Nasco, Inc. v. Gimbert

Decision Date07 September 1977
Docket NumberNo. 32378,32378
Citation239 Ga. 675,238 S.E.2d 368
PartiesNASCO, INC. v. Steve GIMBERT.
CourtGeorgia Supreme Court

Freeman & Hawkins, A. Timothy Jones, Douglas L. Cronkright, Atlanta, for appellant.

Starkey, Benham & Mills, Tom Benham, Atlanta, for appellee.

HILL, Justice.

The plaintiff, Nasco, Inc., sought injunctions and liquidated damages against Gimbert, a former employee, based on noncompetition, nonsolicitation and nondisclosure covenants in his employment contract. Plaintiff also sought an injunction prohibiting the defendant from hiring plaintiff's employees under employment contracts with the plaintiff. The trial court denied injunctive relief and granted the defendant's motion for summary judgment.

1. The two-year covenants against competition, customer solicitation and disclosure, set forth in the contract, expired on April 9, 1977. Hence, this appeal is moot insofar as it seeks review of the denial of injunctive relief to enforce the contract.

2. The contract specifies that it shall be construed and enforced pursuant to Tennessee law. Plaintiff contends that the trial court erred in applying Georgia law.

The plaintiff is a Tennessee corporation which recently qualified to do business in Georgia. The contract indicates that the employee was a resident of Georgia when the contract was made and he was to perform the contract in Georgia, particularly west Georgia and Atlanta.

Although the plaintiff and the defendant had agreed that the contract would be construed pursuant to the law of Tennessee, the trial court applied the law of Georgia. We find no error. The 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. Code Ann. § 102-110; Ulman etc. Woolen Co. v. Magill, 155 Ga. 555, 117 S.E. 657 (1923); see Restatement, Second, Conflict of Laws § 187(2)(b) (1971). 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. Thomas v. Best Mfg. Corp., 234 Ga. 787(1), 218 S.E.2d 68 (1975); Howard Schultz & Assoc. of Southeast, Inc. v. Broniec, 239 Ga. 181(4), 236 S.E.2d 265 (1977).

3. Paragraph five of the contract is labeled as a covenant against disclosure of trade secrets. Actually it is a covenant against disclosure of " any information concerning any matters affecting or relating to the business of employer" including but not limited to the identity of any of employer's customers, its prices (including the prices at which it sells its products), and its production, manufacturing, sales promotion and merchandising methods and systems. The covenant is effective during employment and is in effect for two years following termination of employment. It provides for $50,000 as liquidated damages for breach, in addition to injunctive relief.

There is a great deal of public information concerning many matters which would affect or relate to the business of the employer; e. g., interest rates or minimum wage legislation.

This nondisclosure covenant is overly broad and unreasonable in that it would prohibit disclosure of information not needed for the protection of the employer's legitimate business interests. Durham v. Stand-By Labor, 230 Ga. 558(2), 198 S.E.2d 145 (1973). The employer cannot recover damages for breach of an unenforceable nondisclosure covenant. The trial court did not err in granting summary judgment against the employer's claim for liquidated damages.

4. The plaintiff sought an interlocutory injunction, pending further proceedings, to prevent defendant from pirating its employees under contract; i. e., to prevent interference by defendant with contractual relations between plaintiff and its employees. The trial court found that the defendant had hired one salesman who was an employee of the plaintiff. The court also found that the salesman's duties and abilities were similar to those of over one hundred other employees of plaintiff. For this reason the trial court did not abuse its discretion in denying an interlocutory injunction. Pendley v. Lake Harbin Civic Ass'n, 230 Ga. 631, 636, 198 S.E.2d 503 (1973); Code Ann. § 55-108.

