Referring Former Employer’s Customers To New Employer Held Violation Of Injunction, Resulting In Finding Of Criminal Contempt

A recent Louisiana non-compete case involving two appellate decisions addresses three significant issues in non-compete litigation: 1) whether a former employee’s referral of customers to a new employer violated the employee’s non-solicitation of customer covenant; 2) the consequences of violating the covenant and court injunction; and 3) the appropriate standard of proof for contempt proceedings.

Summary of decision. Five years into her employment with Acadian Cypress & Hardwoods as a sales representative, Acadian had Joy Stewart sign a non-solicitation agreement.  It provided that for two years after her employment terminated, Stewart would not solicit Acadian’s customers in more than 20 specified Louisiana parishes, eight identified counties in Mississippi, and two specific counties in Alabama.  Several years later, she resigned from Acadian and went to work as a sales representative for one of its competitor.   

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