07-16-09
Battle over Suit Salesman at Tysons Galleria
We have come to expect bidding wars over 20-game winners and clean up hitters in baseball, but the competition for high-level talent has extended into an unlikely field: suits. Yes, that suits as in men’s clothes. In a drama that sounds more like a made-for-tv reality show than a courtroom case, two high-end clothiers at Tyson’s Galleria Mall in McLean, Virginia engaged in a battle royal over a popular suit salesman who was generating nearly $1 million in annual revenue from suit sales.
A high-end, “made-to-measure” men’s clothing store at Tysons Galleria, James, Ltd., employed a popular suit salesman who earned nearly $1 million annually during the three years prior to his resignation. James offered competitive salary, commission and benefits not usually found in the retail clothing market in order to retain its proficient employees. Enter Saks Fifth Avenue, a large department store known for its high-end women’s clothing department. In order to increase profitability at its underperforming store at Tysons Galleria, Saks management decided to make a run at the men’s clothing market. Saks took aim directly at James’ most profitable suit salesman, determined to do “whatever it takes” to get the James employee. It succeeded, but James Ltd. would not go down without a fight.
James’ ammunition: the employee had agreed to a non-compete clause in his contract. According to the non-compete, the salesman could not become employed in the men’s clothing department of any store located within 1 mile of James for three years following his termination. Upon the salesman’s leaving James to work at a Saks in the same mall, James commenced litigation against both Saks and the employee. James prevailed on its claims against defendants for, in part, breaches of fiduciary duty and the non-compete. The court ordered the salesman to stop working for Saks. The court also entered judgment in the amount of $1,645,833.00 plus costs, attorney’s fees and expenses against Saks and the employee.
However, James’ victory was bittersweet. Although the order stopping the salesman from working at Saks survived, the Virginia Supreme Court reversed the damage award. The Virginia Supreme Court agreed with defendants’ argument that James had not established at trial any causal connection between its calculation of damages and defendants’ wrongful conduct. Rather, James’ calculation of damages was merely connected to the employee’s resignation, which, as an at-will employee, he was free to do at any time for any reason. As stated by the Supreme Court, “James’ [calculation of] damages were the same regardless of whether [the employee] left to work at the Saks store in the same shopping mall or simply retired.” Saks, 272 Va. at 312. Saks and the suit salesman prevailed in the end.
The takeaway from this case is that carefully and narrowly drafted non-compete agreements will be enforced in Virginia. But, litigants should pay special attention to any theory of damage recovery. Claims based on speculation will be stricken.
The case is Saks Fifth Avenue v. James, 272 Va. 177 (2006).
For more information, click on our non-competes section or contact Kelly Delaney.
A high-end, “made-to-measure” men’s clothing store at Tysons Galleria, James, Ltd., employed a popular suit salesman who earned nearly $1 million annually during the three years prior to his resignation. James offered competitive salary, commission and benefits not usually found in the retail clothing market in order to retain its proficient employees. Enter Saks Fifth Avenue, a large department store known for its high-end women’s clothing department. In order to increase profitability at its underperforming store at Tysons Galleria, Saks management decided to make a run at the men’s clothing market. Saks took aim directly at James’ most profitable suit salesman, determined to do “whatever it takes” to get the James employee. It succeeded, but James Ltd. would not go down without a fight.
James’ ammunition: the employee had agreed to a non-compete clause in his contract. According to the non-compete, the salesman could not become employed in the men’s clothing department of any store located within 1 mile of James for three years following his termination. Upon the salesman’s leaving James to work at a Saks in the same mall, James commenced litigation against both Saks and the employee. James prevailed on its claims against defendants for, in part, breaches of fiduciary duty and the non-compete. The court ordered the salesman to stop working for Saks. The court also entered judgment in the amount of $1,645,833.00 plus costs, attorney’s fees and expenses against Saks and the employee.
However, James’ victory was bittersweet. Although the order stopping the salesman from working at Saks survived, the Virginia Supreme Court reversed the damage award. The Virginia Supreme Court agreed with defendants’ argument that James had not established at trial any causal connection between its calculation of damages and defendants’ wrongful conduct. Rather, James’ calculation of damages was merely connected to the employee’s resignation, which, as an at-will employee, he was free to do at any time for any reason. As stated by the Supreme Court, “James’ [calculation of] damages were the same regardless of whether [the employee] left to work at the Saks store in the same shopping mall or simply retired.” Saks, 272 Va. at 312. Saks and the suit salesman prevailed in the end.
The takeaway from this case is that carefully and narrowly drafted non-compete agreements will be enforced in Virginia. But, litigants should pay special attention to any theory of damage recovery. Claims based on speculation will be stricken.
The case is Saks Fifth Avenue v. James, 272 Va. 177 (2006).
For more information, click on our non-competes section or contact Kelly Delaney.
