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Replacement CEO sued by Sears over non-compete agreement

Bath and Body Works' 1,600 store subsidiary Limited Brands Inc. announced last week that its current CEO will be leaving the company, after four years, at the end of the summer to work as an adviser from San Francisco. Limited Brands Inc. also announced the name of the replacement, who formerly served as the president of Lands End, a Sears Brand.

The replacement CEO, however, may not be taking over for Limited Brands Inc., if Sears has its way. According to sources, Sears Holding Corp. is suing the man to prevent his appointment. Sears says the man signed onto a non-compete agreement as part of his contract which prevents him from taking the job.

Non-compete agreements, usually found as terms in employment contracts, prevent the employee from pursuing a like profession or trade in competition with the employer. Non-competes are designed to prevent the employee from gaining a competitive advantage against the employer by making use of confidential information concerning their former employer's business plans, operations, marketing, customer contacts or other business information.

Many states limit the enforceability of non-compete agreements to limited geographical areas and require that the employer have legitimate business interests for limiting the former employee's employment opportunities. They also must be reasonable restrictions in relation to public policy.

According to Sears, the man's non-compete agreement specifically lists Columbus-based Limited Brands Inc. as a direct competitor. The Limited Brands CEO replacement claims, however, that Bath & Body Works and Lands End are not actually direct competitors, and that the non-compete should be set aside.

Source: Business First, "New Bath & Body Works chief faces fight from former," 18 May 2011.

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