Changes in Montreal

The weather is really fantastic today. I've had a great time thus far meeting friends and family in Montreal. The weather has been nothing short of fantastic. It is really an amazing time in Canada.

First, Montreal is really a beautiful and fun city. The downtown core is quite green and rural compared with Tokyo, a NY style metropolis. On the street where I am staying there are numerous green trees lining the street. Nearby is the famous Mount Royal Park, designed by the same man who brought us Central Park in NYC.

This area has undergone a tremendous revivial. I recall when I was young the area was dilapidated. The mall "La Cite" was run down, and home to a mere handful of merchants. There were vacant lots all down St. Famille St. The lots at the bottom of Mt. Royal were unused.

On St. Laurent small retailers predominated, but there was an increase in Clubs, and drinking establishments. I think right now there has been a trend the other way. Some of the bars have closed. However, what has taken their place is not so much the shops that used to exist, but rather cafe's and specialty food stores. There has been an increase in the number of hairdressers, and soap retailers.

This is most definetely the trendy place for McGill students to live, which is esentially nothing new, there are also the urban professionals.

The mood here in Canada is definetely much brighter than I had anticipated.

It was so much fun to see my neices and nephews yesterday. Sabina is now a curious and talkative six year old, who is really preptually a curious active and friendly child. I am really impressed with her level of confidence and creativity. For example, I urged her to go ask the neighbor if she could use their pool. She didn't hesitate, she simply went downstairs and asked them. That level of confidence and daring with serve her well in the future.

Do you prefer to interact with really small children, or children that can speak? For me at least I prefer children that are at least able to talk. I find babies to by somewhat boring. I mean I know that they are curious about the world, and making different faces, and learning, but they cannot speak. It is the ability to communicate in language that I think makes children especially interesting. When a child can speak you have a combination of the child's unformed mind, capable of all kinds of reasoning, with the language of adults. The child can take the language that we have, and use it in creative ways. They can express thoughts that are suprisingly mature, or immature.

Children are lots of fun to hang out with. I think when I was teaching ESL in Korea I developed an appreciation for how interesting they are. They are especially non-judgmental, playful. Sometimes I feel sorry for adults. I think we are missing that creativity that children have, and we would be much better off if we embraced our inner child. That sounds so new age. But, I think that the New Age people were onto something in that respect.

I always remember reading about a famous physicist who said that he prefered children to work with than physics graduate students. I'm not sure exactly the reason he said this. It dosen't seem like children would be capable of understanding physics at all, and they would likely become bored with complex mathematical equations. I think he was simply expressing frustration with the fixed notions that adults often have when they approach complex problems. Advanced science especially seems to require the ability to jettison outmodded ideas in favor of one that is more effective. You can't do that if you reflexively cling to an idea.

I always try to remind myself that notions should be provisional, but it is precisely because it is so inherent to human development that you cling to your personal idea regardless of reality showing you that idea is false.

So really you get back to a kind of Zen bhudist teaching, or something from empricism, or existentialism. Just let yourself experience reality, and learn from the information that you are receiving from the world.

You can't help but learn a great deal from simply listening to things, or seeing them, touching, ect...

Failing to see something, or disregarding what you see in front of you in favor of some idea that is in your mind is kind of like wearing some kind of glasses that are rose tinted. Everything that you see will have a rose color, and you don't even realize that you are wearing rose colored glasses. If someone asks you to take off those glasses you think that they are asking something impossible.

Once you realize that you are wearing glasses and you can change them you start to become more free to see things in a different light. You can then gain a deeper understanding of phenomena. I won't say more accurate since that implies that your new understanding is somehow more real, but that is simply not the case.

Back in Montreal

I just arrived back in Montreal after having spent close to 1 year abroad. I was in Tokyo, Japan for most of the time and also Vietnam for about 1 month. It feels really great.
I just spent the morning going with my mom to the flea market at a local church, and also walking on St. Laurent Street.

The church was filled with old German Lutherin's and lots of antique clothes. I found a nice leather case for papers and resumes. I also tried on a really sweet blazer.



