Plaintiff sues seven executives and managers who left and formed competing company

In LGCY Power, LLC v. The Superior Court of Fresno County, the plaintiff was a Utah-based company that marketed and sold residential solar energy systems across the western part of the United States. In 2019, the company’s former sales manager and six other executives and managers left and formed a competing solar company.

The company filed a suit in Utah state court against all seven of them. It alleged numerous causes of action, including breach of their employment agreements, which had noncompetition, nonsolicitation and confidentiality provisions.

All of the defendants except for the sales manager brought a joint cross-complaint in Utah with claims such as an alleged breach of their employment agreements and a failure to pay wages and commissions. As for the sales manager, he filed a complaint in Fresno County Superior Court that made virtually identical claims as those in the Utah cross-complaint. The company objected to the Fresno complaint via a demurrer, arguing that California’s and Utah’s cross-complaint statutes barred the sales manager’s causes of action.

The Fresno County Superior Court, overruling the demurrer, determined that s. 925 of California’s Labor Code offered an exception to California’s compulsory cross-complaint statute, so the sales manager was permitted to bring his claims in California despite the pending related suit in Utah. Under s. 925, employers cannot force...

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