A King County Superior Court judge granted T-Mobile USA a preliminary injunction Thursday that prohibits Sue Swenson form working at Amp'd Mobile.
A King County Superior Court judge granted T-Mobile USA a preliminary injunction Thursday that prohibits a former top executive from working at another wireless carrier until the complaint can be resolved at trial.
Last month, T-Mobile filed suit against Sue Swenson, its former chief operating officer, for allegedly violating a noncompete agreement when she left the Bellevue company to become COO of Amp’d Mobile, a wireless startup in California focused on a younger market.
The employment agreements stipulated Swenson could not work at competitors for a year and that she could not disclose confidential material to third parties after leaving T-Mobile.
Judge John Erlick ruled that the two companies are, in fact, competitors and that Swenson should be prohibited from working at Los Angeles-based Amp’d where she could use the information she learned at T-Mobile against the company. That includes marketing and branding plans for the upcoming year.
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“Both companies place a significant focus on the youth demographic,” Erlick said. “Information held by Mrs. Swenson would be of particular value to Amp’d.” T-Mobile said in a statement: “We are gratified with the court’s decision in upholding Sue Swenson’s noncompete agreement. … In this case, we’re simply asserting that the basic rules of fair competition and abiding by one’s contractual commitments should carry the day.”
Amp’d Mobile did not return phone calls seeking comment. Swenson, who was represented by her own attorney, declined to comment.
A hearing is set for today to determine a bond that will act as a security deposit in case the injunction is reversed at trial.
Swenson’s attorney, Lawrence Cock of Cable, Langenbach, Kinerk & Bauer, asked for the bond to be set at more than $13 million, which would include her first year’s salary and stock options in privately held Amp’d.
Cock said the bond request covers Swenson’s compensation and other items because Amp’d Mobile’s board of directors is expected to terminate her job today. Amp’d founder Peter Adderton said in a court declaration that termination would occur if the preliminary injunction was granted.
At the start of Thursday’s proceedings, Erlick said there were two main issues: whether T-Mobile and Amp’d Mobile were indeed competitors and if Swenson’s noncompete clause was reasonable in scope, length and geography.
Karl Quackenbush, an attorney for Preston Gates & Ellis, argued that Amp’d Mobile was a competitor, even though the two offered slightly different services. Quakenbush also represented Microsoft in a similar case against Kai-Fu Lee, a former Microsoft vice president, who was hired by Google to head its China operations.
At issue was how Amp’d Mobile, which has yet to launch publicly, was planning to offer music and video on a high-speed wireless network. T-Mobile’s network operates at a slower speed and the carrier doesn’t offer music or video services.
The judge, using Amp’d founder Adderton’s words from the declaration, said T-Mobile is selling milk, or general communication services, while Amp’d is selling the equivalent of Red Bull, the popular energy drink.
“Your milk customers are much more wide-based,” the judge said to Quackenbush.
Quackenbush said the comparison was erroneous. Both companies are selling to a more hip, youth-oriented crowd. “We want to attract them just as bad as they do,” he said.
Cock argued that the two companies weren’t competitors. He also asked the judge to reconsider the conditions of Swenson’s employment agreements. Since the two are not competitors, he said, Swenson should be allowed to work at Amp’d as long as she did not disclose sensitive information about T-Mobile’s future plans.
T-Mobile’s attorneys said Swenson served on T-Mobile USA’s board and T-Mobile International’s board, making her privy to the company’s plans, which include a rebranding strategy, a new pricing model and handsets that would be rolled out.
The judge agreed that Swenson, as T-Mobile’s former second in command, could harm the company.
“T-Mobile has a well-grounded fear,” he said.
Tricia Duryee: 206-464-3283 or email@example.com