### FI LED U.S. COURT O F APP EALS ELEVENTH CIRCUIT A ugu st 11 , 2 005 THO MAS K. KAH N CL ERK

Ho no ra ble Ric ha rd Mil ls, Un ite d St ate s D istri c t Judg e fo r t he Ce ntr a l D ist

ri c t of I lli no is, * sitti ngby desig nation. [PUBLIS H] IN THE UN ITED STATES COURT OF APPEALS FO R T HE EL EV EN TH CIRC UI T

____ ____ ____ ____ ____ ____ N o. 04- 1567 5

____ ____ ____ ____ ____ ____ D. C. Docket N o.04-01996 -CV -CC- 1 DOUGLAS J. MACGINNITIE, Plai nt iff -Ap pe ll an t, ve rs us HO BBS G ROU P, LL C, HILB, ROGAL AND HOBBS COM PANY, D ef en dants -Appe lle es .

____ ____ ____ ____ ____ ____ Appeal f rom the United State s District Court fo r the N orthe rnD istri ct

of G eo rg ia

____ ____ ____ ____ ____ ____ _ (A ug us t 11, 200 5) Before TJO FL AT and KRA VI TC H, Circuit Judges, and MIL LS , D istrict Judg e. * KRA VI TC H, Circuit Judge:2

In th is cas e in vo lv in g re st ric ti ve co ve na nt s i n a n e m pl oym en t co nt ract , we decide two questions. In a m atter of f irst im pression for our court, w e hold that our “ tot al a ct ivi tie s” te st f

or ac or por at ion ’ s pr inc ipa l pl ac e of bus ine ss f

or div er sity j ur isd ic tio n purp ose s a

ppl ie s to de te rm ine the c iti ze nshi p of ade fe ndant corporation which once operated in the sam e state as the plaintiff but has since be enpur ch as ed

by and i nte gr at ed

int o an ou t- of

-s ta te c or por at iona s ahol din g com pany . W e further

conclude that because the defendant corporation’ s principal place of business is in the sam e state as the purchasing corporation, the fe deral co u rt s h av e ju ri s d i ct i o no v era s u i tb y a c i t i ze no f t h e d ef en d an tco rp o ra t i o n ’s fo rm er hom e state . S ec ond, w e va cate and r em an d th e dis tr ic t c ourt’ s de nia l of prelim inary

injunctive relief

. I. D ef en dant- Appe lle e H obbs G ro up, L L C ( “ H obbs ”) , an in sur an ce br oke ra ge firm , e m ploy ed Plaintiff-Appellant Douglas J. MacG innit ie as its Senior V ice Pr es ide nt and G en er al Co unse l i n 19 98. H obbs is inc or por at ed in the S ta te of D el aw ar e, and unti l 20 02 i t un dis put ab ly ha d it s pr inc ipa l pl ac e of bus ine ss i n th e State of G eorgia. De fendant-Appellant H ilb, Rogal & H obbs Com pany (“ HRH ”), al so an in sur an ce br oke ra ge f irm , a gr ee d to pur ch as e H obbs in 2002 . H RH is inc or por at ed and h as it s pr inc ipa l pl ac e of bus ine ss i n th e Co m

m onw ea lthof3

Virginia. When Hobbs first em

ploy ed MacG innit ie, MacG innit ie signed a form em ploym ent agreem ent which H obbs had drafted. T he agreem ent included re str ic tiv e co ve nants w hic h are a t the he ar t of the pr es en t a ct ion . T he e m plo ym en t ag re em en t’ s no n- sol ic itatio n pr ovi sio n pr ohi bit s M ac G inn iti e fr om e nga gin g in cert ai n a ct iv it ie s fo r a p eri odof t wo years a fte r te rm in at io n o f hi s emplo ym en t. A m ong oth er

thi ngs, Ma cG inn iti e ag re ed not to: [d] irectly or indirectly

solicit for em

ploym ent any

person who is an em plo y ee of [ H obbs ] , unl es s [ H obbs ] f ir st t er m inate s th e em

