WELCH, J.
This writ application comes before us on remand from the Louisiana Supreme Court for briefing, argument and full opinion. The issue raised by the application is whether the trial court erred in denying the plaintiffs' motion for partial summary judgment and in determining that Pennsylvania law, rather than Louisiana law, governed the plaintiffs' No Competition, Non-Disclosure Agreements ("NCND agreements"). For reasons that follow, we reverse the judgment of the trial court, grant the plaintiffs' motion for partial summary judgment, and remand this matter for further proceedings.
The plaintiffs, Patrick O'Hara and Wallace Schaefer, filed a petition for declaratory judgment against the defendants, Globus Medical, Inc. ("Globus"), a Delaware corporation that has its principal place of business in Pennsylvania, and Vortex Spine, LLC ("Vortex"), a Louisiana limited liability company. In the petition, the plaintiffs sought to have certain restrictive covenants declared unenforceable pursuant to La. R.S. 23:921.
According to the plaintiffs' petition, they have made their living for several years in the field of medical equipment sales and related services in Louisiana. The plaintiffs alleged that they acted as sales representatives for Vortex (a distributor for Globus), which manufactures, distributes, and sells products and services for spinal surgery, but that they have never been employed by Globus.
The EDA contains a section addressing confidentiality/no competition, which provides, in part, that "neither Distributor [Vortex] nor any of its employees, agents, representatives, nor Principals ... shall, directly or indirectly, become ... a proprietor, stockholder, director, officer, employee, agent, representative or member of any entity in the continental United States which is engaged in the medical products business." The EDA further provides that "the parties have expressly agreed that this Agreement, the parties' performance hereunder[,] and the relationship between them shall be governed by, construed[,] and enforced in accordance with the laws of the Commonwealth of Pennsylvania, without regard to the principles thereof regarding conflicts of laws."
Mr. Schaefer executed an "Exclusive Distributor Representative No Competition and Non-Disclosure Agreement" with Vortex on July 25, 2011 ("Schaefer NCND Agreement"), although the form agreement was supplied by Globus to Vortex pursuant to the EDA. Mr. Schaefer signed the agreement under the signatory line for "agent," and Mr. Long signed under the signatory line for "Company."
The Schaefer NCND Agreement also contained a "No Competition & No Solicitation Covenant" providing as follows:
The Schaefer NCND Agreement also provided that "Company has agreed to assign its rights and benefits under this NCND Agreement to Globus, if Globus so requests" and "[i]f such assignment occurs, Company and Agent Acknowledge that Globus shall enjoy all of the rights and benefits of the Company under this NCND Agreement." Lastly, the Schaefer NCND Agreement provided that "[i]n order to maintain uniformity in the interpretation of this NCND Agreement[,] the parties have expressly agreed that this NCND Agreement, the parties' performance hereunder[,] and the relationship between them shall be governed by, construed[,] and enforced in accordance with the laws of the Commonwealth of Pennsylvania, without regard to the principles thereof regarding conflicts of laws."
Mr. O'Hara executed a "No Competition and Non-Disclosure Agreement" ("O'Hara NCND Agreement") with Globus on September 7, 2007; however, the agreement contains no signature by anyone on behalf Globus. Nonetheless, this agreement identifies Globus as the "Company" and Mr. O'Hara as "Employee." The "Acknowledgments" contained in the O'Hara NCND Agreement are substantially similar to those contained in the Schaefer NCND Agreement, other than the term "Employee" is used throughout the O'Hara NCND Agreement rather than the term "Agent" and the O'Hara NCND Agreement is referenced as "the Employment Agreement" rather "the Agency Agreement." In addition, one of the acknowledgments in the O'Hara NCND Agreement further provides "Employee performs services for and on behalf of the Company, either as a direct employee or through an independent service contract, for which Company compensates Employee." While the O'Hara NCND Agreement does not contain an acknowledgment defining the "Agency Agreement Term," it does contain a similar "No Competition and No Solicitation Covenant," which defines the "No Competition Period," as the time period encompassing both the "term of the Employment Agreement and the 12-month period immediately following the termination of the Employment Agreement." The O'Hara NCND Agreement also imposed the same "10-mile radius" restriction around each assigned account in the event the "Employee has been assigned certain accounts and not a geographic area" and "[i]n the event the Employee has not been assigned specific accounts or a specific geographic region, the No Competition Territory shall be defined as the United States of America." Mr. O'Hara likewise agreed to the same no competition or solicitation covenant as did Mr. Schaefer, such that Mr. O'Hara agreed, during the "No Competition Period" he would not "solicit, call on, interfere with, or attempt to divert, entice away, sell to[,] or market to any customer, Hospital[,] or Medical Personnel in the No Competition Territory." Lastly, the O'Hara NCND Agreement also contained a provision that the interpretation of the
On April 23, 2014, the vice-president of Globus, Kelly G. Huller, sent a letter to Mr. Long at Vortex. According to the letter, the EDA had terminated April 18, 2014 when the last extension of the EDA expired. The letter requested the return of inventory and confidential information and further reminded Mr. Long of the "post-termination contractual obligations of non-competition [and] non-solicitation... contained in ... the EDA[,] binding [Mr. Long], Vortex[,] and Vortex employees and agents to certain restrictions on competition in the parishes outlined in the EDA." The letter also stated that Globus had "reason to believe you and/or Vortex (and its employees or agents) are not abiding by the post-termination restrictions" and "demand[ed] that [Mr. Long], Vortex[,] and its employees and agents immediately cease and desist all conduct in violation of the EDA restrictive covenants."
