Adam J. Eckstein
Phone: (901) 522-9000 Fax: (901) 527-3746
Bar Admissions

Non-Competition/Restrictive Covenant Enforcement

A national bank’s advisory service faced competition from two former employees in violation of their one-year restrictive covenants.  The national bank had invested more than $65 million in establishing the advisory service and cultivating its clients.  The former employees had joined a brokerage house to start a division that would compete with the national bank’s advisory service.  Eight months into the term of the former employee’s restrictive covenants, one client notified the national bank that it would be switching to the brokerage house for advisory services.  Within two weeks, on January 21, 2015, Shea Sisk Wellford and Adam J. Eckstein of Martin, Tate, Morrow & Marston, P.C. obtained a Temporary Restraining Order against the former employees.  Over the next four months, despite vigorous defense from the former employees and the brokerage house, Martin Tate compelled the production of more than 190,000 pages of documents and uncovered clear evidence that the former employees systematically breached their restrictive covenants.  Martin Tate presented evidence of the breaches over a three-day preliminary injunction hearing.  On July 7, 2015, the Chancery Court entered an Order extending the term of restrictive covenants for one year from the entry of the Temporary Restraining Order, until January 20, 2016.  The Court subsequently awarded the national bank attorneys’ fees in the amount of $198,000 against the two former employees.  Most importantly, during the term of the preliminary injunction, the national bank was able to solidify and retain the clients that the former employees had contacted, including the one client that the former employees had poached.      

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