UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 09-1599

PRYM CONSUMER USA, INCORPORATED; WILLIAM PRYM, 

INCORPORATED,

Plaintiffs - Appellees,

v.

RHODE ISLAND TEXTILE COMPANY,

Defendant - Appellant.

Appeal from the United States District Court for the District of 

South Carolina, at Spartanburg. G. Ross Anderson, Jr., Senior 

District Judge. (7:08-cv-03518-GRA)

Argued: May 11, 2010 Decided: July 21, 2010

Before KEENAN, Circuit Judge, HAMILTON, Senior Circuit Judge, 

and Samuel G. WILSON, United States District Judge for the 

Western District of Virginia, sitting by designation.

Affirmed by unpublished per curiam opinion.

ARGUED: John W. Matthews, III, HAYNSWORTH, SINKLER & BOYD, PA, 

Greenville, South Carolina, for Appellant. Natalma Morison 

McKnew, SMITH MOORE LEATHERWOOD, LLP, Greenville, South 

Carolina, for Appellees. ON BRIEF: H. Donald Sellers, Joel M. 

Bondurant, Jr., HAYNSWORTH, SINKLER & BOYD, PA, Greenville, 

South Carolina, for Appellant. Peter A. Rutledge, SMITH MOORE 

LEATHERWOOD, LLP, Greenville, South Carolina, for Appellees.
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Unpublished opinions are not binding precedent in this circuit.
3

PER CURIAM:

Rhode Island Textile Company (RITCO) appeals from the 

district court’s award of summary judgment to Prym Consumer USA, 

Inc. (Prym). In its complaint, Prym sought a declaration of the 

parties’ rights under a non-competition agreement that 

restricted Prym’s business in the consumer elastics market. The 

district court held that RITCO was not entitled to enforce the 

non-competition agreement. Finding no error, we affirm.

I.

A.

The following facts are undisputed. Prym manufactures and 

distributes sewing and other craft-related notions. In 1991, 

Prym’s predecessor, Prym-Dritz Corporation (Prym-Dritz), sold 

its consumer elastics business to RITCO. Prym-Dritz transferred 

to RITCO all the fixed assets and certain intangible assets, 

including “good will,” associated with that business. To 

achieve this transfer of “good will” to RITCO, Prym-Dritz agreed 

that it would not manufacture or sell elastic fabrics in 

competition with RITCO for a period of twenty-five years (Prym 

Non-Compete).1

 1 Prym-Dritz’s parent company, William Prym, Inc., executed 

a non-competition agreement that is virtually identical to the 

Prym Non-Compete. William Prym, Inc. was a party in the 

 As relevant to this appeal, the parties’ purchase 

(Continued)
4

agreement contained express language stating that neither party 

could assign any of its rights in the agreement without 

obtaining the prior written consent of the other (the noassignment clause). After the sale of Prym-Dritz’s consumer 

elastics business, Prym succeeded to the interests of PrymDritz.

In 2006, RITCO sold its consumer elastics line, 

“Stretchrite,” to Dyno, LLC. As part of this transaction, RITCO 

purported to transfer to Dyno all the rights accruing to RITCO 

under certain contractual provisions, including RITCO’s rights 

in the Prym Non-Compete. However, contrary to the no-assignment 

clause, RITCO did not obtain Prym’s consent to assign to Dyno 

Prym’s obligations under the Prym Non-Compete. Instead, RITCO 

and Dyno executed a separate agreement stating that if any of 

the assignments were ineffective, RITCO would “reasonably 

cooperate . . . to provide for Dyno the benefits” that Dyno

otherwise would have acquired. J.A. 413.

RITCO also executed a non-competition agreement to 

facilitate the transfer to Dyno of any “good will” associated 

with the Stretchrite brand. RITCO agreed that until 2013, it 

would refrain from “selling, manufacturing . . . or marketing 

 

proceeding in the district court but is not a party to this 

appeal.
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any goods similar to or competitive with the Stretchrite 

Products” in the consumer elastics market. However, RITCO has 

continued to conduct business in the broader market for sewing 

notions that, apart from elastics, includes sewing and 

needlecraft accessories such as buttons, needles, and thread.

