Acquisitions
Lawsuit in Quanta Services Deal Challenges Non-Compete Terms
Quanta Electric Power Services wants to keep the case in Western Kentucky U.S. District Court in Owensboro, Ky., while the plaintiffs are seeking to remand it to a local court.
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Two former executives of a family-owned electrical contractor acquired by Quanta Electric Power Services LLC in 2021 now are suing the largest U.S. specialty contractor to have a judge nullify non-compete agreements they signed before the deal.
Clint and Kerry Sharber, ex-vice president of operations and division leader, respectively, of Madisonville, Ky.-based William E. Groves Construction Inc. both worked for the firm founded by their grandfather from the early 2000s until just after the family sold it to Quanta, according to a June 20 complaint filed in Hopkins County Circuit Court. Quanta Electric is a unit of Houston-based Quanta Services, which topped ENR’s 2021 Top 600 Specialty Contractors list.
The case was moved in July to Western Kentucky federal district court in Louisville.
The executives opted to leave the company, founded by their grandfather in 1972, after realizing “they were no longer working for the family business” and “decided it was time to strike out on their own,” their complaint states. While the two say they had not yet issued any proposals under a new company, signed any project agreements or hired any employees, they received a notice on June 17 from Quanta attorneys threatening litigation if they moved ahead with their plan.
Years earlier, prior to the acquisition, both Sharbers signed confidentiality and non-disclosure agreements at the request of their uncle, Groves CEO Jeff Groves, according to the complaint. The agreements included “non-competition covenants” which prevent them from engaging in services that Groves offers for two years after leaving the company.
Clint Sharber’s agreement covers Kentucky, Tennessee and parts of Indiana and Illinois, and Kerry Sharber’s agreement covers all of Kentucky, Tennessee, Indiana, Illinois, Alabama and Mississippi.
In their suit the Sharbers allege tha they asked their uncle about the non-compete agreements before the company’s sale to Quanta, and were told they would not be enforced. The two also claim that Groves had released employees from similar agreements in the past.
Enforcing the agreements would “restrict the Sharbers from working in the only trade or profession that either has ever pursued,” the complaint states.
The Sharbers are asking the court to declare the agreements unenforceable and to award them the costs of pursuing the litigation.
Quanta and its attorneys did not respond to inquiries about the case by press time.
Dispute Over Value of Case
The Sharbers and Quanta are in dispute over whether the value at question in the case is greater than $75,000.
Quanta says both sides stand to risk more than that amount, which means the case should stay in the federal court. Groves President Andy Bachman, in an affidavit, said that each Sharber earned more than $75,000 as a Groves employee in 2021. The firm's top 25 customers, not including its two largest, generated more than $30 million in revenue that year. Even if Groves lost 1% of that revenue, it would be more than the jurisdictional threshold, Quanta attorneys argued in a court filing.
The Sharbers seek to remand the case to the local court. Because they did not work in sales, they did not generate profits for Groves so there is no evidence that the case would cross the $75,000 threshold, according to their attorney.
