Court Opinion

ID: 9629935
Source: CourtListenerOpinion
Date Created: 2023-08-22 09:53:48.517644+00
Date Added: 2024-06-11T18:07:27.544860
License: Public Domain

NIX, Justice
(dissenting).
I agree that depending upon the nature of the business, an employer’s customer relations acquired through the activities of its salesmen may be a protectible interest sufficient to permit the granting of equitable enforcement of a covenant not'to compete at the termination of employment. I also accept in the instant case that a covenant reasonably drawn to effectuate that purpose would have been permissible. It is also true under our cases that where a covenant imposes restrictions broader than necessary to protect the employer’s interest, a court in equity under certain circumstances may grant enforcement limited to those portions of the restrictions which are reasonably necessary for the protection of the employer.1 In my judgment the covenant was unreason*608able in the protection sought for the interest to be protected, both as originally drawn and also as enforced by the Chancellor. I therefore dissent.
The majority predicates its approval of the enforcement of the instant covenant, as modified by the Chancellor, upon a finding of a protectible interest in customer goodwill. While I do not believe that the employer should be restricted in this regard to the extent suggested by the Restatement of Contracts, § 516(f), Comment (h) (1932),2 cited with approval in Girard Investment Co. v. Bello, 456 Pa. 220, 318 A.2d 718 (1974), I do believe that equitable enforcement must not be permitted to restrain the exercise of innate ability even though this quality renders him a unique employee.3
*609I accept the view that a covenant is justified to protect an interest in customer goodwill acquired through the efforts of an employee, “if a part of the employee’s compensated service consists in the creation of the goodwill ., a goodwill that is likely to follow the person of the employee himself.” 6A Corbin on Contracts, § 1394, 100 (1962) (emphasis supplied). It is under this reasoning I conclude that Sidco did have a protectible interest.
By the very nature of. the interest sought to be protected, it is only required that the prohibition prevent interference with those contacts established during the period of the employment and should not prevent the employee from establishing new relationships for another employer where these relationships do not arise from associations which commenced during his original employment.
As originally drafted, the geographical area contained in excess of two thousand (2,000) potential accounts and it was admitted that Aaron had dealings with but two hundred and eighty (280) of this number. Clearly, it was unreasonable to prohibit him from soliciting the other 88% of the potential customers within this area after the termination of his employment with Sidco. Even though as enforced the geographical area was reduced in the order issued by the Chancellor, there is still no indication how many of the potential accounts within the area are in fact accounts with which Aaron had contact as result of his employment with Sidco.
While I recognize that there are businesses where of necessity a geographical limitation must be used, such was not the case here.4 Aaron was paid on a commission *610basis computed on the customers he actually serviced. This was not the case of a salesman dealing with the public at large but rather his relationships were with identifiable businesses. Under these circumstances, I find no reason to permit enforcement based upon geographical limits, where the actual customer lists were easily ascertainable, and there is no clear relationship between the geographical area and the actual customer contacts made therein by the employee during his former employment.

. While I do not intend to focus upon the propriety of the Chancellor’s use of the power to modify a covenant of this nature, I do share many of the views expressed by Mr. Justice Manderino in his dissent. The Court today in embracing its newly found rationale for securing “employer flexibility” dangerously approaches in the instant application a total disregard of the sound admonition expressed by this Court in Reading Aviation Service, Inc. v. Bertolet, 454 Pa. 488, 311 A.2d 628 (1973). Therein we stated:
“The objection to such a practice is that it tends to encourage employers . . possessing superior bargaining power over that of their employees ... to insist upon unreasonable and excessive restrictions, secure in the knowledge that *608the promise may be upheld in part, if not in full.” Id. at 493, 311 A.2d 630.
Many employees are deterred from testing the legality of unreasonably onerous restrictions because of the expense and vicissitudes of litigation. Thus they are condemned to have legitimate options forever foreclosed because of the fear of a violation of an unreasonable and excessive restriction.

. That section provides:
“A promise of a former employee will not ordinarily be enforced so as to preclude him from exercising skill and knowledge acquired in his employer’s business, even if the competition is injurious to the latter, except so far as to prevent the use of trade secrets or lists of customers, or unless the services of the employee are of a unique character.”

. “A coal shoveler may be an exceptionally useful employee because he has a strong back, powerful muscles, and a knack with tools; but this does not make it reasonable to bind him not to serve a competitor after termination of his employment, even though the strength and skill are developed in the employer’s service. The fact that an accountant is a lightning calculator who never makes a mistake and whose judgment as a business adviser is extraordinary does not justify restraining him from using these qualities in another’s service after termination of his employment. It is a sound reason for hiring his services for a long period and for paying for them at a high rate; but it does not justify a provision that requires him to remain unproductive and out of a job for any period other than that included within the first employment itself. Such services help to make a business profitable while they are being rendered, and may also be of lasting benefit after the employment ends or after the employee is dead. For breach of a contract *609to render such services, an award of heavy damages may be justified. But after the promised service has been completed, a restriction on further active service requires special • justification.” 6A Corbin on Contracts, § 1394, 99-100 (1962) (Footnote omitted).

. Interestingly, the Chancellor recognized the problem even though he ignored it in his order.
“THE COURT: Why, of course. They do not want their customers disturbed. It’s their customer list that they do not *610want disturbed. They do not care if he goes out and makes twenty more customers in that same area, it does not bother them, they say, don’t bother my company, don’t bother my customers. If you can get twenty more customers on the outside, go ahead, because you are not bothering me, I have my customers. Don’t bother my customers that I have.
And you are telling me he cannot touch any of these thousand or two thousand? Either you or I have misunderstood what the purpose of restrictive covenants in the law is.
MR. SABLOSKY: You must understand, Your Honor,—
THE COURT: I never have had one case, I have never had one case before me since I have been on the Bench where they say, please, we do not want him to do any business at all. Everyone has been restrictive where they have the list, been restricted to a customer’s list, these are our customers, I do not want him to disturb our customers during this period of time.
This is the first time, Mr. Sablosky, I have had this. You know, there always is a first time, I do not say there isn’t. There’s always a first time. This is the first time I have had a request for everybody. If that is what you want, and you are telling me this, and I assume that is what you are telling me — ”