A week later, on April 30, 2014, the plaintiffs filed this lawsuit against Vortex
On August 6, 2014, the plaintiffs filed a motion for partial summary judgment ("motion for summary judgment"), asserting that they were entitled to a judgment in their favor and against the defendants, Vortex and Globus, declaring that the EDA (between Vortex and Globus) and the two NCND Agreements were unenforceable against them and that the plaintiffs were free to compete against Vortex and Globus, "including but not limited to soliciting any past, present, and future customers of Vortex and Globus, without geographical or other limitation." In support of this motion, the plaintiffs asserted that both the EDA and the NCND contained choice of law clauses that violated Louisiana law pertaining to restrictive covenants and that these NCND agreements failed to properly define the geographic scope of the restrictive covenants as required by
In support of the plaintiffs' motion for summary judgment, they submitted the EDA and both NCND Agreements, along with an affidavit from Mr. Schaefer and Mr. O'Hara, in which each of them attested to the respective date that they signed their respective NCND Agreement in Orleans Parish, Louisiana, and to the following pertinent statements:
The record before us reflects that neither Globus nor Vortex filed an opposition to the plaintiffs' motion for summary judgment. However, on August 22, 2014, Globus filed a reconventional demand against the plaintiffs, claiming that the NCND Agreements were enforceable under Pennsylvania law and seeking a temporary restraining order and preliminary injunction, as well as damages arising from the plaintiffs' alleged breaches of the NCND Agreements.
At a hearing on September 12, 2014, the trial court denied the plaintiffs' motion for summary judgment.
Patrick O'Hara and Wallace Schaefer v. Globus Medical, Inc. and Vortex Spine, LLC, 2014-1436 (La. App 1st Cir. 11/3/14) (unpublished action).
In the writ application, the plaintiffs claim that the trial court erred in denying their motion for partial summary judgment and ruling that Pennsylvania law applied to the restrictive covenants. The plaintiffs, who worked in Louisiana as sales representatives for Vortex, a Louisiana company, and have never worked for Globus, argue that the trial court's application of Pennsylvania law to otherwise unenforceable non-compete agreements prevents them from working in Louisiana. The plaintiffs assert that the applicable Louisiana Civil Code articles governing choice of law require the application of Louisiana law, as Louisiana is the state "whose policies would be most seriously impaired if its law were not applied." La. C.C. art. 3537 and 3540. They further assert that the application of Pennsylvania law to this case thwarts Louisiana's strong public policy against covenants not to compete and that Pennsylvania's policies would not be impaired by the application of Louisiana law to restrictive covenants that have no bearing on work performed in Pennsylvania and do not pertain to an underlying contractual relationship between the Pennsylvania defendant and the Louisiana plaintiffs.
The plaintiffs further submit that La. R.S. 23:921(A) prohibits choice of law
Globus contends that the trial court was correct in denying the plaintiffs' motion for summary judgment and finding that it was entitled to the preliminary injunction because the statutory prohibition against choice of law provisions in "employment agreements" (set forth in La. R.S. 23:921(A)(2)) applies only to "employees" and not to "independent contractors." Globus further contends that a Louisiana business person may freely choose to select the law that governs post-contractual restrictions on competition where the Louisiana citizen receives confidential information, trade secrets, and substantial training of another state's corporation. Globus argues that Pennsylvania is the law of the state whose policies would be most impaired by the application of Louisiana law.