They had a street sale all weekend long. If it isn't just me it sure seems like there are less people there than usual. Although to be fair usually at the end of August there are way less people than during the middle of the summer.

I read an interesting article in the NYT about language and the way it structures reality.

http://www.nytimes.com/2010/08/29/magazine/29language-t.html?src=me&ref=general

The weather is really perfect here, it's both breezy and sunny. A welcome change from Tokyo where it was constantly humid.


I had a really great talk about career options and opportunities with my mom.

Kyoto

I made my way to Kyoto this morning. I rented a bicycle and broke the fender. Tried to put it back in place and it ended up sticking out and part of it cracked off which I threw away. I then I went into the temple. When I came out it was straightened out, and when I took the bike back to the rental place they were cool about it.

I'm at the hostel now and its lots of fun. People from Europe and also the US.

Going to OsAka

Really excited. I'm on my way to Osaka. I have my sweet Cam, and so I expect to get a lot of great photos. I'm especially interested to see the bar and shopping area and get a better feel for the local people. Ive heard that they are different from people in Tokyo. Most Japanese local firms have their headquarters there. Tokyo is the big international city.

Getting to. Another part of Japan is really amazing. I'd love to see Okinawa and Hokaido if at all possible, but we shall see.

I'm super curious to see what it is like there.

I Will try to get some Z's. Just chill. Incidentally this is an ovrrnighf bus.

My draft of paper, Non-competes Canada/USA

1. Introduction: is allowing non-competes is good for employees, employers, and society?
Most employees in the US are indefinite term employees whose status of employment is at-will, and most states allow non-competes. The presumption is that employers and employees can freely negotiate contractual terms. However, employees are usually not on an equal footing with their employer, and are powerless to reject the insertion of a non-competition clause into the employment contract. High-level employees have more bargaining power, but even they find it extremely difficult to reject non-competition clauses. Since employee/owners who sell their business bargain equally with their employer it is unsurprising that they are almost always likely to be held accountable for violating a non-compete agreement. In Canada, indefinite term employees can only be fired for cause, and there are mandatory notice periods or pay in lieu thereof. Upon wrongful termination the notice period increases significantly. The amount of notice varies with the length of employment, difficulty in finding new employment, and the status of the employee. With these increased protections it is possible to justify the non-competes as a quid pro quo for the protections given to employees. In a similar manner the prohibition on non-competes in California can be taken as fair given the at-will status of employees. It doesn’t seem at all fair that employees should live both with their at-will status, and with post-employment restraints on competition.
Do employers need non-competes? Given the amount of money that it typically takes to train an employee, and the high value of certain proprietary information it certainly seems that non-competes are required to protect the interests of the employer. Some have suggested that a non-disclosure agreement is sufficient to protect the interests of employers, however, such an agreement would be too difficult to monitor. A non-compete is perhaps the best way an employer can protect his business from unfair competition. It could be argued that if non-competition clauses were not enforced than it is possible that employers would refuse to train employees adequately for fear of aiding or creating a competitor .
Are non-competition agreements good for the economy? It has been argued that one of the reasons Silicon Valley is so successful is because highly sophisticated employees can easily quit their job at any time and start a new company competing against their former employer. A recent Harvard business school study attempted to isolate the effect non-competition agreements have on the mobility of highly skilled employees. They focused on skilled Michigan inventors, and further isolated those who obtained a majority their patents from a single area of expertise rather than those who had filed patents in many different areas. As they note, “this work exploited an inadvertent change in Michigan non-compete law in 1985 as a natural experiment, comparing the change in mobility of Michigan inventors to the change in mobility of similar inventors in other states that did not change their enforcement. We found a relative decrease in Michigan mobility of 33.9% once non-competes began to be enforced, with an additional 14.2% effect for highly- cited inventors and a 17.3% attenuation of mobility for specialist inventors.” . They finally ask whether, do “the interests of incumbent firms outweigh those of individual careers and possibly regional development”? Often employees who must by the terms of a non-compete choose to take a sabbatical or temporary absence from work, as with Kai-Fu Lee who quit Microsoft to go work for Google . Business leaders remain committed to retaining non-competes. Seeking to emulate California, a Massachusetts legislator proposed legislation that would bar non-compete agreements entirely within that state, in order to (a) prevent organizations from taking advantage of average, mid-level laborers who have no bargaining power and are subject to inherently unfair restraints; and (b) keep talented engineers in Massachusetts. Unfortunately as of July 21, 2010 it was reported that this legislation has been abandoned and has no chance of coming into law . It will be very difficult to ban non-competes faced with opposition from incumbent employers.

