28,171 La.App. 2 Cir. 1/5/96, AMCOM of Louisiana, Inc. v. Battson

• Decision Date: 05 January 1996
• Citation: 666 So.2d 1227
• Court: Court of Appeal of Louisiana — District of US
• Parties: 28,171 La.App. 2 Cir

Page 1227

666 So.2d 1227

28,171 La.App. 2 Cir. 1/5/96, 1996-1 Trade Cases P 71,379

AMCOM OF LOUISIANA, INCORPORATED a/k/a KRMD AM/FM, Plaintiff-Appellee, v. Ken A. BATTSON a/k/a K.C. Daniels, Defendant-Appellant.

No. 28171-CA.

Court of Appeal of Louisiana Second Circuit.

Jan. 5, 1996.

Dissenting Opinion of Justice Hightower Jan. 17, 1996.

Bodenheimer, Jones, Klotz & Simmons by David Klotz and F. John Reeks, Shreveport, for Appellant.

Barlow and Hardtner L.C. by Joseph L. Shea, Jr. and Jay A. Greenleaf, Shreveport, for Appellee.

Before MARVIN, HIGHTOWER, BROWN, WILLIAMS and CLARK, JJ.

MARVIN, Chief Judge.

In this action to enforce a non-competition agreement, Battson, a former employee of plaintiff's radio station appeals a judgment enjoining him from being employed by a competing radio station in the same city.

The trial court found the agreement geographically overbroad in violation of LRS 23:921 but reformed the contract by deleting or severing the language that the trial court found overbroad to reform the contract to comply with the statutory limitations. The defendant answers Battson's appeal, contending that the geographical language employed did not violate the statute and should be upheld by this court.

The appeal was reargued before a five-judge panel when one of the original three-judge panel dissented to a reversal of the trial court. LSA-Const. Art. 5, § 8. On reargument, we find the agreement is geographically overbroad and may not be reformed to comply with the statute by deleting or adding to the overbroad language.

We reverse and render judgment for the appellant-employee, rejecting the employer's demands at its costs.

DISCUSSION

Louisiana has consistently had a strong public policy against non-competition contracts prohibiting an employee from competing with a former employer. Orkin Exterminating Company v. Foti, 302 So.2d 593, 596 (La.1974); Cellular One, Inc. v. Boyd, 94-1783 (La.App. 1st Cir. 3/3/95), 653 So.2d 30, 32. See history of that policy before and after the legislature began to adopt and amend a statute, now LRS 23:921. 66 Tulane Law Review 551 (1991). The history in 66 Tul.L.R. 551 is summarized:

Before 1934 the question of enforcing a non-competition provision was left solely to the Louisiana courts which applied the test of reasonableness as to geographical area, duration, and the type of employment being restricted. Beginning with Act 133 of 1934 the legislature stated the public policy and general prohibition against a provision in an employment contract in which an employee agreed not to compete with his or her employer following the termination of employment.

In 1962 the legislature made two limited exceptions to the general prohibition against such employee-employer contracts: In situations where the employer incurred significant expenses either in training the employee or in advertising the employee's connection with the business. These exceptions to the general prohibition of non-competition provisions in employment contracts still had to meet the test of reasonableness.

In 1989 LRS 23:921 was "completely redrafted" and broadened to apply the "general prohibition [to] all noncompetition agreements [except in] ... four specific exceptions under which noncompetition agreements are enforceable."

After the 1989 redraft of § 921, "courts will no longer be justified in upholding noncompete agreements made outside the employment context merely because their terms are found to be reasonable." Similarly, "judicial construction is no longer needed in order for courts to render such agreements unenforceable.

... Under the new statute, judicial discretion in determining the reasonableness of the terms of noncompetition agreements has been drastically curtailed."

We emphasize the provisions of § 921 which we find pertinent to this action:

A. Every contract or agreement, or provision thereof, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, except as provided in this Section, shall be null and void.

* * * * * *

C. Any ... employee may agree with his employer to refrain from carrying on or engaging in a business similar to that of the employer and/or from soliciting customers of the employer within a specified parish or parishes, municipality or municipalities, or parts thereof, so long as the employer carries on a like business therein, not to exceed a period of two years from termination of employment.