A motion for summary judgment is a procedural device used to avoid a full-scale trial when there is no genuine issue of material fact, and the summary judgment procedure is favored and designed to secure the just, speedy, and inexpensive determination of every action. La. C.C.P. art. 966(A)(2); Power Marketing Direct, Inc. v. Foster, 2005-2023 (La.9/6/06), 938 So.2d 662, 668. A motion for summary judgment will be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, admitted for the purposes of the motion for summary judgment, show that there is no genuine issue of material fact and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(B).
On a motion for summary judgment, the burden of proof is on the mover. If, however, the mover will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the mover's burden on the motion does not require that all essential elements of the adverse party's claim, action, or defense be negated. Instead, the mover must point out to the court that there is an absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. Thereafter, the adverse party must produce factual evidence sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial. If the adverse party fails to meet this burden, there is no genuine issue of material fact, and the mover is entitled to summary judgment. La. C.C.P. art. 966(C)(2).
Summary judgments are reviewed on appeal de novo, with the appellate court using the same criteria that govern the trial court's determination of whether summary judgment is appropriate: whether there is any genuine issue of material fact and whether the mover is entitled to judgment as a matter of law. Power Marketing Direct, Inc., 938 So.2d at 669.
As set forth above, the plaintiffs sought partial summary judgment declaring: (1) that the EDA between Vortex and Globus was not enforceable against the plaintiffs, (2) that the NCND Agreements were not enforceable against the plaintiffs, i.e., that the O'Hara NCND Agreement was not enforceable against Mr. O'Hara and that the Schaefer NCND agreement was not enforceable against Mr. Schaefer, and (3) that the plaintiffs were free to compete against Vortex and Globus. Accordingly,
With regard to the EDA between Vortex and Globus, we note that the material facts are not in dispute; therefore we look solely to the legal question presented by the plaintiffs' motion for summary judgment, i.e., whether, as a matter of law, the EDA between Vortex and Globus is binding or enforceable against the plaintiffs, who were not parties to that contract.
It is well settled that only a party to a contract can be bound by its provisions. Farmers State Bank and Trust Company v. Leger, 503 So.2d 1141, 1143 (La.App. 3rd Cir.1987), citing La. C.C. art. 1983 (which provides that "[c]ontracts have the effect of law for the parties"). In this case, there is no dispute that the plaintiffs were not parties to the EDA agreement between Vortex and Globus. Thus, the plaintiffs are not bound by any of its terms, including the restrictive covenants and the choice of law clauses. Accordingly, the plaintiffs are entitled to summary judgment in their favor and against Vortex and Globus declaring that the EDA between Vortex and Globus is unenforceable against them.
As previously noted, the O'Hara NCND Agreement was between Globus and Mr. O'Hara. Although it is undisputed that Mr. O'Hara was an independent contractor of Vortex, Vortex was not a party to the O'Hara NCND agreement and the record does not reveal any legal basis or right that would allow Vortex to seek enforcement of the O'Hara NCND Agreement. See La. C.C. arts. 1906 and 1983, et seq.
In determining whether the O'Hara NCND Agreement is enforceable by Globus, we must examine the choice of law provision and non-competition provisions set forth in that agreement in conjunction with the evidence offered on the motion for summary judgment.
Louisiana Civil Code article 14 states, "Unless otherwise expressly provided by the law of this state, cases having contacts with other states are governed by the law selected in accordance with the provisions of Book IV of this Code." With regard to conventional obligations, Book IV of the Louisiana Civil Code contains the following applicable provisions:
Louisiana Civil Code article 3537 provides:
Additionally, La. C.C. art. 3540 provides:
In this case, the evidence offered by Mr. O'Hara in support of the motion for summary judgment established that the O'Hara NCND Agreement was executed in Louisiana; that when he worked as a sales representative for Vortex (a Louisiana company), he was a Louisiana resident; that all of the sales that he effectuated for Vortex were performed in Louisiana; and that he has never performed services for or received compensation from Globus (a Pennsylvania company). No evidence was offered by Globus (or Vortex) establishing that Mr. O'Hara had any contacts with Pennsylvania; however, the O'Hara NCND Agreement provided that the agreement and the relationship between the parties would be governed by the law of Pennsylvania.
