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Supreme Court of Washington
March 9, 2004, Oral Argument ; November 10, 2004, Filed
En Banc. [**792] [*830] Ireland, J. -- In this case we consider whether there was consideration for the formation of a valid noncompete agreement signed by an employee, five years after he was hired, when the employer offered no other additional benefits or promises to the employee. Anthony Labriola (Employee) seeks a declaration that an agreement not to compete is null and void against Pollard Group, Inc. (Employer), his former employer. A noncompete agreement entered into after employment has commenced is validly formed only when there is independent consideration at the time the agreement is reached. Finding that there was no [*831] independent consideration at [***2] the time of the 2002 noncompete agreement, we reverse the trial court's summary judgment ruling.
In 1997, Employer hired Employee to work as a commercial print salesperson, and the parties entered into an employment agreement. Under the agreement, Employer could terminate Employee without cause. 1 Employee's compensation consisted of a base salary and commission from sales. The agreement also contained a restrictive covenant not to compete in the custom printing business for a period of three years after employment ended. The agreement had no geographical limitations. 2
[***3] Nearly five years later, in April 2002, Employer requested and Employee executed a "Noncompetition and Confidentiality Agreement" (noncompete agreement). The noncompete agreement required Employee to refrain from accepting employment with a competitor for a period of three years within 75 miles of Employer's business in Tacoma, Washington. Employee remained an "at-will" employee and received no additional benefits. Employer incurred no additional obligations from the noncompete agreement. The noncompete agreement also contained clauses for confidentiality, severability, and an award of attorneys fees and costs.
A few months later, in July 2002, Employer announced a new commission sales compensation schedule. The new schedule raised the threshold sales level required for commissions [*832] to be paid. The old schedule's threshold paid commission when an employee [**793] generated sales of at least $ 25,000 for the month while the new schedule paid commission to an employee only after sales for the month exceeded $ 60,000. Employee determined that the new schedule would reduce his income by about 25 percent and sought employment for a similar position elsewhere. On November 12, 2002, Employer discovered [***4] Employee's intention to seek employment with a competitor and terminated Employee. Employer sent a letter to the competitor interested in hiring Employee, stating its intent to enforce Employee's noncompete agreement. The competitor did not hire Employee. Employee remains unemployed despite actively seeking a position similar to the one he had held with Employer.
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152 Wn.2d 828 *; 100 P.3d 791 **; 2004 Wash. LEXIS 825 ***
ANTHONY A. LABRIOLA, Appellant, v. POLLARD GROUP, INC., Respondent.
noncompete agreement, promise, compete, training, continued employment, attorney's fees, trial court, sufficient consideration, future employment, hired, counterclaims, noncompete, costs, independent consideration, affirmative defense, unenforceable, at-will, summary judgment, terminated, wages, employment agreement, prevailing party, three year, benefits, warranty, damages, signing, sales, five year, competitor
Civil Procedure, Appeals, Standards of Review, De Novo Review, General Overview, Summary Judgment Review, Standards of Review, Summary Judgment, Entitlement as Matter of Law, Genuine Disputes, Materiality of Facts, Labor & Employment Law, Conditions & Terms, Trade Secrets & Unfair Competition, Noncompetition & Nondisclosure Agreements, Employment Relationships, Employment Contracts, Business & Corporate Compliance, Consideration, Enforcement of Promises, Forbearance, Contracts Law, Contract Formation, Sufficient Consideration, Adequate Consideration, Contract Modifications, Duration of Employment, Fixed Term, Remedies, Costs & Attorney Fees, Breach, Breach of Contract Actions, Contract Interpretation, Damages, Avoidable Consequences, Sanctions, Baseless Filings