plo ym en t of such em

ploy ee or [ Hobbs] gives its written consent to su ch em plo ym en t or

of fe r of e m plo ym en t; [c ] al l onor , dir ec tly

or ind ir ec tly , sol ic it, div er

t, or take aw ay

any i n s u r an c e - r e l a t e db u s i n e s s f r o m [H o b b s ], o r , d i r e c t l y o r i n d i r e c t l y, acce pt insu rance- related business from , provide insurance re lated consult ing services of any kind to , or perform

any of the services of fe re d by [ H obbs ] f

or , any pe rs on, f irm , c or por at ionor

oth er e nti ty w ho i s ac ust om er

of [ H obbs ] or

w ho i s, or

dur ing the tw o- y ear pe ri od pr io r to [Mac Gin ni ti e’s] term in at io n o f em pl oym en t was , a4

prospective custo m er of [ Hobbs] with w hom [Mac Ginnitie] had direct co nta ct , or , dir ec tly

or ind ir ec tly , e nc our ag e any suc h c ust om er

to ce as e d o i n g b u s i n es s wi th [H o b b s ].

The e m ploym ent agreem ent also contained a confidenti ality provisio n which obl ige d M ac G inn iti e not

to “ m ak e use of

, divulg e, or

oth er w ise dis cl ose , dir ec tly or ind ir ec tly , w he the r dur ing the pe ri od o f [M ac G inn iti e’ s] e m plo ym en t w ith [H obbs ] or

a t any ti m e the re af

te r, any Co nf ide nti al I nf

orm at ion. . . e xc ep t t o th e ex te nt s uc h us e, divulg en ce or dis cl osur e is m ad e in c onne ct ionw ith [Ma cGin ni ti e’s] em

pl oym en t an d fo r th e b en efi t o f [Ho bb s].” A t the ti m e of

the a cquis iti on o f H obbs , H RH pr es en te d M ac G inn iti e w ith ana cknow le dge m en t a gr ee m en t, und er w hic h M ac G inn iti e ac know le dge d th e nonsolicitatio n and confidenti ality provisio ns of the em

ploym ent agreem ent. T he new contract also added a newparagra ph to th e em

ploym ent agreem ent which provided that [M ac G inn iti e] gr an ts t o [ H RH ] dur ing the te rm of thi s A gr ee m en t the continu ous and u nilateral right, upon written notice to [Mac Ginnitie] of 45 d ay s, to le sse n th e re str ic tio ns o f any of the c ove nants se t f

orth he re in b y so m uc h a s [ H RH ] de em s ne ce ssary e ith er to m ak e thi s5

A gr ee m en t i n a cc or danc e w iththe pol ic y of the S ta te of

G eo rg iaor

to fi tth e c i rc u m s t an ce s p ec u l i art o [M ac Gi n n i t i e].

Ma cG inn iti e al le ge s th at

he w as sub se que ntl y

f or ce d to le av e H RH sho rt ly after the acquisition because his posit ion was elim inated and his j ob du ties reas si gn edto att orne y s wo rk in g a t HRH h ead qu art ers in Ric hm on d, Vi rg in ia . De fe n d an t s , o nth e o th erh an d , c l ai m th at th ey d i dn o th i n g t o fo rc e M ac Gi n n i t i e’s departure fr om

the com pany . Af ter Mac Ginnitie resigned from HRH in Se ptem

ber 2003 , he and a partner opened a newinsurance brokerage business, Beec her Carlson Risk Managem ent, I nc. Ma cG inn iti e fi le d th e pr es en t a ct ionf or de cl ar at or

y and i nj unc tiv e re lie f in G eo rg iastate c ourt i n 20 04, a lle gin g th at the langua ge of

the non -s oli ci ta tio n and co nf id en ti al it y

pro vi si on s ef

fect iv el y pre ve nt s h im

fro m co m pe ti ng wit h HRH. T he de fe ndants f

ile d ati m el y

not ic e of r em ova l, c la im ing f

ed er al j ur isd ic tio n unde r the div er sity

statut e, 28 U . S. C. § 13 32. Ma cG inn iti e fi le d am oti on f or rem and, but the district court foundthat diversity j urisdictio n existed and d enied the m oti on. A ft er the de nia l of

