Hopper v. All Pet Animal Clinic, Inc.

appel- agree We ject tract. 160-acre no concern assignment is of that this

lees judgment declaratory this the context was filed to determine This action action. date the ac- rights they existed on the viz., De- filed, September 1990. tion was deter- judgment actions do not claratory Wyo. 1-37-101 rights. Stat. mine future (1988); Land through 114 White v. Bd. of Comm’rs, (Wyo.1979). declaring parties’ purposes positions Sep- rights action were fixed as of in this 6, 1990, jurisdiction and we have no tember rights on events their based determine transpiring after that date.

Affirmed. HOPPER, D.V.M., Appellant

Glenna

(Defendant),

v. INC., CLINIC, Wyo- ANIMAL ALL PET ming corporation; Alpine Animal Inc., Hospital, Wyoming corporation, (Plaintiffs). Appellees INC., CLINIC, Wyo- ANIMAL ALL PET corporation; ming Animal Inc., Hospital, Wyoming corporation, (Plaintiffs), Appellants D.V.M., HOPPER, Glenna (Defendant). Appellee 92-254, Nos. 92-255. Supreme Wyoming. Court of

Oct. geographic imposed reasonable protect necessary to limits

and durational enjoined a employers’ businesses and practicing small animal veterinarian years a five mile medicine three within for Laramie, Wyo- city limits of radius of the damage ming. denied The district court employment agree- claim breach by the two brought ment veterinarian’s specu- сorporate employers it was because from the appeals lative. veterinarian enforce the terms cove- decision to case, companion corporate nant. In the deny dam- employers appeal the decision ages. year three

We hold that covenant’s imposed an unreasonable restraint duration partial enforce- permitting only trade of the cove- portion ment that term the court’s con- nant. We affirm district remaining terms of law that the clusions of We also the covenant were reasonable. judgment court’s refus- affirm the district finding ing damages the that dam- because clearly errone- ages unproven were is not ous.

I. ISSUES 92-254, appellant,

In veteri- Case No. narian, following issues: frames its A. The trial court discretion abused hardship undue failing in to consider the injunc- in appellant granting tion. its discretion

B. The trial court abused injunction granting appellees in as & Kennard F. Nelson Kirkwood Nel- irrepara- prove the existence failed to Laramie, son, Hopper, D.V.M. for Glenna harm. ble its discretion Aron C. The trial court abused Simpson L. and C.M.

