under California law). Of course, part of the settlement is that Mr. Hurd honor its confidentiality terms by which he cannot disclose or misuse HP's trade secrets. That commitment, however, is governed by the California law that protects the employer from threatened breaches of that obligation upon a proper showing of evidence but that does not enable a court to block the employee from taking a position with a competing company simply based on the notion that he would inevitably disclose such trade secret information by virtue of the position he holds with the competitor.
The California law applies whether or not the employee has the ability to ride out a non-compete period in terms of earning a living. It is codified in the state's statutes and judges cannot make an exception based on the fact that a particular employee got well-paid on his departure (especially since the payment was not in fact given in exchange for a non-compete but for other reasons).
In light of this situation, where it appears that HP agreed to pay Hurd a large amount of money for a "graceful" exit to the company, how does this impact your view of California's rule on noncompetes as a public policy matter? I think noncompetes are usually abusive, but it's disquieting to me that California's rules prevent people expressing reasonable agreements.
I don't have a serious problem with the California approach to non-competes because, as you note, these are often widely abused in a variety of contexts. It really burns me when I see low-level employees from companies, e.g., in Washington state, get hog-tied with oppressive clauses that truly impair their careers simply for having had the misfortune of working for a company that uses non-compete provisions as hyper-control tools. As against this, the California law is really a breath of fresh air, in general, and I truly believe this is one of the reasons why Silicon Valley has functioned as such a powerful engine over the years. I do tend to see this from the founder perspective, however, as this is the client base with which I have worked closely over the years.
That said, I think the California courts have gone too far in stripping employers of reasonable protections precisely in this area of "inevitable disclosure." To me, when I see someone as strategically placed as Mr. Hurd was in HP simply move over to a co-president role and board-level position, the prospects for misusing trade-secret information from his former employer are basically sky-high and, given the existing law, I see him cynically laughing at HP in spite of the serious risks his position poses to HP's trade secret information and in spite of the fantastic sum they paid to him for a graceful exit. In rejecting inevitable disclosure, the California courts have reasoned that this doctrine effectively converts a confidentiality obligation into a non-compete in circumstances where a departing employee is not even paid for the non-compete itself and therefore would violate the public policy against unreasonable restraints on trade. Based on this reasoning, the courts have categorically rejected the doctrine, i.e., declared it as invalid on its face, and have been unwilling to apply it to selective cases where the public policy concerns are not truly implicated (such as I believe this Hurd case is). This goes too far, in my view. One of the carve-out provisions for an enforceable non-compete under California law is precisely that of a case where the non-compete is needed to protect an employer's trade secret information. This is routinely applied in cases of those who are exposed to an employer's whole book of business, e.g., insurance brokers, and who could otherwise just copy the list and raid the client base via a targeted solicitation using confidential client information. It would not be a big stretch for the courts to say that the inevitable-disclosure rule could sometimes be applied in specific cases as a tool that is essential to protect trade secrets and hence within a permissible exception (or carve-out) to the ban on non-competes. If they were to do so, I would think it would be relatively easy to say that a case such as that of Mr. Hurd is one by which an effective non-compete provision is needed to protect the former employer's interests. As so interpreted, the inevitable-disclosure doctrine would fit within one of the established bases upon which a non-compete could be enforced and could be used to prevent abuses of the type that might be occurring here with Mr. Hurd. Nor would this violate the rationale advanced by the existing California cases (that such an interpretation would effectively enable an employer to impose a non-compete obligation on a former employer without paying for the privilege), since, as here, the employer sometimes pays in spades and should get the protection.
Thus, I don't have a problem with the general California law on this subject, nor with its public policy rationale, but I think the courts have misapplied that rationale to needlessly strip employers of protections for the type of case presented here. That same law, and that same rationale, could easily be applied to reach a more sensible outcome as long as the court decisions are not so doctrinaire about protecting former employees at all costs. A more sensible and balanced approach could easily be adopted without doing violence to the existi...
In Ontario, management have fewer protections under the law than rank-and-file employees. For example, it is illegal to fire a rank-and-file employee just for exploring other job options. If they look for a job on their own time and equipment, that's their business and they can't be fired for this alone.
Managers are entitled to no such protection. A manager is considered to be a more vital component of the company's value, and as such the act of seeking another job without negotiating this in advance with your current employer is considered a breach of your obligations to the company even if you do so on your own time.
