Source: https://m.openjurist.org/669/f2d/300
Timestamp: 2020-04-02 10:53:53
Document Index: 364161375

Matched Legal Cases: ['§ 23', '§ 23', '§ 23', '§ 23', '§ 23', '§ 23']

669 F2d 300 Commonwealth Life Insurance Company v. Neal | OpenJurist
669 F. 2d 300 - Commonwealth Life Insurance Company v. Neal
669 F2d 300 Commonwealth Life Insurance Company v. Neal
Plaintiff Commonwealth Life Insurance Company ("Commonwealth") appeals from the district court's, 521 F.Supp. 812, denial of a preliminary injunction restraining a former employee, defendant Francis Craig Neal, from soliciting Commonwealth policyholders. Having determined that the district court did not abuse its discretion in denying the injunction, we affirm.
The four factors listed above which are to be considered in determining the propriety of injunctive relief are mixed questions of fact and law. This circuit has made clear that in the course of reviewing the actions of the district court for abuse of discretion, the district court's findings of fact will be upheld unless clearly erroneous. Fed.R.Civ.P. 52(a). On the other hand, the district court's conclusions of law are subject to broad review and will be reversed if incorrect. Roberts v. Austin, 632 F.2d 1202, 1208 (5th Cir. 1980), cert. denied, --- U.S. ----, 102 S.Ct. 527, 70 L.Ed.2d --- (1981); Buchanan v. United States Postal Service, 508 F.2d 259, 267 n.24 (5th Cir. 1975).
There is still one further wrinkle to our analysis. It is well settled that in diversity cases which involve questions of local law, an appellate court will show deference to the opinion of a district court and give its views great weight. Cole v. Elliott Equipment Corp., 653 F.2d 1031 (5th Cir. 1981); Watson v. Callon Petroleum Co., 632 F.2d 646 (5th Cir. 1980); Avery v. Maremont Corp., 628 F.2d 441 (5th Cir. 1980). This is especially so when "a statutory scheme is less than clear and capable of varying interpretation." Black v. Fidelity and Guaranty Insurance Underwriters, Inc., 582 F.2d 984 (5th Cir. 1978). See also Bishop v. Wood, 426 U.S. 341, 96 S.Ct. 2074, 48 L.Ed.2d 684 (1975), and cases cited therein at 346 n.10, 96 S.Ct. at 2078 n.10. As explained in Cole, supra, the reason for this deference is that a federal trial judge who sits in a particular state and has practiced before its courts is better able to resolve difficult questions about the law of that state than other federal judges lacking such experience. 653 F.2d at 1034. The soundness of this rationale is aptly demonstrated in this case, where we are dealing with a construction of the law of Louisiana, a civil law jurisdiction where common law principles of contract have only limited relevance. Thus, although we will not abdicate our responsibility as an appellate court to pass upon questions of law, the expertise of the district court in local law matters is entitled to some deference, and we will be "reluctant to substitute our views of the state law for those of the trial judge." Id. Accord, Bernhardt v. Polygraphic Co. of America, 350 U.S. 198, 76 S.Ct. 273, 100 L.Ed. 199 (1956). With the principles underlying our analysis and review of this case firmly established, we now consider the district court's decision.
The leading case on this question is National Motor Club of Louisiana v. Conque, 173 So.2d 238 (La.App. 3d Cir. 1965), written by Judge Tate, later a Justice of the Louisiana Supreme Court and presently a member of this court. Conque involved a contract prohibiting an automobile club employee from soliciting customers of his former employer. The Louisiana Supreme Court had, in Martin-Parry Corp. v. New Orleans Fire Detection Service, 221 La. 677, 60 So.2d 83 (1952), held that an agreement by a former employee not to raid the former employer's staff for his newly created business was not covered under § 23:921. The court in Conque noted that Martin-Parry had characterized a "no raiding" clause as "vastly different in nature" from a non-competition clause. 60 So.2d at 85. The court in Conque thus considered whether a non- solicitation clause was of the same nature as a non-competition clause and was therefore equally contrary to public policy:
173 So.2d at 244. Thus Conque held that non-solicitation agreements are equally prohibited by § 23:921. The Third Circuit has been consistent in this view. Orkin Exterminating Company v. Broussard, 346 So.2d 1274 (La.App. 3d Cir.), cert. denied, 350 So.2d 902 (La.1977); Orkin Exterminating Company v. Foti, 287 So.2d 569 (La.App. 3d Cir. 1973), aff'd, 302 So.2d 593 (La.1974).
