Keener v. Convergys Corp., 02-11324.

• Decision Date: 21 August 2003
• Docket Number: No. 02-11324.,02-11324.
• Citation: 342 F.3d 1264
• Parties: James A. Keener, Plaintiff-Counter-Defendant-Appellee, v. Convergys Corporation, Defendant-Counter-Claimant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

342 F.3d 1264

James A. Keener, Plaintiff-Counter-Defendant-Appellee, v. Convergys Corporation, Defendant-Counter-Claimant-Appellant.

No. 02-11324.

United States Court of Appeals, Eleventh Circuit.

August 21, 2003.

COPYRIGHT MATERIAL OMITTED

Dana F. Braun, Callaway, Braun, Riddle & Hughes, PC, Savannah, GA, Grant S. Cowan, Cincinnati, OH, for Convergys Corp.

Wade W. Herring, II, Hunter, Maclean, Exley, Dunn, P.C., Colin A. McRae, Savannah, GA, for Keener.

Appeal from the United States District Court for the Southern District of Georgia.

Before BIRCH and BLACK, Circuit Judges, and PROPST^*, District Judge.

BIRCH, Circuit Judge:

In this appeal, we apply the law as certified by the Supreme Court of Georgia and affirm the district court's grant of summary judgment, which declared a non-competition agreement ("NCA") between Convergys Corporation and James A. Keener unenforceable under Georgia law. However, we hold that the district court abused its discretion when it enjoined Convergys from seeking to enforce the NCA against Keener in any court in the world. We also reverse the portion of the judgment that dismissed Convergys's counterclaims.

I. BACKGROUND

To reach the merits of Convergys's appeal regarding the enforceability of the NCA, we concluded that we must first decide whether the district court properly elected to apply Georgia law to the agreement, instead of Ohio law, as was contracted to by the parties to the NCA. Because this issue involved what we considered a dispute within Georgia conflicts of law jurisprudence, we certified the following question to the Supreme Court of Georgia:

WHETHER A COURT APPLYING GEORGIA CONFLICT OF LAWS RULES FOLLOWS THE LANGUAGE OF RESTATEMENT (SECOND) CONFLICT OF LAWS § 187(2) AND,

THEREFORE, FIRST MUST ASCERTAIN WHETHER GEORGIA HAS A "MATERIALLY GREATER INTEREST" IN APPLYING GEORGIA LAW, RATHER THAN THE CONTRACTUALLY SELECTED FORUM'S LAW, BEFORE IT ELECTS TO APPLY GEORGIA LAW TO INVALIDATE A NON-COMPETE AGREEMENT AS CONTRARY TO GEORGIA PUBLIC POLICY.

Keener v. Convergys Corp., 312 F.3d 1236, 1241 (11th Cir.2002) (per curiam).

The Supreme Court of Georgia answered in the negative. Convergys Corp. v. Keener, 582 S.E.2d 84, 87 (Ga.2003). The court noted the conflicting law found in our circuit: Nordson Corp. v. Plasschaert, 674 F.2d 1371 (11th Cir.1982), and Bryan v. Hall Chemical Company, 993 F.2d 831 (11th Cir.1993). Deeming the decisions "erroneous" interpretations of Georgia law, the Supreme Court of Georgia made it clear that "until `it becomes clear that a better rule exists,'"¹ it continues to adhere to traditional conflicts of law rules. Convergys, 582 S.E.2d at 87 (citing General Tel. Co. v. Trimm, 252 Ga. 95, 96, 311 S.E.2d 460, 462 (1984)). We acknowledge the Supreme Court of Georgia's clarification of the rule and apply it here.

Accordingly, the rule is that [a]fter first ascertaining that there were significant contacts with the State of Georgia, such that the choice of [Georgia] law was neither arbitrary nor constitutionally impermissible, see Allstate v. Hague, 449 U.S. 302, 101 S.Ct. 633, 66 L.Ed.2d 521 (1981) ... "[t]he law of the jurisdiction chosen by parties to a contract to govern their contractual rights will not be applied by Georgia courts where application of the chosen law would contravene the policy of, or would be prejudicial to the interests of, this state. Covenants against disclosure, like covenants against competition, affect the interests of this state, namely the flow of information needed for competition among businesses, and hence their validity is determined by the public policy of this state."

Convergys, 582 S.E.2d at 85-86 (quoting Nasco, Inc. v. Gimbert, 239 Ga. 675, 238 S.E.2d 368, 369 (1977) (citations omitted in original)).

II. DISCUSSION

We now turn to the appeal before us: (1) whether Georgia law applies because the NCA violates Georgia public policy, and, if so, whether the NCA is unenforceable under Georgia law; (2) whether the district court abused its discretion in permanently enjoining the enforcement of the NCA worldwide; and (3) whether the district court properly granted summary judgment for Keener on Convergys's counterclaims for restitution, provided the NCA was unenforceable, and for an injunction prohibiting Keener from working for H.O. Systems, a competitor, because he had access to Convergys's trade secrets that he would use during the course of his employment.

