Court Opinion

ID: 4433856
Source: CourtListenerOpinion
Date Created: 2019-08-28 00:00:48.459601+00
Date Added: 2024-06-11T14:53:08.899629
License: Public Domain

Case: 19-30363   Document: 00515093950        Page: 1   Date Filed: 08/27/2019

        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                               United States Court of Appeals
                                                                        Fifth Circuit

                                    No. 19-30363                      FILED
                                                                August 27, 2019
                                                                 Lyle W. Cayce
BROCK SERVICES, L.L.C.,                                               Clerk

             Plaintiff - Appellee

v.

RICHARD ROGILLIO, also known as Ricky,

             Defendant - Appellant

                Appeal from the United States District Court
                    for the Middle District of Louisiana

Before CLEMENT, HAYNES, and WILLETT, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge:
      Richard Rogillio worked for Brock Services, L.L.C. (“Brock”) until he
resigned to work for a direct competitor. Brock sued him for violating his
employment agreement’s non-compete provision and requested a preliminary
injunction. The district court granted the injunction, and we affirm.
                          FACTS AND PROCEEDINGS
      Rogillio began working for Brock in the summer of 2010. At the time of
his resignation in the fall of 2018, he was the Vice President of Operations for
Brock’s Eastern Region. When he joined Brock, Rogillio signed an Employment
and Non-Competition Agreement (“Agreement”).
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      Section 7.1 of the Agreement is a non-compete provision. It provides in
relevant part:
              7.1 Non-Competition. Employee acknowledges and agrees
      that the Company enters into this Agreement in consideration of
      and reliance on Employee’s agreement to the following, which is
      intended to protect the Company’s Business interests and
      goodwill, and to minimize the complexity and expense of protecting
      and enforcing the Company’s rights in its Confidential Information
      . . . . Accordingly, in consideration for (i) the Agreement by the
      Company to commence and continue Employee’s employment for
      the Employment Period, (ii) Employee’s access to and receipt of
      Confidential Information of the Company . . ., (iii) Employee’s
      promise contained herein not to disclose Confidential Information
      of the Company, during the Employment Period and for a period
      of one (1) year immediately following the termination of the
      Employee’s employment (the “Restricted Period”), the Employee
      will not:

                  (a) have any direct or indirect interest as an owner,
      investor, partner, lender, director, officer, manager, employee,
      consultant, representative, agent or in any other capacity in any
      competitive Business of the Company within the “Restricted Area”
      (as defined below);
            ...

                  (c) [“]Restricted Area” means the area within 100 mile
      radius of any actual, future or prospective customer, supplier,
      licensor, or business location of the Company, that Employee
      conducted business in Employee’s capacity as an employee of the
      Company within the last one (1) year of Employee’s employment
      with the Company, either physically, via mail or via electronic
      means, including but not limited to, as applicable, the parishes of
      Assumption, Caddo, Calcasieu, St. Charles, East Baton Rouge,
      Iberia, Livingston, Iberville, Jefferson, Ouochita [sic], Lafourche,
      Lafayette, Orleans, Plaquemines, Rapides, Vermillion [sic], St.
      Bernard, St. James, St. John, St. Martin, St. Mary, St. Tammany,
      Tangipahoa, Terrebone [sic], Washington, and the municipalities
      of New Orleans and surrounding areas as well as the
      municipalities in the parishes listed above . . . .

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     Section 7.2 of the Agreement is a non-solicitation provision:
            7.2 Non-Solicitation. During the Employment Period and for
     a period of one (1) year immediately following the termination of
     the Employee’s employment, the Employee shall not (i) cause,
     solicit, induce or encourage any employees of the Company to leave
     such employment or hire, employ or otherwise engage any such
     individual; or (ii) cause, induce or encourage any material actual
     or prospective client, customer, supplier, or licensor of the
     Company (including any existing or former customer of the
     Company and any person that becomes a client or customer of the
     Company after the date of this Agreement) or any other person
     who has a material business relationship with the Company, to
     terminate or modify any such actual or prospective relationship.

