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U.S. judge blocks carmaker's non-compete clause


Former Ford Motor Co. executive Martin Leach won his controversial case against the Dearborn automaker Friday, allowing him to seek employment with other automakers despite a non-compete clause he signed with Ford.

After months of wrangling with Ford over the clause, which blocked him from taking work with a competing car company, U.S. District Judge Paul D. Borman concluded that Ford fired Leach in August after the company found out he was seeking other employment. The automaker contended that Leach resigned.

The dispute over whether Leach quit or was fired was critical to the case because the clause applied only if he resigned, not if he was fired.

Leach, who had been president of Ford of Europe, testified in December that he tried to negotiate a mutual separation agreement with Ford because he felt his job was on the line.

He said Fiat Auto offered him a job as chief executive but only if Ford would waive the non-compete clause. When he approached executive vice president David Thursfield in August about working out a deal, he said, Thursfield said he assumed Leach was quitting.

In Detroit, the judge issued an injunction preventing Ford from enforcing the non-compete clause, which says executives can't join another automaker within two years of leaving Ford. Leach, like most other officers, in 2002 received one year's worth of salary in restricted stock in exchange for signing the agreement.

In his ruling, Borman said Ford's clause would only harm Leach's chances of getting another job.

"Ford's public pronouncement that it would seek legal action against Leach and any competitor that tried to hire him has effectively rendered Leach unemployable in the automotive industry," Borman said. "The court finds that Leach will suffer irreparable harm if the injunction is not issued."

In a statement, Leach said he was satisfied with the decision.

"I'm very pleased that this judgment will now allow me the option of working in the industry I love and have worked in all my professional life," he said. "After giving 28 years of dedicated service to Ford Motor Co. I'm very sad that it ended this way."

Leach doesn't have a job lined up, a spokesman, David Rigg, said, adding that Leach likely would seek monetary damages from Ford.

Ford spokesman Ken Zino said "the matter is under review" by Ford. He declined to comment further.

The judge said he arrived at his decision due to pure logic: It didn't make sense for Leach to quit if he wasn't allowed to find another job. Borman also cited a letter a Ford attorney sent to Leach with a phrase saying "if you terminate your employment with the company," as proof that Leach didn't quit his job.

Another inconsistency in Ford's case: Leach was not escorted off the premises. Generally if a person quits the job, he or she is asked to leave, the judge said.

The Fiat job would have been lucrative for Leach. The Italian carmaker would have paid him $5 million in stock options and a signing bonus, plus a base salary of about $2.2 million (1.8 million euros), with a chance to earn up to $4 million a year with a bonus.

Fiat withdrew its offer in mid-September and hired former Volkswagen Brazil head Herbert Demel as CEO.

Leach said he started getting a bad vibe from Ford in early 2003 when executives like chief executive Bill Ford and Thursfield questioned his integrity. He said he also noticed a change in demeanor among his colleagues during executive meetings.

Jeff Wilson, an attorney with the Southfield-based law firm Raymond & Prokop, said employers in many different industries use non-compete clauses, but sometimes courts don't enforce them. In some cases courts are sympathetic to people who are trying to make a living.

"I would say neither side is iron clad," Wilson said.

3,657 Posts
.. and I am sure this sad, sorry saga isn't over yet.

No doubt Leach will sue for the lost opportunity, a certain letter writing attorney will be looking for a job (at least that one will be fired) and the HR people will be doing some explaining.

Not that we will see anything publically as there is not much doubt that a negotiated settlement will be made (as should have been done in the first place) and life will go on.

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