*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 419 A.2d 295 jurisprudence dealing with covenants not (particular list held not entitled to customer compete, only opinion, a 1926 Erikson v. Haw secret). protection as trade (1926), ley, App.D.C. 56 12 F.2d 491 a two- paragraph per curiam affirmance of a district hearing pre- motion for a 2. At the on Hurson’s permanent injunction on the basis of the court, liminary injunction, counsel stated to granting temporary opinion district court's injunction, Wineburgh Meyer, U.S.App.D.C. seeking would like to indicate that what we’re "I 95 here, Honor, merely injunction Your (1955) (approving Meyer 221 F.2d 543 prevent cus- Mr. Ellis from Hurson’s (1953)) Wineburgh, and Chemi going We’re to be content with an tomers. Krouse, U.S.App.D.C. Fireproofing cal trying injunction that does that. We’re not decisions All of these completely put him out of business.” harmony are in essential with the Restatement today. adopt formulation we Ryan, See M.A.P. cases, Borden, See, e.g., two Arkansas (D.C.1971). possi A.2d 310 Another (1972), Smith, Ark. 478 S.W.2d postemployment ble source of restraints Vroman, Rector-Philips-Morse, Inc. v. competi principles arise from tortious of unfair Georgia and two Ark. 489 S.W.2d 1 tion. Ruesch v. Ruesch International argument terms such covenants to the extent their S.W.2d partial (a suggests that enforcement rewards point to dealt with are reasonable4 everything gain fully employers who have infra). jurisdic- more Some of these covenants,8 writing these rule,” hold overbroad pencil tions follow the “blue *3 compromised by need not restraining may covenants enforced concerns be light of limita- adopt today in part, part enforced is we only where rule divisible, is, application. its where the severable char- tions on from the acter of the restriction is evident rele sets forth the The Restatement agreement.5 terms of of these Other less than all of principles. Where vant restraining jurisdictions partially enforce public poli is unenforceable agreement engaging analysis covenants without in an may a nevertheless en cy grounds, court appear of whether the covenant’s terms agreement rest “in favor force the strictly the re- None of “severable.”6 party a in serious of who straining applying cases District misconduct.” Restatement (Second) Columbia have whether law confronted Furthermore, (1981). 184(1) § may and under circumstances a court Contracts what only part of term treat selectively portions of a cove- enforce such “if party rule unenforceable under this nant. it seeks to enforce the term obtained great In mod keeping weight with the good rea faith and accordance with join authority,7 ern we those dealing.” at sonable of fair Id. standards have cove rejected which the view that See, Ehlers, 184(2).9 188 e.g., supra, § not nants must be enforceable 370; at 14 Williston, N.W.2d Contracts See, in whole or at all. v. e.g., Ehlers (3d ed.1972) (problem 1647c Co., Iowa 188 368 Warehouse N.W.2d overreaching part be avoided in at “can (Iowa 1971) why (explaining “logic, equity adoption of the rule least and the authorities” persuaded modern completely invalidates covenants deliber adopt overrule itself and a rule oppressive ately unreasonable and whether favoring partial restraining enforcement of not”). severable covenants). cognizant we are While judicial restraining cove- reluctance to “rewrite” contracts the terms of the Since parties, in the main e.g., Rector-Phillips- between at issue here are severable nant Morse, Vroman, 750, face, prelimi- Inc. 253 not in v. Ark. 489 we need this on their cases, Int'l, (1977) (partial approach P. Rita enforcement Richard Personnel Service Kot, 314, authority”). weight Inc. v. Ga. 191 "represents 229 S.E.2d 79 of modern 85, 1, Joyner, and Purcell v. 231 Ga. 200 S.E.2d 363 Hawley, supra App.D.C. v. note Erikson 56 Cf. (1973). 