Question

Smith was employed as a salesman for borden, inc., which sold food products in 63 counties in arkansas, 2 counties in missouri, 2 counties in oklahoma, and 1 county in texas. smith's employment contract prohibited him from competing with borden after leaving its employ. smith left borden and went to work for a competitor, lady baltimore foods. working for this second employer, smith sold in 3 counties of arkansas. he had sold in 2 of these counties while he worked for borden. borden brought an injunction action against smith and lady baltimore to enforce the noncompete covenant in smith's former contract. was borden entitled to the injunction?

Answer 1

Facts

1.       Plaintiff is a food product firm. Defendant worked as a salesman of plaintiff’s.

2.       Defendant wanted to start work at plaintiff’s competitor. Plaintiff sought an injunction against defendant based on noncompete agreement from plaintiff’s employment. The non compete agreement prohibits plaintiff from competing with plaintiff in certain areas which included around 70 countries mostly within Arkansas with some in Missouri, Oklahoma, and Texas.

3.       Trial court held for defendant on grounds that were no trade secrets involved and the area was unreasonably large and restraint on trade. Plaintiff appealed.

 

Relevant terms

Noncompete agreement 9employee) is a clause in employment contact that prohibits employee from working or starting business in similar field as employer. Some states do not allow these agreements and the clause may be struck by court if deemed to unreasonable e.g. can’t work in similar field forever is an unreasonable restraint.

 

Opinion

The court agreed with trial, the area of noncompete is sufficiently large and unreasonable. Also it disagreed that defendant had any trade secret that would give him unfair advantage. They conceded if anything it was the goodwill gained by defendant from customers in his capacity as a salesman, however, goodwill is the property of defendant not plaintiff.

Appeals Court affirmed the decision.