     Section 9 of the Agreement is a severability clause:
           9. Severable Provisions. The provisions of this Agreement
     are severable and the invalidity of any one or more provisions shall
     not affect the validity of any other provision. In the event that a
     court of competent jurisdiction shall determine that any provision
     of this Agreement or the application thereof is unenforceable in
     whole or in part because of the duration or scope thereof, the
     parties hereto agree that said court in making such determination
     shall have the power to reduce the duration and scope of such
     provision to the extent necessary to make it enforceable, and that
     the Agreement in its reduced form shall be valid and enforceable
     to the full extent permitted by law.

     Section 11.2 of the Agreement is an integration clause:
           11.2 Entire Agreement; Amendment. This Agreement
     constitutes the entire Agreement between the parties hereto with
     regard to the subject matter hereof, superseding all prior
     understandings and agreements, whether written or oral. This
     Agreement may not be amended or revised except by a writing
     signed by the parties.

(emphases omitted).
     When Rogillio resigned from Brock, he went to work for a direct
competitor, Apache Industrial Services, LLC (“Apache”), as a Vice President.
Rogillio’s Apache office is in Ascension Parish, which is not listed in the
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Agreement. As part of his new position, Rogillio managed Apache employees
in at least some of the parishes listed in the Agreement. He also met with Brock
customers in some of the listed parishes.
      Brock learned of Rogillio’s work and sued to enforce the Agreement. 1
Brock sought a temporary restraining order and preliminary injunction.
During the hearing on the motion, Brock conceded, and the district court held,
that subsection 7.1(c) of the Agreement was overbroad because it was not
limited to specified parishes and municipalities, as required by Louisiana law.
Citing the severability provision, the court reformed the definition of the
Restricted Area as follows:
            (c) [“]Restricted Area” means the area that Employee
      conducted business in Employee’s capacity as an employee of the
      Company within the last one (1) year of Employee’s employment
      with the Company, either physically, via mail or via electronic
      means, including, as applicable, the parishes of Assumption,
      Caddo, Calcasieu, St. Charles, East Baton Rouge, Iberia,
      Livingston, Iberville, Jefferson, Ouachita, Lafourche, Lafayette,
      Orleans, Plaquemines, Rapides, Vermilion, St. Bernard, St.
      James, St. John, St. Martin, St. Mary, St. Tammany, Tangipahoa,
      Terrebonne, Washington, and the municipalities of New Orleans.

      The district court then found that subsection 7.1(a) was ambiguous as to
whether Rogillio had to be physically present in the restricted parishes to
violate the Agreement. The court resolved that ambiguity in Rogillio’s favor,
ruling that he needed to be physically present. The court found that Brock was
unlikely to succeed on the merits under that subsection because Rogillio
testified that he had not physically worked in any restricted parish. According
to the district court, with respect to the customer non-solicitation provision

      1 Brock also sued Rogillio, other former employees, and Apache for misappropriating
confidential information. Those claims are not at issue in this appeal.
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(subsection 7.2(ii)), “the parties . . . agreed that that is either not enforceable
or at least [it’s] not being sought to be enforced.”
      The district court denied Brock’s motion for a preliminary injunction.
Regarding the Agreement’s ambiguity, the court noted that “the general rule
is that parol evidence is allowed when there’s ambi[g]uity and I would expect
that there will be testimony on the issue of what was intended by the parties.”
In response, Brock renewed its motion for a preliminary injunction so that it
could introduce evidence concerning the parties’ intent.
      At a second preliminary injunction hearing, Brock’s former general
counsel responsible for drafting the Agreement testified that the intent of
subsection 7.1(a) was to restrict the former employee from working for a
competitor in the restricted parishes, whether physically, electronically, or
indirectly by managing an employee. She testified that the provision was
meant to restrict the former employee “from doing whatever services in
whatever capacity he provided to Brock to a competitive business after he
leaves us.” A former executive of Brock’s parent company also testified that
Rogillio had “assured [him] that he would honor his non-compete and in
fact . . . may have to travel to Texas to gain employment because that would
not be impacted by the non-compete that he had.” Rogillio testified that he
didn’t remember his intent in agreeing to the non-compete provision. Following
the hearing, Brock submitted expense reports showing Rogillio having
customer and staff meetings in restricted parishes both as a Brock employee
and as an Apache employee.
      The district court found that Brock had demonstrated a likelihood of
success on its claim that Rogillio breached the non-compete provision, 2 and

