Key Temporary Personnel, Inc. v. Cox, 82927

• Decision Date: 23 August 1994
• Docket Number: No. 1,No. 82927,82927,1
• Citation: 1994 OK CIV APP 123,884 P.2d 1213
• Parties: 1994 OK CIV APP 123 KEY TEMPORARY PERSONNEL, INC., an Oklahoma corporation, Appellee, v. Debra L. COX, Appellant. Court of Appeals of Oklahoma, Division
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

Page 1213

884 P.2d 1213

1994 OK CIV APP 123

KEY TEMPORARY PERSONNEL, INC., an Oklahoma corporation, Appellee, v. Debra L. COX, Appellant.

No. 82927.

Released for Publication by Order of the Court

of Appeals of Oklahoma, Division No. 1.

Court of Appeals of Oklahoma, Division No. 1.

Aug. 23, 1994.

Certiorari Denied Nov. 10, 1994.

Ronald N. Ricketts, Tulsa, for appellee.

Max K. Naegler, Tulsa, for appellant.

OPINION

HANSEN, Presiding Judge:

Appellant, Debra L. Cox (Cox), seeks review of the trial court's order which granted Appellee, Key Temporary Personnel, Inc. (Key), a preliminary injunction. Key brought this action against its former employee, Cox, for breach of her employment agreement and consulting agreement, requesting a permanent injunction and damages. Key provides temporary personnel services to companies in Tulsa, Oklahoma. Cox terminated her employment with Key in August, 1993 and immediately thereafter went to work for a competitor of Key. Key sought and obtained a preliminary injunction prohibiting Cox from soliciting or diverting any of Key's clients after Cox terminated her employment with Key.¹

On appeal, Cox maintains the non-solicitation covenants contained in the employment agreement unreasonably restrain trade in violation of 15 O.S.1991, § 217, and therefore, are not enforceable. She also argues this appeal is not moot, that the non-solicitation provisions cannot be cured by judicial modification, and that the oppressive work atmosphere at Key prohibits Key from enforcing these provisions. The parties are not appealing Key's entitlement to a temporary injunction for failure to meet the requisites for injunctive relief.

We first address Key's proposition this appeal is moot. The preliminary injunction remained in effect until May 13, 1994. Cox filed her petition in error with this Court on January 21, 1994. Mootness on appeal is a state or condition which prevents an appellate court from rendering effective relief. Smith v. State ex rel. Board of Regents of Oklahoma State University, 846 P.2d 370, 371, dissent nt. 3 (Okla.1993). This Court will not decide abstract or hypothetical questions where no practical relief is possible. Id. Where issues remain to be resolved, for instance, where a party is still potentially liable, the granting of injunctive relief and a review thereof are not moot. Manuel v. Oklahoma City University, 833 P.2d 288 (Okla.App.1992); Moore v. White, 323 P.2d 352 (Okla.1958). Key filed this action seeking injunctive relief and damages caused by Cox's alleged violations of the employment agreement. Although the period enjoining Cox from soliciting certain clients has run, Cox still has potential liability for any breach which may have occurred before the injunction expired. Accordingly, this appeal is not moot.

The basis of Key's motion for preliminary injunction was paragraph 6(D) of the employment agreement executed May 18, 1990. That paragraph provides:

(D) Employee covenants and agrees that if Employee's employment with the Company ceases for any reason, Employee shall not for a period of nine (9) months immediately following the cessation of such employment (regardless of whether such cessation is due to, or caused by the breach of this Agreement by either party or whether such cessation is voluntary or involuntary) for himself or herself or on behalf of any other person, persons, partnership, corporation, or other entity, directly or indirectly solicit, divert or attempt to solicit or divert any client of the Company, provided that client was a client of the Company at the time of the Employee's termination and provided further the client remains a client of the Company during the nine month non-solicitation period. Employee agrees that in the event of a breach or the threat of a breach, hereof, the Company shall be entitled to, in addition to any other remedies and damages available, to an injunction to restrain the violation of this covenant.

