Shores v. Global Experience Specialists, Inc.
422 P.3d 1238
| Nev. | 2018Background
- Landon Shores was promoted to sales manager at Global Experience Specialists, Inc. (GES) in Sept. 2016 and signed a Confidentiality and Non-Competition Agreement (NCA) as a condition of promotion.
- The NCA barred Shores from competing or working in a similar capacity for any GES competitor for 12 months after employment and applied "throughout the United States."
- Shores took a rival position in Southern California in Jan. 2017; GES does not dispute Shores did not solicit GES clients after leaving.
- GES sued for breach and sought a preliminary injunction enforcing the NCA; it submitted a spreadsheet showing clients in at least one city in 33 states, D.C., and Puerto Rico.
- The district court granted a nationwide preliminary injunction, finding GES had a national client base, would suffer irreparable harm, and that the NCA's geographic scope was reasonable.
- Shores appealed, arguing GES failed to show protectable business interests nationwide; the Nevada Supreme Court reversed the preliminary injunction.
Issues
| Issue | Plaintiff's Argument (GES) | Defendant's Argument (Shores) | Held |
|---|---|---|---|
| Whether GES demonstrated likelihood of success to enforce a nationwide NCA via preliminary injunction | GES argued its client contacts in 33 states (plus D.C. and Puerto Rico) support a nationwide restriction and irreparable harm | Shores argued the NCA must be limited to areas where GES has established customer contacts and goodwill; spreadsheet evidence was insufficient for nationwide scope | Reversed: GES failed to make a prima facie showing that a nationwide restriction was reasonable given record; injunction was an abuse of discretion |
| Whether a party seeking preliminary injunctive enforcement of a noncompete must show reasonableness of scope | GES asserted preliminary relief can rest on incomplete evidence and need not prove full merits at this stage | Shores argued the moving party must show a reasonable probability of success and prima facie substantial evidence of reasonableness | Held: Moving party must show a prima facie case by substantial evidence that the noncompete is likely to be found reasonable |
| Proper geographic limitation for post-employment noncompetes | GES contended designation as a nationwide business supports nationwide restriction | Shores contended precedent requires limits to areas with protectable business interests (customer contacts and goodwill) | Held: Geographic scope must be limited to areas where employer has established customer contacts and goodwill; nationwide label does not alter this rule |
| Whether the district court applied controlling precedent in granting injunction | GES argued factual development may later justify broader scope | Shores argued district court ignored controlling precedent (Camco) and made clearly erroneous application | Held: District court abused its discretion by not applying precedent requiring geographic limitation and by concluding nationwide scope reasonable on the record |
Key Cases Cited
- Camco, Inc. v. Baker, 113 Nev. 512, 936 P.2d 829 (1997) (geographic scope must be limited to areas with established customer contacts; overly broad territorial restraints fail at preliminary injunction stage)
- Jones v. Deeter, 112 Nev. 291, 913 P.2d 1272 (1996) (noncompetes enforceable only when reasonably necessary to protect employer's business and goodwill)
- Clark Cty. Sch. Dist. v. Buchanan, 112 Nev. 1146, 924 P.2d 716 (1996) (party seeking preliminary injunction must show likelihood of success on the merits and irreparable harm)
- Finkel v. Cashman Prof'l, Inc., 128 Nev. 68, 270 P.3d 1259 (2012) (moving party must make prima facie showing through substantial evidence to obtain preliminary relief)
- Hansen v. Edwards, 83 Nev. 189, 426 P.2d 792 (1967) (courts should avoid deciding ultimate merits at preliminary injunction stage but require a showing of probability of success)
- Golden Rd. Motor Inn, Inc. v. Islam, 132 Nev., 376 P.3d 151 (2016) (Nevada precedent permits modification of preliminary injunctions enforcing noncompetes when unreasonable)