the m oti on f

or ar em an d, Ma cG inn iti e re ne w ed his m oti on f or apr el im inary

inj unc tio n barr ing e nf

or ce m en t of

the a lle ge dly6

une nf or ce ab le c ove nants . T he dis tr ic t c ourt r ef use d to gr an t the inj unc tio n on thr ee gr ound s: f

ir st, that M ac G inn iti e w as not li ke ly to suc ce ed

on the m er its be ca use the c ove nants w er e not ove rb ro ad ; se co nd, that M ac G inn iti e w oul d no t suf fe r ir re para ble harm be ca use he w as not

li ce nse d pe rs ona lly

to se ll ins ur an ce in G eo rg ia ; and thir d, that the ba lanc e of harm s w ei ghe d inH RH ’ s f av or be ca use it m ight lo se a significant num ber of clients and em

ploy ees if the inj unction we re gr an te d. Fo ll owi ng th e ru li ng , MacGi nn it ie fil eda ti m el y ap pe al . II. MacG innit ie contends th at the district court lacked subjec t-m atter j ur isd ic tio n ov er

the pr es en t c as e an d sh oul d have r em an de d it to the G eo rg iastate court from

which it w as rem oved. W e re view r uling s on the su bje ct-m atter j ur isd ic tio n of

af ed er al c ourt de nov o. W ill iam s v. Be st B uy Co . , I nc . , 269 F . 3d 1316 , 131 9 ( 11th C ir . 200 1) . F ac tua l f ind ing s r eg ar din g th e ci tiz en shi p of aparty ar e subj ec t t o ac le ar ly

e rr one ous standard

of r ev ie w . Mc Co rm ic k v. A de rh olt , 293 F.3d 125 4, 1257 (11th Cir. 2002 ). Ma cG inn iti e cl ai m s th at

the dis tr ic t c ourt l ac ke d su bj ec t- m atte r j ur isd ic tio n ove r the pr es en t a ct ionbe ca use the re w as not

c om ple te div er sity

be tw ee n th eThe de fenda nts claim that MacGinnitie is estopped f rom claimingthat Hobbs is a citizen 1 of Ge org ia by

its filing in a sepa

rate action in a Connec ticut court. The la w is well-settled, howeve r, that principles of estoppel and w aiver

do not apply

to a fe dera l court’s a cquisition of subject-matter

jurisdiction. America

n Fire & Ca s. Co. v. Finn, 341 U.S. 6 (1951); Her tz C orp. v. Alamo Rent-A- Car, 16 F .3d 1126, 1130-31 (11th Cir. 1994). 7 part ie s a t the ti m e the c om pla int w as f ile d. C om

ple te div er sity

r equir es that no 1 de fe ndant i n adiv er sity

a ct ionbe ac iti ze n of

the sam e state a s any

pla int if f. 28 U . S. C. § 13 32; Card env. A rk om a A sso cs . , 494 U . S. 185 , 187 ( 1992 ). F or div er sity pur pose s, ac or

por at ionis a ci tiz enof

both th e state w he re it

is in co rp or at edan d t he st at e whe re i t h as it s p rin ci pa l p la ce o f bu si ne ss . 28 U.S.C. § 1332 (c ). C iti ze nshi p f

or div er sity pur pose s is de te rm ine d a t the ti m e the sui t i s filed. Harris v. Gardner, 216 F.3d 970, 983 (11t h Cir. 2000 ). We h av e a d o p t edth e “to t al ac t i v i t i es ” t es tt o d et erm i n e aco rp o ra t i o n ’s principal place of business. See Vareka I nvestm ents, N .V . v. Am erican In ve stm en t P ro pe rt ie s, I nc . , 724 F . 2d 9 01, 910 ( 11th C ir . 198 4) . T his te st com bines the “ place of a ctivities” test and the “ nerve center ” test used by other ci rc uit s. S w ee t P ea

