Cmgrp, Inc. v. Maggie Gallant
343 Ga. App. 91
| Ga. Ct. App. | 2017Background
- Maggie Gallant signed an employment agreement with Rogers & Cowan (R&C), a unit of CMGRP, in 2008 that included one-year post-employment restrictive covenants: a non-recruitment clause (§7.05(a)) and a non-solicitation-of-clients clause (§7.05(b)).
- Gallant resigned in December 2015 and took a job with the Agency for the Performing Arts; R&C alleged she recruited several R&C employees and solicited R&C clients and sent a cease-and-desist letter.
- Gallant and the APA filed for declaratory judgment seeking a declaration that the non-recruitment and non-solicitation provisions were unenforceable; CMGRP removed to federal court, the case was remanded to state court, and the trial court declared §7.05 void in a summary order.
- On appeal, CMGRP challenged only the trial court’s invalidation of the non-recruitment provision; the parties agreed the non-solicitation clause was void and the trial court’s ruling on it was not contested on appeal.
- The appellate court reviewed whether the non-recruitment clause was void for lack of a geographic limitation, lack of an employee-relationship limitation, or because the void client non-solicitation clause rendered the entire set of covenants unenforceable.
Issues
| Issue | Plaintiff's Argument (Gallant) | Defendant's Argument (CMGRP) | Held |
|---|---|---|---|
| Whether non-recruitment clause invalid for lack of geographic limitation | Gallant argued she did not maintain geographic-limitation argument at hearing; contended employee-relationship limitation was dispositive | CMGRP argued absence of geographic limit does not render clause void; Georgia precedent upholds such clauses | Court: lack of geographic limitation was not the basis of trial court’s ruling; precedent allows non-recruitment clauses without geographic limits |
| Whether non-recruitment clause invalid for failing to limit to employees with whom Gallant had established relationship | Gallant: clause is overbroad absent employee-relationship limitation or evidence justifying restriction | CMGRP: courts have upheld broad non-recruitment language that is not limited to known contacts | Court: non-recruitment clause is not void for lacking an employee-relationship limitation; appellate precedent upholds similar language |
| Whether CMGRP needed to present evidence that restriction was necessary to protect legitimate business interest | Gallant: CMGRP presented no evidence below, so clause should be invalid | CMGRP: validity is question of law for the court; extrinsic evidence was not required and Gallant did not raise CMSRP’s evidentiary failure below | Court: issue not preserved (Gallant didn’t raise it below); and validity is principally a legal question — no new evidentiary review on appeal |
| Whether a void non-solicitation (client) clause invalidates the non-recruitment clause | Gallant: because the client non-solicitation clause is void, all restrictive covenants should fail | CMGRP: non-solicitation/non-compete covenants are non-severable among themselves, but non-recruitment clauses are analyzed separately and need not fall | Court: reversed trial court to the extent it invalidated the non-recruitment clause; void client non-solicit does not automatically void non-recruitment clause |
Key Cases Cited
- Coleman v. Retina Consultants, P.C., 286 Ga. 317 (2009) (whether restraint is reasonable is a question of law for the court)
- Palmer & Cay of Ga., Inc. v. Lockton Cos., Inc., 273 Ga. App. 511 (2005) (upholding employee non-recruitment covenant without relationship limitation)
- Lane Co. v. Taylor, 174 Ga. App. 356 (1985) (upholding broad non-recruitment language as not overly broad)
- Wright v. Power Indus. Consultants, Inc., 234 Ga. App. 833 (1998) (one-year recruitment prohibition reasonable in scope and duration)
- Advance Tech. Consultants, Inc. v. Roadtrac, LLC, 250 Ga. App. 317 (2001) (non-compete and non-solicitation covenants treated similarly for non-severability rule)
- Cox v. Altus Healthcare & Hospice, Inc., 308 Ga. App. 28 (2011) (analyzed non-compete, non-solicitation, and non-recruitment covenants on the merits)
- Vulcan Steel Structures, Inc. v. McCarty, 329 Ga. App. 220 (2014) (held non-solicitation clause void and, in that contract without a separate non-recruitment clause, treated other covenants as unenforceable)