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SWAT 24 Shreveport Bossier, Inc. v. Bond - 00-1695 ( La. 06/29/01), 808 So. 2d 294

Rule:

Louisiana has long had a strong public policy disfavoring noncompetition agreements between employers and employees. Thus, the longstanding public policy of Louisiana has been to prohibit or severely restrict such agreements. This public policy is expressed in La. Rev. Stat. Ann. § 23:921(A)(1).

Facts:

SWAT 24 Shreveport-Bossier, Inc. (SWAT) employed defendant, Robbie Bond, in September 1992, as a carpenter helper. Bond received periodic promotions and, in January 1998, he was promoted to production manager. In connection with this promotion, Bond entered into an Employment Agreement with SWAT, which contained a “Non-Competition” Clause that prohibited defendant from directly or indirectly engaging in competition with SWAT, or serve as an employee of any business for two years following his termination from SWAT. Subsequently, not long after defendant resigned, SWAT found out that he went to work for another construction company working in the same area. Consequently, SWAT filed a petition for damages and preliminary and permanent injunctive relief, alleging that Bond violated the terms of the Agreement's noncompetition clause. The trial court held that the non-competition provision in the Agreement was null and void, as it prohibited defendant from becoming an employee of a competitor. The court of appeal affirmed the judgment of the trial court, holding that the language of the noncompetition clause went beyond the limited exception provided by La. R.S. 23:921(C), because it prevented the defendant's employment in any capacity with other employers in the same field. SWAT sought further appellate review.

Issue:

Was the non-competition clause in the Agreement null and void?

Answer:

Yes.

Conclusion:

After reviewing the legislative history, the supreme court held that the language of La. Rev. Stat. Ann. § 23:921(C) allowed an employee to agree to refrain from carrying on or engaging in the employee's own business similar to that of the employer, subject to certain geographical and time limitations. However, because the language of the clause at issue went beyond that permitted by the narrow § 23:921(C) by prohibiting defendant from accepting employment by a competitor of SWAT, the supreme court declared the offending portions null and void and severed them. The remaining portions of the agreement were not construed to prohibit the actions defendants took subsequent to the termination of his employment with SWAT.

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