616 F. App'x 94
4th Cir.2015Background
- JAK Productions, Inc. and Group Consultants, Inc. (collectively JAK) sued former employee Robert Bayer seeking a preliminary injunction to enforce a restrictive covenant in his employment contract and brought related claims under West Virginia law and the CFAA.
- Section 8.a of the contract forbade Bayer from "directly or indirectly, engag[ing] in any fund-raising or telemarketing business within a thirty (30)-mile radius" of any JAK call center for 18 months after employment termination.
- The district court held a hearing and denied JAK’s motion for a preliminary injunction, concluding section 8.a was facially unreasonable and therefore unenforceable under West Virginia law.
- JAK appealed the denial, arguing the covenant was enforceable and that section 8.a should be read as limited to recruitment activities or otherwise reasonable in scope.
- The Fourth Circuit reviewed the denial for abuse of discretion (factual findings for clear error; legal conclusions de novo) and considered whether JAK demonstrated likelihood of success on the merits, irreparable harm, balance of equities, and public interest.
- The Fourth Circuit affirmed, agreeing the district court correctly found the covenant facially unreasonable and rejecting JAK’s contract-interpretation arguments and reliance on Bayer’s testimony/evidence to reinterpret section 8.a.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of the restrictive covenant (section 8.a) | Section 8.a is a valid, enforceable post-employment restriction preventing Bayer from competing near JAK call centers | Section 8.a is facially unreasonable under West Virginia law and therefore unenforceable | Covenant held unenforceable; district court correctly determined section 8.a was facially unreasonable |
| Proper interpretation/scope of section 8.a (recruitment limitation vs broader ban) | Section 8.a should be construed as limited to recruitment activities; evidence at hearing supports that interpretation | Plain language of section 8.a bars engaging in telemarketing/fund-raising within 30 miles and the court correctly applied plain meaning; JAK’s reinterpretation unsupported | Court rejected JAK’s reinterpretation and found district court did not err in applying plain language to conclude broad prohibition was unreasonable |
Key Cases Cited
- Winter v. Natural Res. Def. Council, 555 U.S. 7 (establishes four-part preliminary injunction test)
- Real Truth About Obama, Inc. v. FEC, 575 F.3d 342 (requires clear showing of likelihood of success for preliminary injunction)
- Greater Baltimore Ctr. for Pregnancy Concerns, Inc. v. Mayor & City Council of Baltimore, 721 F.3d 264 (standard of appellate review for preliminary injunction denials)
- Centro Tepeyac v. Montgomery Cnty., 722 F.3d 184 (appellate review: no abuse of discretion if district court applied correct standard and made no clearly erroneous factual findings)
- Dewhurst v. Century Aluminum Co., 649 F.3d 287 (factual findings reviewed for clear error; legal conclusions de novo)
- Huntington Eye Assocs., Inc. v. LoCascio, 553 S.E.2d 773 (W. Va. 2001) (West Virginia law on enforceability of restrictive covenants)
- Reddy v. Community Health Found. of Man, 298 S.E.2d 906 (W. Va. 1982) (West Virginia precedent on reasonableness of covenants)