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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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United States Court of Appeals

For the Eighth Circuit

___________________________

No. 15-2294

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Symphony Diagnostic Services No. 1 Inc., doing business as MobilexUSA, a

California corporation

lllllllllllllllllllll Plaintiff - Appellant

v.

Kimberly Greenbaum; Josephine Tabanag

lllllllllllllllllllll Defendants - Appellees

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Appeal from United States District Court 

for the Western District of Missouri - Jefferson City

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 Submitted: January 13, 2016

 Filed: July 6, 2016

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Before LOKEN, GRUENDER, and KELLY, Circuit Judges.

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KELLY, Circuit Judge.

After Ozark Mobile Imaging was sold to Mobilex by means of an asset

purchase, two former Ozark employees, Kimberly Greenbaum and Josephine

Tabanag, went to work for Mobilex’s competitor, BioTech X-Ray. Mobilex sued

Greenbaum and Tabanag to enforce the non-compete and confidentiality agreements

they had signed with Ozark. The district court granted summary judgment in favor

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of Greenbaum and Tabanag on the basis that a personal services contract cannot be

assigned to a subsequent employer under Missouri law without the employee’s

contemporaneous consent. Because we find that the non-compete and confidentiality

agreements at issue here were not personal services contracts and could be assigned

without the consent of Greenbaum and Tabanag, we reverse and remand.

I

Both Greenbaum and Tabanag worked as mobile x-ray technicians for Ozark

prior to its acquisition by Mobilex: Greenbaum from March 2007 onwards, and

Tabanag beginning in October 2010. Greenbaumstarted as a part-time employee, but

was eventually given a full-time position and promoted to district manager. Tabanag

too described her position at Ozark as full-time, working 40-plus hours a week with

full benefits. Neither, according to Mobilex, had a written employment contract. At 1

the time they left Ozark, Greenbaum made $21.50 an hour and Tabanag made $17.50

an hour.

In September 2007, Greenbaum signed a non-compete agreement and a

confidentiality agreement with Ozark. Tabanag signed essentially identical

agreementsin October 2010. Both non-competes began by stating that the employee

was entering into the agreement “[i]n consideration of his/her employment by Mobile

Medical Services Inc., Ozark Mobile Imaging, Clearview Mobile Imaging, LLC

and/or its affiliates . . . .” They went on to state that during his or her term of

Greenbaum submitted an affidavit claiming to have signed a written

1

employment contract when she began working at Ozark and each time she was

promoted, but no such contracts appear in the record, and Mobilex disputes their

existence.

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employment and for two years afterwards, the employee agreed within a specified

geographical area not to: 2

1. Directly or indirectly engage in the mobile diagnostic business.

2. In any manner be connected with or employed by a person,

company, firm, or corporation engaged in the mobile diagnostic

business.

3. For himself/herself or on behalf of any other person, partnership,

or corporation call on any customer or customers of Mobile

Medical Services, Ozark Mobile Imaging, Clearview Mobile

Imaging, LLC, and/or its affiliates, for the purpose of soliciting

their business for others.

The separate confidentiality agreements Greenbaum and Tabanag signed

consisted of an acknowledgment that they had been instructed on their employer’s

confidentiality policy, and that they understood thatfailure tomaintain confidentiality

was just cause for dismissal.

Mobilex acquired Ozark through an Asset Purchase Agreement in December

2012. Around this same time, it made Greenbaum an offer of employment. Unlike

her previous position, the job Mobilex offered Greenbaum was part time, with a 90-

day probationary period, no guaranteed number of hours, and no guaranteed benefits. 

According to an affidavit Mobilex submitted, Greenbaum was offered a part-time

position because she had asked to work fewer hours while at Ozark. Greenbaum

refused Mobilex’s offer.

Specifically, within a 100-mile radius of St. Joseph, Missouri; Kansas City, 2

Missouri; Columbia, Missouri; Joplin, Missouri; Laurie, Missouri; Springfield,

Missouri; Lincoln, Nebraska; and Omaha, Nebraska.

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Tabanag was likewise made an offer by Mobilex. Although Mobilex offered

her the same wage she had been earning at Ozark, the position she was offered was

part time and without guaranteed benefits. Tabanag also refused Mobilex’s offer.

Greenbaum took on a new position as a mobile x-ray technician at Mobilex’s

competitor, Biotech X-ray, in January 2013, and Tabanag followed suit in February.

In September 2013, Mobilex filed a complaint in federal court against Greenbaum

and Tabanag, alleging state law claims for breach of contract, breach of fiduciary

duty, and tortious interference with a business relationship. After Greenbaum and

Tabanag moved for summary judgment, the district court concluded that the success

of each of the claims depended on whether the non-compete and confidentiality

agreements were assignable from Ozark to Mobilex without Greenbaum’s and

Tabanag’s contemporaneous consent. The district court found that Greenbaum’s and

Tabanag’s consent was necessary in order for the agreements to be assignable. Since

it was undisputed that neither had provided consent, the district court entered

judgment in their favor on all counts.

