Friday, February 15, 2013

Virginia Supreme Court Finds Covenant Not to Compete Facially Overbroad

In Home Paramount Pest Control Cos., Inc. v. Shaffer, 718 S.E.2d 762 (Va. 2011), the Virginia Supreme Court was asked to rule on the validity of a non-compete agreement which prohibited the defendant former employee, for two years, from:
Engage[ing] directly or indirectly or concern[ing] himself/herself in any manner whatsoever in the carrying on or conducting the business of exterminating, pest control, termite control and/or fumigation services as owner, agent…stockholder.

The Virginia Supreme Court affirmed the decision of the circuit court finding that this restriction was facially over-broad because it restricted defendant from working for any competitor, even in a capacity completely different from that in which he worked for his former employer.  The Court further noted that, on its face, this language prohibited defendant from owning stock in a publicly traded company which owned a pest control business.  The Court found that both these “sweeping prohibition[s]” exceeded plaintiff’s legitimate business interests and unduly burdened defendant’s right to earn a living. 
In so holding, the Court overruled its opinion upholding the exact same non-compete in Paramount Termite Control Co. v. Rector, 380 S.E.2d 922 (Va. 1989), which suit was brought by plaintiff’s predecessor. 

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