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	<title>SC Noncompete Lawyer - Beat Your Non-compete</title>
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		<title>Physician Non-Competes Upheld by South Carolina Court of Appeals: Baugh v. Columbia Heart Clinic, P.A</title>
		<link>http://www.scnoncompetelawyer.com/physician-non-competes-upheld-by-south-carolina-court-of-appeals-baugh-v-columbia-heart-clinic-p-a/</link>
		<comments>http://www.scnoncompetelawyer.com/physician-non-competes-upheld-by-south-carolina-court-of-appeals-baugh-v-columbia-heart-clinic-p-a/#comments</comments>
		<pubDate>Wed, 10 Apr 2013 13:09:25 +0000</pubDate>
		<dc:creator>Andy Arnold</dc:creator>
				<category><![CDATA[Geographical Limitations]]></category>
		<category><![CDATA[No Legitimate Interest]]></category>
		<category><![CDATA[Non-Compete Trends]]></category>

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		<description><![CDATA[In its first non-compete case involving a physicians, the South Carolina Court of Appeals used mostly well-trodden commercial case precedent to reverse a bench trial holding that the agreements were unenforceable]]></description>
				<content:encoded><![CDATA[<p>In its first non-compete case involving a physicians, the South Carolina Court of Appeals used mostly well-trodden commercial case precedent to reverse a bench trial holding that the agreements were unenforceable and awarding relief under the Wage Payment Act in <i>Baugh v. Columbia Heart Clinic, P.A.</i>, 2013 S.C. App. LEXIS 5, 20 Wage &amp; Hour Cas. 2d (BNA) 202 (S.C. Ct. App. Jan. 16, 2013).  <i>Baugh</i> involved two cardiologists who left Columbia Heart in 2006 and, within one month, established their own cardiology practice approximately 300 yards from Columbia Heart&#8217;s then-new Lexington County facility.  The doctors sought an injunction preventing enforcement of no-compete agreements based on forfeiture and liquidated damages clauses that were intended to prohibit them from practicing or assisting in the practice of cardiology for one year within 20 miles of Columbia Heart offices where they had routinely practiced.</p>
<p> The Court of Appeals upheld the non-compete in a set back for all employees as well as consumers of medical services.  Non-competes in the medical field (like many others) limit choices and limit supply for services.  However, <i>Baugh</i> ignored robust debate in other states&#8211; including a  pronouncement by the American Medical Association &#8212; concerning what some consider the injurious  public impact of physician non-compete agreements. Among the other holdings in <i>Baugh</i>, Court of Appeals held the following:</p>
<ul>
<li> the non-compete agreements at issue in the case were supported by consideration (a $5,000-per-month/ $60,000 total for compliance with the non-compete agreement) ;</li>
<li>liquidated damages for each doctor of one year&#8217;s W-2 income of roughly $591,710 and forfeiture by each doctor of $240,000 &#8212; in  a combination earned but unpaid salary, pro rata shares of accounts receivable, and the $60,000 noted above  &#8211; were not penalties; and</li>
<li>unpaid salary and accounts receivable, along with director&#8217;s fees, were not wages &#8220;due&#8221; under South Carolina&#8217;s Wage Payment Act (on the rationale that the doctor&#8217;s forfeited their rights to these items).</li>
</ul>
<p>There were several issues that deserved greater consideration&#8211;for more in-depth treatment click and read on.<span id="more-483"></span></p>
<p>Although South Carolina appellate courts had dealt with a non-compete agreement in the context of a veterinary practice, <i>Stringer v. Herron</i>, 309 S.C. 529, 424 S.E.2d 547 (Ct. App. 1992), and confronted cases tangentially involving a non-compete agreements, <i>Keane v. Lowcountry Pediatrics, P.A.</i>, 372 S.C. 136, 641 S.E.2d 53, (Ct. App. 2007) (medical practice dissolution) and <i>McElveen v. McElveen</i>, 506 S.E.2d 1, 332 S.C. 583 (S.C. App. 1998) (divorce), <i>Baugh</i> is the first time by a South Carolina appellate court has grappled directly with physician non-compete issues.</p>