Under Louisiana law, it is generally acceptable for contracting parties to make a choice of state law that will govern the agreement between them. That choice will be given effect, except to the extent that law contravenes the public policy of the state whose law would otherwise be applicable under La. C.C. art. 3537. La. C.C. art. 3540; THH Properties Ltd. Partnership v. Hill, 41,038 (La.App. 2nd Cir.6/2/06), 930 So.2d 1214, 1218. In this regard, we note that the O'Hara NCND Agreement identifies Mr. O'Hara as an "Employee" and the NCND Agreement as "the `Employment Agreement.'" Over the years, Louisiana has had a strong public policy disfavoring non-competition agreements between employers and employees. SWAT 24 Shreveport Bossier, Inc. v. Bond, 2000-1695 (La. 6/29/01), 808 So.2d 294, 298. This public policy is expressed in La. R.S. 23:921, which provides, in pertinent part, as follows:
(Emphasis added.)
Louisiana's strong public policy restricting these types of agreements 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. Because such convenants are in derogation of the common right, they must be strictly construed against the party seeking their enforcement.
Globus contends that La. R.S. 23:921(A)(2) does not invalidate the choice of law clause in the O'Hara NCND Agreement because the statute only prohibits choice of law clauses in an employee's employment contract or agreement and Mr. O'Hara was an independent contractor and not an employee. Thus, Globus contends the prohibition or restriction set forth in La. R.S. 23:921(A)(2) is inapplicable; thus, the Pennsylvania choice of law clause in the O'Hara NCND Agreement does not contravene the public policy of this state and is enforceable.
The record reflects that Mr. O'Hara was an independent contractor; however, he worked in that capacity for Vortex — not for Globus. Further, the O'Hara NCND agreement was between Mr. O'Hara and Globus. Since Globus is seeking enforcement of its NCND agreement with Mr. O'Hara, Mr. O'Hara's status as an independent contractor for Vortex is irrelevant.
The O'Hara NCND Agreement unequivocally identifies the agreement as "the `Employment Agreement'" and Mr. O'Hara as "Employee." The provisions of La. R.S. 23:921(A)(2) prohibit choice of law clauses in an employee's employment contracts or agreements. Thus, the choice of Pennsylvania law clause in the O'Hara NCND Agreement is null and void and contravenes the public policy of this state. Accordingly, the trial court erred in determining that Pennsylvania law, rather than Louisiana law, governs the validity of the O'Hara NCND agreement, See La. C.C. arts. 3537 and 3540.
Having determined that Louisiana law is applicable, we next turn to the issue of whether the O'Hara NCND Agreement was confected in accordance with Louisiana law. Although Louisiana law generally disfavors non-competition agreements between employees and employers, certain statutory exceptions have been set forth by the legislature. As set forth above, La. R.S. 23:921(C) provides in pertinent part that an "employee may agree with his employer to refrain from carrying on or
An agreement limiting competition must strictly comply with the requirements of La. R.S. 23:921. See LaFourche Speech & Language Services, Inc. v. Juckett, 94-1809 (La.App. 1st Cir.3/3/95), 652 So.2d 679, 680, writ denied, 95-0850 (La. 5/12/95), 654 So.2d 351; Kimball v. Anesthesia Specialists of Baton Rouge, Inc., 2000-1954 (La.App. 1st Cir. 9/28/01), 809 So.2d 405, 411 writs denied, 2001-3316, 2001-3355 (La.3/8/02), 811 So.2d 883 and 886. A noncompetition agreement must specifically name the parishes or municipalities in which the agreement is to have effect. Vartech Systems, Inc. v. Hayden, 2005-2499 (La.App. 1st Cir. 12/20/06), 951 So.2d 247, 258. What is important is that the geographic limitation be express and clearly discernable. Id. The purpose of requiring that the geographic limitation be specified is to provide an objective measure of the agreement's validity and for the employee to know and understand the limitations upon the signing of the agreement. See Bell v. Rimkus Consulting Group, Inc. of Louisiana, 2007-0996 (La.App. 5th Cir. 3/25/08), 983 So.2d 927, 934, writ denied, 2008-0891 (La. 6/20/08), 983 So.2d 1276; Aon Risk Services of Louisiana, Inc. v. Ryan, 2001-0614 (La.App. 4th Cir. 1/23/02), 807 So.2d 1058, 1062.
