Toronto’s Softchoice Corp. (TSX: SO) has won a round in its ongoing legal battle with En Pointe Technologies Inc. (NASDAQ: ENPT), who Softchoice alleges has been unfairly raiding its employees.
Softchoice announced on Tuesday that En Pointe’s counter-suit against it has been voluntarily dismissed by En Pointe. The suit had asked the United States District Court, Central District of California – Western Division, to declare Softchoice had engaged in improper business practices by using anti-competitive clauses in its employment contracts and policies which unlawfully restrict an individual’s ability to work.
“We believe that Softchoice’s overreach manifests itself through an attempt to impose illegal and void terms on employees that restrict the rights of workers through anti-competitive business practices,” said Bob Din, CEO of En Pointe, in a statement last summer.
Following EnPointe’s filing, Softchoice won two motions to dismiss claims it made regarding Softchoice’s employment agreements and hiring practices. The remaining claims alleged that four named individuals chose not to pursue employment with En Pointe because of alleged conduct by Softchoice. Softchoice obtained statements and testimony contradicting that claim and, risking an award of sanctions by the court, En Pointe agreed to the voluntary dismissal of its remaining claims.
“I am happy with the outcome,” said Kirsten Thompson, Softchoice general counsel, in a statement on Tuesday. “Softchoice prides itself on its culture of ethical behavior and corporate responsibility. The allegations contained in this suit were both without merit and incompatible with the way we do business. We are grateful to have this litigation behind us.”
In the statement, Softchoice notes that it continues to pursue claims against En Pointe and En Pointe employees that left Softchoice in Minnesota, Virginia and Nebraska. The suits allege the employees breached non-solicit and/or non-compete clauses, as well as clauses related to confidential information, by soliciting former customers as well as removing confidential company information before their departures. In some cases, Softchoice alleges former staffers encouraged customers to follow them to En Pointe while still on the Softchoice payroll.
In an interview last year, Thompson said En Pointe was added to two of the suits because during the discovery process it “became fairly apparent this was part of a larger organization strategy” by En Pointe to target Softchoice business and employees.
“Over the past several years En Pointe has relied on a ‘business model’ of raiding competitors in general, and plaintiff Softchoice in particular, of experienced sales representatives,” states the Softchoice filing. “This model has permitted En Pointe to reap the benefits of an experience, knowledgeable sales force without making the investment in time and resources required to develop such a sales force.”