Patricia injunction Laramie, granting in ‍​‌‌‌​‌‌‌‌​‌‌‌‌‌​​​‌‌‌​‌‌‌​‌​​‌​​​‌‌​‌​​‌​​‌​​​​‌‍as restric- Arоn, Simpson, for All Hennig & Clinic, tive was overbroad. Inc. Animal Pet Animal Hosp., Inc. corporate employers, re- Appellees, the phrase issues: C.J., THOMAS, MACY, Before A. the evidence sufficient Whether CARDINE, TAYLOR, JJ. GOLDEN finding that sustain district court’s TAYLOR, Justice. not to com- enforcement of the covenant appellant suffer pete not cause appeals test the en- These consolidated hardship[.] undue forceability of a covenant not is sufficient to employment in an B. evidence was included con- Whether which finding that The that sustain the district court’s tract. district court found irreparable injury agreement may appellees suffered as a 12. This be terminat- appellant’s party upon days’ result of breach the cove- ed either notice to termination, compete^] party. Upon nant not to the other Dr. Hopper agrees practice that she will not C. Whether the covenant not to com- period of small animal medicine for a pete question in here is reasonable[.] years three from the date termination 92-255, appellants, In Case No. the cor- corporate 5 miles of the limits within porate emplоyers, question: Laramie, City Wyoming. Hop- finding I. the court’s that the Whether per agrees geo- that the duration and damages by appel- amount of suffered graphic scope of that limitation is reason- speculative proven lants and was not able. by appellants by preponderance agreement was antedated to be effec- contrary to evidence is the evidence^] tive to March responds: The veterinarian parties executed an Addendum To finding Did trial court err Agreement on June 1990. The adden- damages by Ap- the amount of claimed provided All newly dum Pet and a speculative pellants proven and not acquired corporate entity, Alpine Animal preponderance of the evidence? Hospital, (Alpine), Inc. also located in Lara- mie, Hopper’s profes- would share II. FACTS sional services. As the President of All Following graduation her from Colorado Alpine, agreed, Pet and Johnson (Dr. University, State Dr. Glenna addendum, Hopper’s salary. to raise Dr. Hopper) began working part-time as a vet- provision original agree- The bonus Clinic, erinarian at the All Pet Animal Inc. modified, Except ment was eliminated. (All Pet) July special- of 1988. All Pet the other terms of the March 1989 em- animals; in the care mostly ized of small ployment agreement, including the cove- cats, dogs domesticated and and those exot- compete, nant not to were reaffirmed and pets. ic animals maintained as household Hopper Dr. employment. continued her Hopper practiced guidance Dr. under the year later, reacting One to a rumor that Pet, and direction of the President of All Hopper investigating Dr. purchase was (Dr. Johnson). Dr. Robert Bruce Johnson Laramie, veterinary practice of a in Dr. Johnson, Pet, Dr. on behalf of All of- attorney prepare Johnson asked his to Hopper fered Dr. employment full-time in presented letter Hopper. which was to Dr. February of 1989. The oral offer included letter, 17, 1991, The dated June stated: specified salary potential and for bonus you considering I learned that have are earnings employ- as well as other terms of leaving us to take over the small animal Johnson, According ment. to Dr. he condi- part practice of Dr. Meeboer’s in Lara- Hopрer’s acceptance tioned the offer on Dr. mie. compete, of a covenant not to specific details of which were not discussed at the negotiated your When we the terms of Hopper time. Dr. full-time em- commenced employment, agreed you we could ployment agree- All Pet with under the oral notice, upon days’ you leave but that ment in March of 1989 and relocated to practice would not small animal medicine Laramie, discontinuing her commute from within five miles of Laramie for a three- her former residence in Colorado. year period. any. We do not have non- competition agreement large-animal for Employment A Agreement written incor- medicine, which therefore does enter porating agreement the terms of the oral picture. into the finally by parties was executed on De- Ancillary provi- willing you cember 1989. to the I am to release from the employment, agreement sions for non-competition agreement de- for return tailed terms of a covenant not to com- buy-out. a cash I have worked back pete: proportion from thе of the income of All- fifty-two percent of Dr. fifty-one and Alpine you which contribute from and Pet gross City. income figure Hopper’s at Gem that a reasonable decided $40,000.00, compensate the Alpine complaint All Pet and filed loss which for the of business practice Hopper on against Dr. November practice you if happen small-animal will seeking injunctive damages relief and elsewhere in Laramie. medicine of the con- breach willing approach the you If are Employment Agreement. No- in the tained let way suggest, please I in the problem Alpine All Pet and did not seek a tably, appropriate I me know and will have Hop- injunction to restrict Dr. temporary taken care of. paperwork per’s practice possibly mitigate and dam- proceed- ages during pendency Sincerely, ing. September Trial was conducted on [Signed] 1992. Johnson, R. Bruce court, Fact, Findings district its D.V.M. and Judgment, of Law deter- Conclusions responded the letter Hopper mined that the covenant not to going purchase was denying that she as a matter of law and was enforceable Hopper told prаctice. Dr. Dr. Meeboer’s geo- reasonable durational and contained Agree- Employment Dr. Johnson protect limits All graphic necessary to paper it was writ- ment was not worth Alpine’s special interests. The Pet’s and she anything that she could do ten on and found district court special interests do. Dr. Johnson terminated wanted special influence over and direct included: employment her to Hopper’s and informed clients; All Pet’s Alpine’s with contact 30-day having been notice consider files; pricing poli- access to client access unsigned, An note given. handwritten develop- cies; practice instruction Hopper, Dr. Johnson to Dr. dated from prac- enjoined was from ment. 18,1991, affirmed the termination June medicine within five ticing small animal part: providing, notice corporate City of limits of the miles your request by your em- Per abide period years of three Laramie for agreement All Pet and ployment court found July district regards Alpine as termination: damages suffered that the amount of your day of em- Be advised that last and not speculative All Pet 18, July is 1991 for reasons ployment proven by prepondеrance of the evidence. have we are both aware of and previously. III. STANDARD OF REVIEW discussed the court. of this case was before A trial purchased Dr. Subsequently, Hopper specific parties, By request of one (Gem Veterinary City), the City Clinic Gem law findings of fact conclusions Begin- Manning. Dr. Melanie practice of 52(a) (hereinaf- under were stated W.R.C.P. 1991, 15, operated ning July Hopper on 52(a) 52(a)). states: Rule Rule ter in City, violation of the covenant Gem findings by court.— special City of Laramie and General and compete, within by the of fact including large Upon questions and small the trial of practice awith court, jury, it shall advisory Hopper’s guidance, or with animals. Under its to state grew necessary at the for the court City’s client list from 368 not be Gem plain- generally for the practice approxi- findings, except purchased time she par- defendant, compari- A unless one at the time of trial. tiff or mately 950 the introduction requests 187 clients ties it before client lists disclosed that son of evidence, excepting City the view of any were with by Dr. at Gem served upon the of the court the decision Alpine. of All Pet or Some also clients trial, in in involved permissible questions of law shared clients received these state in writ- Hopper. case the court shall services which large animal findings separately of fact Overall, ing its the small animal work contributed 538 law; provided, properly

from its conclusions of admissible evidence in the rec request that without such the court 895, ord. v. Lindsey, Shores 591 P.2d 899 special findings make such of fact and (Wyo.1979); Miller, Wright 9 supra, & proper conclusions of law as it deems given 731. Deference is § preserved and if the same in are opportunity of the trial court to assess by stenographic report record either credibility Shores, of the witnesses. memorandum, by the court’s written 591 P.2d at 899. Because this court does appeal. same considered on Re- weigh novo, findings the evidence de quests findings necessary are not for may not be set aside because we would purposes findings review. of a Shores, reached a different result. master, to the extent the court 899; Wright Miller, 591 P.2d at supra, & them, adopts shall be considered as the appellant at 732-33. The bears the § findings Findings of the court. of fact burden of persuading appellate court unnеcessary and conclusions of law are finding that the Wright is erroneous. 9 & on decisions of motions under Rules 12 Miller, supra, 2585 at 729. § any or 56 or except pro- other motion (c) vided subdivision of this appeal, findings rule. On of fact are not set clearly aside unless erroneous. 52(a) specific language While the of Rule Shores, 899; 591 P.2d at Whitefoot, 561 counterpart, differs from its federal 720; Miller, P.2d at Wright supra, & 52(a), part F.R.C.P. because current fed- 2585 at 729. The definitive test of when require findings eral rules of fact and con- finding clearly adopted erroneous was clusions of in all law cases of trial to the by the United Supreme States Court request parties, court without a this United States v. Gypsum United States adopted court has the view that the similar- Co., 364, 395, 525, 542, 333 U.S. 68 S.Ct. ity in language purpose of the state (1948). L.Ed. 746 “A finding ‘clearly permits federal rules resort to federal although erroneous’ when there is evidence precedent effectuating for aid in the intent support it, reviewing court on the 52(a). of Rule v. Hanover Ins. Whitefoot entire evidence is left definite and Co., (Wyo.1977). firm conviction that a mistake has been Unfortunately, appeal, par on committed.” Id. at 68 S.Ct. at 542. ties have misсonstrued appropriate Citibank, N.A. v. Fargo Wells Asia standard of review relevant such find Ltd., 660, 670, 495 U.S. 110 S.Ct. ings and conclusions. We believe this con (1990), 109 L.Ed.2d 677 cert. de fusion misapplication results from a —nied, —, U.S. 112 S.Ct. principles of jury review utilized for ver L.Ed.2d 868 (reaffirming the United dicts and administrative law with those re test). Gypsum States ‍​‌‌‌​‌‌‌‌​‌‌‌‌‌​​​‌‌‌​‌‌‌​‌​​‌​​​‌‌​‌​​‌​​‌​​​​‌‍Wyoming Co. ac lated to facts found the court. The cepted 52(a) this standard for Rule findings judge factual of a are not entitled Shores, 591 P.2d at Alternatively, to the more limited jury review afforded a determination finding against that a is the verdict. 9 Wright Charles A. & Arthur R. great weight of the evidence means a find Miller, Federal Practice and Procedure: ing will supported be set aside even if by Civil, (1971). 2585 at 730 § substantial Rocky evidence. Mountain purpose specific findings of Turbines, Inc., Inc. v. Syndicate, 660 623 52(a) under Rule is to appellate inform the 758, Shores, P.2d (Wyo.1981); 762 591 P.2d court of the underlying supporting facts 899; Miller, Wright at 9 supra, & 2585 at § the trial court’s conclusions of law and n. 735 disposition of the issues. Lebsack v. Town 1141, Torrington, 698 P.2d (Wyo. 1146 Conclusions of law made the dis of 1985); Sawyer, 725, Cline v. 52(a) 600 P.2d 730 trict court under binding Rule are not (Wyo.1979); Whitefoot, upon 561 P.2d at 720. this court and are reviewed de novo. While findings the are presumptively Shores, 900; Miller, сor 591 Wright P.2d at 9 & rect, appellate the court supra, examine all of “Findings 2588 at 752. of fact of §

