Copypro, Inc. v. Musgrove
232 N.C. App. 194
| N.C. Ct. App. | 2014Background
- CopyPro, Inc. is an office-equipment lessor/servicer operating across 33 eastern NC counties; sales reps have access to customer/pricing info via internal databases, weekly spreadsheets, and Recollect (contract copies).
- Joseph Musgrove was hired as a salesperson in 2009, signed a nondisclosure agreement and a 3‑year noncompetition covenant as employment conditions, and worked primarily in Onslow and Pender Counties.
- Musgrove resigned in August 2012 after losing sole coverage of part of his territory and soon began working for competitor Coastal Document Systems (operating in Brunswick, Columbus, and New Hanover Counties); Coastal warned him not to solicit CopyPro customers.
- CopyPro sued for breach of the nondisclosure and noncompetition agreements and obtained a preliminary injunction prohibiting Musgrove from working for any competitor for three years; Musgrove appealed.
- The Court of Appeals reviewed de novo whether CopyPro showed likelihood of success on the merits and irreparable harm, and affirmed enforcement of the nondisclosure clause but held the noncompetition covenant unenforceable as overbroad.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of noncompetition clause | Clause protects CopyPro’s legitimate business interests by preventing disclosure/use of sensitive customer/pricing information even if employee’s new role differs | Clause is overbroad: prohibits employment in any capacity (even unrelated roles) with competitors for 3 years across many counties; not limited to roles where Musgrove had competitive access | Noncompetition clause unenforceable as broader than necessary to protect employer’s interests; preliminary injunction enforcing it was error |
| Enforceability of nondisclosure clause | Nondisclosure prevents misuse of customer lists and confidential info; enforceable | (No appellate challenge to this provision) | Nondisclosure agreement enforcement affirmed |
| Scope of Precision Walls precedent | Precision Walls supports enforcing broad bans where employee had deep access/responsibility | Musgrove lacked comparable access/responsibility; mere availability of systems (like Recollect) without evidence of use is insufficient | Precision Walls not controlling here; record lacked evidence that Musgrove possessed competitively sensitive information justifying a categorical ban |
| Appealability of preliminary injunction | Injunction interlocutory but necessary to protect CopyPro | Injunction deprives Musgrove of livelihood | Appeal allowed because injunction effectively barred defendant from working for 3 years (substantial right) |
Key Cases Cited
- A.E.P. Indus., Inc. v. McClure, 308 N.C. 393 (discusses standards for injunction review)
- Young v. Mastrom, Inc., 99 N.C. App. 120 (lists requirements for valid employee noncompete)
- Precision Walls, Inc. v. Servie, 152 N.C. App. 630 (upheld a one‑year broad ban where employee had extensive competitive access)
- Henley Paper Co. v. McAllister, 253 N.C. 529 (held noncompete unenforceable when it bars activities unrelated to prior employment)
- Hartman v. W.H. Odell & Assocs., 117 N.C. App. 307 (invalidated covenant preventing unrelated employment roles)