Mari ne , L td. v. A PJMari ne , I nc . , 411 F . 3d 1 242, 124 7 ( 11th Ci r. 200 5) . U nde r the “pla ce of a ct ivi tie s” te st, the loc at ionof the m aj or ity

of the co rp or at io n’s s al es or p ro du ct io n a ct iv it ie s i s i ts pri nc ip al pl ace o f bu si ne ss . Id. U nde r the “ ne rv e ce nte r” te st, the loc at ionof the c or por at e of fi ce s is ge ne ra lly

the pr inc ipa l pl ac e of

bus ine ss. I d.We held in Bonne r v. City of Prichar d, 661 F.2d 1206, 1209 ( 11th Cir. 1981) (en ba nc) 2 that all Fifth Circuit ca ses dec ided prior to the c lose of business on September 30, 1981, are bin din gpr e c e de nt i n th e El e ve nth Cir c uit . 8 T he tot al a ct ivi tie s te st r equir es asom ewha t su bj ec tiv e an al y sis to ch oose be twee n t he res ul ts of t he ne rv e cen te r an d p la ce o f act iv it ie s t es ts , if t he y di ffer . To m s v . C o u n try Qu al i ty M ea t s , I n c. , 6 1 0 F. 2 d3 1 3 , 3 1 5 (5 th Ci r. 1 9 8 0 ). We 2 pr ovi de d gu idanc e as to howthe dis tr ic t c ourts s houl d ba lanc e the tw o te sts in Sw ee t P ea

Mari ne . Whe re ac om

pany ’ s a ct ivi tie s are not

c onc en tr at ed

in one place, a district court is entitled “ to giv e these ‘ nerve-ce nter’ -related facts gre ater sig nif ic an ce ” in d et er

m ini ng p ri nc ipa l pl ac e of bus ine ss. S w ee t P ea

Mari ne , 411 F. 3d at 12 47. A cc or din g to Ma cG inn iti e, H obbs ’ pr inc ipa l pl ac e of bus ine ss w as in Ge orgia at the tim e the suit was f iled, beca use the principal place of business of an

“ ina ct ive ” co rp or at ionr em ai ns the sam e as it s la st p ri nc ipa l pl ac e of bus ine ss whi le th e co rp or at io n was st il l ac ti ve . T he que sti on o f the pr inc ipa l pl ac e of bus ine ss o f an“ ina ct ive ” co rp or at ion is one of first im

pression in this circuit. W e need not, howe ver, rea ch that issue, because our existing to tal activities test is sufficient to resolve the quest ion before us. T he district court found th at at the tim e the suit was f iled H obbs c ont inu ed

to ex ist onl y a s an a ct ive c or

por at e hol din g9

co m pany . . . that w as dir ec te d and c ontro lle d f ro m H RH ’ s c or

por at e he ad quart er s inV ir gin ia . E ve ry de ci sio n ne ce ssary

to re al iz e the strategic advantage offer ed by Hobbs’ continu ed, passive existence w as and c ont inu es to be m ad e in H RH ’ s V ir gin iac or por at e headquarters by

HRH off icers. T hus, at the tim e [Ma cG innit ie] filed [h is] c om pla int , the “ ne rv e ce nte r” of H obbs , f or pur pose s of determ ining diversity , c ouldonly be in Virginia. T he pla int if

f ha s of fe re d no e vid en ce w hic h su gge sts that the dis tr ic t c ourt c le ar ly er re d inm ak ing the se f

ac tua l f ind ing s r eg ar din g th e ne rv e ce nte r of H obbs . Furtherm ore, Hobbs is not an “ inactive” corporation in the sense in which oth er circuits have used that term . MacG innit ie cites tw o lines of cases from other courts in sup port of his inactive corporation argum ent. T he Second Circuit has take n th e vie wthat an in ac tiv e co rp or at ionis, a s am atte r of law , ac iti ze n of

the state w he re it

“ la st t ransa ct ed bus ine ss. ” S ee , e . g. , P inn ac le Co nsul tants , L td. v. L eu ca dia N at ’ l C or

p. , 101 F . 3d 9 00, 907 ( 2nd Ci r. 199 6) ( ci tin g othe r ca se s) . T he Pi nna cl e co urt e m

plo y ed thi s te st in dic ta , how ev er , usi ng i t t o sh owthat the out co m e of

the c as e w oul d no t c hange ba se d onw hic h te st w as appl ie d. I d. T he Pi nna cl e co urt a ct

ua lly de ci de d th e ca se ba se d onthe “ ne rv e ce nte r” te st. I d. MacG innit ie also point s out th at the Fourth and Fifth Circuits have held that ac o r p o r a t i o ni s ac i t i z e no f

th e s t a t e o f

i t s l a s tp l a c e o f

b u s i n e s s u n l e s s “a subs tanti al a m ount

of ti m e” —a ppare ntl y , about

3 y ears —ha s pa sse d si nc e it be cam e ina ct ive . A the naAuto m oti ve , I nc . v. D igr eg or io, 166 F . 3d 2 88, 291 ( 4th10