539 (1958) (noting that without a not the covenant judge can also lose insulation the trial compete, agent, employee, to can com- clearly they if an of erroneous standard the past employ- a pete principal despite with view of the by an erroneous are induced begin preparations can for future ment and law, Gyp- v. United States United States * * * purchasing competi- a 394, competition, as 68 such Co., 333 U.S. at S.Ct. at sum * * * business, leaving present em- tive before 541; Richberg, States v. and United 1968), ployment). ([5th or contain F.2d 523 398 Cir.] that legal conclusions reflect

factual and inqui- Wyoming adopted a rule of reason legal application improper of an stan- the ry from the Restatement of Contracts test- Shores, 591 P.2d at 899-900. dard.” not ing validity the of a covenant to com- Bakeries, 131 at pete. Dutch Maid P.2d IV. DISCUSSION (citing 634 Restatement Contracts (1932)); 180 Ridley, 513-515 P.2d §§ a Covenant Enforceability A. The present rule 127. The formulation the Compete toNot (Sec- is of reason contained Restatement policy against The common law ond) Contraсts, supra, 188: one is contracts restraint trade (1) promise competi- from A to refrain firmly Re established. oldest most a ancil- imposes tion that restraint is (Second) of 185- Contracts statement §§ lary to an valid transaction or otherwise 35). (Introductory (1981) Note at 188 unreasonably in relationship is restraint Schleicher, 58 Maid Bakeries v. Dutch if of trade 374, (1942). 630, Wyo. 131 P.2d 634 (a) greater the restraint is than is of such restraints traditional disfavor legiti- protect promisee’s needed to compete not to are con means covenants interest, or mate party seeking to against strued enforce them. Commercial Bankers Ins. Co. (b) promisee’s need is out- Life Smith, N.E.2d 112 America v. weighed by hardship promi- is (Ind.App.1987). The on the initial burden likely injury public. sor is reason employer prove are (2) imposing restraints that Promises to, has and is neces able and a fair relation rela- ancillary transaction or to a valid for, the interests for which sary business following: tionship include Weaver, protection sought. v. Tench (a) promise the seller a busi- (Wyo.1962). P.2d compete buyer not ness with principles, the freedom to Two injure way value such work, and the freedom to confliсt sold; contract the business enforceability of cove when courts test (b) promise by employee or oth- an Krout, compete. Ridley v. nants agent with his em- er (1947). There Wyo. principal; ployer or other recognition while em general (c) partner promise protection improper ployer seek partnership. competition employ former and unfair (Second) of Con- Restatement ee, protec is not entitled See also See, tracts, quot- An often supra, 186-187. against ordinary competition. tion §§ in- the rule of reason reformulation of Alberty, Ark.App. ed e.g., Duffner is reason- states that restraint quiry 718 S.W.2d American “[a] 480, (1) greater if is than is Vodra, only it no Services, 222 able Inc. v. Neb. Sec. (1986). employer, 73, required protection for the 78 The enforceabili 385 N.W.2d (2) hardship on the impose not undue ty compete depends not does a covenant (3) the injurious employee, ex and not finding proper that the balance upon Blake, Employee M. public.” Harlan competing interests of the ists between the Harv. Compete, 73 employee. Agreements Not employer and the See Restate 625, (1960). (Second) Agency 393 e 648-49 cmt. L.Rev. ment § A and employee during valid enforceable cove obtained the course of compete requires showing nant not to employment over employer’s the custom- (1) (2) in writing; part that the is: Ridley, ers. 180 P.2d at 129. (3) employment; of a contract of based on enforceability of a cove consideration; (4) reasonable reasonable in compete using nant not to the rule of rea geographical limitations; durational and analysis depends determination, son upon a against public policy. not A.E.P. law, promise as a matter of that the not to Industries, McClure, Inc. v. 308 N.C. compete ancillary to the existence of an (1983). Tench, 302 S.E.2d otherwise valid transaction relationship. or 29; 128; Ridley, P.2d at 180 P.2d at Dutch (Second) Contracts, Restatement supra, Bakeries, 634; Wyo. Maid 131 P.2d at If, example, for the contract of § (1988). Stat. 1-23-105 The reasonable § employment containing the covenant not to compete ness of a covenant not to is as compete consideration, fails for lack of upon particu sessed based the facts of the excuse, adhesion or other contractual the lar case and a review of all of the circum covenant is without Reddy effect. v. Com Services, Inc., stances. American Sec. munity Man, Health Foundation N.W.2d at 79. (1982). W.Va. 298 S.E.2d many While factors be consid covenant is also without effect because it is by evaluating ered the court in reasonable ancillary when it in promise is made law, ness as a matter of a useful enumer subsequent to the transaction or relation ation is contained in Philip ship. G. Johnson & (Second) Contracts, Restatement su Salmen, Co. v. 211 Neb. 317 N.W.2d pra, 187 cmt. b. § (1982): When Dr. Johnson made the oral The considerations to be balanced are the promise employment Hopper, to Dr. degree inequality bargaining power; specific terms of the covenant were not the risk of the losing covenantee custom- discussed. Dr. Johnson testified that no ers; respective extent of partic- geographic terms for a radius or time re ipation by parties in securing and competition striction on during were stated retaining customers; good faith of formation of employ the oral contract of covenantee; the existence of sources ment. Without terms and without a writ general or knowledge pertaining to the ing, Wyo.Stat. 1-23-105, promise § identity customers; the nature and compete at this ancillary time failed as extent of the position business held the creation relationship. covenantor; the covenantor’s train- ing, health, education, and needs of his Employment Agreement The written family; the current employ- conditions of Hopper signed does contain a covenant not ment; necessity of the covenantor ancillary ‍​‌‌‌​‌‌‌‌​‌‌‌‌‌​​​‌‌‌​‌‌‌​‌​​‌​​​‌‌​‌​​‌​​‌​​​​‌‍previ- which is to the changing calling residence; ously agreed provisions employment for correspondence of the restraint with memorialized from the oral contract. Re- protecting the need for legitimate (Second) Contracts, statement supra, interests the covenantee. recognizes 187 cmt. ongoing b that in an Wyoming has previously recognized that relationship, promise transaction or legitimate interests of employer, may made be before the termi- covenantee, protected which from nation of the relationship and still be ancil- competition (a) long include: employer’s lary suрported by as it is consider- trade secrets which have been communicat- ation requirements and meets other employee ed to the during enforceability. the course of necessary It is analyze employment; (b) confidential Hopper’s information whether promise not to com- communicated pete, to the em- made after the creation of the rela- ployee, secrets, but not involving tionship trade executing while the written Em- such as information on unique ployment business Agreement, supported by method; (c) influence consideration. 93, Parsons, 26; N.C.App. Stevenson v.

