The Ohio Supreme Court has ruled that noncompete agreements automatically transfer when there is a merger.
In this case, four insurance company employees agreed not to compete with their employer for 2 years after their employment terminated. The employer merged with another company, and these employees remained employed with the newly formed company.
About 4 years later, the employees left to work for a competitor and solicited their former clients. The employer sued, claiming the employees breached the noncompete agreements.
In its initial ruling the Supreme Court found in favor of the former employees, reasoning that the noncompetes expired before the employees left to work for the competitor.
Upon reconsideration, however, the Supreme Court ruled that under Ohio law, the merged company became part of the new company and the merged entity could enforce the noncompetes as though it "had stepped into the shoes of the absorbed company." (Acordia of Ohio, LLC v. Fishel).
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