Shores v. Global Experience Specialists, Inc.
422 P.3d 1238 (2018)
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Rule of Law:
To obtain a preliminary injunction enforcing a non-compete agreement, an employer must make a prima facie evidentiary showing that the agreement's geographic scope is reasonable by limiting it to the specific areas where the employer has established business interests and customer contacts.
Facts:
- Landon Shores worked for Global Experience Specialists, Inc. (GES) from June 2013 until September 2016.
- In September 2016, upon his promotion to sales manager, Shores was required to sign a Confidentiality and Non-Competition Agreement (NCA).
- The NCA prohibited Shores from working for any of GES's competitors in a similar capacity throughout the United States for 12 months following the end of his employment.
- In January 2017, Shores resigned from GES and began working for a competitor in Southern California in a substantially similar role.
Procedural Posture:
- Global Experience Specialists, Inc. (GES) filed a complaint against Landon Shores in the district court (trial court), alleging breach of contract and seeking damages and injunctive relief.
- GES filed a motion for a preliminary injunction to enforce the terms of the Non-Competition Agreement.
- The district court granted GES's motion for a preliminary injunction, enjoining Shores from working for a competitor.
- Shores (Appellant) appealed the district court's order granting the preliminary injunction to the Supreme Court of Nevada.
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Issue:
Does an employer demonstrate a sufficient likelihood of success on the merits to obtain a preliminary injunction enforcing a nationwide non-compete agreement when the supporting evidence only shows the employer has business contacts in a limited number of states, rather than the entire country?
Opinions:
Majority - Cherry, J.
No. An employer fails to demonstrate a likelihood of success on the merits for a preliminary injunction when it seeks to enforce a nationwide non-compete agreement but only provides evidence of business interests in a fraction of that territory. To be reasonable, the geographical scope of a non-compete agreement must be limited to the areas where the employer has established customer contacts and goodwill. Here, GES provided evidence of business in only 33 states, the District of Columbia, and Puerto Rico. Enforcing the NCA's nationwide restriction would impermissibly restrain Shores in states where GES had no proven protectable business interests. Because GES failed to make a prima facie showing that the nationwide scope was reasonable based on its actual business presence, the district court abused its discretion by granting the preliminary injunction.
Analysis:
This decision reinforces the principle that non-compete agreements must be narrowly tailored to protect legitimate business interests, even for companies with a large, multi-state presence. It clarifies that a company's self-characterization as "nationwide" does not automatically justify a nationwide geographic restriction. The ruling establishes a clear evidentiary burden for employers at the preliminary injunction stage: they must present specific proof of business contacts for the entire geographic area they seek to restrict, making it more difficult to enforce overbroad covenants. This holding protects employee mobility by preventing employers from using expansive, unsupported restrictions to stifle competition in markets where they have no established presence.
