Important Virginia Supreme Court Employment Law Decision
Thursday, October 3, 2013

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On September 12, the Virginia Supreme Court decided Assurance Data, Inc. v John Malyevac:  http://www.courts.state.va.us/opinions/opnscvwp/1121989.

Boiled down to the basic facts alleged in the decision, Mr. Malyevac sold ADI products and services to ADI customers. He had signed an agreement that contained non-compete and non-solicitation provisions, thus limiting his post-employment options. He was sued for allegedly violating the agreement. Mr. Malyevac asserted that the agreement was overbroad and therefore unenforceable.

The trial court agreed and granted the defendant’s demurrer. A demurrer is a pleading in which a civil defendant states that a Complaint fails to state a cause of action or fails to state facts warranting the relief being demanded. It commonly is filed before discovery begins and therefore can really short-circuit litigation if a court sustains a demurrer.

Here’s why this case is important. Based on this ruling, if a plaintiff-employer asserts that it intends to present evidence showing that the restrictions contained in an employment agreement are no greater than necessary to protect the employer’s legitimate business interests, a court cannot grant a defendant’s demurrer. Instead, a defendant’s challenge can only take place after the discovery process is underway so that the court can consider evidence. Therefore, civil defendants in these types of cases need to anticipate increased litigation expenses associated and more prolonged litigation, even if they prevail. All things being equal, civil defendants now will have a greater incentive to settle the litigation with terms more favorable to their former employers in order to avoid these greater litigation costs.

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