Cir. 1999 ); H arris v. Black Clawson Co., 961 F.2d 547, 551 (5th Cir. 1992 ). In the se tw o c as es , how ev er , the “ ina ct ive ” co rp or at ion s e nga ge d inno a ct ivi ty w ha tso ev er , and h ad

not don e so f or se ve ra l y ears . S ee A the naAuto m oti ve , 166 F. 3d at 28 9 ( the c or

por at ion“ ce as ed

a ll ope ratio ns” thr ee y ears pr ior to the lit igatio n, w hic h li tig at ionw as it s “ onl y oth er a ct ivi ty ” sin ce the n) ; H ar ri s, 961 F. 2d at 54 9- 550 (the c or

por at ion ’ s to ta l a ct ivi tie s “ w er e ze ro : i t ha d no bus ine ss of fi ce , no e m

plo y ee s or

se rv ic e pe rs onne l, and n o othe r ongo ing bus ine ss activities”). In the present case , H obbs ’ activity in Georgia has c eased, but it has been engaged in oth er business activity , under H RH’ s direction, in Vir ginia. E ven mo r e r e l e v an th e r e , H o b b s w a s u n d e r H RH ’s d i r e c t i o n , f

r o m V i r g i n i a , a tth e t i me thi s su it w as f

ile d. B e c au s e H o b b s w a s th u s ac i t i z e no f V i r g i n i a , n o to f

G e o r g i a , a tth e t i me thi s a ct ionbe gan, w e af

fi rm the dis tr ic t c ourt’ s de nia l of Ma cG inn iti e’ s m oti on t o re m an d th is c as e to G eo rg iastate c ourt f or la ck of sub j ec t m atte r j ur isd ic tio n. III . MacG innit ie also appeals the district court’ s denial of his m otion for a pr el im inary

inj unc tio n barr ing e nf

or ce m en t of

the r es tr ic tiv e co ve nants . T o be entitled to a prelim inary

injunction, Mac Ginnitie m ust sh ow: (1) a substanti al lik el iho od o f suc ce ss o n th e m er its ; ( 2) ir re para ble harm to the pla int if

f unl es s th e11

injunction issu es; (3) that the threate ned injury to the plainti ff outwe ighs th e harm to the de fe ndant i f the inj unc tio n is sue s; and ( 4) that the inj unc tio n w ill not disserve the pub lic interest. Bry an v. H all Chem ical Co. , 993 F. 2d 83 1 (11th Cir. 1993 ). T he dis tr ic t c ourt f ound that M ac G inn iti e fa ile d to sho wthe pr es en ce of the first three e lem ents. A s to the fourth elem ent, the def endants acknowledged be fo re the dis tr ic t c ourt tha t the inj unc tio n w oul d no t di sse rv e the pub lic int er es t. W e re vie wthe dis tr ic t c ourt’ s r uli ng o n pr el im inary

inj unc tiv e re lie f fo r abuse of discretion. McD onald’s Cor p. v. Robertson, 147 F.3d 1301 (11 th Cir. 1988 ). 1. L ike lih ood of S uc ce ss o n th e Me ri ts Ma cG inn iti e cl ai m s th at

the dis tr ic t c ourt m isr ea d th e langua ge of the re str ic tiv e co ve nants , ign or ed oth er une nf or ce ab le c ove nants , and f ai le d to appl y G e o r g i al awc o rr e c t l y. A s ath r e s h o l dma t t e r i ne v a l u a t i n g M a c G i n n i t i e ’s c l a i m, we agree with the district court that we m ust apply“ strict scrutiny ” to our review of the restrictive c ovenants , and that su ch covenants m ay not therefore be “bluepenciled”; i.e. , sever ed. See Ha bif, Arogeti & Wynne, P. C. v. Ba ggett, 231 Ga. App . 28 9, 2 90 , 49 8 S .E.2d34 6, 3 49 (19 98 ); C arro ll v. Ra ls to n & Ass oc s., P.C., 224 G a. App. 862 , 481 S . E . 2d 9 00 ( 1997 ). T he de fe ndants arg ue that be ca use the ca se inv olv es the sa le of

