Eric S. Dawson, Jr. v. Ameritox, Ltd.
571 F. App'x 875
11th Cir.2014Background
- Dawson signed a Confidentiality and Non-Competition Agreement on April 7, 2011, before his official Ameritox start date (found by the district court as April 11, 2011).
- The Agreement restricted Dawson from working for certain competitors (including Millennium) for one year after employment ended; Ameritox claimed he had access to confidential trade information.
- Dawson resigned in December 2013 and allegedly accepted a job with Millennium; Ameritox discovered purportedly transferred confidential documents after forensic review.
- Dawson sued for declaratory judgment in Alabama state court challenging the non-compete; Ameritox removed the case and sought a TRO and preliminary injunction to enjoin him from working for Millennium.
- The district court issued a TRO but denied the portion of the preliminary injunction barring Dawson from working for Millennium, holding the pre-employment non-compete was void under Ala. Code § 8-1-1 because the employer-employee relationship did not exist when the agreement was executed.
- The Eleventh Circuit affirmed, concluding Ameritox lacked a substantial likelihood of success on the merits and the district court did not abuse its discretion in denying the requested preliminary injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ala. Code § 8-1-1 governs the Agreement (voiding restraints on trade) | § 8-1-1 should not apply because the Agreement is only a partial restraint, and § 8-1-1 applies only to total restraints | The Agreement is a pre-employment non-compete and § 8-1-1 applies to employee non-competes (partial or total) signed before employment begins | Court held § 8-1-1 applies; need not resolve partial vs total because Agreement was signed before employment began and thus void under § 8-1-1 |
| Whether the employee-employer exception saves the Agreement | The employer-employee exception applies because Dawson had accepted employment (prospective employment should suffice) | The exception requires an existing employee-employer relationship when the agreement is executed; pre-employment acceptance is insufficient | Held exception does not apply; agreement signed prior to employment is void under Pitney Bowes rule |
| Whether the district court abused its discretion in denying preliminary injunction | Ameritox argued district court erred legally and should have enjoined Dawson from working at Millennium | Dawson argued Ameritox failed to prove the elements necessary for a preliminary injunction and the Agreement is void | Held no abuse of discretion; Ameritox failed to show substantial likelihood of success on the merits, so injunction denial stands |
| Whether appellate court should independently grant injunction | Ameritox asked appellate court to restore injunction under Fed. R. Civ. P. 62(c) | Dawson argued appellate court should not enter injunction because trial court made factual findings and Ameritox did not meet injunction prerequisites | Held appellate court will not reverse and independently grant injunction; affirmed district court decision |
Key Cases Cited
- Pitney Bowes, Inc. v. Berney Office Solutions, 823 So. 2d 659 (Ala. 2001) (holds employee-employer exception to § 8-1-1 applies only when the employment relationship exists when the agreement is executed)
- Ex Parte Howell Eng’g & Surveying, Inc., 981 So. 2d 413 (Ala. 2006) (addresses applicability of § 8-1-1 to partial vs. total restraints in employer covenants)
- Akzo Nobel Coatings, Inc. v. Color. & Equip., LLC, [citation="451 F. App'x 823"] (11th Cir. 2011) (discusses when a restraint is "partial" under Alabama law)
- Scott v. Roberts, 612 F.3d 1279 (11th Cir. 2010) (sets four-factor test and standard of review for preliminary injunctions)
- Citizens for Police Accountability Political Comm. v. Browning, 572 F.3d 1213 (11th Cir. 2009) (places burden on movant to prove prerequisites for preliminary injunction)