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Seldom does an appeal land on the New Jersey Supreme Court’s doorstep with such a capacity to combust as Maw v. Advanced Clinical Communications Inc., A-99-02. The case is a volatile mix of policy issues that could blow up in the justices’ faces no matter how carefully it’s handled. Not much is at stake — only the future of noncompete covenants in New Jersey employment contracts. Such clauses have historically protected companies from losing employees with specialized knowledge to competitors, but the Appellate Division ruled that a worker fired for refusing to sign might, in some circumstances, bring suit under the Conscientious Employee Protection Act. Karol Maw met the test. Hired in November 1997 as a graphic designer for Advanced Clinical Communications Inc., she was fired in March 2001 for refusing to sign an agreement that precluded her from working for any ACCI competitor or customer for two years after leaving the company. A Mercer County judge dismissed her CEPA claim but the Appellate Division reinstated it, finding the pact violated public policy. On Feb. 2, ACCI’s lawyer urged the court not to push CEPA into a new terrain that lawmakers did not anticipate. “The New Jersey Legislature has not made a determination” that restrictive covenants violate public policy, said Debbie Sandler, a partner at White and Williams in Philadelphia. “CEPA must have limits to its reach.” But when Sandler suggested that ACCI had a legitimate interest in having Maw sign a no-compete pact because of the sensitive nature of her work, Chief Justice Deborah Poritz and Justice Virginia Long seemed perplexed. What was it about the job of graphic designer, they asked, that was so sensitive? Sanders answered that Maw dealt with confidential information from clients about trade secrets and new medications that had not been publicly disclosed. The company and its clients had to be able to ensure that if Maw left, she could not disclose that information to competitors. Justice James Zazzali said, “She had a choice, either sign or be fired. Sign and have her future opportunities restricted.” “Only partially restricted,” replied Sandler, noting that Maw could take a job with another company that did not compete with ACCI or its clients. Zazzali seemed unassuaged. “The court is very concerned about blocking workers’ rights to seek employment elsewhere,” he said. Justice Peter Verniero returned to the public policy implications of using CEPA to police noncompete clauses. “It’s up to the Legislature to make this kind of policy determination?” he asked. “Absolutely,” Sandler said. When it came time for Maw’s attorney to respond, he took issue with Sandler’s plea that allowing the CEPA suit to go forward would, in effect, nullify restrictive covenants. “That is an argument that is overblown and far overstates the case,” said Richard Schall, a partner at Moorestown’s Schall & Barasch. “This does not sound the death knell for noncompete agreements.” Schall insisted that public policy augured more for upholding the Appellate Division’s ruling, since employees don’t really have a choice but to sign a noncompete clause. “Most employees don’t have the resources to test” restrictive covenants in court, Schall said. “The consequence of a reversal is that [most employees] would have absolutely no cause of action.”

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