Orkin Exterminating Company, Inc v. Weaver

• Decision Date: 07 April 1975
• Docket Number: No. 74--311,74--311
• Parties: Page 69 521 S.W.2d 69 257 Ark. 926 ORKIN EXTERMINATING COMPANY, INC., Appellant, v. Albert R. WEAVER, Appellee. Supreme Court of Arkansas
• Court: Arkansas Supreme Court

Page 69

521 S.W.2d 69

257 Ark. 926

ORKIN EXTERMINATING COMPANY, INC., Appellant v Albert R. WEAVER, Appellee.

No. 74--311.

Supreme Court of Arkansas.

April 7, 1975.

Rehearing Denied April 28, 1975.

Coleman, Gantt, Ramsay & Cox, Pine Bluff, for appellant.

Baim, Baim & Mullis, Pine Bluff, for appellee.

GEORGE ROSE SMITH, Justice.

The appellant Orkin is engaged in the pest control business in many states. The appellee Weaver worked for Orkin, as a sales and service representative, from 1965 until he was discharged in 1973 for having failed to file reports of his calls upon customers. Within a week Weaver re-entered the pest control business, in partnership with another former Orkin employee. Orkin then brought this suit to enforce, by injunction, a provision in Weaver's contract of employment by which he agreed not to engage in the pest control business in certain areas for a period of two years after the termination of his employment by Orkin. The chancellor denied relief, finding the contractual provision to be invalid. We agree with his decision.

Inasmuch as Orkin relies upon our holding in Orkin Exterminating Co. v. Murrell, 212 Ark. 449, 206 S.W.2d 185 (1947), we may conveniently use that opinion as a basis for our discussion of this case. There Murrell had resigned as the manager of Orkin's Little Rock office and had gone into the pest control business for himself. Murrell's contract, as compared to Weaver's, was less restricted as to time--one year instead of two years--but was broader as to territory. We sustained the contract, upon proof that trade secrets, special training, confidential information, and access to lists of customers were involved. We need only compare the facts in the Murrell case to the facts in this case, which are practically undisputed.

First, trade secrets and confidential information. More than 25 years ago, when Murrell was decided, there may have been such esoteric data, but according to the present record that condition no longer prevails. Training in the field is available at the college level, in Arkansas. Technical manuals upon the subject can be purchased. The Arkansas Association of Pest Control is a source of information to its members. The pesticides used in the business are available upon the open market to the public in general. Federal law requires that directions for their use be set forth on the label. The witness Henry, who was Orkin's manager when Weaver was discharged, testified:

Q. Now, in your opinion, while this man was an employee of yours at Orkin Exterminating Company, did he have access to any trade secrets?

A. Really, I don't believe you would call them trade secrets. It was just information that the company felt should be kept confidential. But information that if you wanted to research all facilities that are available you could come up with it.

Q. Not information that Orkin and Orkin alone had, is that correct?

A. That's right.

In Rector-Phillips-Morse v. Vroman, 253 Ark. 750, 489 S.W.2d 1 (1973), we held that such information--'confidential' in the sense that no company voluntarily opens its records to its competitors--is not secret information in a case such as this.

Next, the matter of special traning. Weaver worked for Orkin for more than seven years, during which he attended four or five training schools. He testified: 'I wouldn't call it special training. I mean, if you have been to one meeting you have been to all of them.' That testimony is not contradicted. There is nothing to suggest that Orkin did anything more than train its own employees, as a matter of self-interest, to be proficient in their jobs. There is no proof that similar training was not readily obtainable elsewhere.

Finally, in Murrell we stressed the former employee's 'access to all records, customers' lists and credit ratings.' Murrell, however, was a branch manager and as such had access to all records in the office. By contrast, Weaver was a route man who was familiar only with the list of some 250 customers that he serviced every month. That familiarity was essential to the performance of his duties. Orkin's witness Richardson, its Pine Bluff manager at the time of the trial, readily admitted that he could not think of any salesman for any company in the United States who did not have contact with customers.

In Murrell we noted that Orkin's former employee solicited and procured 'a large number' of its best customers. In the case at bar Orkin proved that it had between 702 and 850 customers who subscribed to its monthly pesticide service, plus 4,000 subscribers to its annual termite service. In its case in chief Orkin proved that Weaver obtained exactly one of its customers after he left Orkin (but it was shown later in the case that the customer in question was not even in the area protected by the contract). Weaver readily admitted, in response to questions by his own attorney, that he was servicing 18 persons or firms that 'might' have been Orkin's customers. Thus the proof at the time of trial, almost a year after Weaver's discharge, was that he had obtained at most 18 out of the 702 monthly customers that Orkin had. Orkin's manager admitted, however, that the company lost about 40% of its customers every year, by normal attrition.

The basic flaw in Orkin's position is that its contract, according to the proof, is directed not against unfair competition but against competition of any kind on the part of its former employees. Upon this point Orkin introduced its current manager, Richardson, who explained the reason for the contract in these words:

The main reason is, you take a man, you train him in the business, you send him out to service a customer, and they develop a personal contact with the customers, personal relationships, then should they leave for any reason and go in a business of their own they still have this personal contact which means that they have the ability, the opportunity to take a customer from us as their own.

Weaver introduced Orkin's former manager, Henry, who testified:

Q. And this agreement was strictly an agreement that was to, in your opinion, hold down competition by former salesmen and former employees, is that correct?

A. I believe that's absolutely the only reason for it.

Q. It had nothing to do with the trade secrets and confidential information?

A. No, sir.

Precisely the same point of view is urged in Orkin's brief in this court: '. . . preventing a former employee from competing against his employer and using the training, skills and information acquired from his employer is a valid reason for restriction.'

If Orkin's position is sound, then any employer in any business devoted to selling--whether the sales be of insurance, real estate, clothing, groceries, hardware, or anything else--can validly prohibit its former salesmen from engaging in that business within the vicinity for as long as two years after the termination of employment. Needless to say, the law does not provide any such protection from ordinary competition. Vander Werf v. Zunica Realty Co., 59 Ill.App.2d 173, 208 N.E.2d 74 (1965); Renwood Food Products v. Schaefer, 240 Mo.App. 939, 223 S.W.2d 144 (1949); Grace v. Orkin Exterminating Co., 255 S.W.2d 279 (Tex.Civ.App., 1953); Lakeside Oil Co. v. Slutsky, 8 Wis.2d 157, 98 N.W.2d 415 (1959); Herbert Morris, Ltd., v. Saxelby, (1916) A.C. 688, Ann.Cas.1916D, 537.

Orkin also relies upon a paragraph in the contract which recites that if a court should find the territorial restrictions to be unreasonable, then the testrictions are to be limited to any portions of the entire territory that were worked by the employee during any period of 90 days or more within the last twelve months preceding the termination of the agreement. We need not discuss this point, because the invalidity of this contract is not due only to the territorial restrictions. (And see Rector-Phillips-Morse v. Vroman, supra.)

Finally, after...