Bettinger v. Carl Berke Ass'n, Inc.

• Citation: 314 A.2d 296,455 Pa. 100
• Parties: Edward J. BETTINGER, t/a E. J. Bettinger Employment Service, Appellee, v. CARL BERKE ASSOC., INC., et al., Appellants.
• Decision Date: 24 January 1974
• Court: United States State Supreme Court of Pennsylvania

Page 296

314 A.2d 296

455 Pa. 100

Edward J. BETTINGER, t/a E. J. Bettinger Employment Service, Appellee, v. CARL BERKE ASSOC., INC., et al., Appellants.

Supreme Court of Pennsylvania.

Jan. 24, 1974.

Reeder R. Fox, Duane, Morris & Heckscher, Philadelphia, for appellant

Dechert, Price & Rhoads, William A. White, William J. Kennedy, Philadelphia, for appellee.

Before JONES, C.J., and EAGEN, O'BRIEN, ROBERTS, POMEROY, NIX and MANDERINO, JJ.

OPINION OF THE COURT

O'BRIEN, Justice.

In June, 1969, appellee, Edward J. Bettinger, and one of the individual appellants, Carl E. Berke, negotiated an employment agreement whereby Berke began his employment with Bettinger as a salaried salesman in Bettinger's temporary-help division. Berke's duties were to become familiar with Bettinger's business and attempt to expand the temporary-help division. In February, 1970, Berke and Bettinger negotiated a new employment contract that was reduced to writing on March 2, 1970. The contract gave Berke a raise in salary and a promotion to sales manager of the temporary placement division of Bettinger's business. The contract also provided for Berke to receive commissions as of February, 1970, on the gross monthly billings of the temporaryhelp division. The contract contained the following restrictive covenant:

'. . . In the event of termination of employment more than three months after the date hereof, Employee shall not, for a period of one year after the termination of said employment, either directly or indirectly, enter into the employment agency or employment placement business, nor will he enter into the employ of anyone who is engaged in a similar business within fifty miles of City Hall, Philadelphia, Pennsylvania. In the event that Employee engages directly or indirectly, in the employment agency or employment placement business, as employee or otherwise, within said period but beyond said fifty mile radius, Employee shall not solicit employers or employee-applicants which were on Employer's customer lists during the term of this agreement. If Employee violates the provision of this paragraph, then in that event . . . Employee shall forfeit all claim to all commissions otherwise due to him.'

During the period from March, 1970, through December, 1972, Berke fulfilled his contractual duties. In December of 1972, Berke entered into competition with Bettinger. Berke also induced the other two appellants, Dorothye R. Herbert and Emily Simon, to leave the employ of Bettinger, where they had previously been employed without written contracts in the temporary-help division, and come to work for him in his own temporary-help business. Their duties for Berke were the same as their duties had been for Bettinger--the placement of temporary help in accordance with the needs of customers.

In April of 1973, Bettinger filed a complaint in equity, seeking, among other things, to enjoin appellants from competing in the temporary-help field. A hearing was held and the chancellor entered a decree granting the relief sought by Bettinger. Exceptions were argued and denied, the decree was made final and this appeal followed.

Appellant Berke first alleges that the court erred in granting the injunction due to the fact that Bettinger failed to establish irreparable harm. While it is generally true that injunctions will only be issued upon a showing of irreparable harm, we are here dealing with a restrictive covenant in an employment contract. In Jacobson & Co. v. Int. Environment Corp., 427 Pa. 439, 235 A.2d 612 (1967), we stated:

'. . . employment contracts containing general covenants by an employee not to compete after the termination of his employment are prima facie enforceable if they are reasonably limited as to duration of time and geographical extent . . . within such territory and during such time as may be reasonably necessary for the protection of the employer.' At page 452, 235 A.2d at page 620.

Consequently, to determine whether Bettinger was entitled to have the restrictive covenant enforced, we need only concern ourselves with the reasonableness of the covenant. To be enforceable, the covenant must meet the three-pronged test laid out in Jacobson, supra. The covenant must be (1) reasonable in time, (2) reasonable as to geographical extent, and (3) otherwise reasonably necessary to protect the employer, without imposing an undue hardship on the employee. The record supports a finding that the restrictive covenant was reasonable with regard to all three prongs of the test. When asked if Bettinger's company had regularly placed temporary help with the customers on its list, Berke replied:

'Not regularly. It's a constant goingback repetitive process in order to keep your contacts, to maintain it, because if you're not doing it, your competition is; and if you're...