MURPHREE v. YANCEY BROS. CO., A11A1079. (2011)
Court: Court of Appeals of Georgia
Number: ingaco20110921201
Visitors: 11
Filed: Sep. 21, 2011
Latest Update: Sep. 21, 2011
Summary: FootNotes 1. Flint was aware of Murphree's employment contract with Yancey and assured Murphree that if an issue ever arose regarding the restrictive covenant, the company would handle it. 2. It is likewise undisputed that Murphree failed to apprise his Yancey supervisor that he had even been in negotiations with Flint. 3. Yancey produced an expert in computer forensics who testified that he did not believe Murphree had actually copied all of the files contained in his "My Documents" folder
Summary: FootNotes 1. Flint was aware of Murphree's employment contract with Yancey and assured Murphree that if an issue ever arose regarding the restrictive covenant, the company would handle it. 2. It is likewise undisputed that Murphree failed to apprise his Yancey supervisor that he had even been in negotiations with Flint. 3. Yancey produced an expert in computer forensics who testified that he did not believe Murphree had actually copied all of the files contained in his "My Documents" folder ..
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FootNotes
1. Flint was aware of Murphree's employment contract with Yancey and assured Murphree that if an issue ever arose regarding the restrictive covenant, the company would handle it.
2. It is likewise undisputed that Murphree failed to apprise his Yancey supervisor that he had even been in negotiations with Flint.
3. Yancey produced an expert in computer forensics who testified that he did not believe Murphree had actually copied all of the files contained in his "My Documents" folder as claimed. Rather, it appeared to the expert that only 2,000 of Murphree's approximately 4,000 files were copied, including the proprietary files now at issue. Murphree, however, presented the testimony of a family member who claimed to have helped Murphree with the file transfer just as it was described by Murphree.
4. The relevant computer files contained the names of Yancey customers, their buying history, the quotes given to them on machine sales, pricing and merchandising programs, and discounts. And Murphree testified that part of cultivating a sales relationship with his clients involved keeping up with their heavy-equipment purchases, remaining in touch, and knowing when his clients would need to replace their machines.
5. Flint later intervened in the action.
6. Yancey learned that Murphree had transferred the proprietary information to a thumb-drive after the company employed an expert in computer forensics to examine the laptop's hard drive.
7. See Pittman v. Harbin Clinic Professional Ass'n, 263 Ga. 66, 66, 428 S.E.2d 328 (1993) (per curiam) (holding that Court of Appeals had jurisdiction when, "[a]lthough the parties sought equitable relief, both the orders enjoining the partners from violating their contracts and the orders denying the injunctive relief were secondary to the principal issue of the construction of the contracts—an issue of law" (citation omitted)).
8. E.g., Essex Group, Inc. v. Southwire Co., 269 Ga. 553, 557(2), 501 S.E.2d 501 (1998) (citation and punctuation omitted); see also Trujillo v. Great Southern Equipment Sales, LLC, 289 Ga.App. 474, 475-76, 657 S.E.2d 581 (2008) ("The decision whether to grant or deny interlocutory injunctive relief is in the discretion of the trial court and we will not disturb the trial court's order in the absence of a manifest abuse of that discretion." (citation and punctuation omitted)).
9. See Reardigan v. Shaw Indus., Inc., 238 Ga.App. 142, 143(1), 518 S.E.2d 144 (1999); see also McKinley v. Coliseum Health Group, LLC, 308 Ga.App. 768, 770(1), 708 S.E.2d 682 (2011) ("The construction of a contract ... presents a question of law for the court, which this Court reviews de novo." (citations omitted)).
10. Habif, Arogeti & Wynne, P.C. v. Baggett, 231 Ga.App. 289, 289, 498 S.E.2d 346 (1998) (citation omitted); see also Malice v. Coloplast Corp., 278 Ga.App. 395, 400, 629 S.E.2d 95 (2006) ("Under Georgia law, most restrictive covenants in employment contracts are examined under strict scrutiny because they usually involve parties of uneven bargaining power." (citation omitted)). We note that on May 11, 2011, the Georgia General Assembly amended OCGA § 13-8-53 to permit blue penciling, in that "a court may modify a covenant that is otherwise void and unenforceable so long as the modification does not render the covenant more restrictive with regard to the employee than as originally drafted by the parties." OCGA § 13-8-53(d). But the amended Code only applies to contracts entered into on or after May 11, 2011. See Ga. L. 2011, § 5.
11. Baggett, 231 Ga.App. at 290, 498 S.E.2d 346; see also Malice, 278 Ga.App. at 400, 629 S.E.2d 95 ("Generally, [restrictive covenants] are drafted by the employer, and the employee has a `take it or leave it' choice.").