II

The central question presented by this case is whether non-compete and

confidentiality agreements signed by an employee can be assigned without the

employee’s consent. Because this case was brought under Missouri state law, we are

bound by any relevant decisions of the Missouri Supreme Court. See Leonard v.

Dorsey & Whitney, LLP, 553 F.3d 609, 612 (8th Cir. 2009). If no such decisions

exist, “we may rely on the decisions of intermediate state courts, unless we are

convinced by persuasive data that the highest state court would decide the issue

differently.” Id. “Persuasive data” in this context includes “relevant state precedents,

analogous decisions, considered dicta, scholarly works, and any other reliable data.” 

Id. (quoting McKenna v. Ortho Pharm Corp., 622 F.2d 657, 663 (3d Cir. 1980)).

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No decision from the Missouri Supreme Court or Missouri’s intermediate

courts appears to have squarely addressed the question here. Faced with a similar

lack of precedent last year in deciding whether Arkansas law permitted “the

assignment of an employee’s non-compete agreement to a successor employer,” we

predicted that the Arkansas Supreme Court would adopt what we called the majority

rule: that covenants not to compete can be assigned to a successor employer. Stuart

C. Irby Co. v. Tipton, 796 F.3d 918, 923–24 (8th Cir. 2015) (citing 6 Williston on

Contracts § 13:13 (4th ed. 1990)). But see Great Am. Opportunities, Inc. v.

Cherrydale Fundraising, LLC, No. 3718-VCP, 2010 WL 338219, at *11 n.142 (Del.

Ch. Jan. 29, 2010) (noting disagreement as to which view commands majority

support). Stuart C. Irby supplies the default forecast of what a state’s highest court

would do when state law is silent, and therefore controls this case. Indeed, the Stuart

C. Irby court reached the conclusion it did despite the Arkansas courts’ general

skepticism of covenants not to compete, see 796 F.3d at 924, a skepticism that the

Missouri courts do not appear to share. See Whelan Sec. Co. v. Kennebrew, 379

S.W.3d 835, 841–42 (Mo. 2012) (en banc) (holding that “[t]he law of non-compete

agreements in Missouri seeks to balance the competing concerns between an

employer and employee in the workforce” and “[i]n balancing these competing

interests, Missouri courts generally enforce a non-compete agreement if it is

demonstratively reasonable”). We predict the Missouri Supreme Court would permit

assignment of covenants not to compete without contemporaneous consent. Accord

Restatement (Second) of Contracts § 317 cmt. c, illus. 6 (Am. Law Inst. 1981).

The district court thought that a contrary result was required by Roeder v.

Ferrell-Duncan Clinic, Inc., 155 S.W.3d 76 (Mo. Ct. App. 2004). In that case, the

Missouri Court of Appeals observed that “[i]t is well recognized that in a contract for

personal services, which involves special knowledge, skill or a relation of personal

confidence, the duty to performis not assignable without the consent of both parties.” 

Id. at 84 (quoting Kenneth D. Corwin, Ltd. v. Mo. Med. Serv., 684 S.W.2d 598, 600

(Mo. Ct. App. 1985)). But this case, unlike Roeder, does not involve a personal

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services contract: it involves free-standing non-compete and confidentiality

agreements. Neither agreement formed part of a larger employment agreement that

required Greenbaum and Tabanag to provide personal services of any kind to Ozark. 

By contrast, the plaintiff in Roeder, a physician, had agreed in an employment

contract “to provide professional medical services for [his employer’s] sole and

exclusive benefit during the term of the agreement.” Id. at 84. It was this employment contract that Roeder found to be a non-assignable personal services contract. 

Id.

Greenbaum and Tabanag argue that the non-compete and confidentiality

agreements they signed were personal services contracts because the non-compete

agreements stated that they were entered into in consideration for continued (albeit

at-will) employment by Ozark. Stated differently, in exchange for their signing the

non-compete agreements, Ozark agreed not to immediately dischargeGreenbaumand

Tabanag. But this argument misapprehendsthe crucial difference between a personal

services contract and a non-compete agreement: the former requires affirmative

actions by the employee, whereas the latter requires only that they refrain from

certain actions. Managed Health Care Assocs. v. Kethan, 209 F.3d 923, 929–30 (6th

Cir. 2000); see also Sanfillippo v. Oehler, 869 S.W.2d 159, 163 (Mo. Ct. App. 1993)

(holding that the non-compete portion of an employment agreement was severable

and not a personal services contract); Cropper v. Davis, 243 F. 310, 316 (8th Cir.

1917) (suggesting that contract requiring employee to perform, unlike non-compete,

presents involuntary servitude issues); In re Andrews, 80 F.3d 906, 912 (4th Cir.

1996) (“Although the Thirteenth Amendment prohibits a court from specifically

enforcing a personal service contract, an agreement not to compete is specifically

enforceable if it is reasonable.”). As these cases suggest, a contract that imposes on

a party affirmative obligations to act raises concerns that are not implicated by a

contract that simply forbids certain actions, and its assignment must therefore be

policed more carefully. But the fact that Greenbaum and Tabanag signed the noncompete and confidentiality agreements in consideration for continued employment

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did not transform those agreements into personal services contracts, because the

agreements imposed no obligation on them to take any affirmative action.