Wyoming has never determined (1989); Cen- S.E.2d Records compete made 384 promise not to whether ter, Comprehensive Management, v. sup Inc. relationship is during employment the Inc., Pa.Super. 525 A.2d con merely of by the consideration ported Burkett, (1987); Cukjati 772 S.W.2d v. supported must employment or be tinued (Tex.App.1989). See Or.Rev.Stat. contemporaneous consider by separate (1991) (requiring bona fide ad- 653.295 Ridley of This decision in court’s § ation. to employee enforce employment An rela vancement insight. fers useful compete not to entered into after prior сovenant was formed tionship with mechanic relationship). the employment creation the contract the execution of written to ancillary promise containing employee’s the Employment The written at 125. compete. Ridley, P.2d not to signed no Agreement contains the specifically did address we not While consideration, separate such evidence consideration, sufficiency of the written the benefit, exchange in pay raise other sepa with mechanic contained contract Standing compete. to for the covenant not In addition to consideration. rate alone, compete not to con covenant term employment for a to continue promise Employment Agreement in the tained agreed, as con years, employer ten separate due to lack of consideration. failed compete, to promise for the not sideration (Second) Contracts, supra, Restatement lock new skills as a teach the mechanic to However, par on June § operation. at in Id. smith and business Agreement. to the Addendum ties executed 125-26. agreemеnt, Hopper accepted a In that per This pay raise month. $550.00 jurisdictions are Authorities from other restates, incorporation, agreement em- agreement in on whether continued not We compete. not to terms of covenant provides sufficient consideration ployment Agreement, to the Addendum hold is re- separate consideration or whether raise, pay represented sufficient its with ancillary not to an covenant quired create reaf supporting the separate consideration during the existence of compete made compete. not covenant firmation & relationship. Specter Howard A. Therefore, findings court’s the district Finkin, Employ- W. Individual Matthew ancillary employ an the covenant Litigation 8.02 ment Law and § that consideration was ment contract and cases). strong pub- (collecting We believe for the are exchange covenant received policy separate favors consideration. lic clearly erroneous. view, rela- even the at-will The better consider- tionship, require additional permitted The either contract support a restrictive ation corporate employers Hopper or her em- during into the term of the entered notice. employment her terminate the in- recognizes This view ployment. length state agreement did not relation- creasing of the at-will criticism at termination employment permitted and it unequal usually bargaining ship, more, present the terms Without will. reality that parties, and the power for an unreasonable restraint potential “bargains employee rarely for” con- hired example, if an For trade. exchange po- for a employment tinued will, a covenant employee at obtained an ability tentially restraint on the onerous terminated the compete, and then not to living. to earn a cause, arbitrarily re employee, without conduct competition, believe such Id., separate we at 450. consider- strict 8.02 justice Simple faith. support ancillary constitute bad necessary to would ation employ that a termination requires made creation after promise if faith employee good in- at will relationship er of an employment to be en raise, training, а covenant promotion, pay clude Bakeries, advantages Dutch or other forced. Maid employment benefits Coe, 635-36; Ins. 125- American Nat. Co: Ridley, 180 P.2d at employee. for the (E.D.Mo.1986). 657 F.Supp. Supreme The of Georgia agreed Court Demartino, Adrian Beckman to N. Baker & Co. v. 733 that was entitled take to a new (Mo.App.1987) (enforcing employer employee S.W.2d his assets an as which had discharge employer. covenant he contributed to his former when employee cause). 569. “It is good employee’s Id. at true occurred with skill, aptitude, dexterity, manual and men- present facts, Under we cannot ability subjective knowledge tal and other say Hopper the termination of Dr. employment obtained course are testimony pre occurred in faith. bad Trial property employer which the increasing prior sented evidence tension can, of a absence contractual to professional termination relation prohibit right, employee taking ship Hopper. between Johnson and Dr. him with at the termination employ- tension, however, appear This did not permitted Id. ment.” The covenant Cоx result in the termination. The notice of to recover from the loss Beckman’s ser- given Hopper termination after Dr. was by implementing vices a plan transition negotiations confronted about her still permitting while Beckman to work aas purchase competitive practice a and after meteorologist, ap- but not the extent of Hopper employment had termed the pearing on competitive air with a television contract worthless. We cannot find station. Id. The Beckman court deter- these facts faith a bad termination which mined that the business interests of Cox provide a reason depart from the protection required which enforcement of finding district court’s that the contract of the reasonable pro- terms of covenant employment was valid. With the determi vided. Id. nation that as a matter of covenant law the special The interests of All Pet ancillary employment to a valid relation by identified the district court ship, we turn to the inquiry. rule of reason findings clearly of fact are errone ous. upon moved Laramie Employers protect are entitled to comрletion prior of her degree any sig their business from the impact detrimental professional nificant contact with the com competition by who, employees but for munity. Her to All introduction Pet’s and employment, their would not had clients, files, Alpine’s pricing policies, client ability gain influence over practice development techniques pro clients or customers. Ridley, 180 P.2d at vided information which exceeded the skills 131. Beckman v. Broadcasting Cox brought employment. she to her While she Corp., 250 Ga. 296 S.E.2d 566 was a licensed and trained veterinarian principle illustrates the in the broadcast accepted employment, when she the addi industry where clients are the viewers exposure tional and knowledge clients particular of a station. Beckman was a operations employers clinic her shared with television weather forecaster whose contri monetary her had a value which the butions to the “Action Team” News had employers are entitled to pro reasonable extensively promoted been during Cox irreparable tection from Reddy, harm. See employment. pro Id. at The (discussing 298 S.E.2d at 912-14 the eco motion and personality Beckman’s succeed analysis applied nomic to restrictive cove ed in attracting viewers to watch televi nants). proven of 187 loss of All Pet’s sion station. When his contract Cox Alpine’s Hopper’s clients to Dr. new expired, accepted employment Beckman practice sufficiently demonstrated actual competitive with a television in the station competition. harm from unfair same city sought declaratory judg ment to reasonableness, determine the validity of restric in given fact tive prevented situation, which him from placed limitations on appearing on television employee for six months former a covenant not to com within thirty-five pete radius miles Cox’s are determinations made the court station See, offices. Id. e.g., as a matter of law. Jarrett