B.

In 2008, RITCO executed a settlement agreement that 

resolved certain disputes with Dyno. Under the terms of this 

settlement, RITCO agreed to take action to enforce the Prym NonCompete against Prym on Dyno’s behalf, if requested to do so by 

Dyno.2

On receipt of this letter, Prym filed a complaint for 

declaratory judgment against RITCO in the district court. Prym 

sought declaratory relief on the basis that RITCO lacked 

authority to enforce the Prym Non-Compete because, having 

After receiving such a request from Dyno, RITCO sent a 

letter to Prym stating that RITCO was prepared to initiate 

litigation to stop Prym from conducting business in the consumer 

elastics market.

 2 The agreement further provided that RITCO would “permit 

Dyno to assume control of the prosecution or defense of such 

enforcement actions or claims.” J.A. 456-57. On appeal in 

this case, Prym argues that Dyno is using RITCO to re-litigate 

issues conclusively decided by a South Carolina court in an 

earlier litigation between Prym and Dyno. We need not reach 

that argument to decide the issues raised by RITCO on appeal.
6

removed itself from the consumer elastics market in 2006, RITCO 

no longer had a legitimate interest that would justify 

restraining Prym from selling consumer elastics products. The 

district court agreed with Prym’s argument, and entered summary 

judgment for Prym.

II.

On appeal, RITCO asserts that it has “legitimate interests” 

that justify enforcement of the Prym Non-Compete. RITCO 

observes that it is required by its settlement agreement with

Dyno to enforce the Prym Non-Compete on Dyno’s behalf, and 

argues that this independent contractual obligation is an 

interest that permits RITCO to enforce the restraint on

competition imposed by the Prym Non-Compete.

Alternatively, RITCO contends that irrespective of any 

rights acquired by Dyno, RITCO has separate, legal interests in 

enforcing the Prym Non-Compete. According to RITCO, although it 

stopped selling consumer elastics in 2006, the Prym Non-Compete 

protects RITCO’s remaining interests in the general sewing 

notions market until 2016, and RITCO’s future interest in 

resuming the manufacture and sale of consumer elastics when

RITCO’s non-competition agreement with Dyno expires in 2013. 

RITCO explains that if the district court’s decision is 

permitted to stand, Prym will use its consumer elastics business 
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to increase its share of the broader sewing notions market, 

thereby harming RITCO. RITCO also argues that if Prym currently 

is permitted to compete in the consumer elastics market, this

competition will affect any future consumer elastics business 

that RITCO may decide to develop in 2013. We disagree with 

RITCO’s contention that these are “legitimate interests”

protected by the Prym Non-Compete.

III.

A.

We review the district court’s entry of summary judgment de 

novo. Universal Concrete Prods. Corp. v. Turner Constr. Co., 

595 F.3d 527, 529 (4th Cir. 2010). Like the district court, we 

apply the law of Rhode Island because the parties agreed in the 

Prym Non-Compete that Rhode Island law would govern the 

resolution of any contract disputes between them. Under Rhode 

Island law, we consider the plain and ordinary meaning of the 

language used in the parties’ contract. Cathay Cathay, Inc. v. 

Vindalu, LLC, 962 A.2d 740, 746 (R.I. 2009).

RITCO’s first argument, that RITCO can enforce the Prym 

Non-Compete to satisfy its independent contractual obligation to 

transfer “good will” to Dyno, is foreclosed by the unambiguous

language of the no-assignment clause. That clause states: “Th[e 

purchase] agreement shall not be assignable by either party 
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without the prior written consent of the other party hereto.” 

J.A. 50.

Because the Prym Non-Compete is part of RITCO’s purchase 

agreement with Prym, the Prym Non-Compete is subject to the noassignment clause, which does not provide any exception that 

would permit RITCO to assign rights acquired under the Prym NonCompete without Prym’s consent. It is undisputed that in 2006, 

when RITCO sold Stretchrite to Dyno, RITCO did not obtain Prym’s 

consent to assign Prym’s obligation to refrain from competition 

in the consumer elastics market. Thus, RITCO lacked the 

authority to transfer to Dyno the benefits of the Prym NonCompete, and RITCO cannot avoid application of the plain 

language of the no-assignment clause by executing a separate 

contract with Dyno.

