Moore v. Eggers Consulting Co., Inc., S-95-663

• Decision Date: 02 May 1997
• Docket Number: No. S-95-663,S-95-663
• Citation: 562 N.W.2d 534,252 Neb. 396
• Court: Nebraska Supreme Court
• Parties: , 134 Lab.Cas. P 58,292, 12 IER Cases 1519, 3 Wage & Hour Cas.2d (BNA) 1652 Brad J. MOORE, Appellee, v. EGGERS CONSULTING COMPANY, INC., Appellant.

Page 534

562 N.W.2d 534

252 Neb. 396, 134 Lab.Cas. P 58,292, 12 IER Cases 1519,

3 Wage & Hour Cas.2d (BNA) 1652

Brad J. MOORE, Appellee, v. EGGERS CONSULTING COMPANY, INC., Appellant.

No. S-95-663.

Supreme Court of Nebraska.

May 2, 1997.

Syllabus by the Court

1. Summary Judgment: Appeal and Error. In appellate review of a summary judgment, the court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence.

2. Statutes: Appeal and Error. Statutory interpretation is a matter of law in connection with which an appellate court has an obligation to reach an independent, correct conclusion irrespective of the determination made by the court below.

3. Demurrer: Pleadings: Appeal and Error. In an appellate court's review of a ruling on a general demurrer, the court is required to accept as true all the facts which are well pled and the proper and reasonable inferences of law and fact which may be drawn therefrom, but not the conclusions of the pleader.

4. Restrictive Covenants: Employer and Employee. To determine whether a covenant not to compete is valid, the court must determine whether the restriction is reasonable in the sense that it is not injurious to the public, whether the restriction is reasonable in the sense that it is no greater than is reasonably necessary to protect the employer in some legitimate interest, and whether the restriction is reasonable in the sense that it is not unduly harsh and oppressive on the employee.

5. Restrictive Covenants: Employer and Employee. An employer has a legitimate business interest in protection against a former employee's competition by improper and unfair means, but is not entitled to protection against ordinary competition from a former employee.

6. Restrictive Covenants: Employer and Employee: Goodwill. A finding that an employer had a legitimate business interest in customer goodwill does not automatically validate a covenant not to compete.

7. Restrictive Covenants: Employer and Employee. An employer does not ordinarily have a legitimate business interest in the postemployment preclusion of an employee's use of some general skill.

8. Restrictive Covenants: Employer and Employee. A covenant not to compete may be valid only if it restricts the former employee from working for or soliciting the former employer's clients or accounts with whom the former employee actually did business and has personal contact.

9. Restrictive Covenants: Courts: Reformation. It is not the function of the courts to reform unreasonable covenants not to compete solely for the purpose of making them legally enforceable.

10. Consumer Protection. Neb.Rev.Stat. § 59-1602 (Reissue 1993) of the Consumer Protection Act prohibits unfair methods of competition and unfair or deceptive acts in the conduct of any trade or commerce.

11. Consumer Protection. Neb.Rev.Stat. § 59-1607 (Reissue 1993) of the Consumer Protection Act states that the labor of a human being shall not be a commodity or article of commerce.

12. Employer and Employee: Wages: Words and Phrases. Neb.Rev.Stat. § 48-1229(4) (Reissue 1993) of the Nebraska Wage Payment and Collection Act provides that wages shall mean compensation for labor or services rendered by an employee, including fringe benefits, when previously agreed to and conditions stipulated have been met by the employee, whether the amount is determined on a time, task, fee, commission, or other basis. Wages shall include commissions on all orders delivered and all orders on file with the employer at the time of termination of employment less any orders returned or canceled at the time suit is filed.

13. Employer and Employee: Wages: Time: Costs: Attorney Fees. Neb.Rev.Stat. § 48-1231 (Reissue 1993) of the Nebraska Wage Payment and Collection Act provides that an employee having a claim for wages which are not paid within 30 days of the regular payday designated or agreed upon may institute suit for such unpaid wages in the proper court. If an employee establishes a claim and secures judgment on the claim, such employee shall be entitled to recover (1) the full amount of the judgment and all costs of such suit and (2) if such employee has employed an attorney in the case, an amount for attorney fees assessed by the court, which fees shall not be less than 25 percent of the unpaid wages. If the cause is taken to an appellate court and the plaintiff recovers a judgment, the appellate court shall tax as costs in the action, to be paid to the plaintiff, an additional amount for attorney fees in such appellate court, which fees shall not be less than 25 percent of the unpaid wages.

