EMC, Former Employee File Dueling Lawsuits Over Non-compete Clauses

Hewlett-Packard on Wednesday said that it appointed Donatelli as its executive vice president for Enterprise Servers, Storage and Networking, effective May 5.

Donatelli was most recently president of EMC's Storage division, where he was responsible for the EMC storage platforms and related software businesses.

Donatelli actually resigned from EMC and communicated his intentions to take a senior position at a competing company on Monday, an EMC spokesperson said in an e-mailed statement. That same evening, Donatelli filed suit against EMC in the state of California, asking for a judgment to void his key employee agreement.

EMC then filed suit in Massachusetts for violation of the key employee agreement and to enforce the non-compete in the agreement, the spokesperson wrote.

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"Mr. Donatelli's key employee agreement with EMC contains a non-competition clause and other protections that we intend to enforce," the spokesperson wrote.

It is a case complicated by the fact that California has different laws regarding non-compete clauses in employment contracts, said Brian Daucher, an attorney with Costa Mesa, Calif.-based Sheppard Mullin Richter & Hampton LLP.

California does not enforce non-compete clauses at all, Daucher said. "California has the best laws for employees," he said. "When companies decide to fight over non-competes, there's a battle about where it gets litigated. If you are a California resident who works for a Massachusetts company, it will be litigated in California regardless of what the clause says."

Non-compete clauses between large companies are typically hard to fight because large companies are always hiring each other's executives, Daucher said.

"These cases are usually skirmishes, not wars," he said. "You can spend six-figure amounts to litigate over a few months. But for companies like that, it's not a lot."

EMC has raided HP's executive team several times in the past.

Its catches include Mark Lewis, president of EMC's Content Management and Archiving Division and HP's former Network Storage Solutions group vice president of worldwide marketing and solutions, and Howard Elias, president of EMC's Global Services & Resource Management Software group and HP's former senior vice president of business management and operations.

The case is further complicated by HP's decision to integrate its ProCurve Networking business into its Enterprise Storage and Server (ESS) business unit, which also includes HP's storage and server business.

Donatelli will be in charge of the ESS unit when he joins HP.

EMC has appointed Frank Hauck, executive vice president and an 18-year EMC veteran, as the interim leader of its storage division in the wake of Donatelli's departure.

The EMC spokesperson wrote that Frank has a long and successful track record in numerous exec roles at EMC, and that the company has no change in expectations for its storage business moving forward.

"We are extremely well-positioned with the strongest product lineup in our history," the spokesperson wrote. "Franks (sic) will be able to step right in and help that division continue its leadership." EMC declined to provide further comment on the lawsuits, and HP said it would not comment on the case.