543 radiologist’s 422, ing specialty a uncommon Hamilton, Ga.App. S.E.2d 346 Therefore, (1986). practice public policy the district because would violate law about the reason- community deprived court’s conclusions of be of a the geographic, type activity, addition, the of ablеness of unique Id. 290. In skill. at in limits contained the cove- and durational type activity of limitation court held subject nant to de novo review. are created was unreasonable because it an hardship physician on the where undue parties litigation to this devot All only of there were a limited number osteo- of the ed extensive research to evaluations pathic hospitals practice available not of covenants reasonableness various specialty. Id. compete from different authorities. How ever, precedent from our own or find we Arkansas, Appeals The of of in an Court jurisdictions to of limited from other be analysis in opinion, en banc used a similar considering the reasonableness of value in reviewing compete which covenant specific limits in a covenant not contained surgeon prac- orthopedic restricted an from Finkin, supra, & compete. Specter ticing thirty of medicine within radius example, Cukjati, 8.03 at 454-55. For part- miles from the of his former offices Ap at of 772 S.W.2d Court Duffner, ners. at 113-14. The S.W.2d peals of Texas a covenant not to com held court held that the covenant interfered pete it limited a was unreasonable because public’s right to an ortho- with the choose practicing within twelve veterinarian of pedic surgeon that enforcement and employer’s clinic in miles of his former covenant created an unreasonable restraint Irving, community the Dal North within determining at In of trade. Id. 114. that metropolitan area. Be las-Fort Worth partnership of the no business interests proceeding that dis cause evidence from lost, noted while the were the court are closed that Dallas area residents un post-operative surgeon provided normal likely than a few miles for to travel more patients operated he had on care for those care, pet the court found the restriction partnership, he while associated with 218. number unreasonable. Id. at The any partner- “appropriated” had not upon demands their veterinarians ship’s he moved patients” “stock when Laramie, obviously services varies between Id. to another office. Dallas, Texas, Wyoming metropolitan usage creating pattern. We different practice re Enforcement of the the reasonableness of individual believe part accepted as Hopper strictions specific in a limitations contained compete not does cre her covenant not to must be assessed based restraint trade. ate an unreasonable proceeding. upon Ridley, the facts of the covenant specific terms 131. While the 180 P.2d at practice of small animal failed to define the legal principles emerge do from a Useful medicine, usage provided parties’ trade survey authorities and cer- of relevant conforming of domesticated standard tainly applied to decisions about the dogs along exotic animals cats activity, geo- type reasonableness pets. As a veteri as household maintained graphic, limitations. Test- and durational Wyoming, practice licensed narian ing type reasonableness of activi- permitted to earn a Hopper was therefore provides ty opportunity limitation re living profession without in her chosen public to consider the broader court practicing large medi locating by аnimal implications a covenant policy cine, significant practice area of this Tench, compete. deci- type on of activi The restriction state. Appeals of Ohio in sion of the Court of sufficient ty covenant was contained Hobbs, App.3d 9 Ohio v. Williams hardship to Dr. ly limited to avoid undue explains. 460 N.E.2d OBR protecting inter while that en- court determined Williams Alpine. All Pet restrict- ests of forcing a covenant not area, addition, professional, geographic opposed In as a statewide nationwide, upheld geo- courts Hopper certainly implications realized the graphic limits are coextensive with agreeing to the terms of the covenant. which the area in conducts her which While she have doubted either Associates, business. Torrence Hewitt employers’ desires to enforce the terms or 592, 596, Ill.App.3d covenant, 143 Ill.Dec. 493 legality of her actions (1986). geographic N.E.2d 78 A broad establishing practice a small animal violat restriction reasonable when it is promise equity, ed the she made. In she coupled specific activity with a restriction comes the court with hands. before unclean industry an or business which has within Bakeries, 131 Dutch Maid P.2d at If inherently System limited client base. sought challenge to the en Hopper Concepts, Dixon, P.2d Inc. v. 427 forceability covenant, proper her 1983). (Utah remedy declaratory judg a to seek Wyo.Stat. (1988). ment. 1-37-103 § geographical limit contained in Stevenson, (declaratory 384 S.E.2d at 293 the covenant to restricts Dr. brought judgment action veterinarian Hopper practicing from a five within mile against employer challenge former to cove corporate radius of the limits of Laramie. Beckman, compete); to nant not 296 S.E.2d law, a is As matter of this limit reasonable (declaratory judgment at 567 action pre in this The evidence circumstance. brought weather television forecaster at sented trial indicated that clients of employer after former refused release Alpine throughout All Pet and were located compete). from covenant not to county. Despite Wyoming’s rural char acter, the public injury effectively will not suffer five mile restriction competition present limited unfair Hop- enforcement the covenant. Dr. without could, ing hardship. Hopper an undue per’s at All Pet Alpine services were example, opened provide practice for have a at oth primarily to relief for full-time county. er locations within the veterinarians at those clinics. In addition dividing clinics, to her time between the she A durational limitation should be or, when days covered others had off on a reasonably legitimate to the inter related basis, rotating on weekends. While Dr. employer seeking pro est which the is to provided competent care to All Contracts, (Second) of tect. Restatement clients, Alpine’s Pet’s and her services supra, 188 cmt. b. unique there neither were nor uncommon. determining In whether a restraint ex- Furthermore, Hop- the services which Dr. longer period tends for of time than per provided practice new her to small employer, necessary protect animal clients were available at oth- several much court must determine how time is veterinary er clinics within Laramie. Evi- injury needed for the risk of to be rea- challenge public’s ability dence did not sonably moderated. When restraint complete satisfactory receive service purpose protecting is for the customer Hopper’s from these other sources. Dr. relationships, its is duration reasonable unavailability resulting short term from en- only longer if necessary it is no than against forcement a reasonable restraint put a new on [individual] competition unlikely, unfair is as matter job employee and for new law, produce injury public. to the opportunity a reasonable to demonstrate geographic Reasonable re effectiveness to the custom- [or her] generally ground straints are limited to the area in If a ers. restraint on this all, employee actually which the justifiable period former at it seems that usually worked or from which clients were drawn. several months would be reason- selling servicing Commercial Bankers Ins. Co. able. If the relation- Life America, 114-15; ship relatively longer N.E.2d at Brewer complex, period v. 198 Neb. Tracy, N.W.2d for. be called Courts seldom criti- (1977). year When business serves a limited of six or a cize restraints months on such, pre- limit. no credible evidence was Since grounds of duration multiple en- the need for longer supporting restraints are often sented еven to establish influence over visits forced. clients, year limit is one sufficient (footnote Blake, 73 Harv.L.Rev. at injury risk of to All Pet and moderate the Co., omitted). Distributing Inc. See Amex competition by Hop- Alpine from unfair Mascari, Ariz. per. (1986) (quoting applying Blake and 604-05 year dura determining rule in three sufficiently year A one durational limit compete was tion of a covenant not to Alpine’s All Pet’s and interests secures unreasonable). development policies practice pricing Pricing policies at All Pet and information. on The evidence trial focused changed yearly, according were attempting requirement the durational Johnson, changes to reflect in material year being term as nec establish the three provided by as and service costs the clinics potential essary the loss of to diffuse procedures. develop- as well new Practice Hop Alpine All Pet and to Dr. clients from information, especially in a learned ment Sink, per. a licensed veterinar Dr. Charles profession, quickly loses its value as tech- ian, expert All testified as an on behalf of nological change ocсurs and new reference Alpine Wyo that in Pet and and indicated hold, as a material become available. We ming, experience correlated with nation law, of that enforcement of a one matter of al studies that disclosed about 70% year durational limit is reasonable and suf- per a than once clients visit clinic more ficiently of All Pet protects the interests remaining the clients use year. The of 30% Alpine violating public policy. and without year. Dr. per the clinic at least one time at Pet Al estimated that All and Johnson of the formulation of the rule Under average pine, client veterinarian the seeks adopted Wyoming from inquiry reason