In this case, the affidavit of Mr. O'Hara established that he was not assigned to a geographic area, but was assigned to various hospitals, medical centers, and individual surgeons within a hospital or medical practice. This statement was not contradicted by either Vortex of Globus. The O'Hara NCND Agreement then establishes the no-competition territory for Mr. O'Hara's as "the geographic area within a 10-mile radius of each assigned account." However, La. R.S. 23:921 requires the parish or parishes, municipality or municipalities, or parts thereof, be "specified." There is no such specification in the O'Hara NCND Agreement nor is the geographic limitation express or clearly discernable. The O'Hara NCND Agreement purports to establish the no-competition territory as a 10-mile radius from each account; however, the term "account" is not defined and no specific accounts or locations are identified or defined in the O'Hara NCND Agreement. Thus, there is no objective measure of the geographical limitation in the O'Hara NCND Agreement such that Mr. O'Hara would know and understand the limitations when he signed the agreement. See Bell, 983 So.2d at 934.
Strictly construing the provisions of the O'Hara NCND agreement, we find that its non-competition and non-solicitation provisions fail to comply with the statutory requirements set forth in La. R.S. 23:921(C); thus, those provisions contained therein are invalid and unenforceable as a matter of law. Accordingly, Mr. O'Hara is entitled to summary judgment in his favor and against Vortex and Globus declaring the O'Hara NCND Agreement unenforceable against him.
Concerning the enforceability of the Schaefer NCND agreement, the plaintiffs offered, in support of their motion for summary judgment, the affidavit of Mr. Schaefer, with a copy of the Schaefer NCND Agreement attached thereto. As previously set forth, the Schaefer NCND Agreement was between Mr. Schaefer and
Thus, in order for Globus to enforce the Schaefer NCND Agreement, it must have an assignment from Vortex of Vortex's rights under the Schaefer NCND Agreement. Globus did not offer any evidence in opposition to the plaintiffs' motion for summary judgment and the record before us does not contain any evidence of such an assignment from Vortex to Globus. Absent such assignment, we must conclude that Globus has no right to enforce the Schaefer NCND Agreement against Mr. Schaefer.
With regard to its enforceability by Vortex, we again must examine the choice of law provision and non-competition provisions set forth in that agreement in conjunction with the evidence offered on the motion for partial summary judgment. The evidence offered by Mr. Schaefer established that the Schaefer NCND Agreement was executed in Louisiana; that when he worked as a sales representative for Vortex (a Louisiana company), he was a Louisiana resident; that all of the sales that he effectuated for Vortex were effectuated in Louisiana; and that he has never performed services for, or received compensation from, Globus (a Pennsylvania company). No evidence was offered by Vortex (or Globus) establishing that Mr. Schaefer had any contacts with Pennsylvania; however, the Schaefer NCND Agreement provided that the agreement and the relationship between the parties would be governed by the law of Pennsylvania.
The Schaefer NCND agreement identifies Mr. Schaefer as an "Agent" and the NCND Agreement as "the `Agency Agreement.'" As to Vortex, Mr. Schaefer stated in his affidavit that he was an independent contractor. Louisiana Revised Statutes 23:921(C) authorizes independent contractors "whose work is performed pursuant to a written contract" to enter into a noncompetition agreement "on the same basis as if the independent contractor were an employee." Thus, reading La. R.S. 23:921(A)(2) and (C) together, the plaintiffs argue that, since independent contractors can enter into non-competition and non-solicitation agreements on the same basis as an employee, independent contractors, like employees, cannot be bound by foreign choice of law clauses in such agreements. Thus, La. R.S. 23:921(A)(2) renders null and void
However, Globus claims that La. R.S. 23:921(A)(2) does not invalidate the choice of law clause.
The resolution of this issue is a matter of statutory construction. In all cases of statutory construction or interpretation, legislative intent is the fundamental question, and the well-established rules of statutory construction are designed to ascertain and enforce the intent of the statute. Boudreaux v. Louisiana Dept. of Public Safety and Corrections, 2012-0239 (La. 10/16/12), 101 So.3d 22, 26. Legislation is the solemn expression of the legislative will and, therefore, the interpretation of a law primarily involves the search for the legislature's intent. Red Stick Studio Dev., L.L.C. v. State ex rel. Dep't of Econ. Dev., 2010-0193 (La. 1/19/11), 56 So.3d 181, 187. The starting point in ascertaining that legislative intent is the language of the statute itself. Livingston Parish Council On Aging v. Graves, 2012-0232 (La. 12/4/12), 105 So.3d 683, 685. In examining that language, words and phrases are to be read in their context and to be accorded their generally prevailing meaning. La. C.C. art. 11; La. R.S. 1:3. When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written, and no further interpretation may be made in search of the intent of the legislature. See La. C.C. art. 9; In re Succession of Faget, 2010-0188 (La. 11/30/10), 53 So.3d 414, 420.