2. The fiduciary relationship and employees
In both countries existing employees have a duty of loyalty to their employers during the period of the employment contract. Using New York state, and Canadian cases I will compare the fiduciary duties required of employees. First, the Restatement Of Agency section 8.01, states that every employee has a duty of loyalty. The duty is breached with the disclosure of confidential information either during or after termination, or if they compete with the employer during the period of employment. However, under section 8.05 the former employee may compete with, or work for a competitor of, the former employer, including soliciting customers or recruiting employees, unless the former employees is bound by an agreement not to compete that is enforceable. In addition to a reasonable scope, geography, and time. The employer must not have a) discharged the employee for an inequitable reason b) acted in bad faith in invoking the covenant c) the employer materially breached the underlying employment agreement; or d) in the geographic region covered by the restriction a great public need for the special skills and services of the former employee outweighs any legitimate interest of the employer in enforcing the covenant . The crucial issue in many cases is whether in the employee in preparing to leave the employment and take a new opportunity breached her duty of loyalty. In the 3rd district case Scanwell Frieght Express STL, Inc. v. Chan, the manager had prepared for her departure by neglecting to inform her current employer of a lease that was set to expire, and instead allow her subsequent employer to take over the operation. Her disloyalty hinged on the fact that she deceived her employer about the expiring lease. Had she done her job properly she would have been insulated from liability. As the court stated, “an employee must not, while employed, act contrary to the employer’s interests .” In the third district case of Mendelsohn v. Ferber a lawyer a sued her former employer for retainer fees and was countersued for breach of fiduciary duty. The court held that the Plaintiff's status as an at-will employee did not give rise to any fiduciary relationship with her former employer with respect to money collected on retainer agreements entered into while she was an associate at the law firm. NY law is clear that employees must not take opportunities from their employer while employed. In N.K. Intern., Inc. v. Dae Hyun Kim found the employee violated his duty of loyalty by stealing customers while employed . If there is no employment relationship it is unlikely that the courts will find a fiduciary relationship. In Bartfield v. RMTS Assoc. LLC, the court was rejected the argument of the plaintiff employer, a computer consulting firm, that wanted to argue there was a fiduciary relationship between it and an independent agent. Independent agency is determined by contractual allocations and therefore nothing in the contract made the agent a fiduciary.
Employees are allowed to discuss starting their own competing business, so long as they do not take any steps contrary to their duty of loyalty. For example, the court in Bartfield found that the employee did not use the work time to prepare his new business and therefore did not violate his duty of loyalty . The crucial factor regarding an employee’s duty of loyalty under US law is that it is almost exclusively restricted to current employees. Again in the 2009 case of IBM v. Johnson the court found that the employees did not make “use of defendant's time or facilities, disseminated its confidential information or otherwise usurped its business opportunities for a new, competing company” . Even a high level employee has no obligations once he has left to join another business. The company tried to get him to sign a non-competition agreement but he declined to . By contrast Canadian law has massively expanded the notion of fiduciary duties. First, by creating an entirely new class of people who are by definition in fiduciary relationships with their clients. It is important to keep in mind that all employees in Canada owe a duty of loyalty and faithful service, but some employees are also fiduciaries, and attract the highest level of fidelity .
The leading case on the duties of a fiduciary under Canadian law is Can. Aero v. O'Malley. The Court states that a fiduciary relationship “betokens loyalty, good faith and avoidance of a conflict of duty and self-interest. A director or a senior officer like O or Z is precluded from obtaining for himself, either secretly or without the approval of the company, any property or business advantage either belonging to the company or for which it has been negotiating; and especially is this so where the director or officer is a participant in the negotiations on behalf of the company. A strict ethic in this area of the law disqualifies a director or senior officer from usurping for himself or diverting to another person or company with whom or with which he is associated a maturing business opportunity which his company is actively pursuing; he is also precluded from so acting even after his resignation where the resignation may fairly be said to have been prompted or influenced by a wish to acquire for himself the opportunity sought by the company, or where it was his position with the company rather than a fresh initiative that led him to the opportunity which he later acquired . As the Ontario Court noted in Tops, "the varying degrees of trust, confidence and reliance given to the employee and the corresponding vulnerability or dependency of the employer to competition when the person leaves, are the most pertinent factors in determining whether a fiduciary duty exists . This definition expands the role of the fiduciary beyond the traditional roles to include any key employee. The Court goes on to note that regular employees departing along with a fiduciary attract the same level of responsibility to the employer. Departing employees are generally precluded from competing with the employer for a reasonable period of time. As the Ontario trial court stated in IT/Net Inc. v. Doucette “If not a fiduciary, the law prevents a departing employee from using trade secrets, customer lists, and other confidential information acquired during employment, but otherwise they are free to compete. A fiduciary employee owes a duty of utmost good faith that generally prevents the solicitation of business from their former employer's clientele” . Therefore, in Canada there are serious post-employment restrictions on employees designated as fiduciaries or those departing along with them. The latest SCC of RBC Dominion Securities Inc. v. Merrill Lynch Inc seems to expand the class of fiduciaries further. The defendant was an RBC branch manager in the small town of Cranbrook, B.C. He quit suddenly and without notice and helped coordinate the departure of virtually all the employees at his branch. They all went to work at the branch of its chief competitor in the town Merrill Lynch. RBC then sued D and its other employees who left, claiming compensatory, punitive, and exemplary damages. It also sued Merrill Lynch and its manager. He did not have a non-competition agreement with his employer, and was held by the trial judge not to be a fiduciary. Nevertheless both the SCC and the trial court found that he breached his duty of loyalty by copying confidential information, and convincing other employees to depart along with him. RBC is biggest corporation in Canada and should be sophisticated enough to include a non-competition clause. As Justice Abella noted in dissent, “there was no restrictive, non competition clause in D’s employment contract, and he was found by the trial judge not to be a fiduciary employee. Yet the trial judge nonetheless imposed a fiduciary like, elevated duty of good faith. This has the effect of creating a new legal category of “quasi fiduciary” employee, causing inevitable uncertainty for employees who, until now, had the legal right to change employment without fear of financial liability”. The trial court and majority came to their decision based on their finding that he was disloyal to his employer.

