Ryanne Early v. Mimedx Group, Inc.
330 Ga. App. 652
Ga. Ct. App.2015Background
- MiMedx hired Early as the designated consultant under a Consulting Agreement requiring full-time devotion (not less than 40 hours per week).
- Early previously worked for a defunct competitor; she entered into Nondisclosure and Confidentiality agreements with MiMedx.
- MiMedx terminated the Consulting Agreement in December 2011 and sued for breach, among other claims, asserting Early failed to devote full working time and misused trade secrets.
- Early and ISE answered with a counterclaim seeking payment for services; MiMedx amended its complaint to assert breach of the Consulting Agreement.
- Appellants moved for judgment on the pleadings arguing the full-working-time provision is an unenforceable restraint of trade; the trial court denied the motion.
- The Georgia Court of Appeals reversed, holding the full-working-time provision is a restraint of trade and unenforceable, and that severability allows remaining contract terms to survive.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the full-working-time clause an illegal restraint of trade? | Early argues it is an unenforceable restraint of trade. | MiMedx treats it as a breach-of-contract obligation or loyalty provision. | The clause is a restraint of trade and unenforceable. |
| Can the appellants challenge enforceability despite pleadings issues? | Enforceability challenge properly raised via judgment on the pleadings. | Issue not properly raised or waived. | Appellants’ challenge was properly raised; any waiver by MiMedx does not bar merits analysis. |
| Is the full-working-time provision necessarily a loyalty provision or a broader restraint? | Provision is a loyalty/best-efforts provision not a broad restraint. | Provision functions as a broad restraint prohibiting any work beyond MiMedx. | Viewed as a restraint; not merely a loyalty provision. |
| If a restraint, is it enforceable given reasonableness and severability? | Enforceable if reasonable and severable. | Unenforceable as overbroad; severability cannot save the entire clause. | Even as a partial restraint, it is unenforceable; severability allows remaining terms to survive. |
| What is the effect of the severability clause on other contract provisions? | Severability clause preserves remaining terms. | Void terms may void the contract. | The severability clause preserves other terms; void terms do not void the entire contract. |
Key Cases Cited
- Atlanta Bread Co. Intl., Inc. v. Lupton-Smith, 285 Ga. 587 (Ga. 2009) (in-term restraint analysis; loyalty vs. restraint)
- Dougherty, McKinnon & Luby, P.C. v. Greenwald, 213 Ga. App. 891 (Ga. App. 1994) (contractual provisions and enforceability analysis)
- Crippen v. Outback Steakhouse Intl., 321 Ga. App. 167 (Ga. App. 2013) (waiver of illegality defense when not raised below)