      2 Rogillio also claimed that Brock breached certain other contracts that excused his
failure to perform under the Agreement. The district court found this argument
unpersuasive. Rogillio does not renew this argument on appeal, so he has waived it. See
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that the balance of harms and public interest weighed in favor of a preliminary
injunction. The court enjoined Rogillio from “performing or managing any
work, including by phone, over the Internet, or in person” in the restricted
parishes until September 3, 2019. Rogillio timely appealed and requested
expedited review, which we granted.
                             STANDARDS OF REVIEW
      “We review a preliminary injunction for abuse of discretion, reviewing
findings of fact for clear error and conclusions of law de novo.” Texans for Free
Enter. v. Tex. Ethics Comm’n, 732 F.3d 535, 537 (5th Cir. 2013). The
enforceability of restrictive covenants is reviewed de novo. Team Envt’l Servs.,
Inc. v. Addison, 2 F.3d 124, 126 (5th Cir. 1993). Whether a contract is
ambiguous is a question of law. McLane Foodservice, Inc. v. Table Rock Rests.,
L.L.C., 736 F.3d 375, 377 (5th Cir. 2013). “If a contract is ambiguous, the
district court’s findings of fact as to the intent of the parties are reviewed for
clear error.” Id. “A factual finding is clearly erroneous only if, based on the
entirety of the evidence, the reviewing court is left with the definite and firm
conviction that a mistake has been made.” United States v. Cordova-Soto, 804
F.3d 714, 718 (5th Cir. 2015).
                                    DISCUSSION
      A party seeking a preliminary injunction generally must show (1) a
substantial likelihood of success on the merits, (2) irreparable injury if the
injunction is not granted, (3) that the injury outweighs any harm to the other
party, and (4) that granting the injunction will not disserve the public interest.
Cardoni v. Prosperity Bank, 805 F.3d 573, 579 (5th Cir. 2015). A preliminary
injunction may be issued on a prima facie showing that the party seeking it is

