Employer’s Lawsuits Against Former Employees

Employers frequently get involved in lawsuits with former employees. That was not the primary focus of my legal practice, but I did represent former employees in two interesting cases. One was brought by  Green Tree Acceptance, Inc. of St. Paul, Minnesota. The other, by Surgidev Corporation of Goleta, California, already has been discussed.[1]

John Wheeler was an employee of Green Tree from 1977 through October of 1984. At the time, Green Tree was the largest U.S. company in the business of mobile home financing. Wheeler towards the end of his career with the company was its executive vice president and a member of its board of directors. In 1983 he entered into a written employment agreement and noncompetition agreement with the company, but in October 1984 he and the company agreed to a termination of his employment and, he testified, a release from the noncompetition agreement. In May 1986 Wheeler became the president and CEO of another company based in San Diego, California that was involved in financing mobile homes.[2]

In September 1986 Green Tree sued Wheeler for breach of the noncompetition agreement in Minnesota’s federal court.[3] In October 1986 the court denied the plaintiff’s motion for a preliminary injunction barring Wheeler from working for his new employer. The next month (November 1986) the case went to trial before Judge James Rosenbaum and a jury. The jury’s special verdict found that the noncompetition agreement had terminated before Wheeler went to work for his new employer. Accordingly the district court denied Green Tree’s motion for a new trial or judgment notwithstanding the verdict and entered judgment in favor of Wheeler.[4]

Green Tree then appealed, and in October 1987 the appellate court reversed the judgment because of its conclusion that the district court erroneously had submitted to the jury the issue of whether the noncompetition agreement was still in effect. Accordingly the appellate court remanded the case to the district court for a new trial.[5] Soon thereafter the case settled.

This was one of those unfortunately rare cases in which the opposing lawyers were professionally civil with each other while simultaneously vigorously contested the case. I, therefore, commend Green Tree’s lawyers, Peter Hendrixson and David Lauth of the Dorsey & Whitney law firm and Rick Evans, Green Tree’s General Counsel.