It is also well established that the Legislature is presumed to enact each statute with deliberation and with full knowledge of all existing laws on the same subject. M.J. Farms, Ltd. v. Exxon Mobil Corp., 2007-2371 (La.7/1/08), 998 So.2d 16, 27, amended on rehearing on other grounds, 2007-2371 (La. 9/19/08), 998 So.2d 33. Thus, "legislative language will be interpreted on the assumption that the Legislature was aware of existing statutes, well established principles of statutory construction and with knowledge of the effect of their acts and purpose in view." Id. It is equally well-settled under the rules of statutory construction, where it is possible, that courts have a duty in the interpretation of a statute to adopt a construction which harmonizes and reconciles it with other provisions dealing with the same subject matter. Id.
As previously set forth, Louisiana's strong public policy disfavoring noncompetition agreements is reflected in La. R.S. 23:921(A), which states that "[e]very contract or agreement" restraining "anyone... from exercising a lawful profession, trade or business" is "null and void" unless
In 1999, the Louisiana legislature expanded La. R.S. 23:921(A) by adding a prohibition against forum selection clauses and choice of law clauses. See 1999 La. Acts, No. 58, § 1.
Applying the rules of statutory construction, the Louisiana Legislature is presumed to have added the 1999 amendment to subsection (A) (prohibiting forum selection clauses and choice of law clauses in employment contracts or agreements) with full knowledge of existing subsection (C) that allowed independent contractors to enter into non-competition and non-solicitation agreements "on the same basis as if the independent contractor were an employee." Since employees could not agree to choice of forum or choice of law clauses in their employment agreements or contracts, neither could independent contractors. Thus, La. R.S. 23:921(A)(1) and (A)(2) apply to independent contractors to the same extent as if they were employees. This interpretation comports with the standard of strict construction required of non-competition agreements, the clear wording of La. R.S. 23:921(A) and (C), and does not lead to absurd consequences.
Pursuant to the provisions of La. R.S. 23:921(A)(2) and (C), the choice of Pennsylvania law clause in the Schaefer NCND Agreement is null and void and contravenes the public policy of this state. Accordingly, the trial court erred in determining that Pennsylvania law, rather than
Having determined that Louisiana law is applicable, we next turn to the issue of whether the Schaefer NCND Agreement was confected in accordance with Louisiana law. For the same reasons we found that the O'Hara NCND Agreement failed to comply with the statutory requirements set forth in La. R.S. 23:921(C), we likewise find that the Schaefer NCND Agreement failed to comply with La. R.S. 23:921(C). The affidavit of Mr. Schaefer established that he was not assigned to a geographic area, but was assigned to various hospitals, medical centers, and individual surgeons within a hospital or medical practice. The Schaefer NCND Agreement then establishes the no-competition territory for Mr. Schaefer as "the geographic area within a 10-mile radius of each assigned account." Again, we note that La. R.S. 23:921(C) requires the parish or parishes, municipality or municipalities, or parts thereof, be "specified." There is no such specification in the Schaefer NCND Agreement nor is the geographic limitation express or clearly discernable; rather, it purports to establish the no-competition territory as a 10-mile radius from each account, without defining the term "account" or otherwise identifying specific accounts. As such, the non-competition and non-solicitation provisions contained therein are invalid and unenforceable as a matter of law. Accordingly, Mr. Schaefer is entitled to summary judgment in his favor and against Vortex and Globus declaring the Schaefer NCND Agreement unenforceable against him.
Lastly, in the plaintiffs' motion for partial summary judgment, they sought judgment declaring that they are free to compete against Vortex and Globus, including but not limited to soliciting any past, present, and future customers of Vortex and Globus without geographical or other limitation. Having already determined herein that the plaintiffs are entitled to summary judgment declaring that the EDA is not enforceable against them, that the O'Hara NCND Agreement is not enforceable against Mr. O'Hara, and that the Schaefer NCND Agreement is not enforceable against Mr. Schaefer, we must conclude, based on our de novo review of the motion for summary judgment, that the plaintiffs are entitled to judgment declaring that they are free to compete against both Globus and Vortex.
