Cellular One, Inc. v. Boyd
1995 WL 112902, 653 So. 2d 30 (1995)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A noncompetition agreement signed by an at-will employee is enforceable if it complies with statutory requirements regarding time, geography, and scope of business. Continued employment constitutes sufficient cause for such an agreement, and an employer's threat to terminate an at-will employee for not signing does not constitute economic duress.
Facts:
- John Boyd and Hamilton Lemoine were employed as sales representatives for Cellular One from 1989 to 1993.
- During their employment, Cellular One periodically required them to sign noncompetition and nondisclosure agreements as a condition of their continued employment.
- The final agreement signed by Boyd and Lemoine prohibited them from engaging in a 'radio telephone service business' similar to Cellular One's within the parishes of East Baton Rouge, West Baton Rouge, Ascension, and Livingston for two years after their employment ended.
- The agreement also provided that if the former employee competed with Cellular One, they would forfeit certain commission payments known as Non-Competition Payments (NCPs).
- In December 1993, Boyd and Lemoine left their jobs at Cellular One.
- Immediately after leaving Cellular One, both Boyd and Lemoine went to work for Affordable Cellular, a direct competitor and authorized agent of Bell South Mobility.
Procedural Posture:
- Cellular One, Inc. filed suit against its former employees, John Boyd and Hamilton Lemoine, in a Louisiana trial court.
- Cellular One sought a preliminary injunction to enforce the noncompetition agreement.
- After a hearing, the trial court granted the preliminary injunction, enjoining Boyd and Lemoine from engaging in the radio telephone service business in four specified parishes and from soliciting Cellular One customers.
- The trial court then suspended the portion of the injunction that broadly prohibited the defendants from engaging in the radio telephone service business.
- The defendants, Boyd and Lemoine, appealed the trial court's order granting the preliminary injunction to the Court of Appeal of Louisiana, First Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a noncompetition agreement that an at-will employee is required to sign as a condition of continued employment violate Louisiana law for lack of cause or mutuality, or because it was signed under economic duress, and is injunctive relief an appropriate remedy for its breach?
Opinions:
Majority - Lottinger, Chief Judge
No. A noncompetition agreement signed by an at-will employee as a condition of continued employment does not violate Louisiana law, and injunctive relief is an appropriate remedy for its breach. The agreement is valid because it complies with the specific requirements of La.R.S. 23:921(C), which defines permissible geographic and temporal limits. The agreement does not fail for lack of cause, as continued employment is a valid cause for the contract. The legislature's use of 'any person' in the statute unambiguously includes at-will employees. Furthermore, the agreement was not signed under duress; an employer's threat to terminate an at-will employee is a threat to do a lawful act, which does not constitute duress under La.Civ.Code art. 1962. Finally, injunctive relief is an appropriate remedy because La.R.S. 23:921(G) explicitly authorizes it 'in addition' to damages and mandates its issuance upon proof of a breach, without requiring proof of irreparable injury.
Dissenting - Shortess, Judge
Yes. The noncompetition agreement should be found unenforceable because it lacks mutuality of obligation and the employees' consent was vitiated by economic duress. The employees did not gain anything new by signing subsequent, more onerous agreements; they were merely allowed to retain the employment they already had. In modern economic times, continued employment is not sufficient cause for such a restrictive covenant and amounts to 'economic blackmail.' This practice contradicts Louisiana's strong public policy against agreements that prohibit individuals from pursuing their profession.
Analysis:
This decision solidifies the enforceability of noncompetition agreements against at-will employees in Louisiana, provided the agreements strictly adhere to the statutory limitations set forth in La.R.S. 23:921. It establishes that 'continued employment' is sufficient cause or consideration to support such an agreement, resolving a key question for employers. The ruling also clarifies that threatening termination of at-will employment to compel an employee to sign a non-compete is not legally considered duress. The case reinforces the power of La.R.S. 23:921(G), which makes obtaining an injunction significantly easier for employers by removing the traditional requirement to prove irreparable harm.
