In a recent ruling, a West Virginia federal judge held that litigation involving a former employee’s claimed violation of covenants not to compete and not to solicit the ex-employer’s workers must proceed to trial even though the ex-employer produced no evidence of monetary loss. Relying on 76-year old and 118-year old West Virginia cases neither of which concern similar covenants, the court reasoned that if the ex-employer proves a breach of contract, the company will be entitled at least to nominal damages and might be awarded attorneys’ fees and costs. The possibility that the plaintiff might recover damages was held to be a sufficient basis for denying the defendant’s motion for summary judgment. Panhandle Cleaning & Restoration, Inc. v. Vannest, Civil Ac. No. 5:11CV178 (Stamp) (N.D. W. Va., Oct. 5, 2012).

Panhandle constructs, restores and remodels residential and commercial buildings. It alleged that Golec, a former employee, breached an employment agreement promising not to compete within a 50-mile radius of his former place of business for two years after termination, and not to solicit Panhandle’s employees or customers during those two years. The agreement also recited that “The Employee expressly acknowledges that [the covenants not to compete and not to solicit are] reasonable and will not prevent [sic] or impose an undue hardship or otherwise prevent the Employee from earning a livelihood during the time it is in effect.” Golec denied that he had signed the agreement, and he insisted that, in any event, it was unenforceable.

According to the court, in addition to the issue of whether Golec’s signature was authentic, factual disputes included Panhandle’s claim that it had interests requiring protection, and Golec’s contention that enforcement would impose an undue hardship on him. Golec denied that he had solicited Panhandle’s employees, but the company identified witnesses who would testify to the contrary, and that was sufficient to defeat his summary judgment motion on Panhandle’s suit for breach of the non-solicitation covenant. Regarding the non-competition provision, the court cited cases holding that two-year and 50-mile restrictions are reasonable under West Virginia law. However, not determinable without a trial were “what exactly Panhandle’s business is and thus, what type of work constitutes being in direct competition with Panhandle.”

When the case goes to trial, the fact finder may sympathize with Golec at least with respect to the covenant not to compete. That sympathy may impact the decision as to whether the agreement is enforceable against him. Notwithstanding the employment agreement provision to the contrary, it is hard to believe that he posed a threat of substantial economic harm to Panhandle solely as a competitor. By the same token, enforcement of the non-compete would impose a hardship on him by depriving him for two years of virtually all opportunity to earn a living anywhere near Panhandle’s place of business — a 50-mile radius, after all, translates into a circle with a diameter of 100 miles — doing what he does best. The sympathy factor might be diluted, however, if Golec is found to have solicited Panhandle’s employees, and particularly if he refuses to promise that he will not attempt to solicit them for the remainder of the two-year period.