Howard v. Nitro-Lift Technologies, L.L.C.
273 P.3d 20
Okla.2011Background
- Employees Howard and Schneider signed confidentiality/non-compete agreements with Nitro-Lift for two years post-employment.
- Arbitration was agreed, with Louisiana law applying and proceedings in Houston, Texas.
- Employees filed for declaratory judgment and injunction in Oklahoma seeking to void the non-compete.
- Trial court found the arbitration agreement valid on its face; injunction status remained pending appeal.
- Oklahoma Supreme Court determined the arbitration clause does not foreclose judicial review of the underlying covenants.
- Court held the non-compete covenants are void and unenforceable under 15 O.S.2001 § 219A and declined to modify the contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitration or court decides validity | Employees contend court can review validity of covenants. | Nitro-Lift argues arbitrator should decide validity. | Arbitration does not prohibit court review. |
| Whether covenants violate public policy under § 219A | Employees rely on § 219A to void broad restrictions. | Nitro-Lift argues covenants are necessary to protect confidential info. | Covenants are void and unenforceable under § 219A. |
| Whether the covenant can be judicially modified to conform with § 219A | Modification could cure defects while preserving enforceable terms. | Modification would still be too extensive and require new material terms. | Judicial modification is inappropriate; cannot cure with remaining terms. |
Key Cases Cited
- Wyatt-Doyle & Butler Engineers, Inc. v. City of Eufaula, 13 P.3d 474 (OK 2000 74) (arbitration does not bar judicial review of underlying contract)
- Cardiovascular Surgical Specialists, Corp. v. Mammana, 61 P.3d 210 (OK 2002 27) (arbitrator review does not preclude court consideration of contract validity)
- Thompson v. Bar-S Foods Co., 174 P.3d 567 (OK 2007 75) (no arbitration required where underlying contract is invalid)
- Bruner v. Timberlane Manor Ltd. Partnership, 155 P.3d 16 (OK 2006 90) (specific statutes govern non-compete validity over general arbitration principles)