ILNews

When non-competes don't fly

Back to TopCommentsE-mailPrintBookmark and Share
Indiana Lawyer Focus

Joe Guinn quit his job as an aviation mechanic to work for an employer offering shift work so he and his wife could split childcare duties for their young son. That’s when trouble started.

His former employer, Applied Composites Engineering Inc., sued him and notified his new employer that Guinn had signed a non-compete covenant that ACE required all its workers to sign. Guinn’s new employer terminated his employment after being notified of the clause.

joeguinn-1-15col.jpg Aviation mechanic Joe Guinn lost a job when his former employer sought to enforce a non-compete clause, but he won an appellate ruling that the company may have engaged in tortious interference with his subsequent employer. (IL Photo/Eric Learned)

“I didn’t know that, being in America, an employer had that kind of authority over one individual,” Guinn said. “I couldn’t believe an employer could actually hold me back from earning a living.”

Turns out that in Guinn’s case and others recently decided on appeal, they couldn’t.

ACE sued Guinn when he went to work for a company where he performed similar work, and it prevailed at the trial court level. A Marion Superior judge granted summary judgment in favor of ACE. But in September 2013, the Court of Appeals reversed and remanded the case. ACE failed to convince the Indiana Supreme Court to hear an appeal, with justices last month denying transfer to Joseph M. Guinn v. Applied Composites Engineering, Inc., 49A02-1303-CC-239.

Now, Guinn’s attorney, Donald Foley of Foley & Abbott in Indianapolis, is asking for punitive damages in addition to the compensatory damages Guinn sought in a cross-complaint against ACE.

“They were trying to chill him,” Foley said. “The question is whether (getting Guinn terminated) was intentional, and in our view, it was.”

Fishers attorney Peter Kovacs represents ACE and noted that just one of Guinn’s claims survived at the Court of Appeals, which tossed four others he argued. Kovacs said the case is headed to mediation ahead of a trial date tentatively set for Oct. 21.

“There’s just one count left in this dispute, and that’s tortious interference” with Guinn’s subsequent employer, Kovacs said. “It really has nothing to do with the non-compete.”

But it’s clear from recent rulings that Indiana caselaw continues to be built on Donahue v. Permacel Tape Corp., 127 N.E.2d 235 (1955). The Guinn panel cited its holding, that an employer “has no right to unnecessarily interfere with the employee’s following any trade or calling for which he is fitted and from which he may earn his livelihood and … cannot preclude him from exercising the skill and general knowledge he has acquired or increased through experience or even instructions while in the employment.”

Guinn’s case is one of three appeals decided recently involving non-compete clauses, all of which resulted in published opinions in favor of the employee. Each ruling contains the word “disfavor” to describe how such covenants are viewed under Indiana law.

foley-donald.jpg Foley

Kovacs has been on both sides of the issue, advising employers and employees on non-compete covenants. “Indiana strictly construes these agreements,” he said.

“They need to be as narrowly focused as is humanly possible. If you start going overboard in terms of geography, time, etc., you run the risk the court will find that overbroad.”

Foley also has advised employers on drafting covenants as well as employees such as Guinn. He agrees non-competes have their place and can be enforceable. “You’ve got to really identify what the protectable interest is.”

In Guinn, the Court of Appeals ruled that “the designated evidence could weigh in favor of the determination that ACE’s interference with Guinn’s new employment … was unjustified.”

Another recent reversal came from the Court of Appeals in October. Judges Elaine Brown, Edward Najam and Paul Mathias – the same panel that decided Guinn – ordered reversal in Daniel B. Buffkin v. Glacier Group, 79A02-1302-PL-141.

Daniel Buffkin was a contracted information technology recruiter for Glacier Group, which obtained an injunction in Tippecanoe Superior Court preventing him from doing similar work. The COA reversed, holding that the agreement Buffkin was made to sign “is unreasonable in terms of the activities it prohibits and its geographic restraints. Accordingly, the non-competition covenant in the Agreement was unenforceable.”

Lewis & Kappes P.C. attorney Sara R. Blevins in Indianapolis represented Buffkin on appeal and said the case has since settled confidentially.

She said employers have to consider the risks of a non-compete covenant as well as what they aim to protect. “It’s very fact-specific for each employer and each employee. There aren’t any magic words, but it needs to be narrowly tailored … to protect the legitimate interest of that particular employer.”

Blevins advises employers who use the agreements to stay on top of them and adjust them to keep up with their business concerns and the law. “It’s always a good idea to have those refreshed,” she said of non-competes. “Sometimes clauses are going to need to be tweaked from employee to employee.”

A third recently published appellate opinion regarding non-competes was decided Feb. 20. In Clark’s Sales and Service, Inc. v. John D. Smith and Ferguson Enterprises, Inc., 49A02-1306-PL-552, a panel affirmed a Marion Superior Court ruling denying an injunction Clark’s Sales and Service Inc. sought against a former employee and his new employer. The panel ruled the covenant was overbroad and unreasonable.

blevins-sara.jpg Blevins

“The problem in many of these situations is the employer has an overly broad contract,” Foley said. “In Mr. Guinn’s case, they restricted him from any type of employment with an airline maintenance company, and that includes jobs he never came close to performing – sales, finance, management.