Refusing to enforce the non-compete and confidentiality agreements here just

because they were transferred from Ozark to Mobilex without Greenbaum’s and

Tabanag’s consent would lead to anomalous results. If Mobilex had acquired Ozark

by way of purchasing its stock rather than its assets, there would be no bar under

Missouri law to its enforcing the non-compete and confidentiality agreements. See

Alexander & Alexander, Inc. v. Koelz, 722 S.W.2d 311, 312 (Mo. Ct. App. 1986). 

The court in Alexander held that after an employer merges with its parent, the merged

entity is entitled to enforce employment contracts that were entered into pre-merger. 

Id. at 313. And it suggested that the same rule should apply not just to mergers, but

also “the initial acquisition of one company by another by the purchase ofstock.” Id. 

We see no reason why the non-compete and confidentiality agreements here should

be unenforceable simply because Mobilex’s acquisition of Ozark was effected

through an asset purchase rather than a transfer of stock. See Managed Health Care,

209 F.3d at 929; 9 John E. Murray, Jr., Corbin on Contracts § 49.5, at 204–05 (rev.

ed. 2007) (“The underlying issue of whether an employee should be subject to a noncompetition covenant should not depend on matters of form.”).

It maymake sense to preclude assignment of a non-compete agreement without

consent, at least in the absence of an explicit provision permitting assignment, when

the assignment would materially change the obligations of the employee, or the

employee only agreed to the non-compete because of qualities specific to the

employer. See Roeder, 155 S.W.3d at 89; Munchak Corp. v. Cunningham, 457 F.2d

721, 725–26 (4th Cir. 1972). For example, if a non-compete agreement forbade

“engaging in the same business ventures as the employer,” and the employer was

acquired by a company that engaged in a broader set of ventures, the obligations

imposed on the employee by the agreement would be expanded by the acquisition. 

Similarly, if someone agreed to work as a personal assistant to Meryl Streep subject

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to a non-compete because of his admiration for Streep’s character and work, allowing

the non-compete to be assigned to a less accomplished actor without his consent

could fairly be viewed as changing the terms of the deal. See Traffic Control Servs.,

Inc. v. United Rental Northwest, Inc., 87 P.3d 1054, 174–75 (Nev. 2004); Smith, Bell

& Hauck, Inc. v. Cullins, 183 A.2d 528, 532 (Vt. 1962); American Colortype Co. v.

Continental Colortype Co., 188 U.S. 104, 107 (1903) (Holmes, J.) (“Service is like

marriage, which, in the old law, was a species of it. It may be repeated, but

substitution is unknown.”).

We need not decide whether Missouri would disallow assignments in cases

such asthese. The non-compete agreements here precluded only working in the field

of medical diagnostics or soliciting business from certain clients within a specified

geographical area. That obligation is no different whether enforced by Ozark or by

Mobilex. See Munchak, 457 F.2d at 725–26; Artromick Int’l, Inc. v. Koch, 759

N.E.2d 385, 389 (Ohio Ct. App. 2001) (upholding assignment because “no additional

burdens were placed upon appellee as a result of the asset sale or the assignment of

the noncompetition agreement”). And a reasonable jury, looking at the facts in the

record, could find that Greenbaumand Tabanag did not agree to the non-compete and

confidentiality agreements because of Ozark’s unique characteristics. See Alexander,

722 S.W.2d at 313 (“[W]hen a person contracts with a corporation, it must be

assumed that person contemplated the almost certain likelihood of change in the

corporation and its personnel.”); AutoMed Techs., Inc. v. Eller, 160 F. Supp. 2d 915,

924 (N.D. Ill. 2001). 

The danger in enforcing a non-compete agreement is that by eliminating other

realistic opportunities for employment, it may effectively force the employee to

continue working for the employer on the employer’s terms. See Osage Glass, Inc.

v. Donovan, 693 S.W.2d 71, 73–74 (Mo. 1985) (en banc). Greenbaum and Tabanag

say the post-acquisition employment offers Mobilex made them were significantly

less attractive than the positions they had enjoyed with Ozark: they were not

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guaranteed a minimum number of hours or benefits, for example. But in general, this

concern would not be addressed by imposing a rule against assigning non-compete

agreements without consent. As far as the record shows, Ozark would have been

within its rights at any time to reduce Greenbaum’s and Tabanag’s hours and deny

them benefits, leaving them in the same unenviable position they were put in after the

acquisition. To the extent that Greenbaum and Tabanag believe that the specific

terms of the non-compete agreements here restrict too heavily their ability to gain

future employment, they remain free on remand to challenge the agreements on that

basis. See Whelan, 379 S.W.3d at 841–42.

III

We reverse the judgment of the district court and remand the case to the district

court for further proceedings consistent with this opinion.

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