Traffic Control Services, Inc. v. United Rentals Northwest, Inc.

87 P.3d 1054 (2004)

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Nature of the Case

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Facts

Burkhardt (D) specializes in the selling and renting of trench shoring equipment to construction contractors in the Las Vegas area. As a condition of employment with NES, and in exchange for $ 10,000, Burkhardt (D) signed noncompetition and nondisclosure covenants. He received assurances that NES management had no plans to sell the company and would not, in any event, sell to P. NES bragged that it might even purchase P. The covenants stipulated that, if Burkhardt's (D) employment with NES was terminated, Burkhardt (D) would not, for a period of one year, engage in selling, leasing, marketing, distributing, or dealing with trench shoring equipment within a sixty-mile radius of his work location. Burkhardt (D) agreed, in perpetuity, to keep secret and not disclose to any other party any information to include, but not be limited to, customer lists, employee lists, price lists, pricing strategies, training programs and manuals, trade manuals, and sales programs and materials. Burkhardt (D) received confidential customer lists, price lists, pricing strategies, and training and sales information. NES promoted Burkhardt (D) to branch manager. Burkhardt (D) became very familiar with NES's customer base. On June 30, 2002, P and NES entered into an asset purchase agreement. The purchase agreement was limited to certain assets, providing that 'all contracts and agreements that are not listed as 'Assumed Contracts' are 'Excluded Assets.'' While the agreement listed other noncompetition covenants as assumed contracts, Burkhardt's (D) noncompetition covenant was not on the list. The purchase agreement also contained a recitation that 'none of the Assumed Contracts requiring a consent to assignment have been obtained prior to the Closing Date.' NES's negotiators submitted affidavits in the proceedings below asserting that the asset sale included all of NES's noncompetition covenants, including the one with Burkhardt (D). A week before closure P demanded that a significant number of the listed key employees sign new one-year noncompetition and nondisclosure covenants. Consideration for the new covenants included salary packages to be paid during the noncompetition enforcement period and incentive bonuses. Burkhardt (D), refused to sign the new covenants. Burkhardt (D) remained but became dissatisfied with P's customer service. He began negotiations with Traffic (D). Burkhardt (D) informed Traffic (D) about his noncompetition covenant with NES, which he believed was invalid because he was terminating employment with P, not NES. On August 5, 2002, Burkhardt (D) accepted employment with Traffic (D). P terminated Burkhardt's (D) employment on August 8, 2002, after which he returned all of his work-related items to company officials. Burkhardt (D) commenced his new position on August 10, 2002, after signing new noncompetition and nondisclosure covenants. On August 27, 2002, NES and P filed a verified complaint alleging that Burkhardt (D) breached their noncompete agreement. The court ruled for P and Ds appealed.