<p>At the core of <i>Baugh </i>was the question over how far the employers can go in restricting post-termination activities by subspecialist physicians whose practices require facilities with special licensing.  The Court of Appeals reversed a bench trial ruling that had deemed unenforceable the liquidated damages-based prohibition from merely <i>assisting</i> any person in the practice of cardiology within 20 miles of Columbia Heart offices for 12 months after their departure from the practice and that this provision not necessary to protect the employer&#8217;s legitimate interest.  The trial court had found that this provision could not be blue-penciled from the rest of the liquidated damages provision, and therefore deemed the entire provision unenforceable.  Because the liquidated damages and forfeiture provisions were inextricably related, the trial court reasoned, the forfeiture provision was unenforceable as well.</p>
<p> The doctors based their arguments against the no-compete&#8217;s prohibition on assisting in the practice of cardiology on a pair of cases where similar agreements were deemed unenforceable: <i>Preferred Research, Inc. v. Reeve</i>, 292 S.C. 545, 357 S.E.2d 489 (Ct. App. 1987) and <i>Faces Boutique, Ltd. v. Gibbs</i>, 318 S.C. 39, 455 S.E.2d 707 (Ct. App. 1995)<i>, </i>both of which the Court of Appeals nevertheless said were inapposite in <i>Baugh</i>.  In <i>Preferred Research</i>, which applied Georgia law, an agreement prohibited licensees who left a title search business from engaging &#8220;in a similar business, in any capacity&#8221;; in <i>Faces Boutique</i> an agreement had prohibited departing employees from participating in or being connected with any direct competitor of the employer in Hilton Head for three years. </p>
<p>  In deeming these cases inapplicable, the court said, &#8220;The &#8216;any capacity&#8217; restrictions employed in <i>Preferred Research</i> and <i>Faces Boutique</i> are broader than the restriction here.  Assuming Respondents do not violate the other restrictions, they could work for a business that practices medicine in the field of cardiology so long as they do not assist a person to engage in the practice of cardiology.&#8221;  Whether the physicians&#8217; future activities constitute such assistance, the court stated, &#8220;could be a question of fact in other cases.&#8221;</p>
<p>  Similarly, the court upheld the 20-mile radius of the noncompete provision against arguments that the nearest facilities where the doctors could perform their subspecialty of invasive &#8220;interventional cardiology&#8221; procedures were actually 55 miles away. </p>
<p>  This situation, the former Columbia Heart doctors argued, resembled the one in <i>Cardiovascular Surgical Specialists, Corp. v. Mammana </i>61 P.3d 210 (Okla. 2002) where a court deemed unenforceable a non-compete agreement that &#8212; on its face &#8212; prohibited a doctor who specialized in cardiovascular and thoracic surgery from performing cardiovascular or thoracic surgery within 20 miles of a practice for two years.  Because the nearest hospitals in <i>Mammana</i> were at least 100 miles from the practice, the doctor in that case was effectively barred from operating within 100 miles of Tulsa.  Citing <i>Mammana, </i>the Columbia Heart doctors argued that forcing them to move 55 miles away was unduly oppressive restraint on their ability to earn a living and was not tied to the legitimate interests of Columbia Heart. </p>
<p> But the court distinguished <i>Mammana</i>, saying</p>
<blockquote><p>Unlike in <i>Mammana</i>, Columbia Heart  is a full-service cardiology practice, and Respondents specialized in general cardiology, with a subspecialty in interventional cardiology.  While the restriction in <i>Mammana</i> prevented the physician from practicing in his field far beyond the technical terms of the provision, here Respondents can continue to practice in their field&#8211;offering cardiology services not involving interventional cardiology&#8211;outside the 20-mile radius.</p>
</blockquote>
<p>But the court avoided any discussion of public policy concerns that non-compete agreements limit the supply of medical professionals.  While reasonableness  &#8221;from the standpoint of sound public policy&#8221; is a standard criterion of analysis in non-compete cases, it has received scant treatment South Carolina non-compete cases, <i>see, i.e.</i>, <i>Rental Uniform Serv. of Florence, Inc. v. Dudley</i>, 278 S.C. 674, 675-76, 301 S.E.2d 142, 143 (1983) and is only fleetingly discussed in <i>Baugh.</i></p>
<p>In other states, however, public interest in the context of physician non-competes is given much more expansive significance.  Although rejecting a <i>per se</i> rule against physician non-competes the New Jersey Supreme Court nonetheless said</p>