year. one and one-half times a services Contracts, first of the un- Restatement average Apart from this data about client term of any reasonableness of non-divisible visits, year support other the three compete the entire made a covenant requirement durational was derived of unenforceable. Restatement opinion testimony. Dr. Johnson admitted Contracts, perhaps It supra, 518. is due § disappears a client in an that influence over no arbitrary nature of this rule that to the time,” ex unspecified period “short of but permit- has previous of this court decision years pressed a view that three was not to com- of a covenant ted enforcement agreed of “safe.” He also number Tench, 29; Ridley, 180 374 P.2d at pete. transferring from All Pet possibly clients Bakeries, 133; Maid P.2d at Dutch greatest Alpine to would be or conceptual difficulty The of at P.2d 636. year in the diminish in the second first position taken in the former Restate- year. Contracts, supra, leads to ment § strong noted authors and criticism find a rela- We are unable to reasonable pencil rule” rejection of this so-called “blue tionship year the three ‍​‌‌‌​‌‌‌‌​‌‌‌‌‌​​​‌‌‌​‌‌‌​‌​​‌​​​‌‌​‌​​‌​​‌​​​​‌‍durational between many courts. protection of All Pet’s requirement and the Therefore, many very In cases the courts Alpine’s interests. illegal and contract to be entire durational term held the whole enforcement imposed to the restraint contained the covenant not void where reasonable and the public policy as unreasonable excess of what was violates an (Second) agreement no line terms indicаted restraint of trade. Restatement Contracts, a fig- Based that could be marked with supra, on division § visits, In the best considered replacement pencil.” of client veteri- “blue ures cases, however, has the court narian All Pet and would be able modern against a effectively as defen- demonstrate his or her own decreed enforcement clin- dant breach has occurred within professionalism virtually all whose would clear- year ics’ within a one durational in which restriction area clients reasonable, ly though be even the terms is Sometimes term unenforceable on agreement imposed larger of the grounds public policy it is because too Thus, the broad, though unreasonable restraint. seller even term narrower purely promised who local business would be enforceable. In such a situa- open competing anywhere store tion, (2), court may under Subsection prevented by injunc- in America has been only part term, refuse enforce of the running tion from such a within store enforcing part while the other of the he same block as one that sold. In agree- term well as the rest of the some cases it be difficult to deter- power The ment. court’s in such a case limiting boundary mine what is the exact reformation, power however, is not a restriction; of reasonable but often such not, and it will in the course of determin- necessary. a determination is not enforce, ing part term what of the add usually is question whether a restriction scope any term in way. against what the has in defendant fact Id. at 184 cmt. b. threatening done would be a reason- ability We believe the the term narrow plaintiff able valid restriction. of a covenant not to and enforce a permitted always should show permits public policy reasonable restraint good actual extent will that to be served in most effective manner. involved and that defendant has com- through Businesses function the efforts of a mitted breach within that extent. If employees provide who dedicated the ser- restriction otherwise reasonable has no products vices and by build the desired limit, quite possible time it is for the customers. Both the the em- and grant injunctive court to spe- relief for a ployee by invest in expressing success and cific reasonable time. commitment to in form one another of Corbin, L. Arthur Corbin on Contracts compete. reasonable covenant not to For (1962) (footnotes 1390 at 69-73 omitted § employer, may this commitment mean added). emphasis and providing employee with access to (Second) Restatement of Con secrets, trade special customer contacts or tracts, 184, supra, adopt, which we now § training. These of the assets business are accepts permitting the Corbin view enforce protection. employee, entitled For the ment of a narrower term which is reason who of a part bargained covenants as for compete: able in covenant not to provides exchange, the covenant notice of (1) If agreement less all than of an parties accepted the limits both have in unenforceable under the rule stated in relationship. employee their benefits [dealing in with restraints violation § during employer by his tenure with the policy of in public general], a court greater importance organiza- or her to the nevertheless enforce the rest of the exposure tion as a result of the tо the trade agreement in party favor of a who did secrets, customer contacts or train- engage in serious misconduct if the ing. employer-employee When the rela- performance agreement as to which the terminates, tionship a reasonable covenant part is unenforceable is not an essential competi- then avoids unfair agreed exchange. employee against tion the former (2) A court treat only part of a term employer and specter, which no court as under unenforceable the rule stated in enforce, performance specific of of party Subsection if the who seeks to employment agreement. When the good enforce the term obtained init faith parties covenant, agree of a terms one of and accordance with reasonable stan- broad, permitted which is too the court is dealing. of dards fair enforce a narrower term which effectuates position adopted (Sec- public policy goals Restatement these arbitrarily without ond) Contracts, supra, invalidating agreement of 184 does not the entire between permit the parties creating court to add to the terms of the an uncertain busi- covenant. In ness environment. those instances fairly re- served this oper- policy Public truly where a unreasonable trade, Hop- competition it unfair will not be straint on as a restraint ates irrepa- per. All Pet and established enforced. from the of clients to un- rable harm loss jurisdictions recognized that Other in- competition which entitled them to fair arbitrary nothing or rule ‘all “[t]he relief. While the terms of junctive noncompetitive all’ in the enforcement covenant, enforced, Hop- as restrict has, cases, led to re agreements some time, practice for a limited she will per’s equity.” Ehlers v. questionable sults of compliance hardship undue suffer no 368, 371, Co., 188 N.W.2d Iowa Warehouse We, promise. bargained her for grounds, other 190 N.W.2d on modified therefore, conclu- affirm district court’s 1971) (Iowa permitting rule (adopting type activity of law that the sions non-competi partial enforcement total cov- geographic limitations contained the extent reasonable agreements to tive not to were reasonable enant circumstances). See Insurance under the of law. Because enforceable a matter Center, Taylor, v. 94 Idaho Inc. year hold that the covenant’s three du- we (1972); P.2d 1255-56 Solari Indus partially imposed rational term unreason- tries, Malady, 55 N.J. A.2d Inc. v. trade, we for a able restraint of remand (1970); May, 73 Wood enjoin Dr. judgment modification (1968). In Wash.2d competition from unfair for a dura- a “rule of applying what it termed best year of one from the date termi- tion enforcement, partial result” approach nation. Supreme Appeals of West Court three-step Virginia a sound summarized Damages B. Violation Cove- reviewing procedure for a covenant Compete nant Not compete: Wyoming’s general rules (1) The must determine that court damage recovery are well established. reasonable, being covenant is and is used proven a reason “Damages must be with not, reasonably by employer. If however, proof of certainty; of degree able is is set aside. If the covenant covenant damages required.” is not Coul exact inherently inquiry reasonable the contin- Cossairt, 86, (Wyo. P.2d 92 803 show, thard v. (2) employеr must under ues. The may 1990). awarding damages, a court In circumstances, legitimate inter- what speculate conjecture prop or about not implicated. these ests of are When Jerry v.Co. er amount. Reiman Const. established, the reasonable covenant are 1271, (Wyo.1985). Co., 709 P.2d 1277 Hiller in its presumptively enforceable entire- damage principle of assess A fundamental (3) given ty. employee The is then person injured re that a ment declares presumptive chance to rebut the enforce- for his and only compensation loss ceives by showing ability the covenant either of Exploration Teton Drill no more. UNC company has trade assets to that he no 584, 592 ing, Peyton, v. 774 P.2d Inc. abuse, that the assets made available or (Wyo.1989). him, properly belong to or that to him by the interests asserted previous this No decision of protected partial a be enforce- of proper measure court considered the has employee If the ment of the covenant. damages of a for a breach covenant regard latter then the prevails this ancillary a valid em compete which is court to be tailored covenant However, consistent ployment contract. the case. comport equities with the of damage re general principles of with our at 917. Reddy, 298 S.E.2d covery, accept the that we view “[l]ost generally recognized prop as a are year profits Enforcement of a one dura- term, recovery for of of er element of breach along with the other terms tional Is- compete.” Matter compete, not to is reasonable the covenant of bell, 926, (Bankr.W.D.Wis. B.R. this case. 27 930 light of the circumstances of 548

