Giller v. Harcourt Brace & Co.
1995 N.Y. Misc. LEXIS 529, 634 N.Y.S.2d 646, 166 Misc. 2d 599 (1995)
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Rule of Law:
A non-compete clause in an employment contract that lacks a specific geographic limitation is not per se unenforceable; a court may interpret the clause to include a reasonable geographic restriction that conforms with the parties' intent.
Facts:
- On September 10, 1990, Plaintiff, a law student, signed an employment contract with Defendant to be a student representative for its bar review company, BAR/BRI, at Syracuse University College of Law.
- Plaintiff's main duties were to solicit fellow students to enroll in BAR/BRI's course and to promote the company on campus.
- In exchange for his services, Plaintiff received a discount on the BAR/BRI course.
- The contract contained a non-compete clause prohibiting Plaintiff from competing with BAR/BRI in any way during law school and for two years after graduation.
- The non-compete clause did not specify any geographical territory to which the restriction applied.
- Defendant later stated it would only seek to enforce the clause if Plaintiff were to solicit students for a competitor at Syracuse University College of Law.
Procedural Posture:
- Plaintiff filed an action in a New York trial court seeking a declaration that the non-compete clause was unenforceable.
- Defendant, BAR/BRI's parent company, moved to dismiss the complaint.
- Plaintiff cross-moved for summary judgment.
- The court converted both parties' motions into motions for summary judgment and allowed for additional submissions before ruling.
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Issue:
Is a non-compete clause in an employment contract that lacks a specific geographic limitation enforceable?
Opinions:
Majority - Julius Vinik, J.
Yes, a non-compete clause that lacks a specific geographic limitation can be enforceable. While restrictive covenants are disfavored, they are upheld if they are reasonable in time and scope, not unduly burdensome to the employee, and not harmful to the public. Here, the two-year time limitation is reasonable because it protects the legitimate interest of the employer in the goodwill and relationships the Plaintiff established with other students. The absence of a geographic term does not render the clause void. Citing precedent like Karpinski v Ingrasci, the court has the equitable power to reform the contract by interpreting it in conformity with the parties' intent. Given that Plaintiff was a student at Syracuse University and his duties were confined to that campus, the clear intent of the parties was to restrict competition at that specific location. Therefore, the court will construe the clause as applying only to the Syracuse University College of Law campus, making it valid and enforceable.
Analysis:
This case exemplifies the judicial principle of reformation, often called the 'blue-pencil' doctrine, where courts will modify an overbroad or incomplete restrictive covenant to make it enforceable rather than voiding it entirely. It establishes that the omission of a key term like geographic scope is not necessarily fatal if the parties' intent can be clearly ascertained from the context of the agreement. This approach provides a balance, protecting an employer's legitimate business interests from a drafting error while preventing the covenant from being unreasonably burdensome on the former employee. Future litigants in similar cases can expect courts to look beyond the four corners of the document to determine a reasonable scope based on the nature of the employment relationship.
