Ormсo Corporation appeals the Jefferson Circuit Court's denial of its request for a preliminary injunction stemming from Ormco's action against its former salesperson, Timothy M. Johns, for his alleged breach of a noncompetition agreement. We remand.
Before his employment with Ormco, Johns had had no experience with orthodontics or with the sales of orthodontic supplies. Accоrdingly, when he first became an Ormco employee, Ormco trained Johns in the orthodontic-supplies industry through seminars as well as through audiotaped and written materials.
In August 2002, Johns accepted a job as a salesperson with GAC International ("GAC"), one of Ormco's primary competitors. GAC solicited business from the orthodontists in the same region in which Johns had worked as a salesperson with Ormco. In his new position with GAC, Johns sells orthodontic supplies to orthodontists in virtually the same region he covered as a salesperson with Ormco. After accepting the pоsition with GAC, Johns began contacting orthodontists in his former Ormco region, informing them that he is now with GAC.
Upon learning that Johns had taken a position with GAC, Ormco sued Johns, alleging various claims relating to an employment agreement Johns had signed with Ormco.1 The employment agreement contains the following noncompetition agreement, which Ormco alleges Johns is breaching by his activities as a GAC salesperson:
"I . . . agree that for a period of one (1) year following the termination of my employment, for whatever reason, with SDS [Sybron Dental Specialties, Inc.] *1113 (or if my еmployment with SDS is for a period of less than one (1) year, for a period equal to the term of my employment) I shall not, directly or indirectly, alone, or as a member of a partnership or as an officer, director, stockholder, employee or representative of any company, engage in any business activity which is the same or similar to work engaged in by me as an employee of SDS within the territory, wherein I represented SDS and which is directly competitive with the business conducted, or to my knowledge contemplated, by SDS at the time of my tеrmination, unless I have the written consent of SDS. I acknowledge that SDS has the right, from time to time, to change the territory wherein I shall represent SDS."
Along with its complaint, Ormco filed a motion for a temporary restraining order ("TRO") and a motion for a preliminary injunction, seeking to prevent Johns from violating his covenant not to compete during the course of the litigation. The TRO was granted, but was later dissolved and was supplanted by an order from the trial judge prohibiting Johns from "contacting or soliciting business from Ormco customers that he solicited, contacted, or did business with while employed at Ormco."
Following expedited discovery, both sides submitted briefs on Ormco's motion for a preliminary injunction. After an evidentiary hearing, the trial court requested additional briefing on whether Ormco had an adequate remedy at law and whether Ormco could demonstrate immediate and irreparable injury. Following the submission of briefs on those issues, the trial court denied the motion for a preliminary injunction, finding that Ormco had failed to present sufficient evidence to demonstrate irreparable injury. Ormco appeals. See Ala.R.Apр.P. 4(a)(1)(A) (providing for appellate review as of right from "any interlocutory order granting, continuing, modifying, refusing, or dissolving an injunction").
Perley v. Tapscan, Inc.,"(1) that without the injunction the plaintiff would suffer immediate and irreparable injury; (2) that the plaintiff has no adequate remedy at law; (3) that the plaintiff has at least a reasonable chance of success on the ultimate merits of his case; and (4) that the hardship imposed on the defendant by the injunction would not unreasonably outweigh the benefit accruing to the plaintiff."
"'Irreparable injury' is an injury that is not redressable in a court of law through an award of money damages."
Ormco points out that this Court has never held a trial court in error for finding that an employer demonstrated irreparable harm stemming from an employee's breach of a noncompetition agreement, so as to justify a preliminаry injunction. See, e.g., Seymour v. Buckley,
However, we also recognize that there are situations where those interests, while they might be held by the employer, are not primarily tied to the particular former employee salesperson sought to be enjoined. For example, with regard to customer relationships and goodwill, the customer may not make its purchasing decisions based on a personal relationship with the former employee salesperson, but rather based on the quality or particular characteristics of, and a personal preference for, the employer's products.4 This "dependence" factor (i.e., whether the customer is really dependent on or solidly committed to a particular salesperson) may be determined by, among other things, the level of the customer's knowledge and expertise with regard to the products being sold, and the extent to which the customer, if at all, trusts the salesperson to make actual purchasing decisions for the customer.
Also, with regard to the interest of confidential business information, that information, while imрortant, might not be known by the employee salesperson, in which case the protectible interest of confidentiality is held by the employer and not *1117
the employee salesperson. Furthermore, the employee may know of certain business information, but that information is not truly confidential because it is legally attainable by the employer's competitors (in which case the employer loses its protectible interest in the confidentiality of the information). See, e.g, Iroquois Indus. Corp. v. Popik,
In these or similar situations, it appears that irreparable injury should not be inferred from the alleged violation of a noncompetition agreement.
We are persuaded that the best approach to take account of these considerations is the approach taken by the Minnesota courts, which recognize a rebuttable inference of irreparable injury in cases where a former employee salesperson is actively competing with his former employer in the same geographic area in violation of a noncompetition agreement:
*1118"Irreparable harm to an employer from a former employee's competing business is generally not inferred, as it is where competition follows the sale of a business. See Note, Employment Contracts: Covenants Not to Compete in Minnesota, 9 Wm. Mitch. L. Rev. 388, 394 (1984). In Menter Co. v. Brock,
, 147 Minn. 407 410 ,, 180 N.W. 553 554 (1920), the supreme court indicated the necessity of some proof of irreparable damage from the former employee's breach of a covenant not to compete:"'We think the breach of a like covenant in an employment contrаct does not so readily indicate irreparable injury to the employer. Injury is not shown by the mere fact that the employee has left the service and has entered the employ of a rival concern.'
