**UNPUBLISHED** UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT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 th e 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 Circui t Judge, and Samuel G. WILSON, United States District Judge for the Western District of Virginia, sitting by designation.

A ffirmed by unpublished per curiam opinion
.

**ARGUED:** John W. Matthews, III, HAYNSWORTH, SINKLER & BOYD, PA, Greenville, South Car olina, 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 Peter A. Rutledge, SMITH MOORE LEATHERWOOD, LLP, Greenville, South Carolina, for Appellees.2 Unpublished opinions are not binding precedent in this circuit.3 PER CURIAM : Rhode Island Textile Company (RITCO) appeals from the district court’s award of summary ju dgment to Prym Consumer USA, Inc. (Prym)
. In its complaint , Prym sought a declaration of the parties’ rights und er a non - competition agreement t hat restricted Prym’s business in the consumer elastics market. The district court held that RITCO was not ent itled to enforce th e

non - competition agreement . F inding 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

- D ritz), sold its consumer elastics business to RITCO. Prym

- Dritz t ransferred 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 ag reed 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., execute d a non - competition agreement that is virtually identical to the Prym Non

- Compete. William Prym, Inc. was a party in the As r elevant to this appeal, the parties’ purchase

(Continued)4 agreement contained express language stat ing that neither party

c ould assign any of its rights in the agreement without obtaining the prior written consent of the other ( the no assignment clause)
. After the sale of Prym

- Dritz’s consumer elast ics business, Prym succeeded to the interests of Prym

Dritz
. In 2006 , RITCO so ld 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 contract ual 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, RITC O 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.5 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 sew ing 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 term s of this settlement , RITCO agreed to take action to enforce the Prym Non

Compete 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 ag ainst RITCO in the district court. Prym sought declaratory relief on the basis that RITCO la cked 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 initi ate 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 b etween Prym and Dyno. We need not reach that argument to decide the is sues 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
rest raining Prym from selling consumer elastic s products
. The district co urt 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 a n interest that permits RITCO to enforce the restrain t on competition imposed by the Prym Non

- Compete . Alternatively, RITCO contends that ir respective of any rights acquired by Dyno, RITCO has separate, legal interest s in enforcing the Prym Non

- Compete. According to RITCO, although it stopped selling consumer elastics in 2006, the Prym Non

- Compete
p rotect s RITCO’s remaining interest s in the g eneral sewing notions market until 201 6 , 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 permit ted to sta nd , Prym will use its consumer elastics business7 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, th is competitio n will affect any f uture consumer elastics business that RITCO may decide to develop in 2013. W e disagree with
RITCO ’s contention that these are “legitimate interests ”
pro tected 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 gove rn the resolution of any contract dispute s between them. U n der 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. Th at clause s tates : “Th[e purchase] agreement s hall not be assignable by either party8 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 no assignment clause , which does not provide any exception that would permit RITCO to assign rights acquired under the Prym Non

Compete 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 o bligation to refrain from competition in the consumer elastics market. Thus, RITCO lacked the authority to transfer to Dyno the benefits of the Prym Non

Compete , and RITCO cannot avoid application of the plain language of the no

- assignment clause by execu ting 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 competit ion 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 201 3
. In considering this issue, our interpretation of the Prym
Non

- Compete is controlled genera lly by the clear and unambiguous9 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 contrac t, still are subject to judicial scrutiny. Id. at 1053. Courts applying Rhode Island law generally assess non

competition agreements by employing the “reasonableness” test set forth in the Restatement of Contracts. See Dial Media  ̧Inc. v. Schiff , 612 F. S upp. 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 res traint 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,

c ovenants 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 individua l 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 d etermination 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 busines s’ “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 a greement. See Dial Media , 612 F. Supp. at 1489. Applying these principles, w e 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 20 13
. The Prym Non

- Compete cannot be interpreted so broadly. T he Prym Non

- Compete ha d the limited purpose of protecting RITCO’s investment in the “good will” associated with Prym’s consumer elastics bu siness during the time of Prym’s ownership. Between 1 991 and 2 006, the Prym Non

- Compete fulfilled th is purpose by restraining P rym 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 that11 justified the restraint on competition. Thus, RITCO’s present attempt to use the Prym Non

- Compete to protect th e 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 interest s ” that would justify a continuing restrain t on Prym’s abili ty to market consumer elastics.

IV. For these reasons, we hold that RITCO lacks any basis to enforce the terms of the Prym Non

- Compete. W e affirm the judgment of the district court.
AFFIRMED