Durham v. Stand-By Labor of Georgia, Inc.
Durham v. Stand-By Labor of Georgia, Inc.
Opinion of the Court
The appellee, Stand-By Labor of Georgia, has moved this court to dismiss the appeal upon the ground the appellant has failed to file his enumeration of errors within the time allowed by Rule 14(a) of the Rules of the Supreme Court, and upon the ground that the trial court’s certified order overruling the motion to dismiss for failure to state a claim, being one not involving the grant or denial of equitable relief, is not such an order from which an appeal would lie to this court. As we have held on previous occasions, Rule
The contractual restraints in suit are those tending to lessen competition and are to be considered in the light of public policy disfavoring agreements having that effect. Code Ann. §§ 2-2701 and 20-504. Under the law of Georgia, covenants in restraint of trade may be enforced if they are reasonable as to time and place and are not overly broad as to the activities proscribed, taking into consideration the interests of individuals in gaining and pursuing a livelihood, of commercial concerns in pro - tecting property, confidential information and re - lationships, good will and economic advantage, and of the broader public policy favoring individual freedom to enter into contracts and to contract as one will. Shirk v. Loftis Bros. & Co., 148 Ga. 500 (97 SE 66) (1918); Rakestraw v. Lanier, 104 Ga. 188 (30 SE 735, 69 ASR 154) (1898). In all cases involving covenants not to compete, whether in sales of businesses or covenants ancillary to employment contracts, the rule of reason prevails: "[I]f, considered with reference to the situation, business, and objects of the parties, and in light of all the surrounding circumstances ... the restraint contracted for appears to have been for a just and honest purpose, for the protection of the legitimate interests of the party in whose favor it is imposed, reasonable as between them, and not specially injurious to the public, the restraint will be held valid.” Rakestraw v. Lanier, 104 Ga. 188, 195,
(a) The general noncompetition provision. Paragraph Eleven of the present contract of employment provided as part of its general noncompetition terms that the defendant Durham would not enter into any competitive activity "within a radius of 50 miles of any city in which Stand-By Services, Inc., or any affiliated company is operating at the time ... employment is terminated.” As we have indicated in prior decisions, Ellison v. Labor Pool of America, 228 Ga. 147 (184 SE2d 572) (1971); Taylor Freezer &c. Co. v. Sweden Freezer &c. Corp., 224 Ga. l60 (160 SE2d 356) (1968); and, WAKE Broadcasters v. Crawford, 215 Ga. 862 (114 SE2d 26) (1960), such terms are overly broad and unreasonably in restraint of trade due to the chilling effect that may be had upon post-employment competitive activity because of the employee’s inability to forecast with certainty the territorial extent of the duty owing the former employer. In Richard P. Rita Personnel Services v. Kot, 229 Ga. 314 (191 SE2d 79) (1972), this court declined to apply the "Blue-pencil theory of severability” in such circumstances and to sever the unenforceable clauses of the contract in view of policy considerations militating against the adoption of this theory. In Rita, this result was reached despite a specific contractual provision that its illegal clauses were severable.
Taking Paragraph Eleven of the contract as a whole, therefore, and in the face of a specific severability clause, the territorial limitations being overly broad, the entirety of the paragraph’s noncompetition provisions must be declared void and unenforceable. No claim for relief may therefore be asserted pursuant to this part of the contract.
(b) The specific nondisclosure provision. It should be noted, however, that a claim for breach of covenant not
Covenants not to disclose and utilize confidential business information are related to general covenants not to compete because of the similar employer interest in maintaining competitive advantage. Unlike general noncompetition provisions, however, specific nondisclosure clauses bear no relation to territorial limitations and their reasonableness turns on factors of time and the nature of the business interest sought to be protected. See Blake, Employee Agreements Not to
In considering Paragraph Twelve of the present contract, therefore, we are unable to say as a matter of law such provision against disclosure and utilization of confidential information, here customer names and addresses and personnel data, is void as in restraint of trade. Its reasonableness must be developed in the trial court. Certainly, however, customer lists and customer information which have been compiled by firms represent a material investment of employers’ time and money. This information is often highly confidential and constitutes a valuable asset. Whether this information was embodied in written lists or committed to memory is, we believe, of no significance in the present case; in either event, the data are entitled to protection under the contract. And the same is true as regards personnel information and data where, as here, firms are engaged
Because the appellant has filed a general enumeration of error as to the overruling of his motion to dismiss and has not argued orally or in briefs the question whether a tort claim has been stated in Count III of the complaint, we consider this issue to have been abandoned on appeal. It follows from the foregoing that the order of the trial court denying appellant’s motion to dismiss for failure to state a claim must be affirmed.
Judgment affirmed.
Dissenting Opinion
dissenting in part. I dissent from Division 2 (a) of the majority opinion declaring the noncompetition provisions of the contract void for the same reasons stated in my dissent in Richard P. Rita Personnel Services v. Kot, 229 Ga. 314, 318. The majority opinion here is doing exactly what was done in Rita, i.e., rewriting the contract for the parties. The parties to this
I would affirm the order of the trial court denying the motion to dismiss for failure to state a claim for the above stated reason as well as the reason stated in Division 2(b) of the opinion.
I am authorized to state that Chief Justice Mobley and Presiding Justice Grice concur in what is said herein.
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