Court Opinion

ID: 9566920
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:44:51.844604+00
Date Added: 2024-06-11T09:38:05.224530
License: Public Domain

HINES, Justice,
dissenting.
Under clear Georgia precedent, the covenant regarding nonso-licitation of customers at issue in this case is overbroad, and therefore, unenforceable. Accordingly, I respectfully dissent.
Inasmuch as a restrictive covenant contained in an employment contract is in partial restraint of trade, it is to be upheld only if the restraint imposed is reasonable, founded on valuable consideration, reasonably necessary to protect the interest of the party in whose favor it is imposed, and does not unduly prejudice the interests of the public. W.R. Grace & Co. v. Mouyal, 262 Ga. 464, 465 (1) (422 SE2d 529) (1992). In addressing the question of reasonableness, a court should consider duration, territorial coverage, and scope of activity subject to the restrictions. Id.
*485In this case, the trial court found the nonsolicitation agreement to be overbroad because it prohibited the employees from servicing or selling to a company client a product that the employee never sold or serviced while employed by the company; because it prohibited the employee from servicing or selling to the company’s clients a product that the company might no longer offer; and because the employees were prohibited from contacting clients regardless of how long it had been since they sold to these clients and regardless of whether the clients had severed their relationships with the company in the interim. Palmer & Cay of Ga. v. Lockton Cos., 273 Ga. App. 511, 512 (615 SE2d 752) (2005). In finding the breadth of the restriction unreasonable, the Court of Appeals focused on the fact that the employees were prohibited, without limitation either by geography or product or service type, from soliciting and doing business with any customer they had served during the entire terms of their employment. This was especially significant in this case because the three workers were long-term employees, serving the company for five, ten, and eleven years, respectively. Yet, a majority of this Court concludes that the restriction is “narrowly limited” because it addresses “only those customers of [the company] who were served by the [e] mployees during their respective terms of employment.” However, the restriction is anything but narrow.
The restriction contains no territorial limitation whatsoever. Generally, a territorial limitation, specified with particularity, helps to provide the employee with notice of what constitutes a violation of the restrictive covenant. W.R. Grace & Co. v. Mouyal, supra at 465 (2), citing Wiley v. Royal Cup, 258 Ga. 357, 358 (370 SE2d 744) (1988); Fuller v. Kolb, 238 Ga. 602, 604 (234 SE2d 517) (1977). The reasonableness of the restriction is heavily dependent upon the facts and circumstances surrounding the case, and in determining reasonableness, consideration must be given to the employee’s right to earn a living and the employee’s ability to determine with certainty the area within which his or her post-employment actions are restricted. W.R. Grace & Co. v. Mouyal, supra at 466 (2). However, in responding to a certified question from the United States Court of Appeals for the Eleventh Circuit in W.R. Grace & Co. v. Mouyal, this Court rightly acknowledged that to require an express geographic territorial description in every case does not square with the reality of the modern business world in which an employee’s “territory” is not bounded by geography, as modern technology makes possible the servicing of clients located throughout the country and the world. Id. at 467 (2). This Court then concluded that where the parameters of the restrictive covenant were as narrowly drawn as those set forth in that case, *486as addressed by the certified question, there was no need for a territorial restriction expressed in geographic terms. Id. at 467-468 (2).
But in W.R. Grace & Co. v. Mouyal, unlike the present case, the employee was prohibited from soliciting or contacting any customer or prospect of the company with a view to the sale or provision of any product, equipment or service competitive or potentially competitive with any product, equipment or service sold or provided or under development by the company during the two years immediately preceding cessation of the employee’s employment with the company. Thus, the covenant restricted the employee only from soliciting customers contacted by the employee within the two-year window preceding the conclusion of employment. In the present case, there is no such temporal limitation to mitigate the severity of the restraint on the employee’s right to a livelihood.
Regardless of the majority’s assertion to the contrary, Gill v. Poe & Brown of Ga., 241 Ga. App. 580 (524 SE2d 328) (1999), is directly on point. In that case, it was determined that the employer did not have a legitimate business interest in preventing the employee’s solicitation of former clients who might have severed their relationship with the employer up to four years before the employee’s termination. Id. at 583 (2). Thus, the nonsolicitation agreement was held to be an unreasonable partial restraint of trade. Id. at 580. The majority tries to distinguish Gill from the present case by stating that “P&C does not rely on a comparable ‘stagnant list’ to protect any of its ‘former clients.’ ” But the existence of a “list,” or rather the lack thereof in the present case, is irrelevant. The point is that to prohibit the employees from business contact with those with whom the employer may have long ceased doing business fails to serve any legitimate business interest of the employer. In the present case, it strains credibility to conclude that P&C has a legitimate business interest in barring a former employee from soliciting and doing any business whatsoever with a customer the employee had served more than a decade prior to termination of employment with P&C.
The majority cites Wiley v. Royal Cup, supra, and Marcoin, Inc. v. Waldron, 244 Ga. 169 (259 SE2d 433) (1979), for its pivotal conclusion that “the critical factor is whether the former employee ever served the customer, not the length of time since he or she may have done so.” But neither case supports such a proposition. In fact, the cases are inapposite; both involved restrictive covenants containing express territorial limitations. Even so, this Court struck down the restrictive covenant at issue in Wiley v. Royal Cup because the overbroad territorial limitation did not serve a legitimate business interest of the employer, and therefore, was unreasonable. Id. at 359 (1).
*487Decided May 8, 2006.
Bondurant, Mixson & Elmore, Michael B. Terry, Timothy S. Rigsbee, for appellant.
Paul, Hastings, Janofsky & Walker, William K. Whitner, Rogers & Hardin, Hunter R. Hughes III, Ashley R. Hurst, for appellees.
Certainly, an employer has a protectible interest in the customer relationships its former employee established and/or nurtured while employed by the employer, and is entitled to shield itself from the risk that a former employee might attempt to appropriate such customers by virtue of the contacts developed while working for the employer. W.R. Grace & Co. v. Mouyal, supra at 466 (2). But the measures that the employer uses to protect itself from such risk must be reasonably necessary to accomplish that goal. W.R. Grace & Co. v. Mouyal, supra at 465 (1). That is not the case here.
There must be a judicial balancing between the interests of the employer and that of the employee. W.R. Grace & Co. v. Mouyal, supra at 466 (2). Otherwise, the economic environment is compromised. The business climate in this state is ill served by, in essence, penalizing the long-term service of an employee. Unfortunately, the majority, without legal basis, has done so.