B.

RITCO argues, nevertheless, that it can enforce the Prym 

Non-Compete on its own behalf. As explained above, RITCO 

maintains that such enforcement is necessary to protect RITCO’s 

present interest in limiting competition relating to sewing 

notions other than consumer elastics, and to protect RITCO’s 

future interest in any consumer elastics business that RITCO may 

develop in 2013.

In considering this issue, our interpretation of the Prym 

Non-Compete is controlled generally by the clear and unambiguous 
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language chosen by the parties. See Durapin, Inc. v. Am.

Prods., Inc., 559 A.2d 1051, 1056 (R.I. 1989). However, because 

restraints on competition are disfavored, these restraints, even 

when plainly expressed in a contract, still are subject to 

judicial scrutiny. Id. at 1053.

Courts applying Rhode Island law generally assess noncompetition agreements by employing the “reasonableness” test 

set forth in the Restatement of Contracts. See Dial Media ̧Inc. 

v. Schiff, 612 F. Supp. 1483, 1488-89 (D.R.I. 1985). This test

provides, in relevant part:

A promise to refrain from competition that imposes a 

restraint that is ancillary to an otherwise valid 

transaction or relationship is unreasonably in 

restraint of trade if (a) the restraint is greater 

than is needed to protect the promisee’s legitimate 

interest, or (b) the promisee’s need is outweighed by 

the hardship to the promisor and the likely injury to 

the public.

Restatement (Second) Contracts § 188(1). Thus, in Rhode Island, 

covenants that limit competition by businesses are enforced to 

the extent necessary to protect a “legitimate interest” in the 

promissee.3

 3 Although RITCO contends that the district court imposed an 

inappropriately high burden by treating the Prym Non-Compete 

like a restriction on individual employment, we find no 

indication in the record that the district court applied an 

incorrect standard.

 See Home Gas Corp. of Mass. v. DeBlois Oil Co., 691 

F. Supp. 567, 573 (D.R.I. 1987) (applying Rhode Island law).
10

The determination whether a “legitimate interest” exists to 

enforce a non-competition clause depends on the particular facts 

surrounding the agreement. Durapin, 559 A.2d at 1053. In 

conjunction with the sale of a business, the successful transfer

of a business’ “good will” from seller to buyer constitutes a 

“legitimate interest” that can justify imposing a restraint on 

competition. Id. However, a mere general interest in remaining 

free from competition is not a sufficient basis to enforce a 

non-competition agreement. See Dial Media, 612 F. Supp. at 

1489.

Applying these principles, we disagree with RITCO that it 

can enforce the Prym Non-Compete on its own behalf, to protect 

its present interests outside the consumer elastics market, and 

to protect any future business in consumer elastics that RITCO 

may have in 2013. The Prym Non-Compete cannot be interpreted 

so broadly. The Prym Non-Compete had the limited purpose of 

protecting RITCO’s investment in the “good will” associated with 

Prym’s consumer elastics business during the time of Prym’s 

ownership. Between 1991 and 2006, the Prym Non-Compete 

fulfilled this purpose by restraining Prym and its predecessor 

corporation from marketing or selling “elastics fabrics of any 

kind” in competition with RITCO. However, when RITCO sold its 

consumer elastics business and withdrew from the consumer 

elastics market in 2006, RITCO abandoned the very interest that 
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justified the restraint on competition. Thus, RITCO’s present 

attempt to use the Prym Non-Compete to protect the other 

interests now asserted by RITCO would require a revision to, 

rather than an enforcement of, the Prym Non-Compete. 

Accordingly, we conclude that RITCO has not asserted “legitimate 

interests” that would justify a continuing restraint on Prym’s 

ability to market consumer elastics.

IV.

For these reasons, we hold that RITCO lacks any basis to 

enforce the terms of the Prym Non-Compete. We affirm the 

judgment of the district court.

AFFIRMED