*1 Rosen, M-69(81) (D.C. re Appeals. See In Hudock, 20, 1981); re
App. Nov. 20, 1986). May The Court
(D.C.App. public reprimand
should issue by the provisions of the entered
same order including
Supreme Court Wisconsin set
adopting probation the conditions of copies stipulating
forth Wisconsin Spiro’s quarterly reports Dr. Herzl
any compliance reports Alcoholics
Anonymous Bar Counsel be forwarded to Attorneys Board of Professional
Responsibility in Wisconsin. Responsibility
BOARDon Professional
By Is/ Kaiser Hannah J. J. Kaiser
Hannah March, 1989
Date: 13 in this
All members Board concur
report except, Mr. and recommendation
Miller, Freund, Carter, Mr. Mr. participate. ELLIS, Appellant,
Donald B. ASSOCIATES, V. HURSON
JAMES
INC., Appellee.
No. 88-1240. Harrison, with whom Robert G. Keith J. Appeals. District of Columbia Court brief, appellant. was on the Hibbert Argued March Sehroll, Edward R. with whom James Decided Oct. brief, appellee. on the was Varrone ROGERS, Judge, Before Chief STEADMAN, Judge, Associate MACK,* Judge, Retired. Associate STEADMAN, Judge: Associate 22, 1988, than ten January after more On B. appellant Donald employment, appellee resigned his Associates, (“Hur- Inc. V. Hurson James * Retired, Judge, Judge on October Judge of this court Associate Mack was Associate argument. changed to Her status at the time
616
son”)
into
immediately began
compete
ly
indirectly,
and
to
or
enter
or
competition
company,
particular,
began,
with Hurson.
he
with the
attempt
company’s
the
successfully,
away
sometimes
to woo
Hur-
nor
to secure
brought
or
direct or indirect
son’s clients for his own. Hurson
clients
customers
individual,
Ellis,
means,
any
alleging
competing
suit
nor aid
that Ellis was
organization
any way including
relating
postem-
breach of a covenant
to
firm or
ployment
divulging of the
competition signed by Ellis three
but not limited to the
starting
identity
customers of the
weeks after
with Hur-
of clients or
appeals
company,
divulge
son. Ellis
trial
nor
or use the trade
from the
court’s
entry
company
preliminary injunction enjoining
practices
of a
or secrets used
him
“soliciting
providing
employ-
services
of three
any
foregoing prohibitions
to
shall
formerly
clients that were
clients of
ment.
apply during
Hurson and
Mr.
also
Associates before
employee
If
resigned
ment.
shall violate
from Hurson and Associates on
22,
agreement,
entitled
January
shall be
1988.”
injunction,
by any
to an
to be issued
Although
subject
of contractual
competent
equity enjoining
and
postemployment
straints
employee, and each and
generated
judicial
has
sizeable volume
therein,
every
person
other
concerned
opinions
commentary gener-
and academic
violating
assisting in the viola-
ally,
14
e.g.,
Williston,
CONTRACTS
agreement.
tion of this
(3d ed.1972);
1643
6A
Corbin,
Contracts
However,
preliminary injunction pur-
(1962
Supp.1989),
1394
and
this is
ported
portion
to enforce
one
subject
first
presented
case on the
to this
covenant; viz.,
will not
court.1 We remand the case for further
attempt
company’s
clients or
to secure
opinion.
consideration
El-
customers
direct or indirect means.2
urges
I.
lis
us to
the covenant
in its
view
entirety,
taking
if the
inquiry
The threshold
is to determine
enforceable,
por-
entire covenant is not
no
precisely what “covenant” is at issue. The
(Much
tion thereof is enforceable.
of his
to
read
full as
accordingly
attack on
brief is
directed to an
follows:
compete.)
We
broad
employment by,
In consideration of the
disagree.
salary
paid by,
James
Hur-
be
V.
