Rewriting an Unenforceable Noncompete Agreement in Maryland
If you work in Maryland, you might find yourself subject to a non-compete agreement. These are special employment contracts where an employee promises not to work for a competing company within a certain geographical area and for a set amount of time. Usually, a noncompete agreement comes into play following the employee’s departure from an employer.
If you have done some research on noncompete agreements, you already know that they are not always enforceable. If the noncompete agreement is too broad, are in force for too long or apply to an excessively large geographical region, the court may refuse to enforce it. For more information about rewriting an unenforceable non-compete agreement in Maryland, contact a seasoned lawyer at the Spiggle Law Firm today.
Deutsche Post Global Mail v. Conrad
Gerard Conrad and Guy Gemmill were employees of Deutsche Post Global Mail (DPGM), which was in the business of international shipping. As a condition of employment, Conrad and Gemmill were subject to a non-compete agreement. The non-compete agreement applied for two years and prohibited Conrad and Gemmill from engaging in any activity which may hurt DPGM’s business interests.
After working with DPGM for several years, Conrad and Gemmill started their own company called Postal Logistics International (PLI). Within hours of forming PLI, Conrad and Genmwill were soliciting clients from DPGM. After approximately a year in operation, the vast majority of PLI’s revenue and over half of its customers came from former DPGM clients.
DPGM sued Conrad and Gemmill for breach of the non-compete agreement. Despite Conrad and Gemmill readily admitting they were in violation of the non-compete agreement, they won their case and DPGM was unable to recover any damages for Conrad and Gemmill’s breach of the non-compete agreement. How did this happen? There were several reasons, but the main reason was that the non-compete agreement was overbroad and therefore unenforceable in Baltimore County. Rewriting an unenforceable non-compete agreement in Maryland is a complex process that may require the assistance of an attorney.
DPGM and the Three Legal Theories
DPGM’s first argument was that the court should blue pencil the non-compete agreement to make it enforceable in Baltimore County. Blue penciling is a legal rule in Maryland that allows a court to modify an unenforceable contract by removing the improper parts.
The key word here is remove. The blue pencil rule cannot be used to modify the noncompete agreement by adding or rearranging certain words. Sadly for DPGM, the non-compete agreement was written in such a way that blue penciling could not save it.
Next, DPGM argued that the court should apply something called the flexible approach. The flexible approach states that a court may enforce an unreasonable noncompete agreement in Baltimore County if two conditions are met.
First, the non-compete agreement must not show any intent by the employer to deliberately restrict the employee in an unfair, unreasonable and oppressive way. Second, the non-compete agreement must be able to be modified in such a way such that it is fair and can reflect the reasonable expectations of the employer and employee.
Problems with the Flexible Approach
There were two problems with DPGM relying on the flexible approach. First, it was unclear if Maryland law even allowed the use of this legal theory. Second, even if it did, given how unreasonable and overbroad the noncompete agreement was, the court concluded that the non-compete agreement reflected DPGM’s deliberate attempt to unreasonably and unfairly restrict Conrad and Gemmill.
DPGM’s final legal argument was a longshot. They argued that they were entitled to damages on a breach-by-breach basis. DPGM contended that regardless of what the non-compete agreement said, the court should examine each alleged breach and make its own decision as to whether DPGM is entitled to damages for Conrad or Gemmill’s conduct.
This argument failed. The court recognized that DPGM was asking the court to create a new rule that would effectively allow employers to write anything they wanted in the non-compete agreement. Then should they end up in court, the employer could simply ask the court to ignore the unreasonable noncompete agreement and do what’s fair to protect the employer from unfair competition.
The court also realized that such a rule would negate any motivation for an employer to prepare a reasonable non-compete agreement or be willing to negotiate different terms with an employee.
In the end, DPGM tried three things to enforce its self-admitted overly broad noncompete agreement.
Call a Lawyer to Learn More Information
Looking for additional information about the enforceability your Maryland noncompete agreement? Consider contacting us for a no-cost online review of your case.
Contact one of our lawyers at the Spiggle Law Firm today to see how an attorney could help you with understanding the aspects of rewriting an unenforceable non-compete agreement in Maryland.