December 29, 2009
Tennessee Court of Appeals Rules Non-Compete Unenforceable Attempt to Restrain "Ordinary Competition"
On December 28, 2009, the Tennessee Court of Appeals issued an opinion in Jones v. United Propane Gas, Inc., a case involving non-compete and non-solicitation agreements. The opinion is lengthy, but it provides a detailed analysis in ruling that the post-employment restrictive covenants in that case were unenforceable because they sought to restrain "ordinary competition" by two former delivery drivers. The case is also interesting because of the procedural posture -- the ex-employees and their new employer filed the lawsuit seeking a declaratory judgment that the restrictive covenants were not enforceable. The ex-employer counterclaimed against the ex-employees for breach of contract, and it also sued the new employer for tortuous interference with the contracts. Ultimately, the Court of Appeals agreed with the trial court that the covenants were not enforceable because they sought to restrain ordinary competition, and because the ex-employer did not have a legitimate interest deserving of protection. The case is an interesting read because the evidence is dissected and explained in great detail.