Court Opinion

ID: 9735367
Source: CourtListenerOpinion
Date Created: 2023-08-26 18:10:58.054006+00
Date Added: 2024-06-11T18:26:57.557332
License: Public Domain

BRENNAN, J.
¶ 31. (dissenting). I respectfully dissent from that portion of the Majority's opinion granting summary judgment to Techworks on the issue of the validity of the non-compete agreement and on the Majority's remand for trial on the issue of whether David Wille violated the non-compete agreement. I conclude that Techworks has not met its burden of showing that the two-year, look-back provision applicable to former customers, who ceased doing business with Techworks, is reasonable as to time or that it is *518necessary to its business. And, because I conclude these provisions are indivisible from the whole non-compete agreement, I conclude that the agreement is invalid and unenforceable against Wille. Accordingly, I would affirm the trial court and grant summary judgment to Wille. I concur with the Majority on all other issues.
I. Teehworks bears the burden of showing the reasonableness of its non-compete agreement.
¶ 32. A non-compete agreement is to be construed in favor of the employee and is generally disfavored in the law. See Farm Credit Servs. v. Wysocki, 2000 WI App 124, 237 Wis. 2d 522, 614 N.W.2d 1, rev'd on other grounds, 2001 WI 51, 243 Wis. 2d 305, 627 N.W.2d 444. One reason they are so disfavored is based on the unequal bargaining power of the parties to the employment contract. Gary Van Zeeland Talent, Inc. v. Sandas, 84 Wis. 2d 202, 219, 267 N.W.2d 242 (1978). A non-compete agreement is subject to the requirements set forth in Wis. Stat. § 103.465, which states that it is unenforceable unless the restrictions are reasonably necessary to protect the employer. As noted in the Majority opinion, the validity of the non-compete depends on it conforming to five elements. It "must: (1) be necessary for the protection of the employer or principal; (2) provide a reasonable time restriction; (3) provide a reasonable territorial limit; (4) not be harsh or oppressive to the employee; and (5) not be contrary to public policy." General Med. Corp. v. Kobs, 179 Wis. 2d 422, 429, 507 N.W.2d 381 (Ct. App. 1993).
¶ 33. As the Majority sets forth so well, the employer has the burden to prove that the non-compete agreement is reasonable. See NBZ, Inc. v. Pilarski, 185 Wis. 2d 827, 840, 520 N.W.2d 93 (Ct. App. 1994). *519Whether a non-compete agreement is reasonable depends on "the totality of the facts and circumstances." General Med. Corp., 179 Wis. 2d at 434 (citation omitted). This presents a question of law to be resolved from the factual findings. NBZ, 185 Wis. 2d at 840.
¶ 34. The factual record here consists of the parties' submissions on the defendants' summary judgment motion. As noted by the Majority, at summary judgment, the party that has the burden of proof at trial in connection with a claim has the burden to show that there are genuine issues of material fact that require a trial on that claim. Transportation Ins. Co., Inc. v. Hunzinger Constr. Co., 179 Wis. 2d 281, 290, 507 N.W.2d 136 (Ct. App. 1993). Here, Techworks bears that burden. Techworks must show that the non-compete agreement is reasonable. To survive summary judgment, Techworks has the burden to place facts in the record that demonstrate at least a material factual dispute on the issue of the need for and reasonableness of, the non-compete agreement. Because I conclude they have not done so with part of the non-compete agreement here, and because that part is indivisible from the whole, I would affirm the trial court and I dissent from the Majority opinion.
II. Wille's non-compete provision.
¶ 35. As the Majority notes, there are basically two aspects to Wille's non-compete provision. The first restricts Wille for two years after terminating his employment from "any activity... that competes," anywhere, with any Techworks customer he serviced during the two years before he terminated his employment. The second restricts Wille for two years after terminating his employment, from "any activity... that competes" within *520100 miles of Wauwatosa, with any Techworks customer who had been its customer within the two-year period before Wille terminated his employment, even though Wille never personally serviced that customer. Both of these two non-compete provisions are contained in the same paragraph of the agreement and both incorporate the definition of the "Restricted Customer." "Restricted Customer" means "a person or entity with whom Employer conducted its Business within two (2) years prior to the termination of Employee's employment with Employer."
III. Techworks has not met its burden at summary judgment.
¶ 36. At summary judgment it is Techworks's burden to show that there are facts in the record that support its burden of proving that the non-compete is reasonable and necessary to its business. See id. at 290; NBZ, 185 Wis. 2d at 840. Techworks has not provided anything in the record here that suggests any reason or necessity for the specific two-year "Restricted Customer" look-back as to customers that ceased doing business with Techworks during the two years prior to the employee's departure.
¶ 37. And although it is true that the reviewing court examines the parties' submissions in a light most favorable to the party against whom summary judgment is sought, Johnson v. Rogers Mem'l Hosp., Inc., 2005 WI 114, ¶ 30, 283 Wis. 2d 384, 700 N.W.2d 27, Techworks has not presented any factual submissions at all on the precise issue of the necessity for the two-year, look-back restriction on "any activity" with "Restricted Customers" who have already left Techworks.