Adams v. Unione Mediterranea Di Sicurta, 364 F.3d 646, 653 (5th Cir. 2004) (“Issues not
raised or inadequately briefed on appeal are waived.”).
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entitled to relief. See Janvey v. Alguire, 647 F.3d 585, 595–96 (5th Cir. 2011).
Under Louisiana law governing restrictive covenants, the party seeking the
preliminary injunction need not show irreparable injury but only that the
employee failed to perform under the contract. LA. STAT. ANN. § 23:921(H). The
party seeking the injunction must carry the burden of persuasion. Bluefield
Water Ass’n v. City of Starkville, 577 F.3d 250, 253 (5th Cir. 2009). Primarily,
Brock needed to show that the Agreement was enforceable and that Rogillio
breached the non-compete provision.
 I.    Reformation and Interpretation of the Agreement
          A. Reformation of the geographic limitations
       Rogillio first argues that the Agreement is unenforceable because the
district court erred in reforming it. He contends that the court was not required
to reform the geographically overbroad provision and that he could not have
known when he signed the Agreement where he would be prohibited from
working because he did not know at the time where he would work in the year
before he left Brock. Brock responds that the district court properly relied on
the severability clause to reform the Agreement and that the specified parishes
informed Rogillio where he would be prohibited from working.
       Restrictive covenants are unfavored in Louisiana and are narrowly and
strictly construed. See, e.g., Arthur J. Gallagher & Co. v. Babcock, 703 F.3d
284, 288 (5th Cir. 2012). The statute governing restrictive covenants provides
that “[e]very contract or agreement, or provision thereof, by which anyone is
restrained from exercising a lawful profession, trade, or business of any kind,
except as provided in this Section, shall be null and void. However, every
contract or agreement, or provision thereof, which meets the exceptions as
provided in this Section, shall be enforceable.” LA. STAT. ANN. § 23:921(A)(1).
Under § 23:921(C), “[a]ny person . . . may agree with his employer to refrain
from carrying on or engaging in a business similar to that of the employer
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and/or from soliciting customers of the employer within a specified parish or
parishes, municipality or municipalities, or parts thereof, so long as the
employer carries on a like business therein, not to exceed a period of two years
from termination of employment.”
      A non-compete provision “must strictly comply with the requirements of
the statute.” Dixie Parking Serv., Inc. v. Hargrove, 691 So. 2d 1316, 1320 (La.
Ct. App. 1997). But if the provision is geographically overbroad, the court may
rely on a severability provision to reform the overbroad provision and “excise
the offending language.” SWAT 24 Shreveport Bossier, Inc. v. Bond, 808 So. 2d
294, 309 (La. 2001), superseded by statute on other grounds, LA. STAT. ANN.
§ 23:921(D), as recognized in Lemoine v. Baton Rouge Phys. Therapy, L.L.P.,
135 So. 3d 771, 774 (La. Ct. App. 2013); see also Class Action Claim Servs.,
L.L.C. v. Clark, 892 So. 2d 595, 600 (La. Ct. App. 2004) (“[W]hen a non-compete
clause is overbroad in its geographical boundaries, the Court should delete the
overbroad portions and enforce the remainder of the geographic restriction
provision.”).
      The severability provision in the Agreement specifically provides for
reformation if a court finds a provision “unenforceable in whole or in part
because of the duration or scope thereof.” The district court excised the
overbroad language so that the restriction applied only to the specific parishes
and municipality already identified. The court did not err in doing so.
      Rogillio’s argument about being unable to “determine on the ‘front end’
where he would be prohibited from competing” is similarly unavailing. He
relies on a district court case in which the restrictive covenant at issue
prohibited a former employee from working in “the Louisiana Parishes and/or
Municipalities that are included within [Employee’s] identified Medtronic
sales territory” or “that Medtronic engaged in business within and that
[Employee] services . . . supported.” Waguespack v. Medtronic, Inc., 185 F.
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Supp. 3d 916, 929 (M.D. La. 2016) (alterations in original). The district court
found that the geographic limitations were invalid under § 23:921 because the
restricted parishes were not identified and “there was no way for Plaintiffs to
determine—on the front end—what their potential restrictions would be.” Id.
(relying on Aon Risk Servs. of La., Inc. v. Ryan, 807 So. 2d 1058, 1062 (La. Ct.
App. 2002)).
      In both Waguespack and Aon Risk Services, the courts found the non-
compete provisions invalid because they did not identify any specific parishes
or municipalities where the employee would be restricted. See id.; Aon Risk
Servs., 807 So. 2d at 1060 (“The geographic scope of the agreement is described
to be ‘whatever parishes, counties and municipalities . . .’ in which [the
companies] conducted business.”). That is not the case here. Rogillio’s non-
compete provision specified particular parishes and the municipality of New
Orleans. The reformation served only to narrow the provision’s scope by
removing catch-all clauses that went beyond the listed parishes, not to identify
specific parishes after the fact. When signing the Agreement, Rogillio knew
that he could be prohibited from working in the identified parishes, and that
restriction is the only one the district court enforced following reformation. The
reformed Agreement is not invalidly overbroad.
         B. Use of parol evidence
      Rogillio also contends that the district court erred in interpreting the
Agreement’s non-compete provision by applying contract law other than the
principle that ambiguous contracts should be construed against the drafter,
and in considering parol evidence despite the Agreement’s integration clause.
Brock responds that general rules of contract interpretation still apply to
restrictive covenants, and that parol evidence is permitted to interpret an
ambiguous contract.