There's some fuzziness involved. Is a team lead considered a manager or a senior developer with some project management responsibilities? Is an Architecture Astronaut with no reports but crucial IP responsibility entitled to job hunt without permission?
Getting back to this situation, my point is that there is a difference between the obligations of a CEO and the obligations of a rank-and-file employee. Laws erected to protect employees at the expense of the company shouldn't apply to CEOs. Obviously, California's laws are whatever they are for whatever reason. But even if Mark's actions are technically legal, I consider them wrong in every way shape and form.
In fact, debating the legality of his actions is ridiculous for me. I'm not a lawyer, nor do I consider it a worthwhile pursuit to argue what a law can be interpreted to mean with flagrant disregard for the moral ideal.
39 comments
[ 2.6 ms ] story [ 92.3 ms ] threadThe lump sum "thanks for all the fish" payout just seems like you are forcing yourself to sue, rather than just fire the guy.
He knew he could lose his "bird in hand" by joining Oracle. This just makes me wonder exactly what Oracle was offering him.
That he took the $23m anyway just means that he would rather have a chance at keeping it than no chance of keeping it, which is rational.
Plus, that amount of money makes enough interest to pay for its own legal defense, so he really had no down side to accepting it with every intention of breaking the agreement then getting sued for doing so.
If he loses, he breaks even, if he wins he gets $23m. Makes sense.
Also, in this case, there wasn't a long recruitment duration. He was kicked out by the board somewhat abruptly due to a scandal and Larry Ellison went on record saying he thought it was a stupid move. Within weeks he was hired.
I think Larry respected the guy, didn't care about his scandal, saw an opportunity, and jumped on it.
You do. Networking is everything.
And, if he loses, Oracle and Hurd will have damages to pay. By violating his confidentiality agreement and going to work to a direct competitor (Oracle acquired Sun after all) he will cause irreparable damage to HP's business.
It's unethical for Hurd to accept the job and unethical for Oracle to offer it. I am not surprised.
Mark, is that you?
EDIT Although, upon closer inspection they are saying it isn't a non-compete agreement and are calling it a "confidentiality pact" whatever that is.
What is most interesting is the politics of it all. Oracle's CEO (Ellison) is a friend of both Mark Hurd and Steve Jobs. What if this farce is designed to undermine HP's foray into the tablet space with WebOS, which may compete with Apple? There is probably a lot of scheming beneath the surface.
Any conspiracy theories? I love conspiracies.
You also mention the non-compete provision, but the article seems to imply that his agreement with HP didn't include a non-compete provision.
Perhaps HP can do what IBM did with Mark Papermaster when he went to Apple - make him check in with the courts from time-to-time to swear that he's not divulging confidential information.
That's their problem; what HP actually wants is illegal in California. So they are trying to get the same thing in a different way. (And will likely fail, because hey, it's illegal.)
What's interesting about this to me is that it's a case where you can see a downside to California's policy against noncompetes. It's hard to argue that $30+MM(!) is inadequate consideration for an executive noncompete. Most people, even those who (like me) detest noncompete agreements, can grudgingly accept the notion that it's fair and reasonable for two parties to agree to set one up with two lifetime's worth of compensation in exchange for avoidance of competition.
So far as I can tell, none of the exceptions to the "noncompetes are invalid in California" policy cover Hurd, who isn't a partner at HP and hasn't accepted the noncompete as part of the sale of a huge chunk of HP stock. HP is left with the much fuzzier trade secret enforcement path to express a much simpler "don't go fuck us" agreement.
The article outlines an array of superficial "flaws" in the argument that Hurd should be expected to work at a high-profile tech company.. given any real thought, the article's hard backing of HP's corner is obvious.
>CEOs get paid handsomely for this very reason; they are set for life, at the very least. So, if they are restrained from not working for a direct competitor for two years after leaving the firm -- sitting on $33+ million dollars, in Hurd's case -- so be it.
Hurd isn't restrained from working for any individual or party -- the confidentiality agreement is, again, NOT a non-compete.
>Mark Hurd also has many options. He may choose to work in the technology sector with a company that do not pose this strong a conflict of interest with HP. HP most likely would not object to companies such as some smaller tech firm, private equity, or venture capital, just to name just a few of the many options available within technology.
Hurd has plenty of options, yes, but in the absence of a non-compete, who is HP, or the author, to dictate his options? Why wouldn't they object to Hurd working ANYWHERE that might utilize his same knowledge?