abus ine ss, alow er

standard appl ie s. G eo rg ialawis12

clear , how ever, that even when an e m ploym ent dispu te is part of the sale of a busi ne ss, if

the dis put e its el f pe rt ai ns t o ac ontra ct of e m plo ym en t the n th e co ntr ac t m

ust be int er pr et ed und er the lawgov er

nin g su chc ontra ct s. A rn al l I ns. A ge nc y v. A rn al l, 196 G a. App. 414 , 396 S . E . 2d 2 57 ( 1990 ). W e the re fo re appl y str ic t sc ru tiny

in our r ev ie wof

the r es tr ic tiv e co ve nants . T he dis tr ic t c ourt he ld tha t e ve n un de r str ic t sc ru tiny the non -s oli ci ta tio n co ve nant i s no t ov er

br oa d be ca

use it “ onl y pr ohi bit s M ac G inn iti e fr om sol ic iti ng tho se c lie nts of

H RH and H obbs w ithw hom he ha d di re ct

c ont ac t duri ng h is l as t two y ears of e m

pl oym en t wi th de fen da nt s.” W e dis ag re e an d ho ld tha t, w he n pr ope rl y int er pr et ed , se ve ra l pr ovi sio ns o f the em ploym ent agreem ent are overbroad and unenforceable. One provisi on states that M ac G inn iti e m ay

not “ ac ce pt i nsur an ce -r el at ed bus ine ss f

ro m . . . any pe rs on, firm , c orporation or oth er e ntitywho is a custom er of [ Hobbs] .” AGe orgia court he ld c ontra ct

ua l pr ovi sio ns whic h pr ev en t e m plo y ee s f ro m a cc ep tin g bu sin es s from unsol icited form er c lients to b e overbroad in Pregler v. C & Z , I nc., 259 Ga. App. 149 , 575 S . E . 2d 9 15 ( 2003 ). T he P re gle r co urt f ound that su chpr ovi sio ns w er e ove rp ro te ct ive of

the f orm er e m plo y er and h ad an un re as ona

ble im pa ct on both the em

ploy ee’ s and the pub lic’ s ability to choose its prefe rred profe ssion al services. Id. T his is in keeping with the principle of Georgia lawwhich providesTh e fu ll p ro vis ion is that Ma c Gi nn iti e may

no t: 3 [c] all on or, direc tly

or indirec tly , solicit, divert, or take a way any insurance
related business from [Hobbs], or, directly or indirec tly , acc ept insuranc e-r elated business from, provide insura nce r elated c onsulting ser vices of a ny kind to, or perf orm any of the ser vices off ere d by [Hobbs] for, any person, firm, corporation or oth e r e nti ty

who is a c us tom e r o

f [H ob bs ] or who is, or duringthe two-year period prior

to [ MacG innitie’s] termination of employ ment was, a

prospec tive c u s to me r o f [H o b b s ] with w hom [MacG innitie] had direct contac t , or, direc tly or in d ir e c tl y , e n c o ur a g e any s u c hc u s to me r

to c e a s e d o in gb u s in e s s w it h[H o b b s ]. 13 that to be enforceable, a custom er non-solicitation covenant m ust either have a specific ter

ritory contigu ous with the area se rviced by the em ploy ee, or be lim ited to o nly tho se c ust om er s w ithw hom the e m plo y ee ha d abus ine ss r el at ion shi p dur ing som e pe ri od o f the e m plo ym en t. W . R. G ra ce v. Mo uy al , 262 G a. 464 , 467 , 422 S.E .2d 529 (1992 ). W e al so d isa gr ee w iththe dis tr ic t c ourt’ s r ea din g of the non -s oli ci ta tio n pr ovi sio n go ve rn ing H obbs c ust om er s. Appl y ing str ic t sc ru tiny , and r es olv ing am big uit ie s inf