"The supreme court has inferred harm, however, where the former employee was a salesman who began selling competing goods in the same trade area. Thermorama, Inc. v. Buckwold,
, 267 Minn. 551 552 ,, 125 N.W.2d 844 845 (1964). Harm has also been inferred in the case of professional employees assumed to acquire a personal influence over patients or clients of their employer. See Granger v. Craven,, 159 Minn. 296 (1924) (physician employed by another doctor). 199 N.W. 10 "In Thermorama, the case relied on by respondent, the employer alleged
"'a systematic solicitation of plaintiff's customers by defendant and active participation by him in a competitive business enterprise as a salesman . . . .'
"Thermorama,
, 267 Minn. at 552. The court gave little weight to the employee's counteraffidavit stating he had not competed for his employer's customers and `den[ying] there are any customers who belong exclusively to any particular seller.' Id. 125 N.W.2d at 845
"Hefty [the former employee salesman of Rosewood] admits contacting institutions which bought mortgages from Rosewood while he was employed there. Like Buckwold in Thermorama, he denies that any of these institutions are exclusive customers, of Rosewood or any other mortgage company. Here, however, the evidence, which is limited to his deposition, not only supports this claim, but indicates that Hefty had no `personal hold upon the good will of the business,' Menter[,]Rosewood Mortgage Corp. v. Hefty,, 147 Minn. at 410, which would support an inference of harm. 180 N.W. at 555"Although Hefty had `contacts' within institutions buying on the secondary market, they did not provide a reliable `clientele' but merely assured his company's mortgages would be considered. As in many financial markets, pricing rather than personal contacts predominаtes in market decisions, and prices appear to have been set by the large institutions. Thus, these large financial institutions dominated the market, at least as appears from the record here, unlike the retail store owners in Thermorama who bought from manufacturers and wholesalers where `personal contact' carried great weight.
"[Rosewood] failed to present any affidavits, depositions or other preliminary evidence as to characteristics of the secondary market on which to base an inference of harm to it from the competitive activities of Hefty. . . ."
Webb Publ'g Co. v. Fosshage,"Irreparable injury can be inferred from the breach of a restrictive covenant if the former employee came into contact with the employer's customers in a way which obtains a personal hold on the good will of the business. Menter Co. v. Brock,
, 147 Minn. 407 410 ,, 180 N.W. 553 554-55 (1920); see also Thermorama, Inc. v. Buckwold,, 267 Minn. 551 552-53 ,, 125 N.W.2d 844 845 (1964) (systematic solicitation of former employer's customers supports inference of irreparable harm). However, the inference may be rebutted by evidence that the former employee has no hold on the good will of the business or its clientele. See Rosewood Mortgage Corp. v. Hefty,, 383 N.W.2d 456 459-60 (Minn.Ct.App. 1986)."The еvidence in this case sufficiently supports the court's inference of irreparable harm. Fosshage [a former employee of Webb Publishing Company] worked closely with Webb's clients, considered them friends, and at least one client considered him part of `a winning team.' His success in soliciting their business demonstrates the `personal hold' he had on them. Loss of American Cyanamid and Fosshage's other customers would cost Webb 45 percent of its custom publishing revenue, and the damage to its business reputation in that area would be substantial and not easily measured."
Under this approach, when seeking a preliminary injunction to enforce a noncompetition agreement against a former employee salesperson, the employer, to make use of the inference, must make an prima facie showing 1) that a valid *1119 noncompetition agreement exists, 2) that the employer has a protectible interest, and 3) that the former employee salesperson is actively competing with his or her former employer in the same geographic area in violation of the noncоmpetition agreement.
Under Ala. Code 1975, §
"One who sells the good will of a business may agree with the buyer and one who is employed as an agent, servant or employee may agree with his employer to refrain from carrying on or engaging in a similar business and from soliciting old custоmers of such employer within a specified county, city, or part thereof so long as the buyer, or any person deriving title to the good will from him, or employer carries on a like business therein."
Protectible interests certainly include, but are not limited to, those mentioned above: valuable customer relationships and goodwill that have been established by the defendant as an employee of the plaintiff and confidential information, such as trade secrets and confidential business practices.
If the trial court is satisfied that the employer has made the prima facie showing described above, then a rebuttable inference arises that the employer will suffer irreparable injury unless an injunction issues. However, the employee can rebut this inference by producing evidence that the competition of the employee will not irreparably injure the employer. As discussed above, such evidence could include evidence indicating that the customers' purchase decisions were based primarily on an independent preference for the particular goоds6 of the employer rather than on the relationship between the customer and the salesperson (so that the salesperson has no substantial "personal hold" on the customers, see Rosewood Mortgage Corp.,
If the trial court is satisfied that the employee has produced evidence sufficient to rebut the inference that continued competition during the course of the litigation will result in irreparable injury to the еmployer, the burden shifts back to the employer to produce sufficient evidence (beyond that necessary for the prima facie showing described above) of irreparable injury.
REMANDED.
SEE, BROWN, JOHNSTONE, HARWOOD, and STUART, JJ., concur.
MOORE, C.J., and LYONS and WOODALL, JJ., dissent.
Additionally, Johns argues that even if Ormco is a party to the employment agreement, Ormco was not registered to do business in Alabama and therefore, under Alabama's "door-closing" statute, Ala. Code 1975, §
