HOME PARAMOUNT PEST CONTROL v. Shaffer

718 S.E.2d 762, 282 Va. 412, 33 I.E.R. Cas. (BNA) 46, 2011 Va. LEXIS 222
CourtSupreme Court of Virginia
DecidedNovember 4, 2011
Docket101837
StatusPublished
Cited by22 cases

This text of 718 S.E.2d 762 (HOME PARAMOUNT PEST CONTROL v. Shaffer) is published on Counsel Stack Legal Research, covering Supreme Court of Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
HOME PARAMOUNT PEST CONTROL v. Shaffer, 718 S.E.2d 762, 282 Va. 412, 33 I.E.R. Cas. (BNA) 46, 2011 Va. LEXIS 222 (Va. 2011).

Opinion

718 S.E.2d 762 (2011)
282 Va. 412

HOME PARAMOUNT PEST CONTROL COMPANIES, INC.
v.
Justin SHAFFER, et al.

Record No. 101837.

Supreme Court of Virginia.

November 4, 2011.

*763 Alexander Francuzenko (Zachary A. Kitts; Lee B. Warren; Cook Kitts & Francuzenko, on briefs), Fairfax, for appellant.

Charles W. Sickels (Holly Parkhurst Essing; Hall, Sickels, Frei & Mims, on brief), Reston, for appellees.

PRESENT: All the Justices.

OPINION BY Justice WILLIAM C. MIMS.

In this appeal, we consider whether a "non-compete" provision in an employment agreement is overbroad and therefore unenforceable.

I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW

Justin Shaffer was an employee of Home Paramount Pest Control Companies, Inc. ("Home Paramount"). In January 2009, he signed an employment agreement containing the following provision ("the Provision"):

The Employee will not engage directly or indirectly or concern himself/herself in any manner whatsoever in the carrying on or conducting the business of exterminating, pest control, termite control and/or fumigation services as an owner, agent, servant, representative, or employee, and/or as a member of a partnership and/or as an officer, director or stockholder of any corporation, or in any manner whatsoever, in any city, cities, county or counties in the state(s) in which the Employee works and/or in which the Employee was assigned during the two (2) years next preceding the termination of the Employment Agreement and for a period of two (2) years from and after the date upon which he/she shall cease for any reason whatsoever to be an employee of [Home Paramount].

In July 2009, Shaffer resigned from Home Paramount. Soon thereafter and within the two-year period set forth in the Provision, he became employed by Connor's Termite and Pest Control, Inc. ("Connor's").

In September 2009, Home Paramount filed an amended verified complaint asserting that Shaffer's employment by Connor's violated the Provision and alleging, among other things, breach of contract by Shaffer and tortious interference with contract by Connor's. The defendants filed a plea in bar to these claims, asserting that the Provision is overbroad and therefore unenforceable. After an evidentiary hearing, the circuit court granted the plea in bar and dismissed the relevant counts of the amended complaint. The remaining counts then were nonsuited and we awarded Home Paramount this appeal.[1]

II. ANALYSIS

The enforceability of a provision that restricts competition is a question of law that we review de novo. Omniplex World Servs. Corp. v. U.S. Investigations Servs., Inc., 270 Va. 246, 249, 618 S.E.2d 340, 342 (2005). It is enforceable if it "is narrowly drawn to protect the employer's legitimate business interest, is not unduly burdensome on the employee's ability to earn a living, and *764 is not against public policy." Id. The employer bears the burden of proving each of these factors. Modern Env'ts, Inc. v. Stinnett, 263 Va. 491, 493, 561 S.E.2d 694, 695 (2002). When evaluating whether the employer has met that burden, we consider the "function, geographic scope, and duration" elements of the restriction. Simmons v. Miller, 261 Va. 561, 581, 544 S.E.2d 666, 678 (2001). These elements are "considered together" rather than "as three separate and distinct issues." Id.

Home Paramount asserts that the circuit court erred by focusing on the language of the Provision prohibiting Shaffer from "engag[ing] indirectly or concern[ing] himself... in any manner whatsoever" in pest control "as an owner, agent, servant, representative, or employee, and/or as a member of a partnership and/or as an officer, director or stockholder of any corporation, or in any manner whatsoever." By doing so, Home Paramount argues, the court took those words out of context and gave undue weight to the function element of the enforceability analysis to the exclusion of the geographic scope and duration elements. Home Paramount contends the geographic scope was relatively narrow and the duration was one commonly accepted for such provisions, so those elements compensate for the breadth of the function element, making the Provision as a whole no broader than necessary to protect its legitimate business interests. We disagree.

We have consistently assessed the function element of provisions that restrict competition by determining whether the prohibited activity is of the same type as that actually engaged in by the former employer. For example, in Blue Ridge Anesthesia & Critical Care, Inc. v. Gidick, 239 Va. 369, 389 S.E.2d 467 (1990), the employer was a medical equipment vendor. We upheld a provision that prohibited employees from "open[ing] or be[ing] employed by or act[ing] on behalf of any competitor of [the][e]mployer which renders the same or similar services." Id. at 370, 389 S.E.2d at 468. However, that provision included explicit language allowing employees to "work[] in the medical industry in some role which would not compete with the business" of the employer. Id. at 371, 389 S.E.2d at 468. We noted that "the former employees are not forbidden from working in any capacity for a medical equipment company, or from selling any type of medical equipment. They are only prohibited `from working in the medical industry in some role which would ... compete with the business'" of the employer. Id. at 373, 389 S.E.2d at 469 (emphasis in original).

We upheld a similar provision in Advanced Marine Enterprises, Inc. v. PRC Inc., 256 Va. 106, 501 S.E.2d 148 (1998). In that case, the employer provided marine engineering services and included in its employment agreement a provision prohibiting its employees from "rendering competing services to" any customer of the employer for whom the employee had performed services during the period of his employment. Id. at 111, 501 S.E.2d at 151. We noted that the provision "does not contain a blanket prohibition against working for a competitor. Instead, [it] merely prohibits an employee ... from `rendering competing services to'" the former employer's customers. Id. at 119, 501 S.E.2d at 155.

By contrast, we held that a broader provision was unenforceable in Simmons. It prohibited former employees from "directly or indirectly own[ing], manag[ing], control[ing], be[ing] employed by, participat[ing] in, or be[ing] connected in any manner with ownership, management, operation, or control of any business similar to the type of business conducted by" the former employer. 261 Va. at 580, 544 S.E.2d at 678. We concluded the provision was "considerably broader than" the former employer's business activity, which was limited to the importation of a single, "particular brand of cigars grown and manufactured in the Canary Islands." Id. at 581, 544 S.E.2d at 678.

Likewise, we held the provision to be unenforceable in Motion Control Systems, Inc. v. East, 262 Va. 33, 546 S.E.2d 424 (2001).

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Bluebook (online)
718 S.E.2d 762, 282 Va. 412, 33 I.E.R. Cas. (BNA) 46, 2011 Va. LEXIS 222, Counsel Stack Legal Research, https://law.counselstack.com/opinion/home-paramount-pest-control-v-shaffer-va-2011.