Cascade Exchange, Inc. v. Reed

• Decision Date: 28 June 1977
• Citation: 278 Or. 749,565 P.2d 1095
• Parties: CASCADE EXCHANGE, INC., an Oregon Corporation, Respondent, v. Ray A. REED, Appellant. CASCADE EXCHANGE, INC., an Oregon Corporation, Respondent, v. Danny E. PARKER, Appellant.
• Court: Oregon Supreme Court

Page 1095

565 P.2d 1095

278 Or. 749

CASCADE EXCHANGE, INC., an Oregon Corporation, Respondent, v. Ray A. REED, Appellant.

CASCADE EXCHANGE, INC., an Oregon Corporation, Respondent, v. Danny E. PARKER, Appellant.

Supreme Court of Oregon, In Banc.

Argued and Submitted June 7, 1977.

Decided June 28, 1977.

Larry J. Anderson, of Anderson & Richmond, Eugene, argued the cause for appellants. With him on the briefs was Raymond A. Babb, Bend.

Vawter Parker, of Dezendorf, Spears, Lubersky & Campbell, Portland, argued the cause for respondent. With him on the brief was James H. Clarke, Portland.

Before DENECKE, ^* C. J., and HOLMAN, TONGUE, HOWELL, BRYSON, LENT and LINDE, JJ.

PER CURIAM.

These are suits in equity to enforce "noncompetition" provisions of employment agreements between plaintiff and defendants, who had been employed by plaintiff as "dispatchers" or "brokers" in plaintiff's truck brokerage business in Redmond. Defendants appeal from a decree enjoining them from engaging in that business in Oregon for two years. We affirm.

The primary question presented for decision is whether plaintiff, as an employer, had such a "protectible interest" as to entitle it, under the facts of this case, to the enforcement of such contracts. ¹ At the outset, however, it is important to bear in mind that this is not a case in which an employer seeks to enforce such an agreement against a skilled workman in an industrial plant whose skills were acquired through training and experience during the course of his employment, as in Rem Metals Corp. v. Logan, 278 Or. 715, 565 P.2d 1080, also decided this day. Instead, this is a case in which the employees' work necessarily involved access to plaintiff's " customer lists," as well as some other "specialized" information relating to customers, and employees who also had frequent and close contacts with plaintiff's customers on a personal basis, as in Kelite Prod., Inc. v. Brandt et al., 206 Or. 636, 294 P.2d 320 (1956), and North Pacific Lbr. v. Moore, 275 Or. 359, 364-65, 551 P.2d 431 (1976). ²

Because, after reviewing this record, we are convinced that our decision in this case is controlled by our previous decisions in Kelite and North Pacific, despite some differences, as argued by defendants, we see no good reason to write an extended opinion in this case. Instead, we adopt the opinion by the trial court which, while quoting and relying upon our decision in Kelite, was decided immediately prior to our subsequent decision in North Pacific. That opinion by the trial court is as follows:

"Plaintiff seeks to enforce a provision of an employment contract prohibiting defendants, plaintiff's former employees, from engaging in a competing business. The covenant reads, in part, as follows:

" 'Upon the termination of this agreement Parker (Reed) will refrain directly or indirectly from carrying on a business similar to that involved under this agreement in the State of Oregon for a period of two years from the date of termination.'

"Defendants plead, as an affirmative defense, that the covenant is unenforcible on the grounds that it is a restraint of employment and is not reasonably necessary to protect any legitimate interest of the plaintiff. At trial, the defendants further argued that the potential hardship upon defendants in enforcing the provision far outweighed any benefit accruing to plaintiff in its enforcement and for that reason equity should not enforce the restriction. In support of their position that it is not reasonably necessary to protect any legitimate interest of the plaintiff, defendants contend that the covenant, by the nature of plaintiff's business, affords no protection as defendants could lawfully conduct their competing business by moving without the State of Oregon and that the scope of business would be the same no matter where their offices were located.

"Plaintiff is a truck brokerage company that coordinates shippers and truckers interstate with primary attention to shippers and truckers in the Western United States. The solicitation for and conduct of business by plaintiff is transacted almost entirely through the use of inward WATS telephone lines, thereby rendering the physical location of the business office of minimal importance. It is necessary in the conduct of truck brokerage to use certain resources for access to potential customers among which is a Blue Book containing lists of shippers, primarily, with credit ratings and a Red Book also containing lists of shippers but with no credit ratings. These two publications are used in the trade and are generally available. Mr. Brown, plaintiff's president, testified that, in addition, his company had its own customer lists which were not available to others generally and that his company was possessed of other 'specialized' information about shippers and truckers. He further testified that lists of truckers were not contained in the Blue or Red Books and that to contact truckers his company was not dependent upon these two resources.

"The defendants were hired by plaintiff as truck dispatchers under the terms of the subject employment agreement to coordinate shipments of commodities with available trucks. In performing their duties as dispatchers the defendants used the resources provided by plaintiff, previously referred to, and had direct telephonic contact with the individual shippers and truckers. Before employment by plaintiff neither defendant had experience in the truck brokerage business and all skills and techniques in operating such business were acquired through plaintiff.

"Approximately two years after entering into the employment agreement the defendants were terminated by plaintiff and defendants almost immediately entered into a competing truck brokerage business in Bend, Oregon, under the corporate style known as Esquire Truck Brokerage, Inc. There was substantial evidence that the defendants started their brokerage with full awareness of the restrictive covenant in issue and in fact, had secured legal advice as to their liabilities thereunder. The evidence was likewise substantial that the defendants have in the past and are continuing to contact numerous shippers and truckers whose identity and business practices necessarily came to defendants knowledge during their employment by plaintiff. The competition to plaintiff is direct, irreparably damaging and, in the court's view, deliberately in violation of a viable contract.

"The language in Kelite Products, Inc. v. Brandt, et al., 206 Or. 636, 294 P.2d 320, a case of similar stance to the instant matter, seems particularly appropriate: (at page 653 (294 P.2d 320)) " '4. As we said in Eldridge et al. v. Johnston, supra, (195 Or.) at page 405 (245 P.2d 239):

" ' " * * * It is elementary that public policy required that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts, when entered...