(the
Enterprises
company)
Although
son
of the em-
there are a few
below,
ployee signing
agreed
it is
if
that covenants in
which adhere to the view
covenants”)
employee’s employment
(“restraining
terminates
restraint of trade
whatsoever,
voluntary
wholly
in full are
reason
or which are not enforceable
not,
unenforceable,3
involuntary,
majority
enforce
direct-
the vast
1.Indeed,
Inc.,
(D.C.1984)
Services,
binding precedent
Monetary
there is little
in our
nary injunction appeal decide whether or current nation.12 the absence of to adopt pencil” a “blue well-developed rule this jurisdiction, doctrine in our jurisdiction. approach Whether under that adopt we this modern and authoritative ex- or one which would enforce a applies as it to the case insofar to the extent its terms are before us. reasonable, regardless grammatical sev- principle. Section 186 sets forth the basic erability, we hold that the trial court com- promise “A grounds is unenforceable on mitted by entering no abuse of discretion public policy unreasonably if it in re- preliminary injunction pur- which did not promise straint of trade. A is in restraint port to enforce in toto the covenant which performance of trade if its would ... *4 formed the basis of the action. promisor strict the in the exercise of Accordingly, considerably the more nar- gainful occupation.” amplifies Section row issue before us is there is a whether promise this doctrine in the context of a substantial likelihood that made, is, type promise the Ellis that that company’s to solicit the or custom- clients imposes ancillary a restraint to an ers of three will be otherwise valid transaction. Restatement, binding upon found to be valid and Ellis.11 188(2)(b). promises at Such are § “unreasonably in restraint of trade” if: II. (a) greater the restraint than is needed Nevertheless, in a more re even protect promisee’s legitimate the inter- form, stricted we deal here with a form of est, or trade, applies restraint of to which one of (b) promisee’s outweighed by need is the common law’s “oldest and best estab hardship promisor to the and the public policy lished” concerns. Restate likely injury public. to the Introductory (SECOND) ment CONTRACTS, Topic g partic- Note to 2: Comment in Restraint of Trade section 188 focuses postemployment This Restatement in ular its sections on restrictions. It 186-188 sets forth in usually lucid form a codification observes that are such restrictions explanation applicable ground common law defended on the principles as distilled from acquired the case law of has either confidential trade infor- exactitude, state, virtually every statutory In the interests of the class of like has enacted a by injunction. trade, Hurson clients affected prohibition restraint of D.C.Code provides in full that determining 11. In prelimi- whether to issue a contract, "[e]very combination in the form of a nary injunction, the trial court must consider otherwise, conspiracy trust or or in restraint of 1) moving party whether the has shown: any part all trade or commerce of which is prevailing there is a substantial likelihood of within the District of Columbia is declared to be merits; 2) danger there exists a legislative history illegal.” The of the District of suffering irreparable during pendency harm Antitrust Act of Columbia of which action; 3) that more harm will result part, is a that the Act is § 28-4502 states "[i]n injunction from the denial of the than will re- English tradition of common law and feder- grant; sult to the defendant from its and in statutes, designed to al antitrust ... foster inno- cases, 4) appropriate public that the interest will independence in the local business vation not be disserved the issuance of the order. by outlawing sector unreasonable restraints of Down, Columbia, Don't Tear It Inc. v. District of (Emphasis monopolistic acts.” add- trade ed.) (D.C.1979) (citation omitted). Judiciary, Report on the Committee on the argument Ellis’s before us concentrates on the Act, 3-107, of Columbia Antitrust Bill at District remand, requirements. first of these On all (1980). Similarly, Monopolies, 17 AmJur.2d opinion, should be reconsidered in Trade, Restraints Trade Practices Unfair including requirement. the fourth As discussed states that the term 'restraint ”[i]f infra, the issue is entwined with considerations of trade' is not defined a state antitrust public policy. See also note 13 infra. trade, prohibits statute which restraints of only statute outlaws those restraints of trade type promise 12. "The one trade restraint of which were invalid at common law. The rule traditionally that has been left to be dealt with applies construing judicially developed promise of reason state antitrust under rules [is] is, competition.” Restatement, to refrain statutes—that conduct is forbidden su- District, pra, Introductory Topic only the restraint is unreasonable.” Note to statute when possi- (not here) Likewise, version one “the means the revised mation an element all encompass away reading sweepingly from the em- to attract customers ble could clients, It then ployer.” applying observes “whether prior Hurson injury do the risk that were approximately companies justify employer prom- is sufficient to also resigned, clients the time refrain after the ise to to have 12,000 companies claimed to the depend termination of the anytime Hurson’s at been clients of Thus, case.” particular on the facts of the Indeed, even further restriction past.13 justi- “if explains, seeks to injunction, scope in the such ground restraint of the em- fy the on the actually by Ellis while those served clients customers, ability ployee’s to attract Hurson, applying may be indicated nature, employee’s extent and locale of the limitations, particular to this situation the A contacts with are relevant. customers above, of Restatement section discussed if justify is easier the re- restraint at footnote the cases cited taking is limited of his former straint to the 16, infra. employer’s customers as contrasted with *5 opportuni- the trial give So to court Id. general." in ty question preliminary to consider testimony the trial heard While court light principles injunctive relief in Ellis’s em- garding client contacts while above, precise wording set forth and Hurson, understandably ployed at it any granted, such relief we are constrained any exploration in explicit to for considera- remand the case further question enforceability tion. principles. In- above-stated Restatement deed, varying language utilized in suc- protective cessive versions of the order evi- III. precise origi- dences a lack of focus. The however, any argues, Ellis order, July
nal
dated
stated
injunction14
should be
preliminary
event
soliciting
“prohibited
was
read covenant
narrowly
denied since even
plaintiff’s present
or clients
client
defen-
unenforceable. He asserts
would be
by
to
dants came
know of
virtue of his
1)
propositions
following applicable
of law:
response
employment
plaintiff.”
