Edwards v. Arthur Andersen LLP

Case Updates

The California Supreme Court affirmed the appellate court's holding that the noncompetition agreement was invalid, but ruled that the “termination of non-compete” agreement was not invalid.

NCLC urged the California Supreme Court to grant review of an appeals court decision relating to the permissible scope of non-competition agreements and the required terms of employer releases. Arthur Andersen sold its practice and, as a condition of employment with the purchaser, required all employees to execute a broad release of all claims against Andersen. Andersen terminated the employees’ non-compete agreements, which they signed upon hire. The plaintiff refused to sign the general release and sued Andersen. The court of appeals held that Andersen’s general release and non-compete were invalid. In its brief, NCLC argued the court of appeals ruling added uncertainty and confusion to California’s already complex labor and employment laws and will result in increased costs and litigation as businesses fight to defend the very general release language they’ve used to protect themselves from liability in corporate transactions.