<blockquote><p> Significant here is the demand for the services rendered by the employee and the likelihood that those services could be provided by other physicians already practicing in the area. If enforcement of the covenant would result in a shortage of physicians within the area in question, then the court must determine whether this shortage would be alleviated by new physicians establishing practices in the area. It should examine also the degree to which enforcement of the covenant would foreclose resort to the services of the &#8220;departing&#8221; physician by those of his patients who might otherwise desire to seek him out at his new location.</p>
</blockquote>
<p><i>Karlin v. Weinberg</i>, 390 A.2d 1161, 1169-70(N.J. 1978).</p>
<p>Even more dramatically, an Ohio case, <i>Williams v. Hobbs</i>, 460 N.E.2d 287 (Ohio Ct. App. 1983)<i>,</i> shows how <i>Baugh</i> might how turned out differently with the above-described public interest analysis.  <i>Williams</i> involved the seeking of an injunction to enforce a non-compete agreement against a doctor who practiced in a subspecialty of &#8220;interventional radiology.&#8221;  In affirming the trial court&#8217;s refusal to issue an injunction based on a non-compete agreement against the doctor, the Tenth District Court of Appeals of Ohio said,</p>
<blockquote><p>The transcript of proceedings indicates that there was evidence before the court that Dr. Williams is a skilled radiologist, <i><span style="text-decoration: underline;">particularly in his subspecialty of interventional radiology</span></i>. The evidence also indicates that his particular skill is <i><span style="text-decoration: underline;">not common among radiologists in the community</span></i>. There is also evidence that the covenant in the <i><span style="text-decoration: underline;">employment contract constitutes a hardship to</span></i> Dr. Williams and <i><span style="text-decoration: underline;">the public</span></i> since <i><span style="text-decoration: underline;">Doctors Hospital is one of the few osteopathic institutions in which he can practice his specialty</span></i><span style="text-decoration: underline;">. &#8230;</span></p>
</blockquote>
<p><i>Williams</i>, 460 N.E.2d at 290 (emphasis supplied);<i> see also</i> <i>Ellis v. McDaniel</i>, 596 P.2d 222 (Nev. 1979) (enforcement of non-compete agreement unjustified  where doctor would be barred from the city where he had practiced, thus &#8220;patients in need of orthopedic services will be forced to travel great distances at considerable risk and expense in order to avail themselves of such services.&#8221;); <i>Iredell Digestive Disease Clinic v. Petrozza,</i> 373 S.E.2d 449, 455 (1988) (stating that with respect to the doctor/patient relationship, the court was &#8220;extremely hesitant to deny the patient-consumer any choice whatsoever&#8221;); <i>Valley Med. Specialists v. Farber,</i> 982 P.2d 1277 (1999) (&#8220;We stop short of holding that restrictive covenants between physicians will never be enforced, but caution that such restrictions will be strictly construed.&#8221;); <i>Ohio Urology, Inc. v. Poll,</i>  594 N.E.2d 1027 (1991) (though denying summary judgment to a defendant doctor against whom non-compete enforcement was sought, the court said the law&#8217;s disfavor of non-competes is &#8220;especially acute concerning restrictive covenants among physicians which affect the public interest to a much greater degree&#8221; and that these covenants should be strictly construed);<i> Statesville Med. Group, P.A. v. Dickey,</i>  418 S.E.2d 256, 260 (1992) (enforcing a no-compete physician covenant &#8221; would create a substantial question of potential harm to the public health, the covenant not to compete is unenforceable as a matter of law.&#8221;); <i>cf.</i> <i>Bauer v. Sawyer</i>, 134 N.E.2d 329, 331 (Ill. 1956) (referring to &#8220;the interest of the public &#8230; in having adequate medical protection,&#8221; but deciding ultimately that, there was no reason why the affected doctor could not serve the public interest equally well in another community);<i> Calhoun v. WHA Medical Clinic, PLLC</i>, 632 S.E.2d 563 (N.C. Ct. App. 2006) (analyzing the shortage of specialists, the impact of a monopoly, the impact on fees, the emergency availability of doctors, and the public interest in choice in the selection of a physician, but nonetheless deciding covenant should be enforced).</p>
<p>Arguments against physician non-completes are even more compelling because the American Medical Association discourages them.  In Opinion 9.02, the AMA stated</p>
