(888) 785-9923 Sued to shut down their new business, our client walked away owing nothing.
A former employer sought an injunction to close a new venture over a non-compete and a customer list. We contested every claim and turned the case around with wage-and-hour counterclaims.
Docket
Jurisdiction
Clark County, Nevada
Client
Defendant & Counterclaimant (employee)
Matter
Non-compete & trade-secret defense
Duration
Under 1 year, filing to resolution
Status
Settled — walkaway resolution
Case summary
Milan Chatterjee defended an hourly employee whose former employer sued them, after they left and opened a business of their own, claiming the client violated a non-compete and misused a confidential customer list, and seeking to shut the business down. We contested every claim and asserted wage-and-hour counterclaims. The case resolved on a walkaway: our client paid nothing and kept their business.
On this page
01 · Situation
Our client had worked for years as an hourly employee at a local personal-services business, building a loyal following of customers through the quality of their work. Eventually the client decided to move on and open a small business of their own. Like many people who leave an employer to work independently, our client expected that their skills, reputation, and the clients who valued them were theirs to build on.
The former employer saw it differently. Shortly after the client left, the company sued. It alleged that the client had violated a non-competition agreement signed years earlier, had taken and was using a confidential customer list to solicit its clientele, and had breached duties owed as an employee. The company also asked the court for an injunction an order that would have barred the client from serving those customers and could have shut down the new business before it had a chance to establish itself.
For someone who had just staked their livelihood on a new venture, the stakes could hardly have been higher. An injunction alone could have ended the business; the damages and fee claims layered on top of it. The client came to Milan Chatterjee needing not just a defense to the lawsuit, but a way to protect the business and invaluable customer relationships.
02. The legal challenge
The dispute centered on two questions Nevada law treats with real care: whether the non-competition agreement was enforceable, and whether the customer information was actually a protectable trade secret. Nevada does not enforce non-competes automatically. By statute, such an agreement is valid only if it is supported by valuable consideration, does not impose a greater restraint than the employer's legitimate interests require, and is reasonable in its duration, geography, and scope. Nevada law also limits the use of non-competes against employees paid on an hourly basis.
The trade-secret claim raised a separate issue. A customer list is not automatically a trade secret; it qualifies only if it derives real value from being secret and the business took reasonable steps to keep it confidential. And even a protectable list does not prevent customers from choosing, of their own accord, to follow a service provider they trust. Rather than defend on those points alone, we also went on offense: we asserted counterclaims under Nevada's wage-and-hour laws, including for unpaid overtime and for failure to pay final wages on time after separation. Those counterclaims did more than respond to the suit — they reshaped the leverage in the case.
What was at stake
The immediate risk was the injunction. If the court had granted it, our client could have been ordered to stop serving the very customers the new business depended on — effectively closing it. Beyond that, the client faced claims for damages, punitive damages, and the other side's attorney's fees. For a new, owner-operated business, an adverse result would not have meant a setback; it would likely have meant the end of the venture.
03. Our approach
How we defended the claims, shifted the leverage, and moved the case toward a resolution that let our client keep their business, in three steps.
Challenge the non-compete and trade-secret claims
Our first priority was to blunt the injunction and undercut the core claims. We examined the non-competition agreement against Nevada's statutory requirements — consideration, reasonableness, and the limits the law places on restricting hourly workers — and we tested the trade-secret claim against what the law actually requires: genuine secrecy, independent economic value, and reasonable measures to protect the information. We also drew the critical distinction between a customer being solicited and a customer independently choosing to follow a provider they trust. Framing these weaknesses early shaped how the case was litigated and reduced the threat that our client's business would be shut down while the matter was pending.
Assert wage-and-hour counterclaims to shift leverage
A strong defense keeps a client from losing; a well-placed counterclaim can change the shape of the entire case. In reviewing our client's employment, we identified potential claims under Nevada's wage-and-hour laws — including unpaid overtime and the failure to pay final wages within the time the statute requires after an employee leaves. We asserted those claims as counterclaims. Beyond their own merit, they altered the calculus for the other side: the company that had brought the suit now had to weigh its own potential exposure. That shift turned a purely defensive posture into a two-sided negotiation.
Resolve the case on a walkaway basis
The case moved through extensive motion practice and a mediation before it resolved. As the weaknesses in the non-compete and trade-secret claims became clearer, and with our client's counterclaims in play, the path to a negotiated end took shape. The parties ultimately agreed to a walkaway resolution: our client paid nothing, the claims were resolved, and the client kept the business and its customers, with each side bearing its own attorney's fees and costs. Less than a year after the lawsuit was filed, the client was free to run the business they had built, without the cloud of the litigation over it.
04. The outcome
The lawsuit ended in a walkaway settlement less than a year after it was filed. Our client paid nothing to the company that had sued them, the claims were resolved, and the client kept the business and the customers who had chosen to follow them. Each side bore its own attorney's fees and costs. For a defendant who had faced an injunction that could have closed their business, walking away owing nothing was a complete result.
The outcome mattered most in what it preserved. Our client kept the business they had built and the ability to keep serving the people who valued their work — the very things the lawsuit had put at risk. The client avoided an injunction, avoided a damages judgment, and avoided paying anything to resolve the claims. For a new, owner-operated business, that difference is not incremental; it is the difference between continuing and closing.
The result also reflects a strategic point worth drawing out. Defending the claims was necessary, but it was the wage-and-hour counterclaims that changed the negotiating dynamic, giving the other side its own reasons to resolve the matter. A defense that only reacts can still lose slowly; a defense paired with affirmative claims can reset the terms of the conversation. Here, pairing a solid defense with affirmative counterclaims produced a clean exit for our client.
05. Key takeaways
A non-compete you signed is not automatically enforceable
In Nevada, a non-competition agreement must meet real statutory limits reasonable duration, geography, and scope, supported by adequate consideration and the law restricts using non-competes against hourly employees. If a former employer is trying to enforce one against you, it is worth having the agreement reviewed rather than assuming it binds you.
A customer list is not automatically a trade secret, and your customers are not property
A list qualifies for protection only if it is genuinely secret and reasonably safeguarded and even then, customers remain free to choose the service provider they prefer. Being accused of taking customers is not the same as having done anything unlawful.
When you are sued, the best defense sometimes includes going on offense
If the party suing you also has legal exposure unpaid wages, for example asserting those claims as counterclaims can change the leverage in the case and open a path to resolution that pure defense cannot.
06. FAQ
Disclaimer
This case study is provided for informational purposes only and is described in anonymized form to protect client confidentiality; identifying details have been altered or omitted. It does not constitute legal advice and does not create an attorney-client relationship.
Prior results do not guarantee or predict a similar outcome in any future matter. Every case is different and depends on its own facts and circumstances. Dollar figures and durations are stated as conservative, rounded ranges.
Attorney advertising. Licensed in Nevada and California · Milan Chatterjee, Esq.
Related practice areas
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