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Our Blog Case Study Part 1: Stonhard v. Carolina Flooring

Case Study Part 1: Stonhard v. Carolina Flooring

When I think of non-competes, the case that comes to mind is Stonhard v. Carolina Flooring. The litigation lasted 2.5 years, which included twists and turns, peaks and valleys. Both sides spent more than a little money, although the Plaintiff easily outspent Defendant by a factor of 4 to 1. I represented the Defendants, and I came to regret having agreed to a flat fee. First, read the decision; it is fairly short and limited too some specific points of law.

Peak: We won our argument before the South Carolina Supreme Court 5-0, and defeated the enforceability of a non-compete.

Valley: My clients eventually settled for a significant sum of money. (The settlement was not confidential and is part of the public record).

Okay, so how do you pay a settlement if you win the case? We only won the claims based upon the non-compete, but there were claims related to breach of the duty of loyalty. This is the first moral of this case: Every employee has a duty of loyalty during employment relationship. The duty of loyalty is essentially a duty not to compete while employed. Competing during employment can lead to liability. Preparing to compete is permissible. What is competitive? What is preparation? The answer can cost six figures.

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