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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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  3. The practitioners and judges who hail E-filing as the Saviour of the West need to contain their respective excitements. E-filing is federal court requires the practitioner to cram his motion practice into pigeonholes created by IT people. Compound motions or those seeking alternative relief are effectively barred, unless the practitioner wants to receive a tart note from some functionary admonishing about the "problem". E-filing is just another method by which courts and judges transfer their burden to practitioners, who are the really the only powerless components of the system. Of COURSE it is easier for the court to require all of its imput to conform to certain formats, but this imposition does NOT improve the quality of the practice of law and does NOT improve the ability of the practitioner to advocate for his client or to fashion pleadings that exactly conform to his client's best interests. And we should be very wary of the disingenuous pablum about the costs. The courts will find a way to stick it to the practitioner. Lake County is a VERY good example of this rapaciousness. Any one who does not believe this is invited to review the various special fees that system imposes upon practitioners- as practitioners- and upon each case ON TOP of the court costs normal in every case manually filed. Jurisprudence according to Aldous Huxley.

  4. Any attorneys who practice in federal court should be able to say the same as I can ... efiling is great. I have been doing it in fed court since it started way back. Pacer has its drawbacks, but the ability to hit an e-docket and pull up anything and everything onscreen is a huge plus for a litigator, eps the sole practitioner, who lacks a filing clerk and the paralegal support of large firms. Were I an Indiana attorney I would welcome this great step forward.

  5. Can we get full disclosure on lobbyist's payments to legislatures such as Mr Buck? AS long as there are idiots that are disrespectful of neighbors and intent on shooting fireworks every night, some kind of regulations are needed.

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