A trend may be developing in favor of non-compete agreements in Louisiana. Two recent appellate court decisions enforced their terms, even though they contained either overly broad or ambiguous language. The first is from the Louisiana Supreme Court, Causin, L.L.C. v. Pace Safety Consultants, LLC, which we have previously discussed. The second is from the U.S. Fifth Circuit, Brock Services, L.L.C. v. Rogillio, 19-30363 (Aug. 27, 2019).
Louisiana Supreme Court. The non-compete at issue included language that was overly broad. In the description of the parties to the non-compete, it included not only the former employee’s employer but also the employers “subsidiaries” and “affiliates.” The former employee argued that the inclusion of this language rendered the agreement overly broad and thus enforceable. The intermediate appellate court rejected this argument based on the general rules of contract interpretation. Specifically, the court stated that this language was “merely an accessory clause” and that “the reference is not needed for the existence of the agreement.” The Louisiana Supreme Court allowed the opinion to stand.
U.S. Fifth Circuit. The federal trial court found that the non-compete’s terms were ambiguous but ultimately issued a preliminary injunction enforcing the agreement after hearing parol evidence to resolve the ambiguity. The former employee appealed and argued, among other things, that the trial court erred by admitting evidence on the parties’ intent concerning the non-compete’s scope. If a non-compete contains an ambiguity, the former employee argued, then a court should refuse to enforce it because Louisiana law requires such agreements to be strictly construed. The Fifth Circuit rejected that argument and ultimately affirmed the preliminary injunction. The court wrote: “Even though restrictive covenants ‘must be strictly construed against the party seeking their enforcement,’ SWAT 24, 808 So. 2d at 288, the district court properly considered parol evidence to determine the parties’ intent.”
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One take away is that non-competes can still be enforced, even though their language may not be sufficiently concise to satisfy the requirements of Louisiana’s non-compete statute. But employers should still try to remove as much ambiguity and overly broad language from their non-competes as possible.
Editors’ note: Jones Walker represented Brock Services, L.L.C. at the trial and appellate courts.