Scariano Bros., Inc. v. Sullivan

719 So. 2d 131, 98 La.App. 4 Cir. 1514, 1998 La. App. LEXIS 2628, 1998 WL 658224
CourtLouisiana Court of Appeal
DecidedSeptember 16, 1998
Docket98-CA-1514
StatusPublished
Cited by7 cases

This text of 719 So. 2d 131 (Scariano Bros., Inc. v. Sullivan) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Scariano Bros., Inc. v. Sullivan, 719 So. 2d 131, 98 La.App. 4 Cir. 1514, 1998 La. App. LEXIS 2628, 1998 WL 658224 (La. Ct. App. 1998).

Opinion

719 So.2d 131 (1998)

SCARIANO BROTHERS, INC.
v.
Carl L. SULLIVAN, Jr.

No. 98-CA-1514.

Court of Appeal of Louisiana, Fourth Circuit.

September 16, 1998.

*132 Pauline F. Hardin, Laurie M. Chess, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, for Plaintiff-Appellee.

Jeffrey A. Schwartz, Audrey N. Browne, Schwartz & Browne, L.L.C., New Orleans, and Gregory S. Lacour, G. Scott Vezina, Vezina and Gattuso, Gretna, for Defendant-Appellant.

Before KLEES, LOBRANO and MURRAY, JJ.

LOBRANO, Judge.

We are called upon to decide if an agreement not to compete complies with Louisiana's non-competition statute, La. R.S. 23:921 and if so, whether the facts of this case warrant the issuance of a preliminary injunction. The trial judge agreed with Scariano Brothers, Inc., appellee, and enjoined its former employee, Carl L. Sullivan, Jr., appellant, from working for a competitor for a period of two years..

FACTS AND PROCEDURAL HISTORY:

The basic chronology precipitating this lawsuit is not seriously disputed. Prior to April 28, 1998, Carl L. Sullivan, Jr. was employed by Scariano Brothers for approximately seven years as a sales representative. Scariano is engaged in the marketing, distributing and processing of meat, poultry and meat related products in numerous parishes and counties in Louisiana, Mississippi and Alabama. In December, 1995 Scariano and Sullivan entered into an employment agreement which contained a non-competition clause. On November 19, 1997 another employment agreement was entered into which *133 contained a non-competition clause identical to the 1995 agreement. The evidence shows that the 1997 agreement came about because of Scariano's desire to keep Sullivan in its employ and prevent him from leaving to work for F. Christiana & Co., a Scariano competitor. The evidence shows that while Scariano's and Christiana's customer bases are not identical, there is significant overlap; representatives from the two companies consider themselves competitors. The evidence is uncontroverted that, previously Sullivan had considered leaving Scariano to work for Christiana. As an incentive to stay, Sullivan was promoted to sales manager, received a $10,000.00 signing bonus and an increase in pay. Despite these incentives, on April 28, 1998, Sullivan resigned from Scariano and went to work for Christiana.

Scariano filed the instant lawsuit seeking to enforce the non-competition clause of the employment agreement by enjoining Sullivan. The matter was tried on Scariano's request for a preliminary injunction and in accordance with Code of Civil Procedure article 3609.[1] The trial court concluded that Scariano had met the requisite prima facie showing of its entitlement to a preliminary injunction and enjoined Carl L. Sullivan from:

(i) buying, selling, distributing, marketing, processing, and packaging beef, pork, poultry, meat and meat related products as a business in Scariano's business area as defined by the list of parishes and counties indicated in Exhibit B attached to [the] judgment for a period of two years from 28 April 1998;
(ii) soliciting any customers of Scariano, carrying on, or engaging or taking part in Scariano's business as stated in subparagraph (i) above or in a business similar thereto within Scariano's business area for a period of 2 years from 28 April 1998;
(iii) except as a passive investment, rendering services to or owning, sharing in the earnings of, or investing in the stock, bonds or other securities of any other person or entity directly or indirectly engaged in Scariano's business or in a business similar to Scariano's within Scariano's business area; and,
(iv) divulging Scariano's customer lists, information related to customers, trade secrets, confidential information, supplier lists, and information related to supplies, purchasing, pricing, and marketing strategies, and delivery schedules and routes for a period of two years from 28 April 1988.

Sullivan perfects the instant appeal arguing that the non-competition clause does not comply with R.S. 23:921 for several reasons, each of which we address, and that the preliminary injunction should be dissolved. For the following reasons, we amend and affirm.

DISCUSSION:

Undeniably, Louisiana's public policy disfavors non-compete agreements. "Every contract or agreement, or provision thereof, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, ... shall be null and void." La. R.S. 23:921(A). However, that statutory prohibition is subject to the exception granted in Section (C), which provides, in pertinent part:

Any person ... who is employed as an agent, servant, or employee may agree with his employer to refrain from carrying on or engaging in a business similar to that of the employer and/or from soliciting customers of the employer within a specified parish or parishes, municipality or municipalities, or parts thereof, so long as the employer carries on a like business therein, not to exceed a period of two years from termination of employment.

Prior to its revision in 1989, the non-competition prohibition was embodied in Act 104 of 1962 which provided that "[n]o employer shall require or direct any employee" to enter into an agreement not to compete. [emphasis added]. That former language suggests a legislative concern of preventing employers from forcing non-compete agreements as a condition of employment. However, the current statute is *134 couched in permissive terms suggesting, at least, a recognition of the competitive realties of the business world.

Regardless of whether the 1989 revision of R.S. 23:921 signifies a change in public policy with respect to non-competition agreements, the courts of this state have been consistent in strictly construing such agreements in the employee's favor. Water Processing Technologies, Inc. v. Ridgeway, 618 So.2d 533 (La.App. 4 Cir.1993), and the cases cited therein. That rule of strict construction permeates Sullivan's various arguments, each of which we now address.

Sullivan first argues that the covenant not to compete is overly broad because it, in effect, restrains him from working in any capacity for a competitor. He relies on subparagraph iii of the injunction which contains the phrase "rendering services" to a competitor. This, he says, basically prevents him from doing any type of work for Christiana and contradicts the clear legislative intent underlying R.S. 23:921. That intent, Sullivan argues, is expressed in the rationale of our brethren of the Second Circuit in Summit Institute for Pulmonary Medicine and Rehabilitation, Inc. v. Prouty, 29,829 (La.App. 2 Cir. 4/9/97), 691 So.2d 1384, writ denied, 97-1320 (La.9/26/97), 701 So.2d 983. He urges we follow that decision.

In Summit, the court interpreted the two restraints of Section C [of R.S. 23:921] as allowing the "employer to prevent a former employee from engaging in a similar business for himself, i.e. an entire business venture, or from being employed in a competitor's business in a position wherein he solicits the customers of his former employer." At 1387. The issue in Summit was whether the language of the non-competition agreement complied with the statutory requisites.

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Bluebook (online)
719 So. 2d 131, 98 La.App. 4 Cir. 1514, 1998 La. App. LEXIS 2628, 1998 WL 658224, Counsel Stack Legal Research, https://law.counselstack.com/opinion/scariano-bros-inc-v-sullivan-lactapp-1998.