3. The Threshold Question: what property interests are protected:
Under US law legitimate interests include (a) confidential information (b) customer relationships (c) investment in the employee’s reputation (d) investment in the purchase of the employers business . However, a protectable interest does not include information that can be easily obtained. “It has generally been held that information which is already known, or which may be easily acquired, outside of the particular business concerned, may not constitute a trade secret or confidential information entitled to protection by the court . As the Second District Court notes in Rem Metals Corporation v. Logan “general knowledge, skill, or facility acquired through training or while experience while working for an employer appertain exclusively to the employee” . In Rem, the non-competition covenant appeared to be valid, however it failed the threshold test because there was no protectable interest. Clauses (b) and (c) seem to be extremely broad and include any good will the employee has with the public. For example, in Elizabeth Grady Face First, Inc. v. Escavich, Escavich employed as an aesthetician copied the customer lists of her former employer prior to her departure. She had signed a non-competition agreement prohibiting her from working within a twenty-five mile radius of her former employer for one year. She then actively solicited those clients while working for a competitor. The second district court found that she was appropriating her former employers goodwill and was in breach of the non-competition agreement.
Canadian courts have a more narrow definition of protectable interest. Protectable interests include (1) confidential information; (2) customers lists, and (3) trade secrets, both during and after employment has ended. What is confidential information will depend on the nature of the material, degree of confidentiality, whether the disclosure will harm the firm (competitive advantage), whether it made efforts to keep info secret, if it is customary in the industry to keep info secret, if the material is hidden from rest of industry, if the information novel or specific. A customer list is broadly defined. In the 1983 SCC decision of R v. Stewart, Justice Cory defines a customer list to include, computer programs, lists of suppliers, customers, instructions of manufacturing process, list of employees, info on employees . However, the employer ought to make known to the employee what information is confidential. Nevertheless, such warnings are not definitive and the court may still find a protectable interest in their absence . A duty of fidelity requires that employee not memorize or take list of customers in order to business with them after the employment has ended. As noted earlier in RBC you also have a situation where an employee is accused of taking customers from his former employer. The SCC affirmed the trial court decision that the employee breached his duty of loyalty by copying confidential information, failing to provide notice, and convincing other employees to depart along with him. However, it was not on the basis of a non-competition clause since the parties never entered into one.

