Slavery is a concept which is regarded as abhorrent – at least in all Western nations.
At its core, slavery is an arrangement whereby a person is required to provide their labour (and generally to do their master’s bidding) against their will.
Perhaps what makes slavery such an abhorrent concept is the prospect that one person may assert “ownership” over another human being.
But a necessary part of the employment relationship is an aspect of ownership. The work done by an employee – for the benefit of the employer – often has great financial value. And who “owns” this financial value can often give rise to difficult problems.
The recent decision of the American Court of Appeals in Ohio in Market Associates v Gottlieb (Unreported, January 14, 2010) offers a good example of the types of issues that can arise.
Gottlieb was employed as a Sales Representative. In essence, he acted on behalf of his employer to liaise with suppliers to market products to retail stores.
In 1999 Gottlieb was assigned to represent a company called True Seating Products, which manufactured desk chairs for office supply stores. Gottlieb was successful in representing True Seating’s business such that by 2005 it generated about $500,000 per year in income for his employer (about 87% of Gottlieb’s sales).
At the heart of Gottlieb’s success was his marketing to a company called OfficeMax. In August 2005 OfficeMax was sold and it announced that it would relocate to Chicago. True Seating was concerned that unless Gottlieb could relocate to Chicago he could no longer effectively represent its interests with OfficeMax.
Gottlieb agreed with this rationale. He raised the issue with his employer, and there was some serious discussion about the prospect of him opening a Chicago branch of the employer’s business.
There was also discussion about a restraint which was contained in Gottlieb’s employment contract. A provision ostensibly prevented Gottlieb from competing with his employer (and from taking any of the employer’s business) should he terminate his employment – for a period of 12 months.
Put simply, this provision prevented Gottlieb from taking True Seating’s business away from it and setting up on his own account – even though Gottlieb was solely responsible for the marketing success which True Seating had enjoyed over the preceding six years.
On one hand, it is possible to have some real sympathy for Gottlieb’s position. It was through his personal efforts that True Seating’s business had grown – and he was a natural contact with OfficeMax, because Gottlieb obviously knew True Seating’s products and business, and had been successful in his prior dealings with the OfficeMax company.
From Gottlieb’s point of view, he had some element of “ownership” in this business.
On the other hand, however, the contractual provision to which Gottlieb had agreed confirmed that it was the employer that owned the relationship with True Seating and that, should Gottlieb leave the company, the employer should be given a period of 12 months to attempt to replace Gottlieb with someone else to continue the relationship with the company (and with OfficeMax).
It appears that both Gottlieb and his employer took a sensible view about the situation – recognising Gottlieb’s natural desire to move to Chicago, but also acknowledging the employer’s reluctance to open a Chicago branch. There was discussion about an amount that Gottlieb might be able to pay in order to free himself from the restraint, effectively compensating his employer to allow him to act in breach of his restraint.
Regrettably, those discussions failed to achieve a resolution. Gottlieb terminated his employment, and simply set up business in Chicago on his own account, taking True Seating’s custom with him. The employer responded by refusing to pay certain commissions owed to Gottlieb.
Ultimately, the Court found that Gottlieb had acted in breach of his restraint, and that he should pay compensation to his previous employer of $500,000. It also found that the employer had acted inappropriately by withholding payments from Gottlieb. In the end, therefore, Gottlieb was ordered to pay a net sum of about $100,000 – but was also ordered to pay Court costs of about $165,000.
It is, of course, possible that Gottlieb took a commercial attitude to the outcome – and concluded that payment of these amounts was offset by the ongoing custom that he enjoyed with True Seating.
It is, however, equally possible that he regarded the outcome as an unjust conclusion in respect of business which he might have regarded as his “own”.
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