In Celtic Maintenance Services, Inc. v. Garrett Aviation Services, Inc., No. CV 106-177, 2007 WL 4557775 (S.D. Ga. Dec. 21, 2007 (Wood, J.)), the United States District Court for the Southern District of Georgia upheld a no-hire provision between two businesses. The case involved an agreement between Celtic and Garrett in connection with Garrett paying Celtic to perform aviation maintenance at Bush Field in Augusta, Georgia. Garrett and Celtic agreed not to “directly or indirectly solicit, hire, or contract for services with any person employed by the other party.” Celtic alleged that Garrett used Greenwood, Inc., a third party, to circumvent the restrictions in the no-hire provision by inducing Greenwood to hire Celtic employees to perform aviation maintenance tasks on behalf of Garrett after Celtic ceased performing services for Garnett. Greenwood hired three Celtic employees, and Celtic went out of business. Celtic brought claims against Garrett for breach of contract and against Greenwood for tortious interference with contract.
The District Court held that the no-hire provision is enforceable under Georgia law. The District Court first held that the agreement was more analogous to a partnership agreement than to an employment agreement because of the relatively equal bargaining position of the two parties and because the provision bound both parties (Celtic and Garrett) equally. Thus, the District Court applied intermediate scrutiny to the agreement. The District Court then went on to conclude that the no-hire provision was enforceable and implied that it would be enforceable even under the strict scrutiny standard applied to employment agreements because Georgia courts have upheld similar provisions in the employment context. The District Court concluded that summary judgment was inappropriate and that the matter should progress to trial.
The District Court also addressed an “intriguing argument” put forward by Greenwood in response to the tortious interference claim brought by Celtic against Greenwood. Greenwood argued that Garrett had already decided to terminate its contract with Celtic and seek a third party straw man to circumvent the no-hire provision before Greenwood got involved in the process. The Court rejected this argument, holding that Greenwood may have shown that it did not induce Garrett to breach its contract with Celtic, but it may have conspired with Garrett and aided and abetted Garrett in its breach. Thus, the Court concluded that summary judgment on the tortious interference claim was inappropriate.