For all of the foregoing reasons, we grant the supervisory writ application filed by the plaintiffs, Mr. O'Hara and Mr. Schaefer. The trial court erred in determining that the validity of the plaintiffs' respective NCND Agreements is governed by Pennsylvania law, rather than Louisiana law. Applying Louisiana law to our de novo review of the plaintiffs' motion for summary judgment, the NCND Agreements executed by the plaintiffs are invalid. Therefore, the plaintiffs' motion for partial summary judgment is granted and judgment is hereby rendered in their favor and against Vortex and Globus declaring that the EDA between Globus and Vortex is unenforceable against the plaintiffs, the O'Hara NCND Agreement is not enforceable against Mr. O'Hara, that the Schaefer NCND Agreement is not enforceable against Mr. Schaefer, and that the plaintiffs are free to compete against both Globus and Vortex. In addition, the Amended Order of Preliminary Injunction, which was entered in furtherance of the trial court's erroneous ruling and is clearly contrary to our decision herein, is hereby
All costs incurred in this supervisory writ application are assessed to the defendant, Globus Medical, Inc.
CHUTZ, J., concurs in part and dissents in part.
THERIOT, J., concurs.
CHUTZ, J., concurring in part and dissenting in part.
Although I agree with the majority's conclusion reversing the trial court's denial of summary judgment insofar as plaintiff, Patrick O'Hara, I disagree with the result reached as to plaintiff, Wallace Schaefer. While there may be an outstanding issue of fact on O'Hara's relationship with Globus Medical Inc. (Globus), that fact is not material as to his entitlement to a declaratory judgment and, therefore I agree with the majority that the trial court erred in denying him summary judgment. But because Schaefer has failed to demonstrate that Louisiana law is applicable in his case, I believe that the trial court correctly denied summary judgment insofar as his request for declaratory relief.
In the motion for partial summary judgment, O'Hara and Schaefer sought a judgment determining as a matter of law that the non-competition, non-disclosure (NCND) agreements they entered into are unenforceable and, as such, that they are free to compete against Vortex Spine LLC (Vortex) and Globus in any lawful manner. In their memorandum in support of summary judgment, plaintiffs maintained that Louisiana law applies to the validity of the NCND agreements and, therefore, that under La. R.S. 23:921 the NCND agreements are without effect.
In support of summary judgment, O'Hara offered his affidavit. He attested that "On or about September 7, 2007, [he] executed a [NCND agreement], as a condition for becoming a sales representative for [Vortex]." He attached to his affidavit a copy of the NCND agreement, which is entitled "Globus Medical, Inc./No Competition and No Disclosure Agreement," and is unsigned by Globus. In that agreement, O'Hara is identified as "Employee" and, as noted by the majority, the parties expressly agreed to an application of Pennsylvania's law. But O'Hapra stated in his affidavit that he has "never been employed by [Globus] in any capacity." He further attested that he never performed services for, or received compensation from Globus, and that he "never received any offer of employment or continued employment by Globus; [and] Globus never provided [him] a salary, health insurance benefits, bonuses, sales commissions or stock options." Globus offered no evidence to rebut this showing by O'Hara. Thus, despite O'Hara's execution of the NCND agreement ostensibly in favor of Globus, according to the evidence offered in support of summary judgment, O'Hara was not Globus's employee. The parties do not contend and nothing in the record suggests that O'Hara executed a written NCND in favor of Vortex. I agree with the majority that the contractual obligations in the Executive Distributor Agreement were between Vortex and Globus and that no evidence establishes that O'Hara (or Schaefer) were parties to that contract. Therefore, because the record is devoid of any basis to preclude O'Hara from competing against either Globus or Vortex, I agree with the majority's
Turning now to Schaefer, as noted by the majority, the record contains a written NCND agreement between Schaefer and Vortex, which specified that Pennsylvania law is applicable to the parties' performance and relationship. According to La. C.C. art. 14, "Unless otherwise expressly provided by the law of this state, cases having contacts with other states are governed by the law selected in accordance with the provisions of Book IV of this Code." According to salient provisions of La. C.C. art. 3537 of Book IV of the Civil Code, "Except as otherwise provided in this Title, 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." La. C.C. art. 3540 states:
Examining whether Louisiana law is "otherwise... applicable under Article 3537," Article 3537 states:
The majority has correctly pointed out that Schaefer's NCND agreement with Vortex was executed in Louisiana, the sales services were performed in Louisiana, and Louisiana has a strong public policy disfavoring execution of noncompetition agreements against employees.