The trial court determined Cox terminated her employment with Key on August 13, 1993 and that Key was entitled to a preliminary injunction until May 13, 1994. During the nine-month period, the trial court enjoined Cox from "directly or indirectly soliciting, diverting, or attempting to solicit or divert the temporary service business" of (a) Key clients which were accounts assigned to Cox during her employment with Key and (b) Key clients, although not assigned to Cox, were known to be Key clients by Cox while she was employed by Key. The trial court's order further provided:

For the purposes of this preliminary injunction, a Key client shall no longer be deemed a Key client if that client has not purchased temporary services from Key for a continuous period of time longer than six (6) months.

The injunction order had attached to it two exhibits: a list of Key clients which were assigned to Cox during her employment with Key and a list of clients although not assigned to Cox, were known by Cox to be Key clients. The order, dated December 29, 1993, ordered Key to provide to Cox by January 1, 1994, the last date on which the Key clients listed on these exhibits purchased temporary services from Key. Thereafter, Key was required, on the first and fifteenth of each month while the order was in effect, to provide a list to Cox's counsel of any Key clients on either list that, during the previous six months period, have not purchased temporary services from Key.² Finally, the order provided:

Notwithstanding the foregoing, while this injunction is in effect, the Defendant is entitled to make a proposal for temporary services or accept orders for temporary services from any of Key's clients she is prohibited from soliciting or diverting by this injunction, if those Key clients request proposals or services from Defendant without Defendant's solicitation.

The question of whether a particular contract provision is contrary to public policy, and thus violative of 15 O.S.1991, § 217, is ordinarily a question of law. Cohen Realty, Inc. v. Marinick, 817 P.2d 747 (Okla.App.1991). 15 O.S.1991, § 217 provides:

Every contract by which any one is restrained from exercising a lawful profession, trade or business of any kind, otherwise than as provided by Sections 218 and 219 of this title, is to that extent void.³

Section 217 prohibits only those contracts in unreasonable restraint of trade. Tatum v. Colonial Life & Accident Ins. Co, 465 P.2d 448 (Okla.1970); Bayly, Martin & Fay, Inc. v. Pickard, 780 P.2d 1168, 1172 (Okla.1989). Section 217 is not an absolute prohibition of all restrictions of trade: a restriction's enforceability is determined by weighing its reasonableness. Bayly, at 1172. If a contractual provision is unreasonable, judicial modification of a covenant not to compete "is justified if the contractual defect can be cured by imposition of reasonable limitations concerning the activities embraced, time, or geographical limitations." Bayly, at 1173. A covenant not to compete cannot be judicially modified if essential elements of a contract must be supplied. Bayly, at 1169.

In Tatum, the Oklahoma Supreme Court held a contractual provision, similar to the one in this case, did not violate § 217. In Tatum, the ex-employee was enjoined for a period of two years after his employment terminated, from selling or attempting to sell, any form of accident or health insurance to any of the company's insureds and from inducing any of the company's insureds to cancel, lapse, or fail to renew their policies with the company. The injunction was based upon the employee's admitted violations of covenants in the employment agreement. The primary question in that appeal was whether the contractual provision was void under 15 O.S.1961, § 217. In Tatum, as here, the contractual provision did not restrain the ex-employee from exercising a lawful profession, trade, or business. It simply required the ex-employee, for a period of time, to maintain a "hands-off" policy with respect to those whom he knows are clients of the employer. Tatum, at 451.

The Court in Bayly, Martin & Fay, Inc. v. Pickard, 780 P.2d 1168 (Okla.1989) however, did conclude the contractual provision at issue there was unreasonable and that judicial modification could not be utilized to save it. A comparison of the covenants in Bayly and in this action show the restrictions in Bayly were much broader than those agreed to by Cox. Here, Cox is prohibited only from "soliciting or diverting" Key's clients (who remain Key clients) for nine months. In Bayly, the covenant required the ex-employee to not "solicit, accept for service, or receive any commissions, fees or income attributable to the sale of, insurance business of any kind or character"...