271, party "After a has delib- 12 F.2d at 494: at contract, erately con- his and received the made Annotation, Enforceability 4. See therefor, plainly appear must it sideration Compete, 61 Contract not to (discussing A.L.R. 3d 397 public policy before the courts it contravenes cases). ground" upon (quoting declare void Roessle, (1895)). Godfrey App.D.C. 299 5 See, Florida, e.g., 5. Alders v. AFA 353 (S.D.Fla.), (5th F.Supp. aff'd, 654 5, Cir.1974); See, Alders, Burroughs Corp. Cimakasky, F.Supp. e.g., supra 353 346 note Benton, (E.D.Pa.1972); general (noting commentary 1398 Lassen v. that as rule 658 72, (1959). covenants, restraining 87 Ariz. 347 P.2d 1012 should not rewrite courts encourage employers pur- would this "since See, Roane, Tweed, e.g., Del.Ch. John 33 impose egregious on their restraints chasers 4, law); (1952) (applying Maryland A.2d 89 548 employees their in terrorem ef- or sellers for 896, Center, Taylor, Idaho Insurance Inc. 94 fect_”); Starkey, Baker 259 Iowa Indus., (1972); v. Mal- 499 P.2d Solari Inc. (1966) (partial enforcement N.W.2d (1970); ady, 55 N.J. 264 A.2d Sidco many employers an afford rule would in cases Aaron, Paper Co. v. 465 Pa. advantage” over their "unconscionable ees). May, P.2d 73 Wash.2d Wood v. remand, Annotation, should address the trial court A.L.R.3d 9. On note 397; principle. applicability possible Contracts Calamari Perillo, Law of &

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, 51 A.L.R.3d 825 obligation of an for a stated or substantial 4(b) (1973). at § Id. at 958. employment.” As regarding for Ellis’s contention Furthermore, appellants argument geographic limitation, covenant’s lack of a the covenant is “not ancillary considered we note that the territorial limitation re- employment” since cov- quirement generally inapposite where enant was not entered contemporaneously the preliminary injunction entered to the employment, formation of the trial enjoins appellant, that therefore obliged pro- Hurson was from competing in the same field as Hur- separate vide consideration to validate the son, merely Hurson’s covenant, is likewise untenable. The trial See, e.g., Stump, Hebb v. Har- customers. testimony heard that Ellis both filled vey Cook, Inc., Md.App. 487- employment application out an *6 which stat- (restraining 569-70 ed that required he would sign specified covenant’s lack of a geographical restraining covenant as a condition of em- problematic area not appellant where ployment, and was length informed at prevented generally doing business about the restraining during his prevented only doing business interviews with Hurson. See Seaboard In- clients); Mills v. employer’s with former dus., Blair, N.C.App. Murray, (Mo.App.1971) S.W.2d (1971) (covenant S.E.2d 781 signed after (same). Furthermore, the cases reveal employment commenced his held widespread pro- adherence to the view that part to be in fact original of contract of hibitions the solicitation of custom- employment supported by and hence con- ers known to the virtue of his sideration). Therefore, the cases of sister employment are as rea- enforceable Ellis, relied on which hold protecting legitimate sonable restrictions required new consideration is where See employer. business interests of the the employee is requirement notified of the Enforceability Annotation, signing Compete, Contract not to 61 A.L.R.3d 397 employment relationship has been es- 16-20, American (1975); significant period time, tablished for a §§ v. Rod- Welding Alloys Eutectic Sales Co. distinguishable. Moreover, are a number (1st Cir.1973) (where riguez, of courts 480 F.2d 223 which have considered the en- forceability plaintiffs sought limited to what of covenants not relief is signed inception employment reasonably necessary protection after the for the interests, i.e., plaintiffs’ have found legitimate sufficient consideration for such covenants in the fact that to enforce the broad no granted provision ee was continued prohibit but to the solicitation of a substantial plaintiffs’ time after the execution of customers called on while em- us, reject- ployed compensation approxi- 15. The trial court in the case before Mr. Ellis with ing appellant's argument, Meyer, stating mately years. cited ten With the limited evidence employment agreement adequacy "[w]hile the did not re- before the court as to the of Mr. Ellis’ quire employ compensation, Hurson and Associates to Mr. Ellis the court is satisfied that Hurson time, obligation for a minimum Hurson em- fulfilled its under the contract." to bar Ellis might have been ploy, preliminary injunction should have he issued).16 accounts clients whose ally been of those contrast, the harm By personally handled. agree We also with the trial court business; losing is that of year the re the three time duration of ultimately prevail it would in the event that straining sufficiently reason covenant was seeking money made whole it could be preclude finding so as not to able grant of I reverse the damages. would “substantial likelihood of success injunction. preliminary noted, agree merits.” As the trial court limiting competition ments well

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