5. Plaintiff contends that the trial court erred in granting summary judgment against plaintiff's claim for...

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61 cases
  • Wesley-Jessen, Inc. v. Armento
    • United States
    • U.S. District Court — Northern District of Georgia
    • August 14, 1981
    ...court properly refused to enter injunction because restrictive period had passed during pendency of litigation). Nasco, Inc. v. Gimbert, 239 Ga. 675, 238 S.E.2d 368 (1977) (period of restriction over by time of final appeal). On the other hand, if a preliminary injunction issues, or there i......
  • Barnes Group, Inc. v. C & C Products, Inc.
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • August 31, 1983
    ...969, 970 (D.P.R.1979); Boyer v. Piper, Jaffray & Hopwood, Inc., 391 F.Supp. 471, 472-73 (D.S.D.1975); Nasco, Inc. v. Gimbert, 239 Ga. 675, 676-77, 238 S.E.2d 368, 369 (1977), Sec. 187(2) has been applied as well to bypass the contractual choice of forum law, see, e.g., Keystone Leasing Corp......
  • Am. Mgmt. Servs. E., LLC v. Fort Benning Family Cmtys., LLC, A15A0125.
    • United States
    • Georgia Court of Appeals
    • July 15, 2015
    ...one member of the three-judge panel concurred in the judgment only. See Court of Appeals Rule 33(a).87 See Nasco, Inc. v. Gimbert, 239 Ga. 675, 675–676(2), 238 S.E.2d 368 (1977) (first ascertaining whether there were significant contacts with the state of Georgia, such that the choice of ou......
  • Kronovet v. Lipchin
    • United States
    • Maryland Court of Appeals
    • June 17, 1980
    ...the state with the materially greater interest in the matter. E. g., Blalock v. Perfect Subscription Co., supra ; Nasco, Inc. v. Gimbert, 239 Ga. 675, 238 S.E.2d 368 (1977); State ex rel. Meierhenry v. Spiegel, supra ; O'Brien v. Shearson Hayden Stone, Inc., supra. See generally Annot., 112......
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7 books & journal articles
  • Restrictions on Post-employment Competition by an Executive Under Georgia Law - Steven E. Harbour
    • United States
    • Mercer University School of Law Mercer Law Reviews No. 54-3, March 2003
    • Invalid date
    ...is a resident of Georgia, regardless of whether there is a choice of law provision in the employment contract. Nasco, Inc. v. Gimbert, 239 Ga. 675, 238 S.E.2d 368 (1977); Hulcher Servs., Inc. v. R.J. Corman R.R., 247 Ga. App. 486, 543 S.E.2d 461 (2000); Enron Capital & Trade Res. Corp. v. P......
  • Protecting Trade Secrets and Confidential Information in Georgia - C. Geoffrey Weirich and Daniel P. Hart
    • United States
    • Mercer University School of Law Mercer Law Reviews No. 60-2, January 2009
    • Invalid date
    ...even though the customer nonsolicitation provision in the same agreement was unenforceable). 115. See, e.g., Nasco, Inc. v. Gimbert, 239 Ga. 675, 676, 238 S.E.2d 368, 369 (1977) (affirming the trial court's refusal to honor a Tennessee choice-of-law provision concerning an employment agreem......
  • Business Associations - Paul A. Quiros, Lynn S. Scott, and James F. Brumsey
    • United States
    • Mercer University School of Law Mercer Law Reviews No. 53-1, September 2001
    • Invalid date
    ...at 487-88, 543 S.E.2d at 464. 192. Id. at 488-89, 543 S.E.2d at 464-65. 193. Id. at 489, 543 S.E.2d at 465 (citing Nasco, Inc. v. Gimbert, 239 Ga. 675, 238 S.E.2d 368 (1977)). 194. Id. (citing Enron Capital Corp. v. Pokalsky, 227 Ga. App. 727, 490 S.E.2d 136 (1997)). 195. Id. at 490-93, 543......
  • Labor and Employment Law
    • United States
    • Mercer University School of Law Mercer Law Reviews No. 64-1, September 2012
    • Invalid date
    ...Id. at *2-3.101. Id. at *3 (citing Carr v. Kupfer, 250 Ga. 106, 107, 296 S.E.2d 560, 562 (1982)).102. Id. (citing Nasco, Inc. v. Gimbert, 239 Ga. 675, 676, 238 S.E.2d 368, 369 (1977)).103. Id.104. Id. at *4. 105. Id.106. Id.107. Id. (citing Comm'rs of Rds. & Revenues of Fulton Cnty. v. Davi......
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