Court Opinion

ID: 6700145
Source: CourtListenerOpinion
Date Created: 2022-07-20 22:06:56.205361+00
Date Added: 2024-06-11T16:01:23.577985
License: Public Domain

Diane V. Grendell, Judge,
dissenting.
{¶ 73} I respectfully dissent from the majority’s decision to reverse the grant of summary judgment in favor of defendant-appellee, Chad McClain.
{¶ 74} With respect to plaintiff-appellant, 84 Lumber Company’s, claim that McClain breached the noncompetition agreement, the majority finds that this agreement was supported by adequate consideration.
{¶ 75} Under Pennsylvania law, “a restrictive covenant is enforceable if supported by new consideration, either in the form of an initial employment contract or a change in the conditions of employment.” Maintenance Specialties, Inc. v. Gottus (1974) 455 Pa. 327, 330, 314 A.2d 279.
{¶ 76} The majority correctly determines that the biweekly advance on future commissions that McClain would receive in exchange for executing the agreement constituted a tangible benefit. Pennsylvania case law, however, demonstrates that, as a matter of law, a more substantial benefit than a temporary advance in pay is required in order to render a restrictive covenant enforceable.
{¶ 77} For example, nominal consideration such as $1.00 would be insufficient to support a restrictive covenant. George W. Kistler, Inc. v. O’Brien (1975), 464 Pa. 475, 485, 347 A.2d 311, fn. 5. Provisions requiring the employer to give the employee several weeks’ notice in the event of termination have been found insufficient to support a restrictive covenant. Maintenance Specialties, 455 Pa. at 330, 314 A.2d 279, fn. 1; Capital Bakers, Inc. v. Townsend (1967), 426 Pa. 188, 191, 231 A.2d 292. The change from “at will” employment to a week-to-week term of employment was insufficient to support a restrictive covenant. Markson Bros. v. Redick (1949), 164 Pa.Super. 499, 505, 66 A.2d 218.
{¶ 78} In contrast, an employee receiving a commission-based sales position in lieu of a salary-based service position constituted sufficient consideration to support a restrictive covenant. M.S. Jacobs & Assocs., Inc. v. Duffley (1973), 452 *596Pa. 143, 146-147, 303 A.2d 921. The change from an at-will/independent contractor to a regular employee constituted sufficient consideration to support a restrictive covenant. Pennsylvania Funds Corp. v. Vogel (1960), 399 Pa. 1, 6, 159 A.2d 472. Becoming a shareholder in a company was sufficient consideration to support a restrictive covenant. Wainright’s Travel Serv., Inc. v. Schmolk (1985), 347 Pa.Super. 199, 204, 500 A.2d 476.
{¶ 79} As the Pennsylvania Supreme Court has emphasized, the benefit to the employee entering a restrictive covenant after the initial employment must constitute a change in the employment status. Maintenance Specialties, 455 Pa. at 330, 314 A.2d 279. The advance on future commissions in the present case is only a temporary accommodation, not a change in McClain’s employment status. Accordingly, it is insufficient consideration to support the noncompetition agreement as a matter of law.
{¶ 80} With respect to 84 Lumber’s claim that McClain violated-Ohio’s Uniform Trade Secrets Act, I agree with the trial court that it offered “no Civ.R. 56(C) evidence supporting McClain’s improper appropriation of trade secrets, whether customer lists, customer specific needs, product pricing, or other proprietary information.” The single instance of Carter Lumber outbidding 84 Lumber for a job, without more, does not create a reasonable inference of misappropriation.
{¶ 81} For the foregoing reasons, I respectfully dissent and would affirm the decision of the trial court.