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                                 No. 19-30363
      The district court found that subsection 7.1(a) was ambiguous with
respect to whether Rogillio must be physically present in restricted parishes to
violate the provision. Rogillio does not challenge this finding.
      “A noncompetition agreement is a contract between the parties who
enter it, and it is to be construed according to the general rules of contract
interpretation.” Reg’l Urology, L.L.C. v. Price, 966 So. 2d 1087, 1091 (La. Ct.
App. 2007). Interpreting a contract is a matter of determining the parties’
common intent. LA. CIV. CODE ANN. art. 2045. When a contract is
unambiguous, we look only to the four corners of the contract to interpret it.
Id. art. 2046. But, “when the terms of a written agreement are susceptible to
more than one interpretation, or there is uncertainty or ambiguity as to its
provisions, or the intent of the parties cannot be ascertained from the language
employed, parol evidence is admissible to clarify the ambiguity or to show the
intention of the parties.” Condrey v. SunTrust Bank of Ga., 429 F.3d 556, 563
(5th Cir. 2005); see also Scafidi v. Johnson, 420 So. 2d 1113, 1115 (La. 1982)
(“Between the parties to an instrument, parol evidence is admissible . . . to
explain an ambiguity when such explanation is not inconsistent with the
written terms . . . .” (quotation omitted)). “If an ambiguity remains after
applying the other general rules of construction, then the ambiguous
contractual provision is to be construed against the drafter.” Chinook USA,
L.L.C. v. Duck Commander, Inc., 721 F. App’x 361, 366 (5th Cir. 2018) (citing
LA. CIV. CODE ANN. art. 2056 (“In case of doubt that cannot otherwise be
resolved, a provision in a contract must be interpreted against the party who
furnished its text.” (emphasis added))).
      The district court did not err in applying general rules of contract law to
interpret subsection 7.1(a). Even though restrictive covenants “must be strictly
construed against the party seeking their enforcement,” SWAT 24, 808 So. 2d
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at 298, the district court properly considered parol evidence to determine the
parties’ intent. 3
      The Agreement’s integration clause does not alter this conclusion. An
integration clause “is a provision in a contract to the effect that the written
terms may not be varied by prior or oral agreements because all such
agreements have been merged into the written document.” Condrey, 429 F.3d
at 564 (quotation omitted). Rogillio argues that parol evidence is inadmissible
because the Agreement is not incomplete. Cf. id. (“Parol evidence is admissible
to show that the written agreement was incomplete and was not intended by
the parties to exhibit the entire agreement.” (quotation omitted)). But the
district court admitted parol evidence not to vary, add to, or modify the terms
of the Agreement; it did so to determine the parties’ intent as to the meaning
of ambiguous terms. See Diefenthal v. Longue Vue Mgmt. Corp., 561 So. 2d 44,
51 (La. 1990) (holding that parol evidence is inadmissible to vary the terms of
a contract but “is admissible to clarify [an] ambiguity and to show the intent
of the parties”); see also Chinook USA, 721 F. App’x at 366–67 (considering
parol evidence to interpret an ambiguous contract with an integration clause).
      Rogillio argues only that the district court erred in admitting parol
evidence. He does not contend that—assuming the evidence was properly
admitted—the court’s factual findings as to the parties’ intent are erroneous.
Nor do we find them to be clearly erroneous. The court did not err in admitting
parol evidence and determining the parties’ intent as to the meaning of
subsection 7.1(a) regarding where Rogillio needed to be working for Apache in
order to violate the provision.

