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RLM Communs., Inc. v. Tuschen - 831 F.3d 190 (4th Cir. 2016)

Rule:

Covenants not to compete are disfavored in North Carolina. They are valid only if they are: (1) in writing; (2) made a part of the employment contract; (3) based on valuable consideration; (4) reasonable as to time and territory; and (5) designed to protect a legitimate business interest of the employer. The restrictions on an employee's future employment must be no wider in scope than is necessary to protect the business of the employer. More specifically, restrictive covenants are unenforceable where they prohibit the employee from engaging in future work that is distinct from the duties actually performed by the employee. 

Facts:

After working for six years at defendant RLM Communications, Inc. ("RLM"), plaintiff Amy Tuschen resigned and joined a competitor, eScience and Technology Solutions, Inc. (“"Science"). Although RLM and eScience had offices just a few miles from each other, RLM did not initially object to Tuschen's move. Later, however, RLM discovered that eScience was planning to bid against it on a government contract very similar to one that Tuschen had managed during her tenure at RLM. RLM also learned that Tuschen was soliciting her former RLM colleagues to join eScience in the event her new employer won the contract. RLM filed a lawsuit in federal district court against eScience and Tuschen, alleging principally that Tuschen breached a covenant not to compete and unlawfully took confidential information from RLM and shared it with eScience. After discovery, the district court granted summary judgment to eScience and Tuschen on all of RLM's claims. RLM appealed.

Issue:

Was RLM's noncompete agreement with Tuschen enforceable?

Answer:

No.

Conclusion:

The appellate court affirmed the district court's judgment. Th court held that because RLM’s noncompete agreement with Tuschen was overly broad and could not be enforced as written, and could not be mended by blue-penciling, the associated claim for breach of contract was properly dismissed. There was sufficient evidence of breach of RLM's confidentiality agreement. The court found that because RLM had not produced sufficient evidence to permit an inference of misappropriation, summary judgment was properly granted on the trade-secrets claim under N.C. Gen. Stat. § 66-155. Finally, because there was no evidence that eScience was motivated by anything other than competition, its interference with the RLM's employment contract was justified.

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