I was recently laid off by a decent company that will provide me with a good reference.  The industry I'm in (housing) is experiencing a horrible decline, so my layoff doesn't seem to hurting me in the eyes of potential employers.  I was at this company for about 15 months and got a promotion six months after I started. 

I was at the company prior to that for two years and 10 months.  I chose to leave that company and worked an almost three week notice to be certain everything was in perfect order as a professional courtesy.  Unfortunately, I didn't tell them I was going to work for one of their customers and it violated a non-disclosure agreement the company had in place.  Though most employees hired were required to sign the agreement, I had never been forced to do so.  The agreement was reiterated in the employee handbook I received and I did sign that I received that.

Long story short- They sued me for breach of contract two months after I left.  The court decided the agreement was non-binding under state law and dismissed the case.  I then sued them to recoup legal fees and a small amount as compensatory damages (only about $3k for stress, time out of work to go to court, etc.).  They settled out of court with my attorney.

Needless to say, I hate them and they hate me.  Without them on my resume, I lose three years of experience in my field and I have only been in the work force for about nine years.  I certainly can't list my old boss or the owner as a reference and, even if the option is given, selecting the 'Do Not Contact' box on an application raises huge red flags.

I have been dealing with it so far by listing the name and number of a former co-worker at that company.  She left before I did and despises them also.  Her position was higher than mine and a small part of my position (10-15% of my work) was reviewed by her so she was, sort of, my supervisor.  She has gladly agreed, without reservation, to be my reference for this particular company.  She now has a very prestigious job with a high profile charity and that adds to her credibility, in my opinion.

Any other (better) ideas on dealing with this situation?  I hate feeling like I'm being deceptive or that it could somehow hurt my job search, but this is the least damaging way I can think of to handle it.

Thanks,.