The Work

June 16, 2009 5:43 PM

Three Firms Fight Over Whether IBM Dealmaker Can Work for Dell

Posted by Brian Baxter

A month ago The Wall Street Journal reported that Dell was looking to recruit an M&A chief as competitors like Cisco Systems and Hewlett-Packard ratcheted up their dealmaking initiatives.

But when the dudes at Dell hired away 27-year IBM veteran David Johnson later that month, the M&A executive found himself slapped with a breach of contract suit filed by his former employer on May 21.

IBM turned to its longtime outside counsel at Cravath, Swaine & Moore for the complaint against Johnson, which was filed by presiding partner Evan Chesler and partner Stephen Madsen in U.S. district court in White Plains, N.Y.

The Cravath lawyers will square off against a team of attorneys from Morgan, Lewis & Bockius and Schulte Roth & Zabel to fight out what Johnson is allowed to do in his new position at Dell.

IBM claims that Johnson's defection violates a noncompete clause in a contract he signed with the company in 2005.

"As former head of [M&A] for IBM, Mr. Johnson has possession of valuable confidential information of IBM and cannot undertake a senior strategy position at Dell without violating his obligations to IBM," the company said in a statement. "Mr. Johnson repeatedly received significant compensation in exchange for agreeing to noncompete provisions, and IBM expects him to fulfill his obligations."

So far, IBM has had some success in court. Although U.S. district court judge Stephen Robinson denied IBM's request for a temporary restraining order to preclude Johnson from joining Dell--his first day was June 2--court filings show that Johnson's lawyers agreed to limit his activities during his first few weeks to learning Dell's business.

U.S. district court judge Kenneth Karas signed the order, which BusinessWeek reports bars Johnson from advising Dell "on any matter concerning business strategy," and requires him to provide his lawyers with a daily activity log that can be reviewed by IBM's counsel at Cravath.

Johnson's counsel includes Morgan Lewis employment partners Michael Banks and Michael Burkhardt and Schulte Roth employment partners Ronald Richman and Holly Hexter Weiss.

All of the lawyers involved in the case were either unavailable or did not respond to requests for comment. The next hearing is scheduled for June 22, when the judge is expected to rule on whether Johnson can continue to work at Dell or should take a leave until the case is resolved.

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