shutterstock_350116652Reversing a 2-1 decision of the North Carolina Court of Appeals, the state’s Supreme Court held unanimously that an assets purchase-and-sale contract containing an unreasonable territorial non-competition restriction is unenforceable.  Further, a court in that state must strike, and may not modify, the unreasonable provision. Beverage Systems of the Carolinas, LLC v. Associated Beverage Repair, LLC, No. 316A14 (N.C.
Continue Reading North Carolina Courts Are Forbidden To “Blue Pencil” An Unenforceable Non-Compete

shutterstock_87257554A contractual provision designating the exclusive venue for filing a breach of contract lawsuit was held to be trumped by a 100-year old statute requiring trial of such cases in the county of residence of at least one party. A&D Environmental Services, Inc. v. Miller, Case No. COA14-913 (N.C. App., Apr. 7, 2015).

Summary of the case. A North
Continue Reading Forum Selection Clause in Non-Compete Agreement Unenforceable

Courts are divided on the enforceability by an assignee of a non-compete covenant relating to personal services where the covenant does not state whether it is assignable and the employee does not consent to the assignment.

Status of the case.  A non-compete agreement signed by an employee of TSG, Inc., purported to be effective for two years after his termination
Continue Reading Appellate Court Holds That Non-Compete Agreement Assigned Pursuant to Bankruptcy Court Order is Enforceable by Assignee

An asset purchase and sale agreement included unusual non-competition provisions. They authorized a court to redo any time, scope and area restrictions held to be unenforceable. 

The North Carolina Court of Appeals held that the covenant’s territorial restriction was overbroad. Notwithstanding the state’s “strict blue pencil doctrine,” which limits a judge’s authority to revise a non-compete clause, the appellate court
Continue Reading Appellate Court Orders Trial Judge To Rewrite Parties’ Non-Compete Covenant To Make It Enforceable

An employment agreement non-competition provision stated that, for 18 months after termination, the employee shall not become employed by or act “directly or indirectly, as an advisor, consultant, or salesperson for, or become financially interested, directly or indirectly, [in an entity] engaged in the business of selling flavor materials.” Earlier this month, the North Carolina Court of Appeals held that
Continue Reading Beware: Over-Inclusive Non-Compete Agreement May Be Unenforceable

In two unrelated cases decided earlier this month, employers failed in their attempts to enjoin former employees from competing. The Texas First District Court of Appeals vacated parts of the lower court’s injunction order, one part because it did not detail with sufficient specificity the conduct that was enjoined, and another part where the order was sufficiently specific but erroneously
Continue Reading Texas And North Carolina Appellate Courts Repulse Efforts To Enforce Restrictive Covenants

A North Carolina federal court judge exercised his discretion recently to deny a Federal Rule 12(b)(1) motion to dismiss, for lack of subject-matter jurisdiction (complete diversity was absent), multiple state law claims filed by NouvEON against its ex-employee and her new employer. One of the eight counts in the complaint alleged a federal cause of action, violation of the federal
Continue Reading North Carolina Federal Court Uses Computer Fraud and Abuse Act Claim to Exercise Supplemental Jurisdiction Over State Law Claims Against Former Employee and her New Employer

On April 25, 2012, a federal judge in North Carolina issued a ruling granting in part and denying in part motions to dismiss involving claims for trade secret misappropriation, breach of contract, and conversion in a dispute between two pharmaceutical companies in the case of River’s Edge Pharmaceuticals v. Gorbec Pharmaceutical Services, Inc. This decision confirms, to an extent, the need to

Continue Reading North Carolina Federal District Court Confirms Importance of Alleging Actual Harm in Pleadings

Although the trial court’s analysis was not extensive, it clearly found that allegations in a complaint that an employee used a computer program to delete information from a laptop and knowingly deleted information without authorization sufficiently states a Computer Fraud and Abuse Act claim so as to survive a motion to dismiss for failure to state a claim.

In Alliance International Inc. v.

Continue Reading Federal Court in North Carolina Upholds CFAA Claim as Pleaded