>Moreover, many exiled CEO`s work as business consultants, advisors, teach classes at MBA programs, work for many diverse business organizations, etc. during this natural transition period.
And again, more mindless spectation. Hurd could have done any of the above options, but he likely chose the most profitable and beneficial. Who wouldn't?
I think Hurd is being thrown over a fire because HP is enforcing a confidentiality agreement as a de facto non-compete, and everyone seems to be going along with it. Even the author of the article himself states that Hurd is violating the 'spirit and intent' of the confidentiality agreement. If that 'spirit and intent' is non-competition, then the agreement should have been such.
This is a whole lot of PR spin on HP's part, and the legalities aren't being looked at. If Hurd doesn't violate the confidentiality agreement by divulging 'trade secrets' or .. per the agreement.. "confidential" practices, then he should absolutely be permitted to utilize his former work experience in a new position. Isn't that what all of us do when transitioning to a new employer?
This case will turn on what is known as the "inevitable disclosure" doctrine, which has been explicitly rejected in California, going back to the Schlage Lock case in 2002 (see http://library.findlaw.com/2003/Mar/18/132641.html) and most recently in Flir Systems, where the court found that a trade secrets case had been brought in bad faith because it was based on inevitable disclosure. (A recent article on why this case law makes HP's Hurd case an uphill fight appears here: http://www.law.com/jsp/article.jsp?id=1202471748471).
Basically, California law prohibits non-competes in a post-employment context unless coupled with a transfer of a goodwill interest (e.g., when your business is acquired) and, when an employer complains that a former employee will "inevitably" disclose valuable trade secret information by reason of his position with a new firm, the courts have rightly interpreted this position as an after-the-fact attempt by the employer to get what amounts to non-compete-style protection where the law otherwise forbids this.
At the same time, HP is not without arguments because California's adoption of the Uniform Trade Secrets Act does authorize courts to enjoin "threatened" violations of an employer's trade secrets. This usually means the employer has to present detailed evidence that the former employee's role in the new company poses a clear threat that this would happen. Of course, without additional evidence, the mere fact that the employee's new position poses such risks really amounts to "inevitable disclosure" (which the courts reject) and this means that a complaining party is not likely to win such a case unless it really does have some other evidence strongly suggesting that trade secrets are likely to be compromised. That is why it is such an uphill fight for the employer.
Inevitable disclosure cases are often upheld elsewhere in the U.S. but even then it most often happens when the departing executive is shown to have done suspicious things along the way (see, e.g., this piece summarizing why a guy who was one of a handful of people in the world to know the ingredients and processes by which Thomas' English muffins achieve their "nook and cranny" feel could legitimately be enjoined from joining a direct competitor, and where the evidence showed that he hung around for months after secretly accepting the competing employment and, in effect, gathered information from his old employer in anticipation of the move: http://chicagobreakingbusiness.com/2010/07/english-muffin-se...).
In my view of it, major egos are involved on both sides of this Hurd mess and that is likely what is driving this lawsuit. It will therefore be brutally fought and, if there is an ounce of anything in the law to support an injunction, HP will scrape for and find it. Given the well-settled California law, however, this effort is likely to amount only to a wild swing that is unlikely to land. This may mean that Mr. Hurd will get a windfall while HP is left with nothing but a black eye, but that is what is most likely to happen.
The former is what I summarized above but the latter is what motivates a court to want to go one way or the other, as long as it can find a legal "hook" to go that way. As to this, it does matter that Mr. Hurd is head of a multi-billion dollar corporation and that he got a huge severance as part of leaving his employment. Given those facts, judges will be more motivated than otherwise to find a reason why he should be restricted in some fashion as part of his two-year confidentiality agreement. Thus, if the HP lawyers can come up with even a modicum of evidence to show "threatened" compromises of trade secrets, the court might go their way simply out of a sense of justice inspired by the background factors that are not technically relevant to the letter of the law.
So, yes, that factor can be relevant in the way just described.
By the way, this is why contingent lawyers never go into court with an "unattractive" plaintiff (meaning a "creep" and not physically unattractive) - even if you are technically right on the law, no judge or jury wants to out of their way to reward that which they regard as repulsive. This is always crucial to remember in assessing any case.
