Edwards v. Arthur Andersen LLP: One Year Later

Introduction

On August 7, 2008, the California Supreme Court issued its highly anticipated decision in Edwards v. Arthur Andersen LLP, unanimously holding that Business & Professions Code section 16600 invalidated a provision in Edwards’s employment agreement that restricted him from serving customers and competing with Arthur Andersen following the termination of his employment.1 The Supreme Court rejected the “narrow restraint” exception2 that the Ninth Circuit and federal courts had previously embraced, and instead held that a provision prohibiting solicitation of customers that even “partially” or “narrowly” restricts an employee’s ability to practice the employee’s trade or profession is prohibited.