A.N. Deringer, Inc. v. Strough

103 F.3d 243 (1996)

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Nature of the Case

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Facts

P is a customs broker. D worked for P from 1984 through February 1995. In 1994 he applied for a sales position. D was accepted and he signed Strough executed a Confidentiality and Trade Secret Agreement. In exchange for $1,000, the Agreement provided that for ninety days after the termination of his employment, D would not compete with P, directly or indirectly, within a prohibited geographic area consisting of a 100-mile radius around any P office. P has about 30 offices, many along the United States' border with Canada. The agreement provided that if it is found by a court to be unreasonable because it is overly broad as to time period, geographic area or otherwise, then and in that case, the restriction shall nevertheless remain effective, but shall be considered amended in such manner so as to make the restriction reasonable as determined by such court and as so amended shall be enforced. The Agreement provided that P would be entitled to enjoin D from breaching the Agreement. It stated that D would 'pay the costs of any such proceeding, including P's reasonable attorney's fees.' D applied for employment with Fritz. Fritz contacted D on February 15, 1995, offering him a branch manager position. D was told by Fritz that the noncompete agreement between P and D was unenforceable. On February 22, 1995, D began working for Fritz in the immediate vicinity of his previous employment with P. P was not a salesman for Fritz. P sued for a breach of the Agreement and an award of attorney's fees and costs. The district court granted P's motion for a preliminary injunction. Fritz allowed D to work outside the original geographic area of the Agreement. D moved for summary judgment arguing that the Agreement was not enforceable. P cross-moved for summary judgment. The district court granted D's motion for summary judgment. It held that P was not empowered to declare the contract amended to the extent of a reasonable employment restriction because the ninety-day period had expired. The court held the provision was not enforceable because its originally unamended geographic restriction was 'unreasonably broad and without adequate justification.' P appealed.