4.Test to determine whether a non-competition clause is enforceable.
While California, Montana, and North Dakota have by law made non-compete covenants illegal, most states leave it up to the courts to decide on a case-by-case basis. In Rem Metals Corporation v. Logan, the Oregon Supreme Court noted the following test, “(1) it must be partial or restricted in its operation in respect either to time or place; (2) it must be on some good consideration; and (3) it must be reasonable, that is, it should afford only a fair protection to the interests of the party in whose favor it is made, and must not be so large in its operation as to interfere with the interests of the public” (4) to be entitled to the protection which a noncompetition covenant purports to provide, the employer must show that he has a legitimate interest entitled to protection. In Canada neither the federal or provincial governments have any legislation addressing non-competition agreements. Canadian courts have adopted similar criteria. First, “the reasonableness of a covenant in restraint of trade is determined by reference to the interests of the parties concerned and the interests of the public, so that the covenant affords adequate protection to the employer while at the same time not being injurious to the public.” Second, “generally speaking, the courts will not enforce a non-competition clause if a non-solicitation clause would adequately protect the employer's interest”. Third, “In general terms, a restrictive covenant which is too broad with respect to its geographic scope, duration in time, or proscribed activities will not be enforceable” Fourth, “A restrictive covenant which precludes an employee from earning a living following the termination of the employment contract is not enforceable.”
Comparing the US and Canada we can note the following similarities and differences. Both require that the covenant not prove damaging to the public, and that the employer have a legitimate interest worth protecting. Courts in both jurisdictions require that an employer give something in consideration for any change to an employment contract that introduces a non-competition covenant. Both jurisdictions have recognized that changes in the nature of certain jobs means that the geographic scope may sometimes extend to a national or global scale. In the case of Kai-Fu Lee the geographic restriction on his employment was global. The relationship between these various factors is elastic, and therefore a narrower scope may be broader geographically and temporally.
5. Public Policy
Canadian courts look at the public interest before deciding to enforce a restrictive covenant. One of leading Canadian case on public interest is OCA decision of Tank Lining Corp. v. Dunlop Industries Ltd. In this case public interest is divided into two elements. First, is the contract “so restrictive of the promisor's liberty to trade with others that it must be treated as prima facie void… the second question is whether the restrictive clause can be justified as being reasonable.” As the court notes, “the dual test in the doctrine recognizes that the assertion of a private right can create a public wrong.” Even if a private contract is prima facie valid it can still be held to violate public policy to allow it to go into effect. In Baker v. Lintott and Sherk v. Horwitz where medical doctors were prevented from practicing due to non-competition agreements, the judge held that public interest is restricted to situations where the public is injured by the agreement. However, other courts have held that non-competition agreements affecting medical professionals are not automatically void. In Simoni v. Sugarman a pediatrist was subject to a non-competition agreement, and the Newfoundland Supreme Court held that even if the agreement is reasonable between the parties the court might still refuse to enforce it if it is contrary to public policy. The court in Simoni holds that the burden of establishing an agreement is contrary to the public interest falls on the party challenging the non-competition agreement, which is most likely the employee. This may prove difficult and costly since it is not always clear if the public will be adversely affected by a non-competition agreement.
The public interest analysis in US courts is essentially similar. In Hopper v. All Pet Animal Clinic Inc, the second division court was asked to rule on a non-competition clause forbidding a veterinarian from competing against her former employer. The Court held that the services she provided to the public were neither unique nor uncommon. The court also held that it was unlikely that the public would be injured by preventing her from working during the period of the non-compete, and therefore the covenant was not contrary to public policy. US law recognizes that the reasonableness as between the parties and the reasonableness as to the public are separate issues . As in Canada the party asserting that the covenant is contrary to public policy has the burden of proof . American courts will take the following factors into account in any analysis of whether a contract violates public policy: “To strike down a contract on public policy grounds, a court must conclude that the preservation of the general public welfare outweighs the weighty societal interest in the freedom of contract”. Courts will also consider whether it is; “patently offensive to the public good; of clear and certain illegality; clearly and unmistakably repugnant to public interest; expressly contrary to public policy; injurious to the interests of the public; or in contravention of some established interest of society; or some public statute; or finally against good morals, or tends to interfere with public welfare . The court will also consider these additional factors: (1) the nature of the subject matter of the contract; (2) the strength of the public policy underlying any relevant statute; (3) the likelihood that refusal to enforce the bargain or term will further any such policy; (4) how serious or deserved would be the forfeiture suffered by the party attempting to enforce the bargain; and (5) the parties' relative bargaining power and freedom to contract. There is a clear preference to allow privately struck bargains to be enforced absent clear evidence of damage to the public . It will usually be highly specialized employees engaged in essential services who are protected from such clauses .
Courts in both countries will forbid employment restrictions where essential services are denied to the public. US courts give more deference to the principle of freedom of contract than Canadian courts do. In both jurisdictions, public interest is a relatively narrow reason to declare a non-competition agreement invalid, requiring that the employee show they perform an essential service, and enforcement of the agreement would damage the public.

