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Law School Case Brief

Am. Sec. Servs., Inc. v. Vodra - 222 Neb. 480, 385 N.W.2d 73 (1986)

Rule:

There are three general requirements for a valid, partial restraint of trade such as a postemployment covenant not to compete, namely: first, is the restriction reasonable in the sense that it is not injurious to the public; second, is the restriction reasonable in the sense that it is no greater than is reasonably necessary to protect the employer in some legitimate interest; and, third, is the restriction reasonable in the sense that it is not unduly harsh and oppressive on the employee.

Facts:

Appellant company was engaged in the business of providing commercial security services. Pursuant to condition of employment, appellee signed a noncompetition agreement that restricted appellee from soliciting business from customers of appellant for a period of three years after termination of employment. Appellee subsequently terminated employment with appellant and immediately entered into a contract to provide security services for a current customer of appellant. Seeking an injunction, appellant filed suit requesting an accounting against appellee for violating the restrictive covenant, which was denied as unreasonable and unenforceable. Appellant filed an appeal contending the restrictive covenant was reasonable.

Issue:

Was the noncompetition agreement that restricted a former employee from soliciting business from the company's customers for a period of three years after termination reasonable?

Answer:

Yes.

Conclusion:

Applying a balancing test, the Court held that the protection of appellant’s goodwill outweighed any hardship that enforcement of the covenant may have on appellee. The Court further averred that the restriction imposed upon appellee by the postemployment covenant not to compete was not unduly harsh and oppressive on appellee and was, therefore, reasonable. Hence, the Court held that appellant was entitled to injunctive relief.

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