to
supported by
not
consid
the covenant was
Hurson,
August 18, 1988,
a motion
in an
eration,
geo
2)
no
contains
prohibition
the trial
order
court added
restrictions, 3) the
time
three-year
graphic
services,”
against “providing
so as
reach
to
period is unreasonable.
clients ’of
Hurson whom Ellis had
Moreover,
improperly
away.
solicited
al-
appellant’s argument,
first
to
We turn
requested,
though
party
neither
so
had
Vaughn, F.Supp. 981
Byram
citing
language dealing
trial court amended the
(D.D.C.1946),
jurisdic-
cases from other
and
by
order,
with the clients covered
so.
tions,
is no
likelihood
there
substantial
“any
that it affected
clients that were for-
prevail on the merits since
that Hurson
merly clients of
and Associates be-
Hurson
restraining covenant
unenforceable
is
resigned
Mr. Ellis
fore
Hurson
However, By-
of consideration.
for want
Associates.”
authority in that
persuasive
ram weak
is
into
substantially called
holding was
its
original
broadly
the order
form of
Meyer Wineburgh,
clients,
present
question
all
encompasses
even those
(D.D.C.1953)
(approved
departure.
such after Ellis’s
who became
agreement.
remedy
argument,
to
violation of the
appears
tion
from the briefs and oral
13. It
however,
interprets
equity
is
not bound
order to
of course
Hurson
While a court of
apply
to the smaller number of clients.
be influ-
provision, "the clause
such a
be clarified on remand.
This should
determining
exer-
how
court will
ential in
its discretion.” Calamari
cise
Perillo,
&
by its
14. We note that the restrictive covenant
n.
note
expressly contemplated
injunc-
use of an
terms
Wineburgh
Meyer, supra
l),15
e.g., Tasty
note
Box Lunch
the covenant.
which noted that
hardly equitable
is
Kennedy,
Co.
(Fla.App.
So.2d 52
deny
where,
relief on
grounds
formalistic
1960) (court
found continued
despite the
obligation
absence of an
agreement
pay
commissions to be
employer’s part
specified
for
duration of
adequate
agreement
consideration for
employment,
employer
employs
fact
compete signed by
at-will
defendant for a
substantial
of time.
working
she had been
for
Id. at 959. Such is the case here. More-
months); Annotation,
Sufficiency of
three
over,
as the Meyer court
noted,
“[t]here
Employee’s
Consideration
Covenant
authority supporting
substantial
Compete
Not To
Entered Into
In
After
right
equitable
relief
even
the absence
ception
Employment,
in excess of three have been sus jurisdiction.
tained in this Erikson v. See App.D.C.
Hawley, 56
(1926) (ten years); Meyer Wineburgh, (D.D.C.1953) (ap U.S.App.D.C.
proved in 95 F.2d (five supra) years). see note 1
Accordingly, the case is remanded for
further consideration consistent with this
opinion. ordered.
So Retired,
MACK, Judge, Associate
dissenting: respectfully
I dissent. What case law outdated, jurisdiction in this con-
there is
flicting, very helpful analyzing and not (It interesting to note that a
this case. Virginia injunc- preliminary court denied a PEEK, B. A Member In re Harold *7 tion.) very pe- The nature business— District of Columbia the Bar of the titioning Department Agriculture Appeals. Court Administration, Drug the Food and No. 89-128. respect labeling, connotes a with food public by free vital interest best served Appeals. Court of District of Columbia competition. did not find The federal court question Argued Sept. a federal I note this dealing Department had been 3, 1989. Decided Nov. thirty years. many as Agriculture for As 12,000 15,000potential customers in of the current or former clients
this field scope prohibi- company. this of the
tion, engaging in his barring Mr. Ellis from my is in view unreasonable.
profession,
Perhaps appropriate a more restriction Martucci, Co., gan's Equipment Warehouse Home
16. See also Ehlers v. Iowa (Iowa 1971) (enjoining plaintiff (enforcing restrain N.W.2d 368 Pa. from, contacting, soliciting preventing ing to the extent of doing any person contact- or firm business with patronage competing employees defendant); employed by by plaintiff while ed customers); Ramey employer’s v. Combined (1945) (plain- Barany, N.Y.S.2d 124 Molina Co., (Tx. 359 S.W.2d American Insurance “clearly extent entitled to relief to the held tiffs 1962) (appellee entitled to have salesmen held cus- the defendant appel- soliciting policyholders of "enjoined from plaintiffs the defen- with whom tomers while in had solicited" said salesmen lee whom in behalf came in contact and solicited dant employ). appellant’s plaintiffs”); employ Mor- while in the