Lobrano v. C. H. Robinson Worldwide Inc
| Decision Date | 07 January 2011 |
| Docket Number | CIVIL ACTION NO. 10-cv-1775 |
| Parties | GEORGE LOBRANO, JR. v. C. H. ROBINSON WORLDWIDE INC., ET AL |
| Court | U.S. District Court — Western District of Louisiana |
MEMORANDUM RULING
Plaintiff George Lobrano, Jr. seeks summary judgment [Record Document 4] as to his claim for a declaratory judgment that the non-compete and non-solicit restrictive covenants in his "Management Employee Agreement" with Defendants are null and void. This Court first holds that Louisiana law applies to this controversy. Second, this Court holds that the restrictive covenants which purport to apply "anywhere within the continental United States" are geographically overly broad, non-specific, and non-compliant with the requirements of Louisiana Revised Statute § 23:921. Third, the Court holds that the contract as written cannot be reformed under Louisiana law. Thus, the restrictive covenants contained in the "Management Employee Agreement" are null and void as a matter of law. For the reasons further stated herein, this Court hereby GRANTS Plaintiff's Motion for Summary Judgment. [Record Document 4].
The dispute in this matter arises out of a "Management Employee Agreement" entered into by Mr. Lobrano with Defendants (collectively "C. H. Robinson"). Mr. Lobrano executed the Agreement in Louisiana on November 28, 2005 upon his promotion to a management position with C. H. Robinson in its Shreveport, Louisiana office. No evidence indicates that Mr. Lobrano worked in any state other than Louisiana in his 14-year career with Defendants. Sometime around September, 2010, Mr. Lobrano was removed from his management position. He then resigned from employment with C. H. Robinson on October 27, 2010.
The "Management Employee Agreement" contains restrictive covenants which prohibit Mr. Lobrano from obtaining employment with competitors of C. H. Robinson and from soliciting clients of C. H. Robinson. By the terms of the Agreement, these non-compete and non-solicit restrictive covenants apply "anywhere within the continental United States" and are effective for a period of two years after Mr. Lobrano's employment with C. H. Robinson. The Agreement contains a choice of law clause of Minnesota state law and a choice of venue clause of Minnesota, Hennepin County District Court or the United States District Court for the District of Minnesota. The contract also contains a general severability clause and a reformation clause specific as to the geographical area provision.
Mr. Lobrano now seeks to obtain employment with a direct competitor of C. H. Robinson, where he seeks to perform the same role as that performed while working for C. H. Robinson. C. H. Robinson has stated that it will not accommodate this potential violation of the Management Employee Agreement and that it expects Mr. Lobrano to comply with the restrictive covenants in the Agreement as written.
Mr. Lobrano brought this action originally in Louisiana state court, in the First Judicial District Court for the Parish of Caddo, seeking a declaratory judgment that the restrictive covenants in the Management Employee Agreement were null and void under Louisiana state law. The action was removed to this Court on November 30, 2010. On December 10, 2010, Mr. Lobrano filed a Motion for Summary Judgment, along with a Motion for Expedited Consideration of the Motion for Summary Judgment. This Court denied Mr. Lobrano's Motion for Expedited Consideration on December 15, 2010 but scheduled Oral Arguments regarding Mr. Lobrano's Motion for Summary Judgment for January 25, 2010.
In the interim, C. H. Robinson initiated parallel litigation in Minnesota State Court, in the 4th Judicial District Court for the County of Hennepin, on December 21, 2010 seeking an injunction against Mr. Lobrano's further employment with competitors of C. H. Robinson. Mr. Lobrano removed the Minnesota action to the United States District Court for the District of Minnesota on December 23, 2010. Also on December 23, 2010, Mr. Lobrano filed a Motion for Reconsideration of his Motion for Expedited Consideration of the Motion for Summary Judgment.1 Defendants filed their Response and Memorandum in Opposition to Plaintiff's Motion for Summary Judgment on January 3, 2011. On the same date, Plaintiff through counsel informed the Court that the hearing for injunctive relief in Minnesota is scheduled for January 21, 2011.