Louisiana's Fourth Circuit had reached a contrary result in Bookkeeper's Business Service, Inc. v. Davis, 208 So.2d 1 (La.App. 4th Cir. 1968). However, in Alexander & Alexander, Inc. v. Simpson, 370 So.2d 670 (La.App. 4th Cir.), cert. denied, 371 So.2d 836 (La.1979), the Fourth Circuit reversed itself, and specifically endorsed the position of the Third Circuit that non-solicitation agreements were prohibited by § 23:921. 370 So.2d at 671.1
The Second Circuit also had held in an earlier case that a contract reaching only non-solicitation of customers was enforceable. Delta Finance Co. of Louisiana v. Graves, 180 So.2d 85 (La.App. 2d Cir. 1965). However, the decision in Delta Finance was based in part upon the court's understanding of the 1962 amendment to § 23:921. That amendment had added the language which provided an exception to the general prohibition if the employer had expended monies on the employee's behalf. The court concluded that:
180 So.2d at 88. However, the view that the 1962 amendment had in any way eroded the strong public policy in Louisiana against non-competition agreements was laid to rest in Orkin Exterminating Co., Inc. v. Foti, 302 So.2d 593 (La.1974). In that case the Supreme Court of Louisiana resolved a conflict in the circuits over whether the 1962 amendment required only a nominal expenditure of funds by the employer to escape the prohibitions of § 23:921, or whether a "substantial" expenditure was necessary. The Louisiana Supreme Court endorsed the "substantial expenditure" rule of Conque, supra, as being in harmony with the state's strong public policy against non-competition agreements. It overruled the cases relying on the nominal expenditure rule, including Aetna Finance v. Adams, 170 So.2d 740 (La.App. 1st Cir. 1964), cert. denied, 247 La. 489, 172 So.2d 294 (1965), the leading case announcing that rule, and a case relied on in the Second Circuit's decision in Delta Finance. Because the underlying rationale of Delta Finance has been rejected by the Louisiana Supreme Court in Foti, its precedential strength is seriously undermined, as the Second Circuit itself noted in Target Rental Towel, Inc. v. Byrd, 341 So.2d 600 (La.App. 2d Cir. 1977).
Commonwealth points to John Jay Esthetic Salon, Inc. v. Woods, 377 So.2d 1363 (La.App. 4th Cir. 1979), and National Oil Service, Etc. v. Brown, 381 So.2d 1269 (La.App. 4th Cir. 1980), as proof that the Fourth Circuit's position has not changed. However, John Jay involved a non-raiding clause, not a non-solicitation clause; it was thus clearly controlled by the Louisiana Supreme Court's decision in Martin-Parry, supra. National Oil Service held that a purported non-competition agreement was not entered into. It stated in a footnote that Louisiana courts had found various types of agreements not to be non-competition agreements prohibited by § 23:921, and included in its list non-solicitation agreements. The district court stated that this was mere dicta, and that it certainly did not overcome the specific endorsement of the Third Circuit view which was the basis of decision in Alexander & Alexander, Inc. v. Simpson, supra. We agree
Commonwealth makes much of the District Court's statement that since the only decisions squarely on point are those of intermediate level courts, the district court would "guess" what the Louisiana Supreme Court would decide. It argues that this undercuts the reliance which should be given to the district court's conclusions. We disagree. As stated above, the thoroughness of the district court's treatment of local law, as evidenced by its scholarly opinion, belies any such accusation. As federal courts sitting in diversity, both we and the district court must make a decision as to applicable state law, and where the state's highest court has not spoken on a question, federal courts are required to give due consideration to the decisions of intermediate courts in ascertaining the law of the state. E.g., Commissioner v. Estate of Bosch, 387 U.S. 456, 464-65, 87 S.Ct. 1776, 1782-83, 18 L.Ed.2d 886 (1967). See generally 1A Moore's Federal Practice P 0.307(2) (2d ed. 1976). This task was performed by the district court, and we agree with its conclusion. As for the use of the word "guess" in the district court's opinion, we do not believe that mere informality of expression is a sufficient ground for reversal of a well-researched and well-reasoned decision.