Boisen v. Petersen Flying Service

Brief Fact Summary.

Plaintiff sued Defendant for a declaration that a covenant not to compete, which Plaintiff signed during his employment by Defendant was unenforceable. The trial court ruled in favor of Plaintiff. Defendant appealed.

Synopsis of Rule of Law.

A covenant not to compete is unenforceable if it is: (1) contrary to public policy; (2) greater than is reasonably necessary to protect a legitimate interest of the employer; or (3) unduly hard and oppressive to the employee.

Facts.

Douglas Boisen (Plaintiff) worked as a pilot for Petersen Flying Service (Defendant), flying planes that sprayed agricultural chemicals on farms, for approximately one year. Before beginning his employment with Defendant, Plaintiff, received special training in how to use a spray plane. While working for Defendant, Plaintiff did not have any direct business contact with Defendant’s customers. Defendant did not have any trade secrets or keep a customer list. Any customer contact with Defendant was initiated by the prospective customers. As part of his employment, Plaintiff signed a covenant not to compete. After Defendant terminated Plaintiff’s employment, Plaintiff sued Defendant for a declaration that the covenant not to compete was unenforceable. The district court found that the covenant not to compete was unreasonable and unenforceable, and Defendant appealed.

Issue.

Whether a covenant not to compete is unenforceable if it is: (1) contrary to public policy; (2) greater than is reasonably necessary to protect a legitimate interest of the employer; or (3) unduly hard and oppressive to the employee.

Held.

Yes. The trial court’s ruling is affirmed. A covenant not to compete is unenforceable if it is: (1) contrary to public policy; (2) greater than is reasonably necessary to protect a legitimate interest of the employer; or (3) unduly hard and oppressive to the employee.

Discussion.

An employer has a legitimate interest in protecting itself against unfair competition, but not in protecting itself from ordinary competition. An employer has a legitimate interest in protecting against an employee’s competition if the employee has substantial contact and develops goodwill with the employer’s customers and can take that goodwill away from the employer. An employer also has a legitimate interest in protecting against competition from an employee who has obtained confidential information or trade secrets from the employer. However, an employer does not have a legitimate interest in restraining an employee’s use of general skills or training obtained during his employment. In this case, Defendant does not have a legitimate business interest in protecting itself against competition from Plaintiff. Plaintiff had no contact with Defendant’s customers or potential customers that would allow him to divert customers away from Defendant. Plaintiff did not obtain confidential information from Defendant regarding its customers and potential customers or trade secrets about the aerial spraying business. The training that Plaintiff received and the skills he acquired from Defendant were no different from what he would have received from another aerial spraying employer. Because the nature of Plaintiff’s employment did not threaten Defendant’s relationship with its customers, the covenant not to compete does not protect a legitimate business interest against unfair competition. The covenant is therefore unenforceable.