Acordia of Ohio, L.L.C. v. Fishel
133 Ohio St. 3d 345
| Ohio | 2012Background
- Employees Fishel, Freytag, Taber, and Diefenbach signed two-year noncompete agreements with their respective employers dating 1993–2000.
- The agreements lack any express language extending to successors or assigns.
- Rauh & Company became Acordia of Cincinnati, Inc. after a 1994 acquisition by Acordia, Inc.; the Cincinnati entity later merged into Acordia of Ohio, Inc. in 1997.
- Wells Fargo acquired Acordia, Inc. in 2001 and required new employment forms from employees.
- Seven months after Wells Fargo's acquisition, Acordia, Inc. merged with Acordia of Ohio, L.L.C. (the L.L.C.); only the L.L.C. remained after the merger.
- Employees subsequently left the L.L.C. for Neace Lukens in 2005 and recruited customers from the L.L.C., creating the dispute over enforceability of the noncompetes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether noncompete agreements transfer by operation of law after a merger. | L.L.C. asserts transfers occur by operation of law and survive as enforceable. | Employees argue the agreements are not enforceable by the surviving entity and do not extend beyond the original contracts. | Transfers occur, but enforceability remains limited to original terms. |
| Whether the surviving company may enforce the transferred noncompetes as if it had signed them. | L.L.C. maintains it may enforce under operation of law. | Employees contend the agreements do not bind the surviving entity beyond the original parties and terms. | Enforceability limited to terms and period; cannot expand to successors. |
| What is the effective termination trigger and duration for the noncompetes after merger? | L.L.C. contends post-merger enforcement is valid. | Employees argue the noncompete periods expire once the original employer ceases to exist. | Noncompete periods expire within two years after termination with the original employer; merger does not reset them. |
Key Cases Cited
- Rogers v. Runfola & Assocs., Inc., 57 Ohio St.3d 5 (1991) (noncompete enforceable when business structure changes but business remains)
- Morris v. Invest. Life Ins. Co., 27 Ohio St.2d 26 (1971) (merger effects and continuation of entity)
- Marfield v. Cincinnati, D. & T. Traction Co., 111 Ohio St.139 (1924) (consolidated entity steps into shoes of constituent companies)
- ASA Architects, Inc. v. Schlegel, 75 Ohio St.3d 666 (1996) (contracts binding on surviving entity absent explicit merger language)
- Raimonde v. Van Vlerah, 42 Ohio St.2d 21 (1975) (noncompete reasonableness standards for enforcement)
- Lake Land Emp. Group of Akron, L.L.C. v. Columber, 101 Ohio St.3d 242 (2004) (reasonableness and scope of noncompete covenants)