Morgan v. West Memphis Steel & Pipe, Inc.
Morgan v. West Memphis Steel & Pipe, Inc.
Opinion of the Court
Pending is Plaintiffs’ Motion for Partial Summary Judgment (Doc. No. 4). Defendant has responded.
I. BACKGROUND
Plaintiffs Scott Morgan and Chris Morgan (brothers) are former employees of Defendant West Memphis Steel & Pipe, Inc. Scott went to work for West Memphis Steel in 2000 and Chris went to work there in 2005. In 2009, each employee signed an “Employment, Non-disclosure, and Non-competition Agreement” with West Memphis Steel. Under the terms of the Agreements, for two years after quitting West Memphis Steel the employees were prohibited from soliciting the business of West Memphis Steel’s “past, present, or prospective future customers or clients” within a 175-mile radius of West Memphis, Arkansas.
In January 2014, the employees quit and filed suit against West Memphis Steel, seeking declaratory judgment that the agreements’ noncompete clauses are overly broad and unenforceable.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate only when there is no genuine issue of material fact, so that the dispute may be decided on purely legal grounds.
The inquiry performed is the threshold inquiry of determining whether there is the need for a trial — whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.8
The Court of Appeals for the Eighth Circuit has cautioned that summary judgment is an extreme remedy that should be granted only when the movant has established a right to the judgment beyond controversy.
[T]he burden on the party moving for summary judgment is only to demonstrate, ie., “[to point] out to the District Court,” that the record does not disclose a genuine dispute on a material fact. It is enough for the movant to bring up the fact that the record does not contain such an issue and to identify that part of the record which bears out his assertion. Once this is done, his burden is discharged, and, if the record in fact bears out the claim that no genuine dispute exists on any material fact, it is then the respondent’s burden to set forth affirmative evidence, specific facts, showing that there is a genuine dispute on that issue. If the respondent fails to carry that burden, summary judgment should be granted.12
Only disputes over facts that may affect the outcome of the suit under governing law will properly preclude the entry of summary judgment.
III. DISCUSSION
Arkansas law is a no friend of the noncompete agreement.
West Memphis Steel has a valid interest in protecting the customers who the Morgans helped establish and with whom the Morgans closely worked. But, the non-compete clauses take it a step too far by attempting to protect “prospective future customers or clients.” In Moore v. Midwest Distribution, Inc., the Arkansas
Here, the noncompete clauses take protecting West Memphis Steel a-step too far by prohibiting the Morgans from competing with “prospective future customers or clients.” West Memphis Steel suggests that by “prospective future customers or clients” it meant those customers with whom the Morgans had been working and developing, and it has a legitimate interest in protecting.
Because the noncompete clauses attempt to restrict the Morgans more than is reasonably necessary to protect West Memphis Steel’s legitimate interest, they are over broad. How close a noncompete clause comes to being just broad enough does not matter — if it misses by an inch, it misses by a mile.
CONCLUSION
For the reasons set out above, the Morgans’ Motion for Partial Summary Judgment (Doc. No. 4) is GRANTED, and the claims related to the validity of the non-compete clause set out in West Memphis Steel’s Counterclaim (Doc. No. 9) are DISMISSED with prejudice. The Morgan’s breach-of-contract claim and West Memphis Steel’s counterclaim for declaratory judgment on the sufficiency of consideration and validity of the nondisclosure clauses remain.
. Doc. No. 15.
. Doc. No. 22.
. Unless otherwise noted, the background section is comprised of facts as set out in Defendant’s Statement of Material Facts Not in Dispute (Doc. No. 17).
. Doc. Nos. 9-1, 9-2.
. Doc. Nos. 1, 2, 26.
. After filing their Motion for Summary Judgment, Plaintiffs filed an Amended Complaint (Doc. No. 26) adding claims for breach of contract concerning allegedly unpaid commissions; and, Defendant filed its Answer and Counterclaim (Doc. No. 9), seeking declaratory judgment on the validity of the noncompete and nondisclosure clauses of the agreements and the sufficiency of consideration. But, because Plaintiffs argue only that the non-compete clause is overly broad, I do not address these other issues at this time.
. Holloway v. Lockhart, 813 F.2d 874 (8th Cir. 1987); Fed.R.Civ.P. 56.
. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
. Inland Oil & Transp. Co. v. United States, 600 F.2d 725, 727 (8th Cir. 1979).
. Id. at 728.
. Id. at 727-28.
. Counts v. MK-Ferguson Co., 862 F.2d 1338, 1339 (8th Cir. 1988) (quoting City of Mt. Pleasant v. Associated Elec. Coop., 838 F.2d 268, 273-74 (8th Cir. 1988) (citations omitted)).
. Anderson, 477 U.S. at 248, 106 S.Ct. 2505.
. HRR Ark., Inc. v. River City Contrs., 350 Ark. 420, 430, 87 S.W.3d 232 (2002).
. Id.
. Import Motors, Inc. v. Luker, 268 Ark. 1045, 1050-51, 599 S.W.2d 398 (1980).
. Bendinger v. Marshalltown Trowell Co., 338 Ark. 410, 417-418, 994 S.W.2d 468 (1999).
. Rebsamen Ins. v. Milton, 269 Ark. 737, 742, 600 S.W.2d 441 (1980).
. See, e.g., Bendinger, 338 Ark. at 410, 994 S.W.2d 468 (1999).
. Freeman v. Brown Hiller, Inc., 102 Ark.App. 76, 81, 281 S.W.3d 749 (2008).
. Moore v. Midwest Distrib., Inc., 76 Ark.App. 397, 402-403, 65 S.W.3d 490, 494 (2002).
. Church Mut. Ins. Co. v. Copenhaver, No. 4:09-CV-00487-JMM, 2010 WL 2105623 (E.D.Ark. 2010).
. Sensabaugh v. Farmers Ins. Exch., 420 F.Supp.2d 980, 985 (E.D.Ark. 2006) (citing Evans Laboratories, Inc. v. Melder, 262 Ark. 868, 870, 562 S.W.2d 62 (1978)).
. Doc. No. 15.
. Bendinger, 338 Ark. at 419, 994 S.W.2d 468.
. See, Church Mut. Ins. Co. v. Copenhaver, No. 4:09-CV-00487-JMM, 2010 WL 2105623 (E.D.Ark. 2010).
Reference
- Full Case Name
- Daniel Scott MORGAN and Christopher Michael Morgan v. WEST MEMPHIS STEEL & PIPE, INC.
- Cited By
- 2 cases
- Status
- Published