U.S. judge orders Apple executive to stop work

“A U.S. District Court judge in New York ordered a newly hired Apple Inc. executive to stop work immediately because he might be violating an agreement with his former employer, IBM,” David Lawsky reports for Reuters.

“Federal District Judge Kenneth Karas in White Plains ordered that Mark Papermaster ‘immediately cease his employment with Apple Inc until further order of this court,'” Lawsky reports.

“Apple announced on Tuesday that Papermaster would lead the engineering teams making Apple’s highly successful iPods and iPhones and that he would report directly to Chief Executive Steve Jobs. On Friday it said he would cease work for now,” Lawsky reports.

“‘We will comply with the court’s order but are confident that Mark Papermaster will be able to ultimately join Apple when the dust settles,’ a spokesman said,” Lawsky reports.

Full article here.

[Thanks to MacDailyNews Reader “Mark” for the heads up.]

38 Comments

  1. You are kidding, right MizuInOz? In this day and age I am not sure there aren’t people who would do what you suggest you do. But then any employee who signs such an agreement has to be pretty dense unless they are being compensated like hedge fund managers use to be.

  2. “If this was California, the court would tear up the agreement and impose their own terms.”

    While that’s certainly true at lower levels in an organization, it’s not true at higher levels.

    For an injunction to be issued the indication is that IBM’s position at least has some merit.

    “a deed is more enforceable”

    Says who? It sounds like just another form of contract. Have you ever sued to enforce it in US court?

    Now bear in mind agreements that you will keep secret and not re-use any information you learned from an old employer with respect to their business are almost always enforceable, even in California. That would be things like the secret recipe for coke, customer lists, company financial information, trade secrets and so on.

    But when it comes to re-using the skills you gained for another employer, usually US courts come down on the side of the employee being allowed to continue with their chosen profession.

    This is usually only overridden if the person received substantial compensation for agreeing not to compete as in the examples I’ve given above. For example a business owner selling a business will usually be held to an agreement not to compete with the buyer, a doctor selling a practice will usually be held to an agreement not to set up across the road and solicit his old patients. But a doctor won’t usually held to an agreement never to practice medicine again.

    Even in those cases, the agreement will be analyzed for the reasonableness of the time limitation, the geographical limitation, and the scope of competition.

    So given that this is a senior position, it could go either way. For example if Papermaster had agreed to a contract where the company would have to pay him for a time period regardless of if they terminated him, having a noncompete which covered that time period would probably be regarded as reasonable. If Papermaster recieved nothing more than his normal salary and bonuses and was an at will employee, he probably wins.

    Since we don’t have the agreements between Papermaster and IBM, it’s hard to say which way this one will go.

  3. Hmm, does this mean that certain persons are unemployable by default once they resign from their former employer? I thought that indentured servitude was forbidden even if both parties agree to its terms. If I’m not receiving a paycheck from IBM (or Apple), I’m not working for IBM (or Apple). If I’m not working for IBM (or Apple) they can stuff it.

  4. @MizuInOz:

    If I were applying for a job and the employer put a 135 page document for me to sign, I would tell you that, if you pay the fees for me to consult an attorney for interpretation and recommendation of said document, I will give due consideration to it. If not, I’ll look elsewhere for employment. Come to think of it, no I would not. I’d terminate the interview and leave.

    @Denny
    You can’t decimate what has already been destroyed.

  5. “I thought that indentured servitude was forbidden even if both parties agree to its terms”

    True, and no court in the land will force you to work for a company for exactly the constitutional reason mentioned by another poster.

    HOWEVER you can still be sued for breach of a contract and damages if you don’t keep your side of a bargain.

    A good example would be a concert performer not appearing for a show. They can’t be forced to perform due to the involuntary servitude problems but they can be sued for the losses the promoter incurs by them not showing up and doing something they freely agreed to do.

    But that’s not what this is about. This is about having left one company whether can he can work for another.

    “Hmm, does this mean that certain persons are unemployable by default once they resign from their former employer?”

    Not generally, no, while you generally can’t take proprietary information with you and use it, you are usually presumed to be able to reapply your skills for the benefit of a new employer. The reasoning is quite logical. People hire you for your skills and experience, Society is not benefited by forcing people to start a new career with every job change.

    But if you contract with your former employer to not compete with them, then yes it can be binding. Such agreements must always meet a test as to whether the restraint of trade is reasonable.

    California has very pro worker laws in this area to allow easy mobility among tech jobs. In many cases especially low level employees signing boilerplate agreements, California will just tear up the agreement. Most other states have stricter laws.

    In any case you should always be careful agreeing to any such restraint that you can live with the terms of the agreement that you’re making.

  6. I was born in White Plains Hospital, a long time ago LOL. It’s really becoming a nice town.

    It’s all plain and simple really. Papermaster has a document that restricts his employment. Apple is going to have to fight to have IBM release him from those obligations. Chances are, Apple will have to pay some sort of damages or settlement to make this all go away.

  7. Good, I’m glad. This shows Apple that they can’t do what they want all of the time. This is needed to show Apple that they can’t get what/who they want all the time.

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