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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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  1. Someone off their meds? C'mon John, it is called the politics of Empire. Get with the program, will ya? How can we build one world under secularist ideals without breaking a few eggs? Of course, once it is fully built, is the American public who will feel the deadly grip of the velvet glove. One cannot lay down with dogs without getting fleas. The cup of wrath is nearly full, John Smith, nearly full. Oops, there I go, almost sounding as alarmist as Smith. Guess he and I both need to listen to this again: https://www.youtube.com/watch?v=CRnQ65J02XA

  2. Charles Rice was one of the greatest of the so-called great generation in America. I was privileged to count him among my mentors. He stood firm for Christ and Christ's Church in the Spirit of Thomas More, always quick to be a good servant of the King, but always God's first. I had Rice come speak to 700 in Fort Wayne as Obama took office. Rice was concerned that this rise of aggressive secularism and militant Islam were dual threats to Christendom,er, please forgive, I meant to say "Western Civilization". RIP Charlie. You are safe at home.

  3. It's a big fat black mark against the US that they radicalized a lot of these Afghan jihadis in the 80s to fight the soviets and then when they predictably got around to biting the hand that fed them, the US had to invade their homelands, install a bunch of corrupt drug kingpins and kleptocrats, take these guys and torture the hell out of them. Why for example did the US have to sodomize them? Dubya said "they hate us for our freedoms!" Here, try some of that freedom whether you like it or not!!! Now they got even more reasons to hate us-- lets just keep bombing the crap out of their populations, installing more puppet regimes, arming one faction against another, etc etc etc.... the US is becoming a monster. No wonder they hate us. Here's my modest recommendation. How about we follow "Just War" theory in the future. St Augustine had it right. How about we treat these obvious prisoners of war according to the Geneva convention instead of torturing them in sadistic and perverted ways.

  4. As usual, John is "spot-on." The subtle but poignant points he makes are numerous and warrant reflection by mediators and users. Oh but were it so simple.

  5. ACLU. Way to step up against the police state. I see a lot of things from the ACLU I don't like but this one is a gold star in its column.... instead of fighting it the authorities should apologize and back off.

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