1983). Accord Robert S. and to Dr. higher Weiss Asso- rate ciates, 525, Wiederlight, Inc. v. 208 Conn. because the lost clients would be served at 216, (1988) 546 A.2d 226 and paid. Weinrauch v. the clinics after all costs fixed were 885, Kashkin, 64 A.D.2d 407 N.Y.S.2d finding The of the district court (1978). Ward, v. 105 Idaho See Dunn damages specula- of amount suffered was (1983)(holding that in unproven preponderance tive and of a a covenant sale business with not clearly evidence is erroneous. The compete, damages the measure of is lost percent profit ninety assumption net defies profits impairment good- amount for logic represent any attempt and does not will). profits are The lost calculated based apply accounting principles, common such “(1) figure requiring proof on a “net” that: prorating expenses. necessary (2) profits lost; net were the amount of doing business, costs of such as costs of profits can those be determined with a rea- drugs dispensed, accounting charges, staff degree certainty; sonable the wages depreciation on the value of proximate defendant’s breach was the equipment, were never Calcu- established. profits.” Jeffrey lost cause L. Lid- lating expense the cost operation Jr., Gray, dle & William F. Dam- Proof of proof damages essential item the ages Breach a Restrictive Covenant seeking profits a suit net lost for viola- Noncompetition Agreement, Employ- tion compete. of covenant not to Mills v. (1983). ee Relations L.J. Wyo- Murray, 16 (Mo.App.1971). S.W.2d ming Bancorporation Bonham, calculations, Without these All Pet’s and (Wyo.1977) (stating P.2d the Alpine’s damage fail. claims profits rule calculation of lost future proof must be made “best available as Y. CONCLUSION loss”). to amount of A well-drafted covenant not Alpine presented All Pet and compete preserves a necessary careful and approaches three computing damage economic balance in society. our While figure. system first considered an av layers there are many employer- charged erage fee for veterinarian services employee relationship, preventing unfair at All multiplied Pet and which was competition employees who misuse by the number clients lost believed trade secrets or influence over cus Hopper. The second method consid public policy. tomers Tempering serves profit ered amount of realized protect employ balance is the need to Hopper on the services provided she ees from competition unfair restraints on former of All clients Pet and Alpine. The goals which defeat policy broad in favor of approach third profits calculated a loss small business and individual advancement. All at Pet and from a reduction in Courts, in reviewing covenants not to com the total year number of client visits pete, must policy implica consider these following Hopper’s departure. assessing tions in the reasonableness of the All