In order to be valid, a noncompetition agreement after the 1989 amendment must strictly comply with the requirements of the new statute. Comet Industries, Inc. v. Lawrence, 600 So.2d 85 (La.App. 2d Cir.), writ denied, 604 So.2d 1002 (1992); Cellular One, Inc., supra. The noncompetition provision in the AMCOM employment contract before us reads:

EMPLOYEE agrees and represents to AMCOM, ... that for a period of two (2) years following the termination of this Employment Agreement, ... EMPLOYEE will not, as principal, employer-stockholder, co-partner, employee or in any other individual or representative capacity whatsoever, enter into or engage directly or indirectly in the performances of any services for any other radio station or competitor of AMCOM located in Shreveport or Bossier City, Louisiana, or in Caddo or Bossier Parishes, Louisiana, or within a seventy-five (75) mile radius of Shreveport or Bossier City, Louisiana.

The 1989 amendment permitting a former employee to agree not to compete with his or her former employer within a statutorily specific area [one or more "specified ... parishes, ... municipalities or parts thereof"] does not change the Louisiana public policy against such agreements nor enervate the requirement that such agreements be strictly and narrowly construed. First Page v. Network Paging Corp., 628 So.2d 130 (La.App. 4th Cir.1993), writ denied; Comet Industries, Inc., supra. See also Allied Bruce Terminix Companies v. Ferrier, 93-0561 (La.App. 1st Cir. 3/11/94) 634 So.2d 44; Medivision, Inc. v. Germer, 617 So.2d 69 (La.App. 4th Cir.1993), writ denied; Daiquiri's III on Bourbon, Ltd. v. Wandfluh, 608 So.2d 222 (La.App. 5th Cir.1992), writ denied; Water Processing Tech., Inc. v. Ridgeway, 618 So.2d 533 (La.App. 4th Cir.1993).

Non-competition agreements which fail to specify the "parish or parishes, municipality or municipalities, or parts thereof" wherein the employer carries on a similar business are unenforceable. Comet Industries, supra at 87.

Moreover, a "savings clause" stating that any provision in an employment agreement found excessively broad would be limited [or reduced] to what was permitted by applicable law does not allow a court to reform a noncompetition provision to the geographical area permitted by LRS 23:921. Comet Industries, supra, at 88.

To allow reformation of an invalid non-competition agreement would run counter to the requirement of strict and narrow construction of the statute, would allow ambiguous non-competition agreements and a degree of uncertainty as to the validity and scope of what an employee has agreed to, and would place courts in the business of either saving or writing a contract that is not generally favored in the law.

We agree with the trial court's factual finding that the geographical area encompassed within a 75-mile radius of Shreveport or Bossier City makes this employment agreement overly broad. The 75-mile radius, measured in whatever direction, will include in whole or in part, some parishes and municipalities in Louisiana (and perhaps in Texas or Arkansas) that are simply not "specified" in the employment contract as § 921 requires. We disagree, however, that either we or the trial court may rewrite the overly broad language, either by deleting or adding words to reform the agreement to limit it to a geographical area allowed by the statute. Reiterating the general prohibition against non-competition agreements, except as specifically provided in § 921, the legislature has declared that contracts by which anyone is restrained from exercising a lawful trade, except in the specified areas, "shall be null and void."

A 75-mile radius of Shreveport or Bossier City, measured in whatever direction will encompass wholly or partly many unspecified municipalities and parishes either in Louisiana or perhaps in neighboring states. The statute states that an employee may agree to a non-competition provision within specified parishes or municipalities or parts thereof so long as the employer carries on a like business in those specified parishes or municipalities. Our emphasis. We shall not reason or do as the plaintiff-employer urges in answer to the appeal, that is either to approve the 75-mile radius or to insert language into the contract specifying the parishes or municipalities which are wholly or partly within the geographical limits of a 75 mile radius measured from various points on the polygonal corporate boundary of either Shreveport or Bossier City, Louisiana.

DECREE

At the cost of the employer, the judgment is reversed and judgment is hereby rendered declaring the non-competition agreement null and void and rejecting the employer's demands.

REVERSED AND RENDERED.

HIGHTOWER, J., dissents with reasons.

HIGHTOWER, Judge, dissenting.

This sweeping reversal by the majority both unreasonably extends Comet, supra, and overshoots judicial interpretations in those two states providing the model for La.R.S. 23:921. Furthermore, if the statute's effect is to strike down appellant's agreement and thus countenance his immediate employment at another radio station within the same city (as the majority concludes), then it is highly unlikely that any noncompete covenant can ever be feasibly enforced in the broadcast industry, or in any other sizeable segment of Louisiana's economy. So too, it is extremely doubtful that such an emasculation of our noncompetition statute conforms to its legislative design.

Two broad grounds underlie my...