Non-compete provision was overbroad and unenforceable (6-1)
November 07, 2011 by Ross Runkel at LawMemo
Just a reminder to be careful when drafting a non-compete agreement.
If a court concludes the agreement is "overbroad," the agreement may be unenforceable. Sometimes a court will narrow it down (wow, judicial re-drafting), sometimes not.
In Home Paramount v. Shaffer (Virginia 11/04/2011) the Virginia Supreme Court found that a non-compete agreement was overbroad, refused to narrow it, and refused to enforce it.
Shaffer's former employer sued him for violation of the non-compete provision of his employment agreement. The trial court granted Shaffer's plea in bar asserting the non-compete provision was overbroad and unenforceable. The Virginia Supreme Court affirmed.
The non-compete provision provided in part:
The Employee will not engage directly or indirectly or concern himself/herself in any manner whatsoever in the carrying on or conducting the business of exterminating, pest control, termite control and/or fumigation services as an owner, agent, servant, representative, or employee, and/or as a member of a partnership and/or as an officer, director or stockholder of any corporation, or in any manner whatsoever, in any city, cities, county or counties in the state(s) in which the Employee works and/or in which the Employee was assigned during the two (2) years next preceding the termination of the Employment Agreement and for a period of two (2) years from and after the date upon which he/she shall cease for any reason whatsoever to be an employee of [Home Paramount].
The court concluded that the clear overbreadth of the function in this case could not be saved by narrow tailoring of geographic scope and duration.
The DISSENT argued that the court had approved this language in 1989 involving the very same company; adherence to the doctrine of stare decisis demanded reversal.
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