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La. Code Civ. Proc. Ann. art. 863, like Fed. R. Civ. P. 11, authorizes an award of "reasonable" and not necessarily actual attorney fees.
When the employee signed the employment contract, agreements not to compete were prohibited unless the employer incurred substantial expense to train the employee or advertise his connection with the business. The employer claimed to have spent $ 150,000 on the employee's training and advertisements. One week after the employee was fired, he began working for the employer’s competitor. The employer sued the employee, alleging that the latter had violated the employment contract by going to work for the employer’s competitor. On the employer’s petition and supporting documents, the trial court issued a temporary restraining order (TRO) enjoining the employee from working for, and divulging proprietary information of the employer to any competitor. The trial court subsequently dissolved the TRO upon finding that the employer failed to prove the kind of substantial training expense that was required for enforcement of an agreement not to compete. The court further awarded the employee sanctions and damages under La. Code Civ. Proc. Ann. art. 863 for the wrongful issuance of the TRO. The employer appealed.
Under the circumstances, did the trial court err in awarding the employee sanctions and damages?
The court affirmed the judgment of the trial court awarding the employee sanctions and damages. The court found no abuse of discretion in the trial court's finding that the employer and its counsel did not make an objectively reasonable inquiry into the nature and amounts of the claimed training expenses, before alleging that the employer had incurred "great expense" to train the employee. Considering that the expenses totaled almost four times as much as the employee's annual earnings, the employer's counsel should have made further inquiry into the factual basis for the claimed expenses before using them to have the employee restrained and enjoined from working for his subsequent employer. Moreover, most of the expenses were for the type of training that consistently had been found legally insufficient to support enforcement of an agreement not to compete.