6. Are courts willing to amend non-competition clauses?
In Hopper the non-competition covenant was original drafted to last of for 3 years. However, the court found that term to be excessive and reduced the duration to 1 year. Across the US there is a large divergence of opinion when it comes to the willingness of courts to amend. In Ferrofluidics Corp. v. Advanced Vacuum Components, the judge explains that when with restrictive covenants containing unenforceable provisions courts have taken three approaches: (1) “all or nothing” approach, which would void the restrictive covenant entirely if any part is unenforceable, (2) the “blue pencil” approach, which enables the court to enforce the reasonable terms provided the covenant remains grammatically coherent once its unreasonable provisions are excised, and (3) the “partial enforcement” approach, which reforms and enforces the restrictive covenant to the extent it is reasonable, unless the circumstances indicate bad faith or deliberate overreaching on the part of the employer. The following list was compiled by Kenneth J. Vanko sets out the approach each state takes to adjusting the terms of the non-competition clause . The courts that fall into the first group are: Arkansas, Georgia, Nebraska, Virginia, and Wisconsin. Courts that take the second approach include: Arizona, Indiana, North Carolina, and South Carolina. Most of the other states, including New York, fall into the third category. A fourth category requires courts to reform the covenant. The states that fall into that group include: Idaho, Florida, and Texas. In a number of states the case law is unresolved. Finally, California, Montana, and North Dakota disallow non-competes. It is readily apparent that, aside from the states that disallow non-competes, the first approach is most favorable to the employee. If the employer drafts an overly broad non-competition clause than the court will refuse to enforce it. By contrast the other approaches try to interpret the agreement so as to allow it to be enforced. The fourth category is best for the employer since it requires that the courts amend the non-competition agreements so that they can be enforced. The second approach was taken by the second district court in Hopper. The geographical limit and scope of employment were both reasonable with the only unreasonable term being the three-year duration of the non-compete. The vet was forbidden from opening a competing small pet operation within the town. The employee was still allowed to do other kinds of veterinary work. The court held that because both parties gained through the employment situation it would be unfair to allow the employee to compete against her former employer for at least 1 year. At the formation of the contract the employee bargained away a promise not to compete for a reasonable amount of time. One possible rational for the decision is that court thought the employee was acting in bad faith by agreeing to rent a property while still employed. The line between legitimate steps in preparation for departure and breach of fiduciary duty is a very narrow one. There seems to be some evidence the court believed Dr. Hopper was disloyal.
The Canada is much closer to the “all or nothing” states because Canadian courts will rarely resort to the second blue pencil rule. In 2009 KRG Insurance Brokers (Western) Inc. v. Shafron went to the SCC. An insurance agent MS sold his Vancouver agency and continued to be employed under a contract that included a non-competition clause applicable to "Metropolitan City of Vancouver". He left this employment in 2000 and in January 2001 began working as insurance agent for another agency in Richmond, a suburb of Vancouver. The trial judge dismissed the employer's action for breach of restrictive covenant, finding term "Metropolitan City of Vancouver" neither clear nor certain, and in any event, unreasonable. The Court of Appeal reversed the trial judge's decision, finding the restrictive covenant reasonable and enforceable, and applying doctrine of notional severance, construing term "Metropolitan City of Vancouver" as applying to "City of Vancouver, the University of British Columbia Endowment Lands, Richmond and Burnaby". MS appealed to the Supreme Court. The Court held that “Restrictive covenants generally are restraints of trade and contrary to public policy. Freedom to contract, however, requires an exception for reasonable restrictive covenants. Normally, the reasonableness of a covenant will be determined by its geographic and temporal scope as well as the extent of the activity sought to be prohibited. Reasonableness cannot be determined if a covenant is ambiguous in the sense that what is prohibited is not clear as to activity, time, or geography . The court further added that, “blue pencil severance, removing part of a contractual provision, may be resorted to sparingly and only in cases where the part being removed is clearly severable, trivial and not part of the main purport of the restrictive covenant” . The Court further notes that, “Rectification cannot be invoked to resolve the ambiguity in this case. Rectification is used to restore what the parties’ agreement actually was, were it not for the error in the written agreement”. When you compare the approach in KRG with facts in Hopper, the three year term could not have been blue penciled since it was not a clearly severable or trivial. However, it could have been rectified since at the time of the modification Dr. Hopper and All Pet did mutually agree that the term was three years. However, the SCC holds ”Employers should not be invited to draft overly broad restrictive covenants with the prospect that the court will sever the unreasonable parts or read down the covenant to what the courts consider reasonable. This would change the risks assumed by the parties and inappropriately increase the risk that an employee will be forced to abide by an unreasonable covenant.” If courts blue pencil or rectify unreasonable terms than employers will be encouraged to use them. Canadian courts have generally been reluctant to read down restrictive covenants. In the Manitoba Court of Queens Bench decision Williams Restaurant Supply Ltd. v. Leadle, the employee who sold bakery equipment, signed a non-competition agreement forbidding all competition with his employer . The time and geographical limits were reasonable, but the prohibition against all competition was unreasonable. Canadian courts will refuse to enforce a broad non-competition agreement if the employer could have drafted a narrower agreement, or replaced it with a non-solicitation clause. In the Ontario Court of Appeals case of Lyons v. Multari a dentist left her former employer to set up a rival practice 3.7 miles away. The court held that because non-solicitation would have sufficed to protect the employer the non-competition clause was invalid . This is a good example of how Canadian courts prefer non-solicitation clauses to address the employers concerns.