The "Management Employee Agreement" states that the agreement is "made under and shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to conflicts of law principles thereof, or of any of the United States of America." Thus, the threshold issue in this case is which state law applies: Minnesota or Louisiana? Although the contract states that Minnesota law should apply, this Court, exercising diversity jurisdiction and applying the conflicts of law principles of Louisiana, 2 holds that Louisiana law applies.
To determine which state law applies, the Court first looks to Louisiana Civil Code Article 3540, which states:
All other issues of conventional obligations are governed by the law expressly chosen or clearly relied upon by the parties, except to the extent that law contravenes the public policy of the state whose law would otherwise be applicable under Article 3537.
Louisiana Civil Code Article 3537 states, as a general rule, that an issue of conventional obligations is "governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue." The language of Article 3537 continues:
That state is determined by evaluating the strength and pertinence of the relevant policies of the involved states in the light of: (1) the pertinent contacts of each state to the parties and the transaction, including the place of negotiation, formation, and performance of the contract, the location of the object of the contract, and the place of domicile, habitual residence, or business of the parties; (2) the nature, type, and purpose of the contract; and (3) the policies referred to in Article 3515, 3 as well as the policies of facilitating the orderly planning of transactions, of promoting multistate commercial intercourse, and of protecting one party from undue imposition by the other.4 (Footnotes added).
Thus, the Court must first determine which state's law would apply in the absence of the choice of law provision in the "Management Employee Agreement" by considering the factors of Article 3537. The Court initially notes that Minnesota is the domicile of C. H. Robinson and Louisiana is the domicile of Mr. Lobrano. Nonetheless, it is clear that Louisiana was the place of execution and performance of the contract by Mr. Lobrano. The subject of the contract was Mr. Lobrano's employment at C. H. Robinson's Shreveport office. Although C. H. Robinson's operations have a national reach and although C. H. Robinson states that Mr. Lobrano's "responsibilities for services and customers extended on a national and sometimes global basis, " there is no allegation that Mr. Lobrano physically performed any employment obligationsoutside of Louisiana during his 14 years of employment. Other than for the fact that Minnesota is the headquarters of C. H. Robinson, Minnesota has little contact with the employment transaction in this case.
Thus noted, the Court next finds application of Minnesota law would significantly impair the policies of Louisiana in protecting its employees from restrictions on the common right to work. Louisiana's statutory and jurisprudential law expresses a strong public policy against restrictions on Mr. Lobrano's "common right" to work in Louisiana. See SWAT 24 Shreveport Bossier, Inc. v. Bond, 20001695 (La. 6/29/01), 808 So. 2d 294, 298.
This strong public policy to protect employees from restrictive covenants on the employees' right to work is evidenced by Louisiana Revised Statute § 23:921(A)(2). This statute precludes employers and employees from choosing the state law that will apply to employment agreements, providing:
The provisions of every employment contract or agreement, or provisions thereof, by which any foreign or domestic employer or any other person or entity includes a choice of forum clause or choice of law clause in an employee's contract of employment or collective bargaining agreement, or attempts to enforce either a choice of forum clause or choice of law clause in any civil or administrative action involving an employee, shall be null and void except where the choice of forum clause or choice of law clause is expressly, knowingly, and voluntarily agreed to and ratified by the employee after the occurrence of the incident which is the subject of the civil or administrative action.5 (Emphasis added).
Through this provision, the Louisiana legislature has effectively determined that contracts for employment should be governed by the laws of the state whose policies would be most severely impaired, which in most instances for contracts for employment in Louisiana will be Louisiana. The Louisiana legislature has made this determination even though it potentially impedes interstate transactions and commerce.
The Louisiana Supreme Court has noted "Louisiana has long had a strong public policy disfavoring" non-compete and non-solicit restrictive covenants like those in the "Management Employee Agreement." SWAT 24, 808 So. 2d at 298. The purpose of Louisiana's strong public policy "is based upon an underlying state desire to prevent an individual from contractually depriving himself of the ability to support himself and consequently becoming a public burden." Id.
As is discussed in more detail below, Louisiana state courts, noting Louisiana's strong public policy against covenants in derogation of the common right to work, require strict compliance...
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