All three of Alpine’s applies Pet’s meth- restraint it to both of damage employee. ods calculation were based on figures gross profits. for In testimony, his Affirmed as modified and remanded for speculated Dr. Johnson profits that net judgment conformity issuance of a here- ninety from the lost clients per- would be with. gross. cent of the figure He based this on assumption the incredible only that his CARDINE, J., dissenting opinion. filed servicing costs for these clients would be CARDINE, Justice, dissenting. drugs. Dr. Johnson testified that his other costs, including fixed mortgage recep- Glenna Hopper system. has beaten the tionist, paid were for terminated, the first prior being clients Just Hopper who come in to the clinics. He assumed informed Dr. Johnson that “the [covenant] profit margin that from all clients paper lost isn’t worth it’s written on.” And termination, right. Upon she went was she veterinary in violation of

into the business compete. July From her covenant 6, 1992, Dr. until October in violation practiced small animal medicine employment in her promise her solemn compete. she agreement nоt to Whether animal veteri- practice small continued 6, 1992, in nary medicine after October disclosed of the covenant is not violation appeal. on the record a matter of The court has now decided as non-competition one-year restric- law that reasonable, longer period is and a tion is pronouncement This unreasonable. estab- period during lishes for the future competition In can be restricted. which case, continued appellant have this during appeal— violating the her complied. or she We do court, remand, know. The trial on should appellant question, and determine this ought satisfy one-year non- to at least imposed by now this court. hold, therefore,

I cove- supported by nant consideration from beginning lawful and enforce- and was able, require appellant I and would part

enjoined practice from that veterinary specified medicine in the cove- the trial

nant not to date court, remand, judg- its modified on enters one-year period ment which least this finds reasonable. court now LIVINGSTON, Appellant

Eugene L. (Defendant-Obligor), VANDERIET, ‍​‌‌‌​‌‌‌‌​‌‌‌‌‌​​​‌‌‌​‌‌‌​‌​​‌​​​‌‌​‌​​‌​​‌​​​​‌‍Appellee Janet (Plaintiff-Obligee).

No. 93-47. Wyoming. Supreme Court of 11, 1993. Oct.

Case Details

Case Name: Hopper v. All Pet Animal Clinic, Inc.

Court Name: Wyoming Supreme Court

Date Published: Oct 1, 1993

Citation: 861 P.2d 531

Docket Number: 92-254, 92-255

Court Abbreviation: Wyo.