More Non-Compete Litigation in the Broadcasting Industry

Over the past few years, non-compete litigation in the broadcasting industry has become increasingly common.  A recent case out of Birmingham, Alabama continues that trend.  On Monday, Citadel Broadcasting (a subsidiary of Cumulus Media) filed a lawsuit against Ryan Haney, who formerly served as program director for Citadel’s Birmingham sports talk radio station, WJOX 94.5 FM.  In late January, Haney left WJOX to go work for Cox Radio at their ESPN affiliated station, The Zone 97.3.

Here’s the back-story:   Haney has had long tenure Citadel.  He began working for Citadel’s predecessor, Dick Broadcasting Company, back in 1998.  Over the past fifteen years, Haney has been involved in nearly every aspect of Citadel’s Birmingham operation.   According to the complaint, Haney has had a hand in developing programming; negotiating with affiliates, advertisers and employees; managing business relationships; and developing marketing and programing strategies.

On January 21, Haney abruptly resigned from Citadel.  According to the complaint, immediately prior to tendering his resignation, Haney “took possession of all files and other paperwork stored in his office at Citadel, including employment contracts and contracts with customers.”   A week later, he began working for Cox Radio.

There are always two sides to every story.  But a review of the complaint and the employment contract at issue suggest that Citadel a strong case.   The operative non-compete provision is a relatively reasonable one:   It bars Haney from working for any competing radio stations within a 60-mile radius for 1-year after his departure from Citadel.  That seems reasonable in terms of temporal, geographic and industry scope.  With respect to the interests at stake, Alabama essentially follows a standard legitimate business interest test.  In this case, it appears that confidential information will be the big interest at stake.

Given Haney’s tenure at Citadel and the nature of his role there, it is likely that he had at least some exposure to valuable, confidential information.  And if the complaint’s allegations are true, Haney’s actions lend that theory credence:   When Haney left Citadel, he apparently took files with him.  If Haney actually took files with him, that is bad news.  The fact that an industry veteran made the conscious decision to take files with him suggests that those files contain information that (1) would not otherwise be readily available to him at his new employer and (2) has value.  Also, if Haney took files, that makes it much tougher for him to push back against arguments regarding inevitable disclosure.   It is possible to beat the inevitable disclosure argument, but that requires the court accepting the defendant’s promises not to disclose his former employer’s confidential information.  And where the defendant took corporate materials and files on his way out the door, a court probably will be less inclined to find such promises credible.

Although the complaint also mentions Citadel’s interest in protecting its customers and preventing Haney from soliciting its employees, those issues are mentioned only in passing.  The real focus of the case is confidential information.  Although I frequently criticize the use of non-compete agreements in the broadcasting industry, this case is different.  In most instances, I object to media personalities having non-compete agreements because there is no legitimate business interest at stake.   When companies use a non-compete agreement to prevent a popular radio personality or newscaster from jumping ship, they are not trying to protect confidential information or customer relationships in the traditional sense.  They are simply trying to lock in their market share and protect their bottom lines.  But there is a huge difference between a media personality and a media executive.  Whereas the former might just be an on-air personality, the later – particularly a media executive like Haney, with fifteen years of experience at the company – is likely to have at least some valuable, confidential company information.

One more time for the record:  When you quit a job, leave the files behind.   Most significantly, the files are corporate property.  And beyond, it is terrible optics.   The case is Citadel Broadcasting Company v. Haney, 2:13-cv-00235-RDP (N.D.Ala. February 5, 2013).

Jonathan Pollard is a trial lawyer and litigator based in Fort Lauderdale, Florida.  He focuses his practice on cases involving non-compete disputes, antitrust and business torts.  He represents clients in Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Jupiter, Fort Myers, Tampa, and Orlando.  If you have a non-compete question or need a referral to a non-compete lawyer in your area, please contact Jonathan’s Fort Lauderdale office at 954-332-2380.