Brief Fact Summary.
Fullerton Lumber Company (Fullerton) sued Torborg for opening a lumber yard in breach of an employment contract that stipulated thatTorborg would not work for a similar company up to 10 years and within a 15-mile radius of Clintonville, Wisconsin.
Synopsis of Rule of Law.
Restrictive covenants are enforceable as long as they are reasonable.
Torborg, a manager for Fullerton Lumber Company (Fullerton), signed a contract stating that he would not work for a similar company up to 10 years and within a 15-mile radius of Clintonville, Wisconsin, following his termination from Fullerton. When Torborg quit to begin his own lumber yard, three Fullerton employees left to work in Torborg’s lumber yard. Fullerton sued to enjoin Torborg from operating his lumber yard and the trial court granted judgment in favor of Torborg.
Whether restrictive covenants are enforceable?
Yes. The judgment of the trial court is reversed and remanded. The 10-year period in this case is too long and unnecessary to protect Fullerton. Similarly, allowing Torborg to immediately open his own lumber yard would allow Fullerton to suffer irreparable harm. It is therefore up to the court to determine what amount of time is reasonable to prevent harmful competition from Torborg’s lumber yard.
However, these contracts are always subject to the test of whether their purpose is contrary to public policy, and if there is any credible evidence to sustain a finding that they are deliberately unreasonable and oppressive, such covenants must be held invalid whether severable or not.View Full Point of Law
Wisconsin prohibits restraint-of-trade provisions from preventing an employee from working within his industry or earning a living. Restraints of trade that are unreasonable in its entirety are rendered completely unenforceable; Restraints of trade that are divisible render the covenant partially enforceable.