av or of Ma cG inn iti e, the c la

use m ust be r ea d to pr ohi bit

him f ro m de al ing w ith“ any

pe rs on, f irm , c or por at ionor

oth er e nti ty w ho i s ac ust om er

of [H obbs ] , ” w he the r Ma cG inn iti e ha d pr ior c ont ac t w iththe c ust om er or not . T he provisi on do es contain the lim iting words “ with w hom [Mac Ginnitie] had direct contact,” but a care ful reading sugg ests that this lim iting language does no t m odify the portion of the clause which pertains to MacGinnitie’ s dealings with actual H obbs c ust om er s, but

r athe r, onl y

the portio n pe rt ai nin g to pr ospe ct ive c ust om er s. 314

T he dis tr ic t c ourt a lso f

ai le d to c onsi de r tw o othe r re str ic tiv e co ve nants w hic h are a lso une nf

or ce ab le und er

G eo rg ialaw , a s M ac G inn iti e poi nte d ou t be fo re the dis tr ic t c ourt and a ga in t o th is c ourt. T he f ir st i s th e em

plo y ee non sol ic itatio n pr ovi sio n, w hic h se ts n o ge ogr ap hic al or r el at ion shi p r es tr ic tio n, but rather pr ohib its MacG innit ie from solicitin g any

Hobbs or HRH e m

ploy ee, regardless of place or prior re lationsh ip to hi m . The G eorgia courts have ref used to en fo rce s uc h p ro vi si on s. See , e.g., Hu lc he r Sv cs ., Inc . v. R.J . Cor m an RR Co ., L L C, 247 G a. App. 486 , 543 S . E . 2d 4 61 ( 2000 ). T he se co nd i s th e co nf ide nti al ity pr ovi sio n, w hic h c ont ai ns n o ti m e re str ic tio n and, Ma cG inn iti e ar gue s, pr ote ct s inf orm at ionw hic h is pub lic ly a va ila ble f ro m oth er sourc es . B oththe se de fi ci en ci es r en de r a re str ic tiv e co ve nant r eg ar din g in fo rm at ionune nf or ce ab le under Georgia law. H owar d Schultz & A ssoc. of the Southeast, Inc. v. Br oniec, 239 G a. 181 , 188 , 236 S . E . 2d 2 65, 270 ( 1977 ) (t im e re str ic tio n) ; N as co , I nc . v. G im be rt , 239 G a. 675 , 676 , 238 S . E . 2d 3 68, 369 ( 1977 ) (p ubl ic ly a va ila ble inform ation). Be ca use non e of

the se c lause s m ay

be blu e- pe nc ile d, the y

are a ll une nf or ce ab le . W e the re fo re c onc lud e that the dis tr ic t c ourt a buse d it s di sc re tio n in r uli ng tha t M ac G inn iti e fa ile d to sho wasub stanti al li ke lih ood of suc ce ss o n th e m er its .15

2. Irr eparable H arm T he dis tr ic t c ourt he ld tha t be ca use Ma cG inn iti e is n ot l ic en se d to se ll ins ur an ce in the S ta te of

G eo rg ia , he ha s no t e sta

bli she d ho whe w ill be ir re para bly harm ed absent injunctive relief. T he defendants claim that MacG innit ie’ s injuries ar e not ir re para ble be ca use the y c an“be und one thr oughm one tary r em ed ie s. ” T . J. Cunni ngham

v. A dam s, 808 F . 2d 8 15, 821 ( 11th C ir . 198 7) . W e dis ag re e, and hol d th at Ma cG inn iti e ha s de m onstrate d th at ir re para ble harm w ill oc cur if

the in jun ct io n d oe s n ot is su e. Under G eorgia law , Ma cG innit ie does not need a license to sell ins urance him se lf in or de r to o pe rate an in sur an ce br oke ra ge bus ine ss and h ir e oth er s to ca rry o u ti n s u ra n ce s al es . S ee O.C .G. A. § 3 3 -2 3 -4 (h )( 2 ). Th e d i s tri ct co u rt ’s ho ld in g t o t he co nt rary was an erro r of law. F urthe rm or e, Ma cG inn iti e ha s sh ow n ir re para ble harm w hic h c annot

