Our client earned her marketing degree from LSU. In her first Louisiana job the employer required her to sign a noncompete. The clause barred her from working with any business engaged “to any extent” in employer’s business, in twelve named parishes plus “any parish” where employer had a relationship during the contract “or any relationship thereafter.”
The employment relationship deteriorated and our client had to leave and pursue her trade elsewhere. In response, her former employer sued her. It filed a petition in the district court and obtained a temporary restraining order the same day.
We moved to dissolve the TRO as improper and for damages and attorney fees. After an evidentiary hearing the trial court ruled the noncompete was null and void in its entirety. The court found the agreement enforceable only as to the fact that our client’s signature appeared on it, and found the noncompete overbroad, overreaching, and against public policy under La. R.S. 23:921. AMR filed a second motion for preliminary injunction arguing the same points. The court denied that one too. The trial court did not reach our fee claim and treated it as moot, so we raised it on appeal.
On February 23, 2022, the Fifth Circuit affirmed the trial court. Louisiana voids every noncompete unless it fits the narrow exception in La. R.S. 23:921(C): a business similar to the employer’s, named parishes, and no more than two years. The Fifth Circuit held that AMR’s clause failed all three. AMR’s business was marketing for clinics, but the clause reached marketing for any business, and so it “drives a freight train through this limitation.” The “any parish” language was “a catch-all phrase to further restrict [our client] from business activity in any parish within this State.”
“In fact, AMR has expressly preserved its right to unilaterally claim additional parishes that it engages business in to further restrict [our client’s] employment with any other business operating within Louisiana.”
AMR also asked the court to rewrite its problematic clauses under its reformation provision. The Fifth Circuit refused: “Reformation in such circumstances would mean rewriting a disfavored contract into compliance with a narrowly drawn statutory exception.”
The Fifth Circuit then went further concluding that based on the evidence in the record the businesses are not similar, and finding that “the temporary restraining order was wrongfully obtained,” and sent the case back for a hearing on attorney fees and damages under La. C.C.P. art. 3608.
The Louisiana Supreme Court unanimously denied AMR’s writ application.
Back at the trial court, our client was awarded $12,000 in attorney fees, plus costs, for defending against the wrongful TRO AMR pursued to keep her from working.
The takeaway is a reminder that Louisiana disfavors overreaching noncompetes for many few reasons, and one in particular that the Fifth Circuit put plainly: to keep a worker from “contractually depriving himself of the ability to support himself.”
Our case has been cited in Louisiana Law Review (Thawing the Bayou: Melting Away Noncompetes and Their Chilling Effect on Job Mobility in Louisiana), and has caught the attention of parties on both sides of the aisle here, here, and here.
Advanced Med. Rehab, LLC v. Manton, 362 So. 3d 703, 710 (La. Ct. App. 2022), No. 816-742 (24th Jud. Dist. Ct. Parish of Jefferson May 10, 2021), aff’d in part, rev’d in part, and remanded, 21-315 (La. App. 5 Cir. 2/23/22), writ denied, 2022-00606 (La. 6/1/22).
Past results are not a guarantee of future success. Results may vary.
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