|
Employment & Labor Publications COVENANTS NOT TO COMPETE (Download this article) The Danbury Bar Association - May 25, 2006
"In order to be valid and binding, a covenant which restricts the activities of an employee following the termination of his employment must be partial and restricted in its operation 'in respect either to time or place, . . . and must be reasonable – that is, it should afford only a fair protection to the interest of the party in whose favor it is made and must not be so large in its operation as to interfere with the interests of the public....' The interests of the employee himself must also be protected, and a restrictive covenant is unenforceable if by its terms the employee is precluded from pursuing his occupation and thus prevented from supporting himself and his family." Scott v. General Iron & Welding Co., 171 Conn. 132, 137 (1976) (citations omitted).
NewInno, Inc. v. Peregrim Development, Inc., 2003 Ct. Sup. 7852, 7853-7854 (Conn. Super. 2003) ("[T]here can be no doubt that the enforceability of confidentiality agreements must be guided by the same considerations that govern the validity of non-compete agreements.") Compare, e.g., Artman v. Output Technologies Solutions Eastern Region, Inc., 2000 Ct. Sup. 8003, 8007 (Conn. Super. 2000) ("[I]t is well settled law in Connecticut that continued employment is not consideration for a covenant not to compete entered into after the beginning of employment."); Timenterial, Inc. v. Dagata, 29 Conn. Sup. 180, 185-186 (Conn. Super. 1971) (employment contract with restrictive covenant signed after employment commenced was invalid because past consideration is insufficient), with NewInno, Inc. v. Peregrim Development, Inc., 2002 Ct. Sup. 15209, 15220 (Conn. Super. 2002) (continued at-will employment is sufficient consideration for a confidentiality agreement); Sartor v. Town of Manchester, 312 F.Supp. 2d 238, 245 (D. Conn. 2004) ("Connecticut recognizes that continued employment is sufficient consideration to support non-compete covenants with at-will employees."); Roessler v. Burwell, 119 Conn. 289 (1934) (restrictive covenant was "founded upon an adequate consideration given" when contained in a written agreement, entered into 3 years after employment commenced, under which employer agreed to employ employee "indefinitely").
Robert S. Weiss & Associates v. Wiederlight, 208 Conn. 525, 532 (1988) ("[T]he reasonableness of a restrictive covenant of employment does not turn on whether the employee subject to the covenant left his position voluntarily or was dismissed by the employer.") Heritage Benefit Consultants, Inc. v. Cole, 2001 Ct. Sup. 2891, 2902-2903 (Conn. Super. 2001) ("[T]he breach of an Employment Contract by an employer is a recognized defense to the enforcement of a non-compete agreement."). The determination of what geographic scope and time of restriction are reasonable is fact sensitive. Compare, e.g., Aetna Retirement Services, Inc. v. Hug, 1997 Ct. Sup. 6621 (Conn. Super. 1997) (temporary injunction for 6 months granted enforcing a restrictive covenant barring a senior executive from working in a similar job for a competitor worldwide for a period of one year, based on employer's agreement to continue paying base salary during the non-compete period); Van Dyck Printing Co. v. DiNicola, 43 Conn. Sup. 191 (Conn. Super. 1993), aff'd, 231 Conn. 272 (1994) (covenant restricting the defendant from competing with the plaintiff for one year throughout Connecticut, with a penalty of an additional year for violation of the covenant, upheld as reasonable); Gartner Group Inc. v. Mewes, 1992 Ct. Sup. 898 (Conn. Super. 1992) (one year restrictive covenant enforced as modified by the court to apply only to Connecticut, Massachusetts, and New York); and Daniel v. Keane Agency, Inc. v. Butterworth, 1995 Ct. Sup. 1355-E (Conn. Super. 1995) (judgment entered enforcing three year restriction from engaging in the insurance agency or brokerage business within the City of Bridgeport and a 20 mile radius of the City), with Amphenol Corp. v. Hendry, 1997 Ct. Sup. 25 (Conn. Super. 1997) (refusing to grant a temporary injunction to enforce a one year restrictive covenant with no geographic limitation); Timenterial, Inc. v. Dagata, 29 Conn. Sup. 180 (Conn. Super. 1971) (restrictive covenant covering a radius of 50 miles from any place of business of the plaintiff - the sale & rental of motor homes - is too broad and therefore unreasonable); and Russo Associates v. Cachina, 1995 Ct. Sup. 1805 (Conn. Super. 1995) (two year restriction prohibiting employee from engaging in other computer assisted design work within a 75 mile radius of Fairfield was unreasonable). Normally there is a four-part test that must be satisfied for the issuance of a temporary injunction. An applicant must show: (1) a likelihood of success on the merits; (2) imminent, substantial and irreparable injury; (3) lack of an adequate remedy at law; and (4) that a balancing of the equities favors the granting of the injunction. See, e.g., Griffin Hospital v. Comm'n on Hospitals and Health Care, 196 Conn. 451, 457-58 (1985). United Rentals, Inc. v. Pruett, 296 F. Supp. 2d 220 (D. Conn. 2003). In this case, applying Section 187 of the Restatement (Second) of Conflict of Laws, the court transferred to California a case in which the plaintiff sought a temporary injunction to enforce a non-compete provision in an employment agreement. The court concluded that even though the parties' agreement had a valid choice of law provision which specified that the agreement was to be governed and construed according to Connecticut law, and even though the agreement had a valid forum selection clause which provided that disputes about enforcement of the agreement should be resolved in state or federal court in Connecticut, the case should be transferred to California because the employee had solely worked in California; the employee resided in California; almost all of the witnesses resided in California; and the interests of justice dictated that the case should be decided in California under California law because, unlike Connecticut law, California law generally prohibits covenants not to compete and California public policy strongly favors employee mobility. |

