Court Opinion

ID: 9712827
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:00:46.862468+00
Date Added: 2024-06-11T18:23:14.677324
License: Public Domain

HUNTER, Justice,
dissenting.
I must respectfully dissent from the majority opinion as I find that the promise of continued employment was not adequate consideration to support a covenant not to compete in this case. The employer did not *1051give any present and valuable consideration to Leatherman since there was no express promise of continued employment for a.definite period. There could be no implied promise of employment for a definite period either as Indiana courts have consistently recognized the continued application of the employment at will doctrine in this jurisdiction. See eg.: Woodward Insurance, Inc. v. White, (1982) Ind., 437 N.E.2d 59 (Hunter, J., dissenting); Campbell v. Eli Lilly & Co., (1980) Ind.App., 413 N.E.2d 1054 (Ratliff, J., dissenting in part), trans. denied (1981) Ind., 421 N.E.2d 1099 (Hunter, J., dissenting); Martin v. Platt, (1979) Ind.App., 179 Ind.App. 688, 386 N.E.2d 1026.
Both parties agree that there was no increase in salary that would serve as consideration for the nonpiracy agreement in this case. There was no new value given for this agreement that Leatherman did not already have under earlier agreements. Management Advisors, Inc. here alleges that Leatherman received benefits because he was allowed to continue work and meet his employer's customers and have access to customer information. They further allege that there would be no "coercion" because Leatherman was not prohibited from competing with his former employer upon a termination of employment but was only prohibited from soliciting the existing customers of the employer. There is no merit to this argument since the only "benefit" Leatherman received was access to information about his employer's customers and this was the information he was specifically prohibited from using. No consideration cannot be characterized as adequate consideration.
I agree with those jurisdictions that have concluded that covenants not to compete, as well as nonpiracy covenants, executed after the inception of employment "are not enforceable unless supported by additional consideration-a requirement not satisfied simply by the promise or fact of continued employment." - Woodward Insurance, Inc. v. White, supra, 437 N.E.2d at 70 (Hunter, J., dissenting) and cases cited therein.
I remain convinced that our prior case law also supports this position.
"Campbell v. Eli Lilly Co., supra (even if employee at will was promised he would not be discharged, that covenant was unenforceable for lack of consideration in that the employee had not promised he would continue employment); Advanced Copy Products, Inc. v. Cool, (1977) 173 Ind.App. 363, 363 N.E.2d 1070 (continued employment held not sufficient to constitute adequate consideration to support a covenant not to compete); Warrick Beverage Corp. v. Miller Brewing Co., (1976) 170 Ind.App. 114, 352 N.E.2d 496 (since either party could terminate duties of performance at will, contract was unenforceable); Shanks v. Fisher, (1955) 126 Ind.App. 402, 130 N.E.2d 231 (unilateral promise of owners to pay builder extra amount for work already subject to contract was unenforceable due to lack of consideration); Semon, Bache & Co. v. Coppes, Zook & Mutschler Co., (1905) 35 Ind.App. 351, 74 N.E. 41 (contract which failed to impose any obligation on one of the parties was unenforceable for lack of mutuality in consideration)" - Woodward Insurance, Inc. v. White supra, [437 N.E.2d] at 70 (Hunter, J., dissenting).
I agree with Judge Young's conclusions in this case:
"We agree with those cases that hold that continued employment is not sufficient consideration to support a covenant not to compete. When an employee agrees to a covenant not to compete in exchange for continued employment he gains nothing that he did not already have and the employer is under no additional obligation. Continued employment for an indefinite period at the employer's discretion is illusory consideration. An employee could agree to the covenant one day and be fired the next day. The opportunity for coercion is too great. Thus, we hold that the second non-piracy agreement is void for lack of consideration and not binding on Leatherman. The trial court erred in finding that MAI had demonstrated a likelihood of success at trial by establishing a prima facie case. *1052Therefore, the issuance of an injunction was improper." Leatherman v. Management Advisors, Inc., (1982) Ind.App., 436 N.E.2d 349, 352.
I would deny transfer and affirm the Court of Appeals' opinion and reversal of the trial court's judgment.