14. Legislature: Employer and Employee: Wages: Costs. The Legislature has made it clear that employers who unsuccessfully subject employees to litigation to recover wages owed are subject to being taxed fees and costs.

J Russell Derr, of Erickson & Sederstrom, P.C., Omaha, for appellant.

Robert E. O'Connor, Jr., Omaha, for appellee.

WHITE, C.J., CAPORALE, WRIGHT, CONNOLLY, and GERRARD, JJ., and LIVINGSTON, D.J.

LIVINGSTON, District Judge.

This is an action based upon an employment agreement between employer Eggers Consulting Company, Inc. (Eggers), and employee Brad J. Moore in which Eggers claims the district court erred in finding a covenant not to compete between the parties was unenforceable and in granting summary judgment to Moore under the Nebraska Wage Payment and Collection Act.

FACTS

Moore was employed by Eggers from May 1989 to August 18, 1992. Moore's job title was personnel recruiter, and his duties included solicitation of, consultation with, and placement of employee prospects. In August 1989, Moore was asked to sign an employment agreement, which applied retroactively from May 1989. The employment agreement defined the geographic area and time period in which employees agreed not to compete. The agreement defined the geographic area as the continental United States and the period of time restricted as 1 year. The area restricted was the general industry of data-processing personnel. At the time of this litigation, Moore was the sole proprietor of Regency Group, an executive recruiting firm in North Sioux City, South Dakota. With the Regency Group, Moore continues to place people with companies in the data-processing field.

On September 30, 1992, Moore sued Eggers for unpaid wages due in the amount of $16,343.72. This amount included a $1,500 bonus trip based on performance. Eggers counterclaimed, alleging that Moore had, inter alia, violated the terms of a covenant not to compete between the parties. Moore stated that in the year after he left Eggers, he contacted companies that he had dealt with while he was working for Eggers.

Eggers' counterclaim also included six other causes of action: interference with business relationships, breach of fiduciary duty, unfair competition, unfair and deceptive trade practices, misappropriation of trade secrets, and replevin. As to the first through fifth and the seventh causes of action, Eggers prayed that Moore pay liquidated damages in the amount of $100 per day for each day Moore allegedly had broken and continued to break the provisions of the covenant not to compete.

Eggers' fourth cause of action, unfair and deceptive trade practices, alleged that Moore's actions amounted to unfair or deceptive acts or practices in the conduct of trade or commerce in violation of the Consumer Protection Act. Moore filed a demurrer to this cause of action, claiming that the Consumer Protection Act, specifically Neb.Rev.Stat. § 59-1607 (Reissue 1993), excepts the labor of a human being as a commodity or article of commerce. The court granted Moore's demurrer, finding that the Consumer Protection Act excludes the labor of human beings and, therefore, that Eggers' fourth cause of action did not state a cause of action.

Moore filed a motion for summary judgment as to Eggers' seventh cause of action, alleging breach of the covenant not to compete. The court sustained Moore's motion, finding that the provisions of the employment agreement were overbroad and should not be enforced.

The matter was called for trial on June 6, 1995. At the pretrial conference, counsel stipulated that the lost wage claims, if Moore was entitled to recover, amounted to $16,343.72. The parties then agreed that none of the seven counts of Eggers' counterclaim remained for determination by either a jury or the court. Moore then made an oral motion for summary judgment for "wages" under the Nebraska Wage Payment and Collection Act. Eggers' counsel waived the statutory 10-day notice regarding the summary judgment motion. The court found that the Nebraska Wage Payment and Collection Act voided the employment agreement's definition of wages because the agreement was against public policy. The district court awarded Moore $16,343.72 in unpaid wages and $4,085.93 in attorney fees.

This appeal was originally filed in the Nebraska Court of Appeals. We transferred it to this court's docket pursuant to our power to regulate caseloads of the Court of Appeals and this court.

ASSIGNMENTS OF ERROR

Eggers claims the district court erred in (1) granting summary judgment in favor of Moore as to Eggers' cause of action seeking to enforce the covenant not to compete, (2) determining that Eggers did not state a cause of action pursuant to the Consumer Protection Act, (3) determining that the Nebraska Wage Payment and Collection Act was applicable to Moore's claim, and (4) awarding Moore unpaid wages.

STANDARD OF REVIEW

In appellate review of a summary judgment, the court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence. Stones v. Sears, Roebuck & Co., 251 Neb. 560, 558 N.W.2d 540 (1997); Doe v. Golnick, 251 Neb....