be undo ne thr oughm one tary r em ed ie s, in the f

or m of une nf or ce ab le r es tr ic tio ns o n his a cc es s to c ust om er s, e m plo y ee s, and i nf

orm at ion . T he se inj ur ie s are in the fo rm of l os t o pp or tu ni ti es , whi ch are d iff ic ul t, i f no t i m

po ss ib le , to qu an ti fy . G eo rg iapub lic pol ic y

is cl ear that r es tr ic tiv e co ve nants in em plo ym en t c ontra ct s are d is fav or edas p ot en ti al res tra in ts of t rad e whi ch ten d t o l es se n c om pe ti ti on . See generally

Mouy al, 262 Ga. at 465; Ga. Const. A rt. III , § V I, para. V( c);16

O. C.G .A . §13-8-2. Beca use of this pu blic poli cy , the G eorgia courts and this cou rt have not he sit at ed to fi nd i rr ep ar ab le harm

in ca se s in vol vin g c ove nants not to com pete. See , e .g. , K eener v. Convergy s Corp., 342 F.3d 1264 (11th Cir. 2003); E nr on C ap ita l & T ra de Re sour ce s C or p. v. P oka lsky , 227 G a. App. 727 , 729 , 460 S. E. 2d 13 6, 138 (1997). W e theref

ore hold that the di strict court abused its di scretion in ruling that M a c G i n n i t i e f

a i l e dt o s h o wi rr e p ar ab l e h arm. 3 . B a l an c e o f

th e H arms T he dis tr ic t c ourt f

ound that the ba lanc e of

the harm s ti ppe d inf

av or of the de fe ndants . I t he ld tha t the de fe ndants m ay suf fe r sig nif ic an t i nj ur

y in los t custom ers and em

ploy ees if the inj unction issued, while Ma cG innit ie only loses the ability

to com pete for a fewcustom ers and em

ploy ees out of all the custom ers and em ploy ees available in the m arket. W e conclude that the district court abused its dis cr et ionin ru lin g th at the ba lanc e of

the harm s ti ppe d inthe de fe ndants ’ favor. T he pub lic pol ic y

c onsi de ratio ns b eh ind

G eo rg ialawgov er

nin g r es tr ic tiv e covenants com

pel our conclusio n. T he defendants’ argum ent is, in essence, that th ey are en ti tl edto pro te ct io n fr om co m pe ti ti on forcu st om ers an d e m pl oyees. Su chc om pe tit ionis part

and p ar ce l of

ac om pe tit ive e co nom

y . Ma cG inn iti e, on17

the oth er hand, is harm ed

by r es tr ic tiv e co ve nants w hic h are a ga ins t G eo rg ia publ ic pol ic y

be ca use of the ir ne ga tiv e ef

fe ct on c om pe tit ion . I n purc ha sin g H obbs , H RH did

not pur ch as e the abil ity

to m ak e co nsum er s’ and e m plo y ee s’ ec onom ic de ci sio ns f

or the m . L oss of

bus ine ss d

ue to fr ee and f

ai r co m pe tit ionis not aharm ; vi olatio n of

le ga l r ule s de sig ne d to pr om ote suc h c om pe tit ionis a h arm. The district court er red in its determ ination of the first three elem ents of a pr el im inary

inj unc tio n, and the de fe ndants c onc ed ed the f ourth e le m en t be fo re the dis tr ic t c ourt. W e the re fo re f ind that the dis tr ic t c ourt a

buse d it s di sc re tio n in deny ing prelim inary

injunctive relief

in favor of Mac Ginnitie. IV. Fo r the f or eg oin g r ea sons , the dis tr ic t c ourt’ s de nia l of the pla int if

f’ s m oti on to r em an d th is c as e to s ta te c ourt i s AF FIRMED . T he dis tr ic t c ourt’ s de nia l of the pla int if

f’ s m oti on f

or apr el im inary

inj unc tio n is VA CA TED and this c as e is REM AN DED f

or f urthe r pr oc ee din gs c onsi ste nt w iththi s op ini on.