“He couldn’t even have been a janitor in competition with ACE” without violating the covenant, Foley said.

Also troubling, he added, was that everyone who worked in any capacity had to sign an identical covenant. Guinn was asked to sign a non-compete covenant after he’d already worked for ACE for a period of time, according to the appellate case record.

Guinn since has found employment as an aviation mechanic for a company that he requested not be disclosed. He said that when he lost a job after the non-compete clause was presented to his new employer, he grew concerned about whether he’d be able to ply a trade for which he put himself through school to become FAA-certified.

“To have somebody try to strip you of that is pretty scary,” Guinn said. “I disliked what they did, and I hope this keeps them from pursuing anyone else the way they did me. I put my faith in the law on this one.”•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. The appellate court just said doctors can be sued for reporting child abuse. The most dangerous form of child abuse with the highest mortality rate of any form of child abuse (between 6% and 9% according to the below listed studies). Now doctors will be far less likely to report this form of dangerous child abuse in Indiana. If you want to know what this is, google the names Lacey Spears, Julie Conley (and look at what happened when uninformed judges returned that child against medical advice), Hope Ybarra, and Dixie Blanchard. Here is some really good reporting on what this allegation was: http://media.star-telegram.com/Munchausenmoms/ Here are the two research papers: http://www.sciencedirect.com/science/article/pii/0145213487900810 http://www.sciencedirect.com/science/article/pii/S0145213403000309 25% of sibling are dead in that second study. 25%!!! Unbelievable ruling. Chilling. Wrong.

  2. MELISA EVA VALUE INVESTMENT Greetings to you from Melisa Eva Value Investment. We offer Business and Personal loans, it is quick and easy and hence can be availed without any hassle. We do not ask for any collateral or guarantors while approving these loans and hence these loans require minimum documentation. We offer great and competitive interest rates of 2% which do not weigh you down too much. These loans have a comfortable pay-back period. Apply today by contacting us on E-mail: melisaeva9@gmail.com WE DO NOT ASK FOR AN UPFRONT FEE. BEWARE OF SCAMMERS AND ONLINE FRAUD.

  3. Mr. Levin says that the BMV engaged in misconduct--that the BMV (or, rather, someone in the BMV) knew Indiana motorists were being overcharged fees but did nothing to correct the situation. Such misconduct, whether engaged in by one individual or by a group, is called theft (defined as knowingly or intentionally exerting unauthorized control over the property of another person with the intent to deprive the other person of the property's value or use). Theft is a crime in Indiana (as it still is in most of the civilized world). One wonders, then, why there have been no criminal prosecutions of BMV officials for this theft? Government misconduct doesn't occur in a vacuum. An individual who works for or oversees a government agency is responsible for the misconduct. In this instance, somebody (or somebodies) with the BMV, at some time, knew Indiana motorists were being overcharged. What's more, this person (or these people), even after having the error of their ways pointed out to them, did nothing to fix the problem. Instead, the overcharges continued. Thus, the taxpayers of Indiana are also on the hook for the millions of dollars in attorneys fees (for both sides; the BMV didn't see fit to avail itself of the services of a lawyer employed by the state government) that had to be spent in order to finally convince the BMV that stealing money from Indiana motorists was a bad thing. Given that the BMV official(s) responsible for this crime continued their misconduct, covered it up, and never did anything until the agency reached an agreeable settlement, it seems the statute of limitations for prosecuting these folks has not yet run. I hope our Attorney General is paying attention to this fiasco and is seriously considering prosecution. Indiana, the state that works . . . for thieves.

  4. I'm glad that attorney Carl Hayes, who represented the BMV in this case, is able to say that his client "is pleased to have resolved the issue". Everyone makes mistakes, even bureaucratic behemoths like Indiana's BMV. So to some extent we need to be forgiving of such mistakes. But when those mistakes are going to cost Indiana taxpayers millions of dollars to rectify (because neither plaintiff's counsel nor Mr. Hayes gave freely of their services, and the BMV, being a state-funded agency, relies on taxpayer dollars to pay these attorneys their fees), the agency doesn't have a right to feel "pleased to have resolved the issue". One is left wondering why the BMV feels so pleased with this resolution? The magnitude of the agency's overcharges might suggest to some that, perhaps, these errors were more than mere oversight. Could this be why the agency is so "pleased" with this resolution? Will Indiana motorists ever be assured that the culture of incompetence (if not worse) that the BMV seems to have fostered is no longer the status quo? Or will even more "overcharges" and lawsuits result? It's fairly obvious who is really "pleased to have resolved the issue", and it's not Indiana's taxpayers who are on the hook for the legal fees generated in these cases.

  5. From the article's fourth paragraph: "Her work underscores the blurry lines in Russia between the government and businesses . . ." Obviously, the author of this piece doesn't pay much attention to the "blurry lines" between government and businesses that exist in the United States. And I'm not talking only about Trump's alleged conflicts of interest. When lobbyists for major industries (pharmaceutical, petroleum, insurance, etc) have greater access to this country's elected representatives than do everyday individuals (i.e., voters), then I would say that the lines between government and business in the United States are just as blurry, if not more so, than in Russia.

ADVERTISEMENT