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it is unusual for punitive damages to be awarded in restrictive covenant cases that's because a restrictive covenant is typically contract between the employer and the employee in many cases in most jurisdictions punitive damages are not awarded in breach of contract cases therefore when a restrictive covenant case does not include separate tort claims it's often that punitive damages are not recoverable punitive damages were awarded in this case for what I think were several reasons in this case the Court did sustain tort claims against the defendants and as I've noted punitive damages are recoverable in tort actions but typically not in contract cases secondly the conduct in this case was particularly egregious these defendants took with them some sensitive confidential information from their former employer and used it willfully in fact all of their business in their first year with the new employer was derived from their old employer next there was a an email that had been discovered in this case which I'll call a smoking gun in it one of the employers employees said to the other why compete when you can just have the business and that I think is a tacit admission that they were literally stealing this business from their old employer and lastly I think the court was annoyed with these particular defendants for having ignored his discovery rulings and orders in the case and in fact having violated a preliminary injunction order that the court put in place that's certainly a recipe for punitive damages this ruling confirms what we already tell our clients when faced with restrictive covenant issues there is no substitute for fair competition stay away from unfair competition and you'll likely stay away from these types of lawsuits next when hiring an employee it's important for the employer to do its due diligence to make sure that the employee that it's hiring either does not have a restrictive covenant or if they are bound by a valid restrictive covenant that the employer takes steps to make sure that employee does not violate those contractual obligations we even encourage the employer to be proactive advising the employee in writing not to bring with him or her any confidential information or other confidential from their former employer that the new employer has no intention to use that information in the business taking steps like that will go a long way to ensure that our clients don't get involved in these types of cases