Opinion ID: 1835915
Heading Depth: 3
Heading Rank: 2

Heading: The Business Clause

Text: ¶ 53 The business clause bars Dal Pra, for 24 months following his termination, from engaging in any business which is substantially similar to or in competition with the business of [Star Direct], within a fifty (50) mile radius of Rockford, Illinois. The circuit court and court of appeals both held that the business clause was unenforceable. ¶ 54 The focal point of the dispute regarding the business clause is the substantially similar language. Star Direct argues that a substantially similar business is one that is, by definition, competitive. It even stated in oral argument that the phrase is possibly the result of an overzealous lawyer and should have been left out. Dal Pra responds that this approach turns the phrase substantially similar into pure surplusage. ¶ 55 We agree with Dal Pra and find Star Direct's argument unavailing. The disjunctive or plainly separates one from the other. A substantially similar business cannot refer to the same thing as a business in competition with Star Direct; nor would it be reasonable to read substantially similar as merely a subset of competitive activity as Star Direct urges. The only reasonable way to read the contract language giving meaning to every phrase is that it attempts to bar Dal Pra not only from competitive enterprises, but also from engaging in a business that is substantially similar to Star Direct's business yet not competitive. ¶ 56 An enforceable restrictive covenant must be reasonably necessary for the protection of the employer. See Wis. Stat. § 103.465. We do not believe it is reasonably necessary for the protection of Star Direct to prevent non-competitive or otherwise non-deleterious business activity by its former employees. [9] See Geocaris v. Surgical Consultants, Ltd., 100 Wis.2d 387, 389, 302 N.W.2d 76 (Ct.App.1981) (concluding that a surgical practice's attempt to prohibit a surgeon from practicing any other type of medicine, including non-competitive non-surgical medicine, was unreasonable). While having Dal Pra engage in a non-competitive substantially similar business might plausibly have some de minimus or insubstantial affects on Star Direct, the interests do not rise to the level of being reasonably necessary for its protection. A former employee engaged in a similar but non-competitive enterprise poses little if any additional danger to his former employer's business interests than any other member of the public engaged in substantially similar but non-competitive activities. Lakeside Oil, 8 Wis.2d at 163, 98 N.W.2d 415 (An employer is not entitled to be protected against legitimate and ordinary competition of the type that a stranger could give.). ¶ 57 The parties spend considerable time in their briefs debating what exactly a substantially similar business might or might not include. Star Direct argues for a narrow interpretation that essentially includes competitive business activities. Dal Pra points to the statement in the contract defining the business of Star Direct as the distribution of consumer products to service stations and/or convenience stores. The precise nature of a substantially similar businesswhat products Dal Pra could plausibly sell and not sellis unnecessary to our determination, however. As discussed above, it is clear that a substantially similar business must refer to a non-competitive business, and such a prohibition is not necessary for Star Direct's protection. ¶ 58 In sum, we conclude that the business clause's restriction on engaging in a substantially similar business is overbroad and is not reasonably necessary for the protection of Star Direct. Because the clause does not protect a legitimate business interest, we need not measure the business clause against the remaining four Lakeside Oil criteria for determining the enforceability of restrictive covenants. The lack of any protectable interest means the business clause is unreasonable and unenforceable.