7. At-will Employment
All US employees are by default at-will. The default rule in Canada is a reasonable notice requirement for both employers and employees. If an employer wishes to terminate the employment relationship than the employee must be told at least one week, to a maximum of eight weeks by law prior to the termination . Depending on the length of service and the difficulty in finding new employment the notice period may increase. For example, if the employee is senior management and has a great deal of work experience notice could go as high as two years or more. For high-level employees the notice period is generally at least many months, if not a year or more. Similarly, employees must notify employers when they plan to quit. If the employee has worked less than two years the employer must be given at least one week, and at least two weeks if over two years. Generally a two week notice period is sufficient, however if it is difficult to find a replacement courts will require a longer notice period.
In the US both employer and employee can end the relationship at any point in time. The statement is that an employer can fire an employee for any reason, a bad reason, or no reason at all effective immediately. If the employee is fired some courts will refuse to enforce the non-competition agreement, some will, and finally others will determine which party exercised bad faith. Generally a fired employee is owed nothing. The principle of freedom of contract underpins the employment law regime, with the government interfering as minimally possible. This freedom to contract means employers and employees must bargain for terms and conditions. Especially in highly technical, professional, or managerial jobs there is the presumption that the parties start out on more or less equal terms. Unlike a common day laborer the skilled employee is valuable to the employer, to such an extent that the employer is motivated to draft a non-competition clause. In Rem Metals Corporation v. Logan one of the reasons the court refused to enforce the non-competition clause was because the employer would have suffered a loss even if employee just quit suddenly for any reason. It was also easy to train someone new to do roughly the same quality job. This can be contrasted with the notice requirement under Canadian law. In identical circumstances a Canadian court would find that an employee who quit suddenly and thus caused his employer a financial loss would be in violation of a duty to give notice, and that might in turn give the court justification for enforcing the non-competition clause. This was the case in the 2009 OSCJ case of GasTOPS Ltd. v. Forsyth, were senior personnel working at a software firm gave two weeks notice and than set up their own rival company. The court held that the employees ought to have given 10 months of notice prior to their departure .

