Example Of Matthew Baldwin Case Study Case Study

The elements of a valid non-compete agreements are: a.) should be supported by a valid consideration at the time of the signing of the agreement; b.) it should be able to protect a legitimate business interest of the employer; and c.) the scope, geography, and time must be reasonable
A non-compete agreement should be supported by valid consideration, wherein the employee is expected to receive a value thing in exchange for the undertaking that such employee will refrain from any competition. When an employee has signed a non-competition agreement before the start of his employment, the employment itself is tantamount to an adequate consideration for the undertaking not to compete. In the case of Matthew Baldwin, he signed a non-compete agreement prior to his employment. Thus, he is expected to abide by such agreement, which now becomes a part of the original employment contract.
A non-compete agreement serves as a protection for the legitimate business interest of IMG Agency. In the case of IMG, it was able to develop goodwill in terms of customer relations and it has become one of its assets. Thus, it can use a non-compete agreement to prevent it former employee, Baldwin to capitalize on that goodwill that has been established by IMG. At the same time, IMG can use a non-compete agreement to prevents its employees to disclose confidential information.
In the case of IMG, the information that was taken by Baldwin case can be considered as confidential information that is entitled to be protected. In fact, IMG has taken reasonable steps to keep the information secret to give it a competitive advantage, but Baldwin disclosed the information to IMG’s competitor, CAA Sports.
The key to determine if the non-compete agreement is reasonable is by going to the court to balance the need of IMG to protect its legitimate business interests that will depend based on duration and scope. The reasonableness of the duration of the agreement is on a case to case basis to protect confidential information. One of the considerations is the geographical area by considering the reasonableness of the circumstances. In the case of Baldwin, it will depend on the services it provides to its new employer, CAA in California, where non-compete contracts are not highly recognized.
The red and blue pencil states in non-compete agreements refer to that power of the court strike out a defective covenant not to compete. If the court has thrown out the entire covenant not to compete, it is known as the “red pencil” doctrine. On the other hand, if the court upholds a portion of the contractual provision by striking out the portion of the provision which renders it unenforceable, it is called the “blue pencil” doctrine. These approaches are important to help the employer and the employee to pursue their original intent that can modified up to the extent allowed by law.
The court did not favor the contentions raised by Matthew Baldwin because there was bad faith on his part. It was unethical on his part to leave his former employer IMG and took away some confidential documents which contained financial information and immediately transferred to CAA Sports, a known rival of IMG. There was bad faith on his part not to recognize the legal consequences of the non-compete agreement he signed with IMG.