RECENT VIRGINIA DECISION IN A NON-SOLICIT CASE
“An auto-detailing business cannot recover from its former employer who made plans to start a competing business while still employed by plaintiff; a Chesapeake Circuit Court says plaintiff’s non-solicitation clause is facially overbroad because it would prevent defendant from offering his services as a “concert promoter, fishing guide, sous chef or plumber,” and plaintiff has failed to prove any damages.
This is another Virginia case arising from the machinations of the “rough and tumble world comprising the competitive marketplace.” Plaintiff Integrity Auto Specialists is in the business of automotive reconditioning or detailing – preparing vehicles for sale at various automobile dealerships. On April 18, 2005, defendant Phillip Meyer entered into an employment contract with Integrity. While employed by Integrity, Meyer serviced four dealership accounts: Colonial Auto Center, Battlefield Ford, Jim Price Chevrolet and Cross Roads Chrysler Jeep, all located within the Hampton Roads market. After formulating a plan to begin his own auto detailing business, Meyer contacted the managers of these four dealerships, informing them he was leaving Integrity. Upon the dealers’ inquiries, Meyer revealed that he was leaving to start his own detailing company, which would be “up and running” within a month.
Defendant ended his employment with Integrity on June 18, 2009, to begin management of A Clear Solution LLC, the detailing company he previously formed on May 27, 2009. Before terminating his employment with Integrity, defendant performed work for two of the dealerships, Colonial Auto Center and Battlefield Ford. Integrity sued for breach of fiduciary duty and of duty of loyalty; breach of contract, tortious interference with contract and/or contract expectancy; and violation of the Virginia Uniform Trade Secrets Act…
Judgment for defendant.”
The case is Integrity Auto Specialists Inc. v. Meyer.
Kevin E. Martingayle is the winning attorney.
One ruling in this case that I am most grateful for, is the discussion and explanation as to how the non-solicitation is overbroad. The issue is whether you can solicit old clients regardless of the business venture, services offered etc.
I see this all the time in contracts. “Employee will for the period stated in the above paragraph, refrain from directly, indirectly, offering or performing any services to employers customers, clients, etc.”
When I see this, I advise my clients that the provision is likely overbroad. If you wanted to open a hot dog stand outside of an old client’s office, you would not be harming your old employer – so I think the Court will find this provision to be overbroad.
Although the Judge in Chesapeake didn’t use my hot dog stand analogy, the point is clear. If there isn’t a link between the business at issue, and the restriction, then the restriction will not be upheld.
Clearly, these cases are hard to win. We have said that before. BUT, it doesn’t stop employers from trying.
Congrats to the defendant on this one. Sadly, it is not really a win when you have to pay attorneys fees but we are excited for you anyway.