188 F. Supp. 3d 843
N.D. Ind.2016Background
- Zimmer US hired Troy Mire as a sales representative; Mire signed Zimmer’s standard Confidentiality, Non-Competition and Non-Solicitation Agreement.
- Mire worked accounts in DeRidder, Leesville, and Alexandria, Louisiana, and his employment ended in October 2015.
- Zimmer alleges Mire took confidential information (customer names/pricing) and joined competitor Smith & Nephew, soliciting Zimmer customers, and sued for breach of the non‑compete (Count I).
- The Agreement defines “Restricted Geographic Area” as “any geographic territory assigned to Employee during Employee’s last two years,” but the written agreement did not expressly identify or formally assign a specific territory to Mire.
- Mire moved to dismiss Count I under Rule 12(b)(6), arguing the restrictive covenants never became operative because no geographic territory was assigned; Zimmer argued the Complaint pleads that Mire was assigned/handled accounts in the named Louisiana area and that Indiana law allows courts to ascertain geographic scope from extrinsic evidence.
- The court denied the motion to dismiss, holding Zimmer’s complaint pleaded sufficient facts to state a plausible breach claim and that resolution of whether a territory was in fact “assigned” requires a developed record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the non‑compete’s restrictive covenants are inapplicable because no “Restricted Geographic Area” was assigned in the agreement | Zimmer: Complaint alleges Mire handled accounts in DeRidder/Leesville/Alexandria; Indiana law permits determining geographic scope from extrinsic evidence | Mire: Agreement conditions covenants on an express “assignment” of territory; no assignment occurred, so covenants never became operative | Court: Denied 12(b)(6). Complaint plausibly alleges Mire was restricted; factual dispute about “assignment” is premature and requires discovery |
| Whether the lack of an expressly identified territory renders the covenant unenforceable as a matter of law | Zimmer: No; courts may infer geographic scope from parties’ conduct or customer lists; intent can be developed in discovery | Mire: Yes; strict construction against drafter requires precise enforcement of chosen language ("assigned") | Court: Not appropriate to resolve at pleading stage; factual development required |
| Whether the complaint meets federal pleading standards for breach of contract | Zimmer: Allegations of solicitation of former customers and misuse of confidential information are sufficient | Mire: The alleged legal predicate (operative covenant) is absent, so claim fails as pleaded | Court: Complaint states a plausible claim under Twombly/Iqbal and survives 12(b)(6) |
| Whether the court should apply blue‑pencil or strike provisions to save the covenant at pleading stage | Zimmer: If necessary, courts may blue‑pencil to effectuate parties’ intentions | Mire: The issue is not severability or overbreadth but whether covenants ever applied | Held: Blue‑pencil doctrine not applicable at this stage; intent and application are factual issues for later resolution |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading must permit reasonable inference of liability)
- Bielanski v. County of Kane, 550 F.3d 632 (7th Cir.) (accept facts and inferences for 12(b)(6))
- Field v. Alexander & Alexander of Indiana, Inc., 503 N.E.2d 627 (Ind. Ct. App.) (courts may consider extrinsic evidence to determine geographic scope)
- Seach v. Richards, Dieterle & Co., 439 N.E.2d 208 (Ind. Ct. App.) (customer‑based restrictions can substitute for geographic descriptions)
- Nightingale Home Healthcare, Inc. v. Helmuth, 15 N.E.3d 1080 (Ind. Ct. App.) (contract interpretation rules; noncompetes strictly construed but enforced if reasonable)
- Gleeson v. Preferred Sourcing, LLC, 883 N.E.2d 164 (Ind. Ct. App.) (noncompete enforceability requires legitimate employer interest and reasonable scope)