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Amazon (Basically) Loses Non-Compete Case Against Former Employee Who Left For Google

In October of this year, Amazon sued a former employee who had jumped ship and gone to work for Google.   Beginning in mid-2010, Daniel Powers served as a vice-president of Amazon’s Web Services division.  His principal job in that capacity was to sell Amazon cloud computing services to businesses.  Powers left Amazon in June, signed a severance agreement and reaffirmed the terms of his non-compete agreement.  Roughly four months later, he went to work for Google as the Director of Cloud Platform Sales.  Amazon sued.

On Thursday, a federal court in Seattle rejected Amazon’s attempt to obtain a sweeping preliminary injunction that would greatly restrict the terms of Powers’ employment at Google.  In short, Amazon sought an injunction that would have prevented Powers from engaging in “any activity that directly or indirectly supports any aspect of Google’s cloud computing business that competes with Amazon’s cloud computing business.”  Instead, the court issued a narrow injunction that only prevents Powers from soliciting Amazon customers for the next three and a half months.   All in all, the court’s order is a victory for Powers and for employees generally.   The decision raises a number of interesting considerations:

(1)    The Google Offer Letter:  When Google brought Powers on board, they had him sign an offer letter that spelled out what his role at Google would be.  A major reason why Google used such a letter was to limit Powers’ role (at least on paper).  The offer letter essentially “prevents” Powers from doing work at Google that would run afoul of his non-compete agreement with Amazon.  Google’s own self-imposed restrictions were a major factor in the court’s decision.

 (2)    Leave the Documents Behind:  I am like a broken record with this one.  When I consult with employees who are contemplating a move to a competitor, one of the first things I tell them is to leave the documents behind.  Do not take any files.  Do not take that Powerpoint presentation that you were working on.  Do not email yourself a few spreadsheets.  This is very basic but very sound advice.  When an employee takes company files with him to a competitor, this creates terrible optics.  Put aside the issue of whether the files actually have any value.  The mere act of taking them suggests the employee thinks they are valuable enough to steal.  It is the ugly sort of fact that the court will latch onto.  In contrast, when the employee makes a clean break and leaves all the files behind, this is a positive fact that can play in the employee’s favor.  In the Amazon case, Powers made a clean break.  In its order, the court repeatedly returns to the fact that Powers took nothing with him – no documents or materials – when he left the company.   Clearly, this plays in Powers’ favor.  But Amazon did itself no favors on this point.  Amazon did what many employers do in non-compete cases: overplayed its hand.  The injunction Amazon sought, in part, would have required Powers to return materials he took with him.  But there was absolutely no evidence in the record to suggest that Powers ever took any such materials.  The court basically throws this back in Amazon’s face.

(3)    Real Burden on Confidential Information:   I have seen many non-compete cases where courts basically give the former employer a pass on confidential information.  But over the past several months, I have noticed more courts pushing back on that front.  In this case, Judge Jones rejected Amazon’s claims re confidential information as hollow and unsubstantiated.  Basically, the court reasoned that although Powers may have had access to confidential information or trade secrets, Amazon’s claims on this front failed because:

  • They did not identify this information with any degree of specificity.
  • Powers took nothing with him, so he would have to remember that information.
  • Several months had elapsed and some of the information was likely stale.
  • There was no proof of inevitable disclosure.

 (4)    Legitimate Interest:  In issuing a narrow injunction, the court distinguished between a restraint on competition that was necessary to protect Amazon and a restraint that was purely anticompetitive.  Whereas a short term ban on Powers’ working with his former Amazon customers would protect Amazon’s goodwill, a worldwide ban on Powers’ working in cloud computing whatsoever would be “a ban on competition generally.”

The decision is thoughtful, well-reasoned and worth a read.  It is available here: Amazon v. Powers Order

Jonathan Pollard is a trial lawyer and litigator based in Fort Lauderdale, Florida.  He focuses his practice on cases involving employment disputes, antitrust and business torts.  He has a particular interest in non-compete agreements.  He represents clients in Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Jupiter, Fort Myers, Tampa, and Orlando.

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