Predict whether a Franklin court will enforce a two-year, statewide noncompete against a departing sales manager. You have 90 minutes. To: Associate. Use the File and the Library only, then compare your draft with the rubric and the model answer below.
The assignment
To: Associate. From: Hannah Okafor, Partner. Re: Brightline Supply v. Reyes. Our client, Brightline Supply, sells commercial cleaning products. Its former regional sales manager, Diego Reyes, left in March and now works for a competitor. Brightline wants to enforce a noncompete in his employment agreement. Please write an objective memorandum predicting (1) whether the covenant protects a legitimate business interest, (2) whether its time and geographic limits are reasonable, and (3) what a court would do if it finds part of it too broad. Use only the Library. Do not restate the facts at length.
File
Interview notes: Brightline Supply
Mr. Reyes worked for Brightline for six years and managed 41 customer accounts in the Northern District. He signed the agreement on his first day. Brightline paid for his training and gave him access to customer price lists and renewal dates. He resigned on March 3 and started on March 20 with Crestline Products, which sells competing goods. Brightline says he has called at least nine of his former accounts. Brightline sells in all of Franklin, but 90 percent of Mr. Reyes's accounts were in the three northern counties. He was paid $96,000 and received a $6,000 payment on signing.
Employment agreement, section 12
For two years after leaving Brightline, Employee will not work for, or own any part of, a business that sells cleaning or sanitation products anywhere in the State of Franklin, in any role. Employee agrees this restriction is reasonable and necessary to protect Brightline's goodwill. If a court finds any part of this section too broad, the court may enforce it to the extent permitted by law.
Library
Commercial Code, section 14-210 (Franklin)
A covenant not to compete in an employment agreement is enforceable only if it (a) is reasonably necessary to protect the employer's legitimate business interest, such as trade secrets, confidential information, or customer goodwill; (b) is reasonable in time and geographic scope; and (c) does not impose an undue hardship on the employee or harm the public. A covenant may not restrict an employee from working in a role that does not threaten the employer's legitimate interest.
An employer sought to bar a former sales representative from working anywhere in the state for three years. Held: the covenant was overbroad. An employer's interest in customer goodwill supports a restriction on contacting or serving the customers the employee actually dealt with, but does not support a bar on all work for a competitor. A geographic limit is reasonable when it matches the area in which the employee actually worked and had customer relationships. Two years is generally reasonable for a sales position.
An employer asked the court to enforce a noncompete that was too broad. Held: a court may narrow an overbroad covenant, and may enforce it only as narrowed, if the employer acted in good faith and the covenant can be limited without rewriting it. A court will not narrow a covenant when the employer drafted it to be far broader than necessary in the hope that employees would comply, or when narrowing would require inventing new terms. Consideration in the form of continued employment or a signing payment supports a covenant signed at the outset of employment.
What graders look for in this task
Graders score a response against these criteria, and every one of them depends on using only the facts in the File and only the rules in the Library, so treat the list as a check for your draft after the first pass and again before you stop writing.
States the three parts of section 14-210
Identifies customer goodwill, price lists, and renewal dates as legitimate interests
Applies Westbrook to find a statewide bar on any role overbroad while a bar on serving his own accounts is supportable
Finds the two-year period likely reasonable for a sales role
Finds a statewide geography broader than the northern counties where he worked
Applies Palmer Freight on narrowing and addresses good faith and whether narrowing requires rewriting
Notes the covenant was supported by consideration
Predicts a court is likely to enforce only a narrowed restriction, with uncertainty acknowledged