      3 Even if the district court had construed the Agreement in favor of Rogillio without
admitting parol evidence, subsection 7.1(a) would be interpreted to restrict him from
physically working for Apache in the restricted parishes. As discussed below, there was
evidence of Rogillio doing exactly that.
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II.     Breach of the Agreement
        Rogillio argues that the only evidence of a possible breach of the
Agreement was of customer solicitation, and because that is not prohibited by
section 7.1, Brock failed to show that he violated the Agreement. Rogillio also
argues that Brock did not introduce evidence showing he ever conducted
business for Brock in the restricted parishes, only that he is now doing work
for Apache. Brock responds that solicitation is included in section 7.1, and that
regardless, Brock introduced evidence of Rogillio otherwise competing in
restricted parishes.
        The district court held that there was evidence that Rogillio breached
section 7.1. The court found that Rogillio had worked in the restricted parishes
as a manager by meeting with subordinates and by electronically contacting
and physically meeting with Brock customers. The court stated that the latter
was relevant to the issue of breach (even though Brock is not attempting to
enforce the Agreement’s explicit non-solicitation provision) because contracts
often contain redundancies and solicitation is a form of competition.
        The district court did not clearly err in finding that there was evidence
of Rogillio working for Brock in restricted parishes and working for Apache in
restricted parishes. The parties stipulated that “Brock does business in all
parishes listed in the employment agreement” and that “Rogillio is managing
employees on behalf of Apache in at least some of the listed parishes in the
employment agreement.” In addition, Brock produced evidence that Rogillio
conducted business for Brock, including staff and customer meetings, in at
least some of the restricted parishes, including East Baton Rouge Parish.
Brock also produced evidence of Rogillio physically conducting Apache
business by meeting with staff in some restricted parishes, including East
Baton Rouge Parish. So, there was evidence of Rogillio conducting business for

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Brock in restricted parishes and Rogillio conducting business for Apache
(including but not limited to customer solicitation) in restricted parishes.
         The district court’s reliance on evidence of customer solicitation was
unnecessary to the finding of breach. Once the court found that Brock had
made a prima facie case based on Rogillio’s Apache staff meetings in restricted
parishes, Brock was entitled to a preliminary injunction. See LA. STAT. ANN.
§ 23:921(H) (“[U]pon proof of the obligor’s failure to perform, and without the
necessity of proving irreparable injury, a court . . . shall order injunctive relief
enforcing the terms of the agreement.); see also Ethan & Assocs., Inc. v. McKay,
No. 2005 CA 2567, 2006 WL 3544807, at *5 (La. Ct. App. Dec. 6, 2006)
(“Pursuant to [§ 23:921(H)], upon such proof of . . . failure to perform in
accordance with their respective employment agreements, [the employer] was
entitled to injunctive relief enforcing the entirety of the employment
agreements without establishing that McKay and Mosely had breached each
individual obligation of the employment agreement.”). 4
III.     Granting the preliminary injunction
         The district court did not err in finding a likelihood of success on the
merits. The Agreement is enforceable and there was prima facie evidence of
Rogillio breaching section 7.1. Rogillio has not shown that the district court
abused its discretion in finding the balance of harm and public interest weigh
in Brock’s favor. The burden on Rogillio is minimal, as the preliminary
injunction will only be in force for four months, and the area in which he is

         4It is unclear whether the district court determined that subsection 7.1(a)
unambiguously included customer solicitation, or whether the court found that the provision
was ambiguous and that the parties intended it to include solicitation. But we need not parse
the district court’s analysis on this point or decide whether its interpretation was correct.
The evidence that Rogillio met with Apache staff in restricted parishes provides an
independent ground to affirm the injunction. Should Brock seek to prove damages, however,
it may be necessary for the district court to address the solicitation issue more clearly.
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restricted from working is not geographically overbroad. While restrictive
covenants are disfavored in Louisiana, the one at issue here meets the
requirements of the law, so the injunction does not disserve the public.
                                CONCLUSION
      For the foregoing reasons, we AFFIRM.

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