UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

THE REYNOLDS AND REYNOLDS

COMPANY,

Plaintiff-Appellant,

No. 96-2077

v.

THOMAS P. HARDEE,

Defendant-Appellee.

Appeal from the United States District Court

for the Eastern District of Virginia, at Norfolk.

Rebecca B. Smith, District Judge.

(CA-96-327-N)

Argued: December 3, 1997

Decided: December 30, 1997

Before WILKINSON, Chief Judge, MOTZ, Circuit Judge,

and WILSON, Chief United States District Judge for the

Western District of Virginia, sitting by designation.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Patrick John Stewart, VENABLE, BAETJER, HOWARD

& CIVILETTI, L.L.P., Washington, D.C., for Appellants. Dean Taylor Buckius, VANDEVENTER, BLACK, MEREDITH & MARTIN,

L.L.P., Norfolk, Virginia, for Appellee.

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Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

PER CURIAM:

This case arises out of a diversity action asserting breach of contract and violation of trade secrets brought by The Reynolds and

Reynolds Company against Thomas P. Hardee. Reynolds appeals

from an order of the district court dismissing one claim and granting

summary judgment in favor of Hardee on the other. We affirm.

On March 9, 1988, Hardee signed an employment agreement with

Jordan Graphics, Inc., as a sales representative for the area surrounding Virginia Beach, Virginia. Jordan manufactured and supplied business forms. The employment agreement contained a covenant not to

compete that stated:

Sales Representative agrees that during the period of one (1)

year next following the date of the termination for any reason of his employment with [Jordan], he will not ... engage

in or become financially interested in the business of manufacturing, buying, selling, trading and dealing in business

forms, including printed matter, stationery, manifolding

forms, books of account and pressure sensitive labels in the

Territory; and it is hereby provided that if Sales Representative shall violate or attempt to violate any provision of this

paragraph, he may be enjoined in an action to be brought in

any court of competent jurisdiction and such action shall not

be subject to the defense that there exists an adequate remedy at law.

The agreement also contained a provision restricting Hardee's use

of Jordan's proprietary information. Hardee agreed that

all sales files, customer records, and reports used, prepared

or collected by him are the property of [Jordan] and agrees

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that in the event of the termination of his employment with

[Jordan] for any reason, he will return and make available

to [Jordan] prior to the last day of his employment all sales

files, customer records reports in his possession.

Reynolds, like Jordan, manufactures and supplies business forms.

On January 23, 1996, Reynolds and Jordan executed an acquisition

agreement whereby Reynolds purchased substantially all of Jordan's

assets and goodwill, including the employment agreements between

Jordan and its sales representatives, among them Hardee. On the day

of the sale Hardee was terminated. Simultaneously, Reynolds offered

to rehire Hardee under a different employment agreement. This new

agreement contained a more restrictive non-competition covenant that

extended both the duration and the territory covered. Hardee rejected

the new agreement, but offered to work for Reynolds under the terms

of his prior agreement with Jordan. Reynolds would not accept those

terms, and informed Hardee that it intended to enforce the original

covenant.

Reynolds filed this diversity suit in federal district court on March

29, 1996, asserting that Hardee breached this covenant and misappropriated trade secrets. Specifically, Count I of the complaint alleges

that in late January 1996, Hardee breached his employment contract

by engaging in the supply and sale of business forms in the Virginia

Beach area in violation of the non-competition covenant, and by taking proprietary customer artwork with him upon his termination.

Count II alleges that Hardee misappropriated the artwork and used it

to attract his former Jordan clients, in violation of the Virginia Uniform Trade Secrets Act. See Va. Code Ann.§ 59.1-336 et seq.

(Michie 1992 Repl. Vol.).

Reynolds sought to enjoin Hardee from engaging in the business

of buying, selling, trading, or dealing in business forms within a sixtymile radius of Virginia Beach. Reynolds also sought to enjoin Hardee

from using any trade secrets that he took from Jordan, including any

artwork of his former Jordan clients. Additionally, Reynolds asked for

compensatory damages in excess of $50,000 plus costs.

Hardee asserted several grounds before the district court for dismissal or summary judgment. The grounds relevant to this appeal are:

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(1) Reynolds lacked standing to sue under the employment agreement

because Jordan could not assign the agreement, or the noncompetition covenant therein, to Reynolds; and (2) Reynolds failed to

produce evidence sufficient to prove that Hardee actually misappropriated any artwork.

As to the breach of contract claim, the district court acknowledged

two lines of case law that reflect the conflicting policy considerations

underlying the assignability of non-competition covenants that arise

in the context of employment agreements. The court reasoned, however, that Hardee's covenant not to compete arose as part of a personal services employment contract. Because personal services

contracts are not assignable under Virginia law absent mutual consent, the court concluded that Virginia would most likely follow the

line of precedent holding that such non-competition covenants may

also not be assigned. Thus, the court held that Jordan could not assign

the covenant to Reynolds.

With regard to the remaining count, for violation of the state trade

secrets act, the court reviewed the affidavits submitted by both parties

and granted Hardee's motion for summary judgment. The court concluded that Reynolds failed to meet its evidentiary burden under Rule

56 to show that a genuine issue of material fact existed with regard

to whether Hardee actually took any artwork.

This appeal followed.* Having reviewed the record, briefs, and relevant statutes and case law, and having had the benefit of oral argument, we conclude that the district court did not err. Accordingly, we

affirm on the reasoning of the district court. See Reynolds and Reynolds Co. v. Hardee, 932 F. Supp. 149 (E.D. Va. 1996).

AFFIRMED

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*Shortly after filing this appeal, Reynolds, who had originally brought

this diversity case in federal court and lost, asked us to certify the question of assignability of the non-competition covent to the Supreme Court

of Virginia. We declined to do so.

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