A. Summary Judgment

We review a district court's legal conclusions underlying a decision to grant injunctive relief de novo. Major League Baseball v. Crist, 331 F.3d 1177, 1183 (11th Cir.2003). We agree with the district court's determination that the application of Georgia law is not arbitrary or constitutionally impermissible because Convergys would be attempting to enforce the NCA against Keener, who is living and working in Georgia, where the effects would be felt.² Applying Georgia conflicts of law rules, the district court assessed whether the NCA was contrary to Georgia public policy and, finding that it was, refused to apply Ohio law. Keener v. Convergys Corp., 205 F.Supp.2d 1374, 1377-80, 1381-82 (S.D.Ga.2002) (citing, inter alia, Hulcher Svcs., Inc. v. R.J. Corman R.R. Co., L.L.C., 247 Ga.App. 486, 543 S.E.2d 461, 465 (2000) (refusing to honor choice of law clauses if chosen law would contravene Georgia public policy)); Nasco Inc., 238 S.E.2d at 369 (same); Troup County Elec. Membership Corp. v. Georgia Power Co., 229 Ga. 348, 191 S.E.2d 33, 36 (1972) (citing Georgia State Constitution provision for public policy disfavoring restrictions of right of persons attempting to do business with the public).

Georgia law applies strict scrutiny to restrictive covenants in employment contracts. New Atlanta Ear, Nose & Throat Assocs., P.C. v. Pratt, 253 Ga.App. 681, 560 S.E.2d 268, 270-71 (2002). Recognizing that Georgia does not employ the "blue pencil" doctrine of severability, the district court deemed the NCA overbroad because its prohibition of working for any competitor necessarily included any similar company worldwide because Convergys is an international company. Keener, 205 F.Supp.2d at 1380 (citing Advance Tech. Consultants, Inc. v. RoadTrac, L.L.C., 250 Ga.App. 317, 551 S.E.2d 735, 738-39 (2001) (invalidating entire NCA containing an overbroad restriction), and Morgan Stanley DW, Inc. v. Frisby, 163 F.Supp.2d 1371, 1377-78 (N.D.Ga. 2001) (applying Georgia law and refusing to "blue pencil" a restrictive covenant)). Furthermore, the geographic reach of the NCA was indeterminate until the date of termination, thereby invalidating the NCA because Georgia law invalidates "territorial restrictions that change and expand during the course of the agreement." Id. at 1381 (quoting New Atlanta Ear, Nose & Throat Assocs., 560 S.E.2d at 272). Third, the district court found the nonsolicitation component of the NCA to be "likewise unenforceable," for reasons of overbreadth, lack of definite geographic limitations, and blanket restrictions against soliciting any customers, whether a prior relationship existed or not. Id. at 1382 (quoting Capricorn Sys., Inc. v. Pednekar, 248 Ga.App. 424, 546 S.E.2d 554, 557-58 (2001)); but see W.R. Grace & Co., Dearborn Div., Conn. v. Mouyal, 982 F.2d 480, 481 (11th Cir.1993) (applying law as certified by the Georgia Supreme Court and holding that a non-solicitation clause need not contain a geographical restriction so "long as the scope of restriction is defined in a manner that is explicit, does not require the restricted employee to speculate as to the bounds of the restriction, and does not overreach"). Accordingly, the district court found the NCA unenforceable "in toto, thus entitling Keener to declaratory and injunctive relief." Keener, 205 F.Supp.2d at 1382.

Based on the district court's thorough analysis and application of Georgia law, we affirm the district court's order granting summary judgment in favor of Keener. The NCA was contrary to Georgia public policy, Georgia law therefore applied, and the NCA was unenforceable under Georgia law due to its overbreadth.

B. Permanent Injunction

We review the district court's grant of injunctive relief for abuse of discretion. Alabama Disabilities Advocacy Program v. J.S. Tarwater Developmental Ctr., 97 F.3d 492, 496 (11th Cir.1996). Permanent injunctive relief requires three elements: (1) success on the merits; (2) continuing irreparable injury; and (3) no adequate remedy at law. Newman v. Alabama, 683 F.2d 1312, 1319 (11th Cir.1982). Injunctive relief should be limited in scope to the extent necessary to protect the interests of the parties. See Gibson v. Firestone, 741 F.2d 1268, 1273 (11th Cir.1984) (constitutional violation context); see also Soc'y for Good Will to Retarded Children, Inc. v. Cuomo, 737 F.2d 1239, 1251 (2d Cir.1984) ("Injunctive relief should be narrowly tailored to fit the specific legal violations adjudged."); Consolidation Coal Co. v. Disabled Miners of Southern W.Va., 442 F.2d 1261, 1267 (4th Cir.1971) (An injunction "should be tailored to restrain no more than what is reasonably required to accomplish its ends.").

Keener prevailed on summary judgment when the district court declared that the NCA is unenforceable under Georgia law, thus entitling him to injunctive relief if he demonstrated irreparable harm and that there was no adequate remedy at law.³ Finding the circumstances amenable to injunctive relief, the district court awarded it to Keener by permanently enjoining Convergys from attempting to enforce the NCA "in any court worldwide." Keener, 205 F.Supp.2d at 1382. Convergys contests the equity of the result, claiming that Keener should not be permitted the protection of the injunction because he intentionally misrepresented to Convergys the nature of his new employment when he left Convergys in order to avoid their enforcement of the NCA in Ohio by applying Ohio law. Convergys decries the fact that the district court did...