*521¶ 38. There may be legitimate reasons for the above restriction, but Techworks has not presented any here. Techworks has simply argued, in a very generic fashion, that it has valid business concerns about former employees raiding its customer base. More than that is required. That argument only addresses part of the "Restricted Customer" provision, namely the part that prohibits the ex-employee from soliciting current customers of Techworks. I agree with the Majority that Techworks has met its burden on the part of the non-compete that restricts a former employee from trying to solicit current customers of the company, whether they are customers the employee serviced or not. But it has not offered any facts in support of the part that restricts the former employee from "any activity"... that competes with Techworks with a customer who left Tech-works as long as two years before the employee did. To survive a summary judgment motion, Techworks must present facts demonstrating the need for this part of the non-compete restriction.
IV The two-year, look-back on former customers' part of the "Restricted Customer" provisions is unreasonable.
¶ 39. On the state of this record, I conclude that the non-compete is unreasonable with regard to restricting an employee who leaves from conducting "any activity" in competition, with the company with customers who left the company up to two years before the employee did. Restricting an employee who leaves the company from working with a customer who left the company as long as two years previously is not reason*522able. This is especially trae when the restriction is so broad as to encompass "any activity ... that competes."1
¶ 40. The illogic of the two-year, look-back restriction is demonstrated by the fact that in this case it operates to restrict Wille from contacting customers of Techworks who had left Techworks on their own nine months before Wille left Techworks. Three customers, Hatch, Horner and Grumman Buttkas, left in May or June 2006. Another customer, Medical Eye, signed papers to replace Techworks in October 2006. Wille did not leave Techworks until late February 2007. The record shows that Medical Eye, in an affidavit in the record, averred that their decision to leave had nothing to do with Wille. A two-year restriction on "any activity" that competes with the company, with a customer who left the company of their own accord is unreasonable. Because the "Restricted Customer" provision here contains that restriction, it is not reasonable.
¶ 41. The look-back restriction on former customers was held invalid in Equity Enterprises, Inc. v. Milosch, 2001WI App 186, 247 Wis. 2d 172, 633 N.W.2d 662 because it was unreasonable. Id., ¶ 11. The Majority opinion here distinguishes Equity Enterprises on the grounds that under the facts of that case the look-back *523went too far back. The look-back language in Equity Enterprises restricted the employee's contact with past customers of the company (who the employee had serviced), going all the way back to when the employee started with the company. Id., ¶¶ 2,15 n.4. In that case, the employee started work there in 1982, so the non-compete provision restricted his contact with customers back to 1982. Id. But the holding in Equity Enterprises does not limit its applicability to a magic number of years. It is the totality of the circumstances that must be evaluated, and more to the point here, the employer has the burden of demonstrating the necessity for a certain length of time, which Techworks has failed to do in this case.
¶ 42. In Equity Enterprises the court found the former customer look-back provision unreasonable even though the non-compete provisions there were even less onerous than Techworks's. In Equity Enterprises the type of activity was more particularly described as, "do business," or "entice employee," as opposed to the over-broad description, "any activity" in Techworks's non-compete agreement. Also, in Equity Enterprises the restriction applied only to those customers the employee had serviced, as opposed to Techworks's restriction that applies to any customers of the business, whether or not the employee had serviced them. See id., ¶ 15. And despite these less broad, more favorable terms, the court in Equity Enterprises, still found the former customer restriction invalid. See id., ¶ 28.
V The unreasonable portion of the non-compete provision is indivisible.
¶ 43. Where an unreasonable provision of a non-compete agreement is indivisible from the whole, then *524the whole agreement is invalid. Streiff v. American Family Mut. Ins. Co., 118 Wis. 2d 602, 613, 348 N.W.2d 505 (1984). Here the "Restricted Customer" provision is indivisible from the entire non-compete section. The "Restricted Customer" definition is contained within the "competition," Section lc. of the agreement. The "Restricted Customer" definition applies both to the two-year, look-back provision in that section as well as the two-year post-termination provision. If you were to excise the "Restricted Customer" section or the "any activity" language, it would render the other part of the non-compete provision (the two-year post-termination part) meaningless. They are intertwined. Accordingly, the entire non-compete Section lc. is invalid.2
¶ 44. For all of the foregoing reasons, I dissent and would affirm the decision of the trial court and grant summary judgment to Wille, Red Anvil and Dolan.

 Recently, in Star Direct, the supreme court held that an employer does "have an interest in prohibiting the solicitation of its recent past customers." See id., 767 N.W.2d 898, ¶ 38. But the court explicitly limited its holding to the facts of that case, stating that it "render[s] no opinion as to how much time must pass between a customer placing an order and a route salesperson's termination before the employer no longer has a legitimate protectable interest in that customer .... [but that] under the facts of this case . . . the interim of one year is not too long." Id., ¶ 41. For that reason, I conclude Star Direct is consistent with the dissent.

 Although the Wisconsin Supreme Court in Star Direct overturned Brass, 242 Wis. 2d 733, ¶ 11, it upheld and clarified Streiff, 118 Wis. 2d 602. See Star Direct, 767 N.W.2d 898, ¶¶ 65-78. In that regard, Star Direct is consistent with the dissent.