VIRGINIA NON COMPETE CASE RESOLVED
According to Virginia Lawyers Weekly Blog, a Hanover County employee (not too far from Richmond) won a non-compete battle when his employer’s agreement was struck by the Court as overbroad!
Now, this is another great victory for the employee. I salute his attorney and hope more courts will do the same. I am sure it wasn’t a fun battle however – and clearly has last over 14 months. I am sure that wasn’t fun or cheap – but job well done.
The following is directly from VLW’s blog post by editor Paul Fletcher:
“In Specialty Marketing Inc. v. Lawrence (VLW 010-8-061), the employee signed a noncompete as part of a stock ownership deal. The company is a wholesaler of consumer home and auto electronics. Lawrence started working there in 1995; by 2000 he was the account rep for Virginia and North Carolina. In 2006 he became a director of Specialty, getting to buy stock.
That purchase carried a noncompete that said Lawrence couldn’t own, manage, or be employed by “any business competitive with Specialty in areas where Specialty has a market for its business.”
Those of you who handle noncompete cases already know where this one’s going.
Lawrence stopped being an owner in December 2008 and two months later he no longer worked there. Some nine months later, in October, a company called Goldberg hired him to be its account rep in, yes, Virginia and North Carolina.
Specialty brought suit for breach of contract in Hanover, but Judge J. Overton Harris took a dim view of the noncompete. He surveyed numerous cases in the field, noting that the test for upholding a noncompete usually turns on limitations on employee function, geographic scope and duration.
The provision that Lawrence couldn’t be employed by “any business competitive with Specialty” is “precisely the type deemed overly broad and unforceable” by the Supreme Court, he said. Why? It is “unlimited in functional scope.”
And while duration wasn’t an issue here, geography was. The prohibition was on working “in areas where Specialty has a market for its business.” Overton noted that Lawrence could move to Arizona, and if Specialty expanded its operation to include the Grand Canyon State, he would be in breach of the agreement.
Overton struck the noncompete and dismissed the lawsuit. But before doing so, he recalled a vivid analogy from a 2000 case from Henrico County: A noncompete, he said, “is like an amoeba. By having a life wholly unto itself, this covenant may grow more oppressive without restriction day by day, week by week, month by month, year by year.””