COA: Restrictive covenant is overly broad and unreasonable

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The restrictive covenant a former employee of a high-end appliance sales company signed before leaving to join another high-end sales company is overly broad and unreasonable, the Indiana Court of Appeals affirmed Thursday.

Clark’s Sales & Service Inc. appealed the order denying its motion for a preliminary injunction as to the restrictive covenant Clark’s sought to enforce against former employee, John D. Smith, and his new employer, Ferguson Enterprises Inc. Smith worked for Clark’s for nearly 14 years before joining Ferguson, which also sells high-end appliances, but principally sells plumbing and lighting.

The trial court found the covenant to be overly broad and restrictive because it prevents Smith from working directly or indirectly in any capacity for any other entity that seeks to solicit or provide services to any entity that was a customer of Clark’s during the 14 years Smith worked there. The Court of Appeals agreed in Clark's Sales and Service, Inc v. John D. Smith and Ferguson Enterprises, Inc., 49A02-1306-PL-552, also finding the geographical scope of the covenant to be unreasonable.

Clark’s contended then that the appeals court should utilize the blue pencil doctrine and strike the portions of the covenant that are unenforceable, leaving in place some of the restrictions.

“Here, Clark’s had a fair opportunity to draft a reasonable and enforceable restrictive covenant yet failed to do so. The overly broad and unenforceable covenant that Clark’s did draft is not clearly separated into divisible parts or severable in terms such that we can mechanically strike unreasonable restrictions and enforce reasonable ones,” Judge Terry Crone wrote. “The restrictions are unreasonable as a whole. Therefore, we conclude that the blue pencil doctrine is inapplicable, as it would subject the parties to an agreement that they did not make.  Accordingly, we agree with the trial court that Clark’s has failed to establish by a preponderance of the evidence its likelihood of success at trial. The trial court’s denial of Clark’s motion for preliminary injunction is affirmed.”



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  1. This is ridiculous. Most JDs not practicing law don't know squat to justify calling themselves a lawyer. Maybe they should try visiting the inside of a courtroom before they go around calling themselves lawyers. This kind of promotional BS just increases the volume of people with JDs that are underqualified thereby dragging all the rest of us down likewise.

  2. I think it is safe to say that those Hoosier's with the most confidence in the Indiana judicial system are those Hoosier's who have never had the displeasure of dealing with the Hoosier court system.

  3. I have an open CHINS case I failed a urine screen I have since got clean completed IOP classes now in after care passed home inspection my x sister in law has my children I still don't even have unsupervised when I have been clean for over 4 months my x sister wants to keep the lids for good n has my case working with her I just discovered n have proof that at one of my hearing dcs case worker stated in court to the judge that a screen was dirty which caused me not to have unsupervised this was at the beginning two weeks after my initial screen I thought the weed could have still been in my system was upset because they were suppose to check levels n see if it was going down since this was only a few weeks after initial instead they said dirty I recently requested all of my screens from redwood because I take prescriptions that will show up n I was having my doctor look at levels to verify that matched what I was prescripted because dcs case worker accused me of abuseing when I got my screens I found out that screen I took that dcs case worker stated in court to judge that caused me to not get granted unsupervised was actually negative what can I do about this this is a serious issue saying a parent failed a screen in court to judge when they didn't please advise

  4. I have a degree at law, recent MS in regulatory studies. Licensed in KS, admitted b4 S& 7th circuit, but not to Indiana bar due to political correctness. Blacklisted, nearly unemployable due to hostile state action. Big Idea: Headwinds can overcome, esp for those not within the contours of the bell curve, the Lego Movie happiness set forth above. That said, even without the blacklisting for holding ideas unacceptable to the Glorious State, I think the idea presented above that a law degree open many vistas other than being a galley slave to elitist lawyers is pretty much laughable. (Did the law professors of Indiana pay for this to be published?)

  5. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.