I Dream of Shiro, But Will Not Let Him Compete with Me
Shiro Kashiba, founder and former executive chef of Shiro’s Sushi Restaurant, filed a declaratory action in King County Superior Court on May 27, 2014, to prevent the restaurant’s current owners from extending a non-compete provision against him. Shiro, twice nominated for a James Beard Award, signed an employment agreement with Taste of Japan, LLC (“Taste of Japan”), when Taste of Japan purchased the restaurant in 2007. In that agreement, Shiro agreed to work for the new owners by helping to train the new executive chef and by occasionally visiting the restaurant to help provide a “sense of presence” during the transition to new ownership. Shiro also agreed that he would not compete against Taste of Japan in the Japanese restaurant business for up to three years after his employment with the company. The employment agreement expired by its own terms in 2008. Accordingly, Shiro has taken the position that the three-year non-compete provision expired in 2011.
It is now 2014. Shiro has an opportunity to partner with investors on a new restaurant venture here in Seattle. Apparently, however, Taste of Japan seeks to enforce the non-compete provision in the 2007 agreement to prevent Shiro from opening a new restaurant. After the original employment agreement expired in 2008, Shiro signed on with Taste of Japan in 2009 to work as a consultant. According to the complaint, the 2009 agreement did not contain a non-compete provision or make reference to the 2008 agreement.
Although Taste of Japan has not yet responded to the lawsuit, employers can take away a good lesson from the facts alleged in this case. An employer should make sure any subsequent employment/consultant agreements incorporate – or at least make reference to – prior agreements if the employer intends to enforce such obligations. On the flip side, if the employer – or an employee/consultant – wants the subsequent agreement to supersede any prior or contemporaneous agreements, a term to that effect should be expressly included in the governing agreement. Consult with counsel to draft your agreements accordingly.