In his agreement with Vortex, Schaefer expressly acknowledged that Vortex and Globus owned proprietary and trade secret information
Moreover, to the extent that Louisiana is the state whose policies would be most seriously impaired if its law is not applied under Article 3537 as set forth in Article 3540, I agree with the trial court that Schaefer has failed to show that Pennsylvania's law violates Louisiana's public policy. Although the majority correctly points out that La. R.S. 23:921 sets forth Louisiana's public policy disfavoring non-competition agreements in employment contexts,
Under its clear terms, the limitation on a choice of law selection is imposed against enforcement of an employment contract or agreement. Because it is undisputed that Schaefer was an independent contractor, the provisions of Subsection (A)(2) do not apply. See La. C.C. art. 9 (when a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written) and art. 10 (when the language of the law is susceptible of different meanings, it must be interpreted as having the meaning that best conforms to the purpose of the law). There is no reason to conclude that the provisions of La. R.S. 23:921(C) stating, "An independent contractor, whose work is performed pursuant to a written contract, may enter into an agreement to refrain from carrying on or engaging in a business similar to the business of the person with whom the independent contractor has contracted, on the same basis as if the independent contractor were an employee," is intended to refer to the choice of law prohibition in Subsection (A)(2). This reference can be easily understood as directed to the exceptions by which an employee may enter into a non-competition agreement that are also set forth in subsection (C), i.e., "Any person ... who is employed as an agent, servant, or employee may agree with his employer to refrain from carrying on or engaging in a business similar to that of the employer and/or from soliciting customers of the employer within a specified parish or parishes, municipality or municipalities, or parts thereof, so long as the employer carries on a like business therein, not to exceed a period of two years from termination of employment." Thus, under the plain language of subsection (C), an independent contractor whose work is performed pursuant to a written contract may agree not to compete in a business similar to that of the other party within specified temporal and spatial limitations. See Reynolds v. Paulson, 2003-1884 (La.App. 4th Cir. 3/31/04), 871 So.2d 1215, 1222 (because plaintiff was an independent contractor and not an employee, La. R.S. 23:921(A)(2), which invalidates a forum selection clause with respect to an employee, did not apply).
The trial court stated in its oral reasons for its denial of the motion for summary judgment that Pennsylvania law on non-compete agreements "does not violate or diminish [Louisiana's] strong public policy concerning non-competes.... Pennsylvania's law ... does not violate even the technical aspects of Louisiana's law." The trial court further explained that Louisiana and Pennsylvania law are "very closely aligned other than minor technical issues on a geographical location definition basis, but the production is the same." See e.g., Victaulic Co. v. Tieman, 499 F.3d 227, 235-37 (3rd Cir.(Pa.) 2007) (after noting that under Pennsylvania law compliance with a covenant not to compete is disfavored but that it is appropriate where the
I agree with the trial court. That Schaefer's NCND agreement failed to specify the parish or parishes, municipality or municipalities, or parts thereof is a mere technicality which is not encompassed in Louisiana's public policy consideration. Schaefer does not contend, nor could he, that a determination of the ambits of the spatial component of this exception is not ascertainable. Simply put, Louisiana's public policy allows enforcement of non-competition agreements by employers against employees and independent contractors including Schaefer. The duration of the NCND agreements and an articulation of the places included in the NCND agreements are technical concerns that are not encompassed in a determination of Louisiana's public policy relative to an application of Article 3540. Unlike the consideration before us in review of O'Hara's agreement, Schaefer cannot be considered an employee. Thus, Louisiana's history of protecting employees and this circuit's most recent pronouncement, see Garcia v. Banfield Pet Hosp., Inc., 2009-0466 (La. App. 1st Cir. 1/21/10), 35 So.3d 261, 264, writ denied, 2010-0393 (La. 4/30/10), 34 So.3d 299, precluding a noncompetition agreement where the spatial element was not expressly specified at the time the employee entered into the non-competition agreement are inapplicable to Schaefer.
Schaefer has failed to prove that under La. C.C. art. 3540, Louisiana is the state whose policies would be most seriously impaired if its law were not applied under Article 3537. And to the extent that Louisiana is the state whose policies would most seriously be impaired if its law were not applied, Schaefer has failed to show that an application of Pennsylvania law as agreed to by the parties contravenes Louisiana's public policy. I disagree with the majority that the trial court erred in denying Schaefer's motion for summary judgment.
For these reasons, I believe the trial court should have granted summary judgment in favor of O'Hara, but that it correctly denied summary judgment as to Schaefer. Therefore, I would grant the writ in part and reverse the trial court as to O'Hara; and I would deny the writ as to Schaefer.