Get off your bully pulpit and read.
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Summary of the Case
1) Fnet is a company headquartered in Westlake Village California. Defendant James L. Magruder ( “Magruder” ) was employed by Fnet as Chief Executive Officer from March 31, 1998 until the end of 1998 and as President and Chief Operating Officer from the beginning of 1999 until he resigned on April 7, 1999.
2. During February-March 1998, Magruder came to Westlake Village, applied for and accepted employment by FNet. He signed a written Employment Agreement ('Employment Agreement") and a written Employee Invention Assignment and Confidentialility Agreement ("Confidentiality Agreement” ) that had been prepared by an attorney designated by him. The Employment Agreement provided Magruder with valuable options to acquire stock in FNet and in its parent, Franklin telecommunications Corp. Thereafter, at Magruder's request, he was granted additional stock options; and he in fact exercised the options and sold the stock at a 500% gain.
3. During March 1999, Magruder told FNet he was experiencing physical problems, was drained by his work, was frustrated by what he perceived as a long haul before his stock options grew to represent considerable wealth, and that he wanted to resign. In April 1999, Magruder went on temporary leave to Maryland, allegedly due to back pain. On April 7, 1999, while on temporary leave and with a year remaining on his employment contract, he wrote to FNet and said he wanted to resign. His resignation was accepted by FNet.
4. On April 8, 1999, Magruder submitted to FNet a proposed separation agreement prepared by his attorney. The proposed agreement obligated FNet to pay Magruder's salary through April 15, 1999, to transfer to him 40,000 additional shares of stock without payment on his part, and to release him from all trade secret/non-competition obligations existing under the Confidentiality Agreement and common law. [Net accepted Magruder's financial terms but insisted upon retaining the trade secret/non-competition protections to which it was entitled under the Confidentiality Agreement and common law. Magruder refused this and threatened litigation if FNet did not release him. Unbeknownst to FNet, the real reason Magruder resigned and demanded to be released from the Confidentiality Agreement was so he could go to work for one of FNet's principal customers.
5. Within less than three weeks after Magruder went to work for FNet's customer, the customer instructed FNet to suspend performance in relation to existing contracts and withheld payments due FNet. The customer also declined to proceed with another pending agreement that was scheduled for execution. FNet further discovered that several of its prime independent contractors began working for that customer instead of for FNet. In addition, another prospective customer with whom Magruder was negotiating on behalf of FNet ceased discussions with FNet. FNet thereupon determined to file this action.
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You can't stand the heat, get out of the kitchen. |