8. Conclusion: Drafting suggestions for non-competition clauses in both jurisdictions.
Given the different approaches to non-competition agreements a number of suggestions can be made. First, in Canada, and states like Arkansas, Georgia, Nebraska, Virginia, and Wisconsin, as well as the blue pencil states, it is imperative to draft the non-competition agreement narrowly. Anything more than six months, outside a reasonable geographical area, and of overly broad scope will likely be struck down. Second, employers ought to include a separate non-solicitation clause in any agreement. Canadian courts are especially amiable to non-solicitation agreements. Third, it makes a tremendous amount of sense to include some kind of payment post-termination for key employees, so as to prevent them from competing themselves or joining a competitor. In the Ontario General division case of Woodward v. Stelco Inc., the plaintiff employee was a vice-president in charge of sales and marketing for defendant employer, a steel company. He signed a retirement benefits contract providing that when he retired, the employer would pay a special monthly benefit in consideration for agreeing not to work in competition with employer, without his employer's consent. The non-competition agreement was both unlimited in time, and covered all of North America, but was nevertheless enforceable. In the US employers are also taking this approach. In the 9th circuit case of Nike v. McCarthy the court found that the fact that Nike paid the employee during the non-competition period mitigated negative effects resulting from the agreement . The fact that an employer is willing to pay an employee to sit out also helps establish the threshold test of having a protectable interest. Fourth, following the SCC holding in RBC Dominion Securities it is crucial in Canada for all employees to provide a reasonable period of notice. Council for both the employer and employee must advise their client to provide a notice period commensurate with finding a new employer or employee. Even in the US there are cases were employees must give notice of their intent to terminate the employment relationship. In ZVUE Corp. v. Bauman you have a fact situation where the employer has purchased the business and the previous owners were now employees. The 2nd district court held that the non-competition agreement would be void only if the employees had notified the employer of their intent to resign ten days prior to their resignation, thus giving the employer time to remedy the breach. The court therefore enforced the non-competition clause despite the fact that the employer had fired the employees the day of their resignation . The requirement for notice in ZVUE corp., stemmed from the notice requirement written into the contract. It is highly unlikely that contracts outside of business purchases will contain such requirements. In general courts in the US don’t require notice when ending the employment relationship, either by the employee or employer. Nevertheless, for the employee giving notice may show that it is not in breach of the duty of loyalty. Similarly, for the employer notice prior to termination may persuade courts to enforce the non-compete agreement when they would otherwise have refused given the fact the employee was terminated.

A happy legal day in America

http://www.nytimes.com/2010/08/08/us/08kagan.html?hp

This is a really great choice to go into the Supreme Court. I like her for exactly the same reasons the Republicans dislike her. Although I wish someday they would appoint someone who didn't go to Harvard, Princeton, or Yale.

No if only one of the conservative guys would leave before Obama is out of office, the majority of the court could be liberal.