Rental Uniform Service of Florence, Inc. v. Dudley
278 S.C. 674, 301 S.E.2d 142, 1983 S.C. LEXIS 257 (1983)
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Rule of Law:
Restrictive covenants not to compete are enforceable if they are necessary for the protection of a legitimate employer interest, are reasonably limited in time and place, are not unduly harsh on the employee, are reasonable from a public policy standpoint, and are supported by valuable consideration.
Facts:
- Rental Uniform Service of Florence, Inc. (Appellant) engaged in the business of laundering and furnishing uniforms to commercial establishments across fourteen counties in South Carolina.
- Mosley (Respondent) was employed by Rental Uniform Service for seven years until his termination in 1979.
- Mosley's duties involved driving a truck to pick up and deliver industrial laundry to customers in a six-county area within the company's fourteen-county territory.
- In 1972, Mosley executed an employment contract containing a covenant not to compete.
- Approximately one year after leaving his job with Rental Uniform Service, Mosley began working for a competitor in the same six-county area where he had previously worked for the appellant.
Procedural Posture:
- Rental Uniform Service of Florence, Inc. commenced an action in a trial court (court of first instance) seeking injunctive relief to enforce the terms of the covenant not to compete against Mosley.
- The trial judge found the non-compete agreement to be unreasonably restrictive and denied Rental Uniform Service's request for an injunction.
- Rental Uniform Service of Florence, Inc. (appellant) appealed the trial judge's order to a South Carolina appellate court (the court whose opinion is being briefed).
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Issue:
Is a three-year, six-county geographic restriction in a non-compete clause, limited to the specific area where the employee worked and established customer contacts, an unreasonably restrictive covenant?
Opinions:
Majority - Per Curiam
No, a three-year, six-county geographic restriction in a non-compete clause, limited to the specific area where the employee worked, is not an unreasonably restrictive covenant. The court held that while restrictive covenants are generally disfavored and strictly construed against the employer, they are enforceable if they meet five criteria: necessity for legitimate employer interest, reasonable limitation in time and place, not unduly harsh on the employee, sound public policy, and valuable consideration. The court found the three-year time restraint reasonable, citing Delmar Studios of the Carolinas v. Kinsey (two years reasonable) and Sermons v. Caine & Estes Insurance Agency, Inc. (two or three years may not be obnoxious). The geographic restriction, limited to the six-county area where Mosley worked and established customer contacts, was also deemed reasonable, consistent with the standard set in Standard Register Company v. Kerrigan. The court further clarified that the interpretation of an unambiguous agreement is for the court, not bound by a Sales Manager's differing testimony, and rejected other arguments by the respondent for lack of proper appellate filing.
Analysis:
This case clarifies and reinforces the framework for assessing the enforceability of restrictive covenants not to compete in South Carolina, particularly concerning the 'reasonable time and place' element. It provides concrete examples of what constitutes reasonable limitations, specifically validating a three-year time period and a geographic scope limited to the employee's actual customer contact territory. The decision underscores the importance of clear and unambiguous drafting of such agreements, as courts will interpret the written terms strictly, even against internal misunderstandings. This ruling guides employers in structuring enforceable non-compete clauses and helps employees understand the potential limitations on their post-employment opportunities.