12. Reardigan, 238 Ga.App. at 143(1), 518 S.E.2d 144 (citation omitted).
13. Id. (citation omitted); see also Kuehn v. Selton & Assocs., Inc., 242 Ga.App. 662, 664(1), 530 S.E.2d 787 (2000) ("To be reasonable, [a restrictive covenant] must be strictly limited as to time and territorial effect." (citation omitted)). In addition to being reasonable, restrictive covenants must also be "founded on valuable consideration, reasonably necessary to protect the employer's legitimate business interests," and cannot "unduly prejudice the public's interest." Malice, 278 Ga.App. at 399, 629 S.E.2d 95 (citation omitted).
14. See W.R. Grace & Co., Dearborn Division v. Mouyal, 262 Ga. 464, 467(2), 422 S.E.2d 529 (1992) ("As the group which the employer wishes to protect from solicitation by the former employees becomes more narrowly defined, the need for a territorial restriction expressed in geographic terms becomes less important." (citation omitted)); see also Trujillo, 289 Ga.App. at 478(1), 657 S.E.2d 581 (holding that in absence of either a territorial restriction or a restriction limited to customers with whom former employee had contact, nonsolicitation provision was overbroad and unenforceable).
15. There was evidence that in addition to heavy equipment, Yancey also sells novelty items (e.g., toys, hats, t-shirts) and, replacement parts for equipment, and sells and leases other products.
16. E.g., Mouyal, 262 Ga. at 466(2), 422 S.E.2d 529 (citations omitted).
17. See generally Baggett, 231 Ga.App. at 295-96(2)(c), 498 S.E.2d 346 (describing the different interests protected by the two types of restrictive covenants and the types of activities precluded by each).
18. Baggett, 231 Ga.App. at 298(3)(c), 498 S.E.2d 346 ("Upon the application of strict scrutiny, prohibiting the solicitation and diversion of clients is reasonable as is prohibiting the contact of clients." (footnote omitted)); see Palmer & Cay of Ga., Inc. v. Lockton Cos., 280 Ga. 479, 480(1), 629 S.E.2d 800 (2006) ("A court will enforce an agreement prohibiting an employee from pirating his former employer's customers served by the employee during the employment, at the employer's direct or indirect expense." (citation and punctuation omitted)); see also Cobb Family Dentistry, P.C. v. Reich, 259 Ga. 450, 450-51, 383 S.E.2d 891 (1989). Compare Howard Schultz & Assocs. of the Southeast, Inc. v. Broniec, 239 Ga. 181, 184(2), 236 S.E.2d 265 (1977) (holding, in context of a covenant not to compete, that it was unreasonable because the employee was prohibited from working in any capacity for a competitor and because it failed "to specify with any particularity the nature and kind of business which is or will be competitive with the employer").
19. Compare Riddle v. Geo-Hydro Engineers, Inc., 254 Ga.App. 119, 120, 561 S.E.2d 456 (2002) (holding that nonsolicitation covenant was overbroad when it did not limit purpose for which former employee could not solicit clients, prohibited former employee from selling unrelated items, and went beyond what was necessary to protect former employer's business interests); Advance Technology Consultants, Inc. v. RoadTrac, LLC, 250 Ga.App. 317, 322(4), 551 S.E.2d 735 (2001) (holding that covenants were unenforceable when "in neither [was] the prohibition against contacting or pursuing [former employer's] clients restricted to efforts competitive with [former employer], but each simply prohibit[ed] contact for any purpose" (emphasis supplied)).
20. See Baggett, 231 Ga.App. at 298(3)(c), 498 S.E.2d 346; see also Sysco Food Svcs. of Atlanta, Inc. v. Chupp, 225 Ga.App. 584, 588(2), 484 S.E.2d 323 (1997) ("An `indirect' solicitation occurs when the former employee undertakes `some affirmative action on his part that could be considered a solicitation in the broadest possible sense.'" (citation and punctuation omitted)).
21. Baggett, 231 Ga.App. at 298(3)(c), 498 S.E.2d 346 (footnote omitted). Cf. Waldeck v. Curtis 1000, Inc., 261 Ga.App. 590, 592, 583 S.E.2d 266 (2003) ("[A] covenant prohibiting a former employee from merely accepting business, without any solicitation, is not reasonable." (footnote omitted)).
22. See Whaley v. Alco Standard Corp., 253 Ga. 5, 6, 315 S.E.2d 654 (1984) (holding that nonsolicitation covenant was "reasonable in the scope of its prohibited activities" when it restricted "the solicitation of customers who were customers of [the] employer at the time of termination"). Cf. Sysco Food Svcs. of Atlanta, 225 Ga.App. at 588(2), 484 S.E.2d 323 (holding that court incorrectly struck down nonsolicitation covenant as overly broad when "the plain language of the covenant and the affirmative conduct rule ... require that the salesperson in question ... actively participate in the indirect solicitation of his own former account").
23. See Marcoin, Inc. v. Waldron, 244 Ga. 169, 171(1), 259 S.E.2d 433 (1979) (holding that trial court did not err in denying injunction when former employee had taken no affirmative action to solicit clients from former employer, and further holding that "the words `solicit,' `divert' and `take away' require affirmative action on the part of an employee before a restrictive covenant prohibiting such conduct is violated").
Source: Leagle
