Boisen v. Petersen Flying Service, Inc.
222 Neb. 239, 60 A.L.R. 4th 953, 383 N.W.2d 29 (1986)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A postemployment covenant not to compete is unenforceable if it does not protect a legitimate business interest of the employer, such as customer goodwill or trade secrets, and merely shields the employer from ordinary competition.
Facts:
- Douglas Boisen, a farmer and pilot, was trained by Charles Petersen, the owner of Petersen Flying Service, Inc., to fly an aerial spray plane.
- On July 6, 1982, Boisen signed an employment contract with Petersen Flying that included a covenant not to compete.
- The covenant prohibited Boisen from working in any competing business within a 50-mile radius of Minden, Nebraska, for 10 years after leaving his employment.
- During his employment, Boisen's duties were limited to piloting the spray plane; he did not solicit customers, handle business accounts, or develop special relationships with Petersen Flying's clientele.
- Boisen did not acquire any trade secrets or confidential information; the skills he learned were general to the aerial spraying industry.
- Petersen Flying terminated Boisen's employment in late 1983, stating that he had not developed into a good spray pilot.
- Charles Petersen admitted his reason for the covenant was to prevent training someone who would then become a competitor in the area he had developed.
Procedural Posture:
- Douglas Boisen filed a declaratory judgment action in the district court for Kearney County (trial court) against Petersen Flying Service, Inc., asking the court to declare the non-compete covenant invalid.
- Petersen Flying Service, Inc. filed a cross-petition, asking the court to find the covenant valid and enforceable or, alternatively, to modify its terms to be equitable.
- The district court found the covenant unreasonable and unenforceable and refused to modify it.
- Petersen Flying Service, Inc., as appellant, appealed the trial court's judgment to the Supreme Court of Nebraska.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is a postemployment covenant not to compete enforceable when its purpose is to prevent ordinary competition from a former employee who did not have substantial customer contact and was not privy to trade secrets or confidential information?
Opinions:
Majority - Shanahan, J.
No. A postemployment covenant not to compete is not enforceable when it merely protects an employer from ordinary competition. For such a covenant to be valid, it must be reasonably necessary to protect a legitimate business interest of the employer. Legitimate interests include shielding against unfair competition, which arises when a former employee could appropriate the employer's goodwill by using substantial personal contacts developed with customers during employment, or when the employee could use confidential information or trade secrets. In this case, Boisen had no substantial customer contact, nor did he acquire any trade secrets. The skills he learned were general to the trade. The employer's stated purpose was simply to prevent competition, which is not a protectable interest. Therefore, the covenant is an invalid restraint of trade, and the court will not reform or modify its terms because its fundamental purpose is illegitimate.
Analysis:
This decision solidifies the principle that non-compete agreements cannot be used as a tool to simply stifle ordinary competition. It establishes a critical threshold inquiry for Nebraska courts: before analyzing the reasonableness of a covenant's geographic and temporal scope, a court must first determine if the employer has a legitimate business interest (e.g., customer goodwill, trade secrets) that warrants protection from unfair competition. The ruling curtails the enforceability of such covenants against employees who lack significant, client-facing roles or access to proprietary information, thereby protecting employee mobility and the use of general skills acquired on the job. Future litigation will hinge on whether the employee's role gave them the ability to unfairly siphon away the employer's specific business assets, not just compete in the same market.
