Timber Lake Foods, Inc. v. Estess
| Docket Number: | 2009-CA-00980-COA Linked Case(s): 2009-CA-00980-COA |
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| Court of Appeals: |
Opinion Link Opinion Date: 03-08-2011 Opinion Author: Griffis, P.J. Holding: Reversed and remanded. |
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| Additional Case Information: |
Topic: Contract - Covenant not to compete - Geographic scope Judge(s) Concurring: Lee, C.J., Irving, P.J., Myers, Ishee, Roberts, Carlton and Maxwell, JJ. Non Participating Judge(s): Barnes, J. Procedural History: Trial on Merits Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 04-21-2009 Appealed from: Lee County Circuit Court Judge: Paul S. Funderburk Disposition: Denied Motion for Preliminary Injunction to Enforce a Covenant Not to Compete Case Number: CV-08-177 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Timber Lake Foods, Inc. |
BERKLEY N. HUSKISON, J. DOUGLAS FORD |
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| Appellee: | Stephanie Estess | JOHN A. FERRELL | ||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Covenant not to compete - Geographic scope |
| Summary of the Facts: | Timber Lake Foods, Inc. filed suit seeking a preliminary injunction and damages against its former employee, Stephanie Estess, based on her alleged violation of a covenant not to compete. The circuit court found that the geographic scope of the covenant not to compete was unreasonable. Timber Lake’s motion for a preliminary injunction was denied. Timber Lake appeals. |
| Summary of Opinion Analysis: | When considering the enforcement of a covenant not to compete, the Court must weigh the rights of the employer, the rights of the employee, and the rights of the public. There has been no allegation of harm to the public in this case because there are many other buyers, sellers, and brokers of poultry who are in competition with Timber Lake and Stephanie. Non-competition agreements are only valid within such territory and during such time as may be reasonably necessary for the protection of the employer or principal, without imposing undue hardship on the employee or agent. The covenant not to compete restricted Stephanie from brokering meat within 250 miles of Tupelo for a period of two years after her termination from Timber Lake. Joe testified that Timber Lake’s customers were located throughout the United States. As a broker, Stephanie could buy from and sell to these nationwide customers from any location with a computer and a telephone. Stephanie argued, and the circuit court agreed, that the 250-mile geographic scope was an arbitrary restriction considering that the nature of Stephanie’s job allowed her to work from any location. In essence, the circuit court’s finding is that, in order to protect its interests, Timber Lake would have had to impose a nationwide geographic restriction on competition by its former employees. While other jurisdictions have acknowledged that advancements in technology have created a need for such a broad geographic scope in covenants not to compete, Mississippi law has yet to address the issue. In an effort to make the agreement reasonable to Stephanie, and thereby enforceable, Timber Lake chose to limit the geographic restriction to 250 miles instead of a nationwide restriction. The circuit court was correct that the 250-mile limit was an arbitrary number that would not keep Stephanie from competing with Timber Lake outside that limit. However, such finding does not establish the unreasonableness of the geographic limit. The 250-mile limit provided some protection to Timber Lake by preventing her from competing in the Tupelo area. The covenant did nothing to prevent Stephanie from competing with Timber Lake on a nationwide level anywhere outside the 250-mile radius, thereby balancing her interest in finding employment with a Timber Lake competitor. The circuit court’s finding of unreasonableness based solely on the arbitrariness of the 250-mile limit was clearly erroneous. Since the two-year time limitation of the covenant not to compete has expired during the pendency of this appeal, the issuance of an injunction would be improper; therefore, the case is remanded for a determination of Timber Lake’s claim for damages. Timber Lake also stated a claim for compensatory damages for Stephanie’s alleged violation of the nondisclosure clause of the employment agreement and this should be addressed by the circuit court on remand. |
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