Neither of these reasons seem to apply here. Hurd didn't have to agree to the exit package they offered. He could have simply quit like an ordinary worker quits--walked out the door with his last paycheck. The $33 million he got makes it so he has no need to "make a living" for the next two years.
The problem here, though, is that the $33 million was presumably paid in connection with a broad settlement by which the parties mutually would have release all legal claims against one another. There is no formal non-compete obligation here (as this would be unenforceable under California law). Of course, part of the settlement is that Mr. Hurd honor its confidentiality terms by which he cannot disclose or misuse HP's trade secrets. That commitment, however, is governed by the California law that protects the employer from threatened breaches of that obligation upon a proper showing of evidence but that does not enable a court to block the employee from taking a position with a competing company simply based on the notion that he would inevitably disclose such trade secret information by virtue of the position he holds with the competitor.
The California law applies whether or not the employee has the ability to ride out a non-compete period in terms of earning a living. It is codified in the state's statutes and judges cannot make an exception based on the fact that a particular employee got well-paid on his departure (especially since the payment was not in fact given in exchange for a non-compete but for other reasons).
That said, I think the California courts have gone too far in stripping employers of reasonable protections precisely in this area of "inevitable disclosure." To me, when I see someone as strategically placed as Mr. Hurd was in HP simply move over to a co-president role and board-level position, the prospects for misusing trade-secret information from his former employer are basically sky-high and, given the existing law, I see him cynically laughing at HP in spite of the serious risks his position poses to HP's trade secret information and in spite of the fantastic sum they paid to him for a graceful exit. In rejecting inevitable disclosure, the California courts have reasoned that this doctrine effectively converts a confidentiality obligation into a non-compete in circumstances where a departing employee is not even paid for the non-compete itself and therefore would violate the public policy against unreasonable restraints on trade. Based on this reasoning, the courts have categorically rejected the doctrine, i.e., declared it as invalid on its face, and have been unwilling to apply it to selective cases where the public policy concerns are not truly implicated (such as I believe this Hurd case is). This goes too far, in my view. One of the carve-out provisions for an enforceable non-compete under California law is precisely that of a case where the non-compete is needed to protect an employer's trade secret information. This is routinely applied in cases of those who are exposed to an employer's whole book of business, e.g., insurance brokers, and who could otherwise just copy the list and raid the client base via a targeted solicitation using confidential client information. It would not be a big stretch for the courts to say that the inevitable-disclosure rule could sometimes be applied in specific cases as a tool that is essential to protect trade secrets and hence within a permissible exception (or carve-out) to the ban on non-competes. If they were to do so, I would think it would be relatively easy to say that a case such as that of Mr. Hurd is one by which an effective non-compete provision is needed to protect the former employer's interests. As so interpreted, the inevitable-disclosure doctrine would fit within one of the established bases upon which a non-compete could be enforced and could be used to prevent abuses of the type that might be occurring here with Mr. Hurd. Nor would this violate the rationale advanced by the existing California cases (that such an interpretation would effectively enable an employer to impose a non-compete obligation on a former employer without paying for the privilege), since, as here, the employer sometimes pays in spades and should get the protection.
Thus, I don't have a problem with the general California law on this subject, nor with its public policy rationale, but I think the courts have misapplied that rationale to needlessly strip employers of protections for the type of case presented here. That same law, and that same rationale, could easily be applied to reach a more sensible outcome as long as the court decisions are not so doctrinaire about protecting former employees at all costs. A more sensible and balanced approach could easily be adopted without doing violence to the existi...
Managers are entitled to no such protection. A manager is considered to be a more vital component of the company's value, and as such the act of seeking another job without negotiating this in advance with your current employer is considered a breach of your obligations to the company even if you do so on your own time.
There's some fuzziness involved. Is a team lead considered a manager or a senior developer with some project management responsibilities? Is an Architecture Astronaut with no reports but crucial IP responsibility entitled to job hunt without permission?
Getting back to this situation, my point is that there is a difference between the obligations of a CEO and the obligations of a rank-and-file employee. Laws erected to protect employees at the expense of the company shouldn't apply to CEOs. Obviously, California's laws are whatever they are for whatever reason. But even if Mark's actions are technically legal, I consider them wrong in every way shape and form.
In fact, debating the legality of his actions is ridiculous for me. I'm not a lawyer, nor do I consider it a worthwhile pursuit to argue what a law can be interpreted to mean with flagrant disregard for the moral ideal.
Morally, I find this repugnant.