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The two retail heavyweights are fighting over non-compete contract provisions, which companies feel protect their trade secrets and people assets, but executives believe are notorious for stifling career moves.
The case will be tried in St. Louis County Court, in a suburb of St. Louis called Clayton, according to a May Co. spokeswoman. May is based in St. Louis.
The case will determine the future of former Foley’s chairman Mark Weikel and could have far-reaching implications for how non-competes are written into contracts and interpreted. Weikel is seeking to work at Victoria’s Secret Stores.
The Limited has filed suit against May, contending that Foley’s is not a competitor to Victoria’s Secret and therefore hiring Weikel does not constitute a violation of non-compete restrictions written into Weikel’s contract at Foley’s, which runs through April 2005. Weikel was removed from his job at Foley’s, though May has been paying him. Reportedly, there is a restraining order preventing Weikel from joining Victoria’s Secret where he has been offered a senior-level job.
It’s the first time that Limited and May have been in a legal battle involving executive recruitment. Limited officials couldn’t be reached for comment this week.
It’s possible that the dispute gets settled before it’s time to go to court. Usually these kind of cases do, with the suing company being able to extract money or other concessions from the company being sued. As a result, the executive is usually released from his or her contract. The wrinkle this time is that the recruiting company, Limited, is suing the one where the executive works, May.
“If this goes against May, it will probably change a lot of things and will be meaningful to the industry overall,” said one retailer.
Non-compete provisions, which are widely used by retailers, protect employers by prohibiting executives from joining competitors. Typically, restrictions extend for six months to two years after a contract expires and apply to top executives. However, many retailers, and those involved in recruiting for retailers, believe non-competes can be vague in defining the competition and therefore so restrictive that they “enslave” executives to their current employers and minimize career options. They also contend non-competes drain the available talent pool and are a major reason why it takes so long to complete high-level executive searches. The retail talent pool is already small and the Limited-May court battle underscores companies’ determination to hang on to talented managers.