Millward v. Gerstung Int'l Sport Educ., Inc. - 268 Md. 483, 302 A.2d 14 (1973)

Rule:

Some of the factors to be considered in such an examination of the enforceability of non-competition clauses in employment contracts are whether the restriction is reasonable in area and duration, the hardships its enforcement might impose on the employee, the interests of the public, and whether the employee sought to be enjoined performs unique services, is soliciting customers, using trade secrets, assigned routes, customer lists, or is exploiting personal contacts established between the employee and his customers during his employment.

Facts:

Appellee Gerstung International Sport Education Inc. has operated a physical education program in winter and a day camp in summer. The program was the first to introduce a European method of movement education. Appellant Millward was employed because of the unique qualifications that made him an invaluable asset to the corporation. Appellant was well known since he had been much publicized as the coach for the now-defunct professional soccer team when he coached his team to the championship of a league. Because of this, appellee issued numerous promotional and press releases to advertise appellant’s association with them. In addition to his ability as a soccer player and coach, appellant was a qualified instructor of tennis, cricket, swimming, and life-saving. Appellant began his work without a written contract. In 1969, he signed a one-year contract with a provision prohibiting him from competing against the appellee. In 1970, a new one-year contract, containing the subject two-year non-competition covenant was signed and appellant became director of the summer camps. He was re-employed, but without a written contract, to serve as a full-time teacher. A part of the restrictive covenant was waived to enable him to supplement his income. The relations between the parties were completely severed when appellant informed appellee of his affiliation with a competitor, Sports Camps, Inc. This camp would cater to the same clientele as appellee's and be in direct competition with it. The trial court enjoined appellant from competing in a similar business, however, the injunction specifically exempted appellant’s duties as an instructor as this part of the restriction was waived. Appellant sought review. 

Issue:

Was the restrictive covenant enforceable?

Answer:

Yes.

Conclusion:

The court affirmed the judgment. The appellate court found that the restrictive covenant was enforceable. The court held that the covenant appeared reasonable on its face as to the area and duration of the restriction, also no evidence was introduced to show that the covenant was unreasonable. Moreover, when other factors were considered in determining enforceability, the court detected none that would render the clause unenforceable. The court explained that important factors that dictated the court's decision were the uniqueness of the appellant's reputation and qualifications and the fact that the appellant was able to establish personal contacts with potential campers, their parents, and others in the field through the appellant's work at appellee's school.