Court Opinion

ID: 7125187
Source: CourtListenerOpinion
Date Created: 2022-07-24 13:05:16.360599+00
Date Added: 2024-06-11T16:14:15.242167
License: Public Domain

MEMORANDUM *
Safelite Glass Corporation (“Safelite”) appeals the district court’s denial of Safe-lite’s preliminary injunction motion and entry of judgment in favor of Crawford. We affirm. Because the parties are familiar with the factual and procedural history of this case, we will not recount it here.
The district court did not err in concluding that Safelite’s non-competition covenant was unreasonable and unenforceable. Under Arizona law, a covenant not to compete cannot be used to prevent competition per se. Valley Med. Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277, 1281 (Ariz.1999). Such an agreement is valid only if it protects “some legitimate interest [of the employer] beyond the employer’s desire to protect itself from competition.” Id. Legitimate interests that can support a covenant not to compete include an employer’s need “to prevent competitive use, for a time, of information or relationships which pertain peculiarly to the employer and which the employee acquired in the course of the employment.” Id. (internal quotation and citation omitted).
Under Arizona law, a restrictive covenant is reasonable if it:
give[s] the employer a reasonable amount of time to overcome the former employee’s loss, usually by hiring a replacement and giving that replacement time to establish a working relationship. Even in the commercial context, ‘[w]hen the restraint is for th'e purpose of protecting customer relationships, its duration is reasonable only if it is no longer than necessary for the employer to put a new man on the job and for the new employee to have a reasonable opportunity to demonstrate his effectiveness to the customers.’
Id. at 1284 (quoting Amex Distrib. Co., Inc. v. Mascari, 150 Ariz. 510, 724 P.2d 596, 604 (Ariz.Ct.App.1986)).
In applying these principles of Arizona law, we conclude that Safelite did have a protectable interest in maintaining its customer relationships, but that the covenant not to compete was not narrowly tailored to protect only those interests. Rather, it constituted a broad non-competition restriction, prohibiting activities that were beyond the scope of its protectable interest. We also conclude, under Arizona law, that the covenant could not be cured by severence. See Amex. Distrib., 724 P.2d at 605. In sum, the district court correctly determined that the covenant not to compete was unreasonable and unenforceable under Arizona law.
Thus, the district court did not abuse its discretion in denying Safelite’s motion for a preliminary injunction on the basis that Safelite was unlikely to show either probable success on the merits, or that “serious questions were raised and the balance of hardships tips sharply in its favor.” Textile Unlimited, Inc. v. A. BMH Co., Inc., 240 F.3d 781, 786 (9th Cir.2001).
For the same reasons, the district court did not err in granting Crawford judgment on the merits. The district court should not have granted judgment sua sponte and should have provided notice of its intent to consolidate the preliminary injunction hearing and a determination of the merits. See Univ. of Tex. v. Camenisch, 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981). However, any error in doing so was harmless, given Safelite’s lack of showing of prejudice as to the tender of any additional evidence and *615the legal correctness of the court’s ruling. See Fed.R.Civ.P. 61; 28 U.S.C. § 2111.
AFFIRMED.

 This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as may be provided by Ninth Circuit Rule 36-3.