*NEWS*CALIF JUDGE RULES AGAINST LEXMARK

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California judge rules against Lexmark
Hewlett-Packard Co. has achieved a victory in a two-state battle over a former Lexmark International executive that the printer industry leader lured from Lexington earlier this year.A California judge ruled late last week that parts of Lexmark’s employment agreement with former manager Bruce Dahlgren are void in California.Both companies declined to comment on the ruling.The voided items include a non-compete clause that bars employees from joining a competitor for at least a year, as well as a section that forbade Dahlgren from luring certain Lexmark employees or customers for at least three years.In the ruling on certain aspects of the case, Superior Court Judge Kevin McKenney said California law should apply in the case, even though the employment agreement dictates that the laws of Delaware, where Lexmark is incorporated, applied.McKenney also voided a section of the contract that could have required Dahlgren to pay back gains from stock incentives he received while working at Lexmark.Earlier this year, McKenney issued a temporary restraining order barring Lexmark from enforcing a Lexington judge’s ruling that would have enforced the agreement.Dahlgren was considered to be among Lexmark’s top 20 executives, according to his supervisor’s court testimony.Dahlgren’s perceived importance to HP is his experience in selling printing solutions, which involves helping companies improve workflow and printing needs.In a research report earlier this year, Moors and Cabot analyst Cindy Shaw said it appears HP is “beginning to step up its efforts in what we think is Lexmark’s most profitable division.”The cases are continuing to go forward in both states. Attorneys representing both companies in the California case did not return calls inquiring about the future of the case after McKenney’s judgment. A conference is scheduled in the California court later this month, according to the court’s online records.i the Kentucky case, Fayette Circuit Judge Thomas Clark asked lawyers for both companies to submit briefs about a motion by Lexmark’s attorneys to compel Dahlgren to answer certain questions posed during a recent deposition.Also at issue is a motion to find Dahlgren and HP in contempt of Clark’s previous order. In general documents submitted to Fayette Circuit Court, Lexmark’s attorneys wrote that Dahlgren and HP “have engaged in activity which competes with the business of Lexmark in North America.” The bulk of the documents expanding on the motions have been filed under seal because they are considered confidential.

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July 17, 2006 at 11:12 AM