<blockquote><p> Covenants-not-to-compete restrict competition, disrupt continuity of care, and potentially deprive the public of medical services. The Council on Ethical and Judicial Affairs discourages any agreement which restricts the right of a physician to practice medicine for a specified period of time or in a specified area upon termination of an employment, partnership, or corporate agreement. Restrictive covenants are unethical if they are excessive in geographic scope or duration in the circumstances presented, or if they fail to make reasonable accommodation of patients’ choice of physician&#8230;.</p>
</blockquote>
<p><i>See http://www.ama-assn.org/ama/pub/physician-resources/medical-ethics/code-medical-ethics/opinion902.page </i>last visited April 2, 2013.</p>
<p>In a 2005 decision that was later superseded by statute, the Tennessee Supreme Court ruled took note of the AMA concerns and ruled that physician non-competes in general were <i>&#8220;</i>inimical to public policy and unenforceable.&#8221;  <i>Murfreesboro Medical Clinic, P.A. v. Udom</i>, 166 S.W.3d 674, 683 (Tenn. 2005), <i>superseded by statute</i> Tenn. Code Ann. § 63-1-148.  <i>See</i> <i><a href="Shepards%20Central%20Indiana.rtf#CITING">Central Indiana Podiatry, P.C. v. Krueger, 882 N.E.2d 723 (Ind. 2008)</a></i> (characterizing <i>Udom</i> as holding &#8220;essentially all&#8221; physician non-compete agreements are against public policy); <i>Calhoun v. WHA Medical Clinic, PLLC</i>, 632 S.E.2d 563, 568, 573, 574 (N.C. App. 2006) (citing the AMA position on non-competes, but ruling nevertheless that the physician non-compete in that case was not against public policy and should be enforced.).</p>
<p>  The <i>Udom</i> court seemed to chide courts for their lack of activism on physician non-compete agreements, saying</p>
<blockquote><p>  &#8230; [W]e find it curious that a majority of states continue to apply a reasonableness standard in evaluating non-compete agreements between physicians, similar to the evaluation of covenants in commercial contexts. &#8230; We note that the largest number of cases dealing with physician&#8217;s covenants not to compete were decided prior to the AMA&#8217;s adoption of its current ethical guidelines in 1980. &#8230;</p>
<p>We further find it most surprising that several of the jurisdictions to have addressed this issue since 1980 have placed little emphasis on the general ethical concerns cited by the AMA in discouraging physicians&#8217; non-compete agreements.</p>
<p>Nevertheless, several states, emphasizing public policy concerns, have subjected these covenants to closer scrutiny than non-compete agreements in other context</p>
</blockquote>
<p><i>Id</i>. at 680-81.</p>
<p>The <i>Udom</i> court also noted also that Colorado, Delaware, and Massachusetts had enacted statutes which purport to render void non-compete clauses in physicians contracts.  <i>Udom</i>, 166 S.W.3d at 681 (citing  Colo. Rev. Stat. Ann. § 8-2-113(3) (2003); Del. Code Ann. tit. 6, § 2707 (1993); Mass. Gen. Laws Ann. ch. 112, § 12X (1991)).  These statutes, however, seem half-hearted because at least two of them &#8212; Colorado and Delaware &#8212; nevertheless allow damages related to competition.  Somewhat more vaguely, Massachusetts statute says that &#8220;nothing herein shall render void or unenforceable the remaining provisions of any such contract or agreement.&#8221;  </p>
<p>Despite the legislative ambivalence concerning physician non-competes, it is clear that the issue has raised strong concerns among some legislators.  The Colorado statute was adopted because &#8220;the state legislature believed that restrictive covenants between physicians adversely affected patient care and the delivery of health care services.&#8221;  Paula Berg, <i>Judicial Enforcement of Covenants Not to Compete Between Physicians: Protecting Doctors&#8217; Interests at Patients&#8217; Expense</i>, 45 Rutgers L Rev 1, 11 (1992). A memorandum by legislators expressed concerns that physician no-compete agreements</p>
<blockquote><p>  (1) are anti-competitive and inhibit free enterprise;</p>
<p> (2) restrain trade and enable some medical organizations to engage in monopolistic practices, which increase the cost of medical care; </p>
<p>(3) protect the business interests of the medical organization, while not protecting the health care needs of patients; </p>
<p>(4) have -a negative impact on patient care; and (5) sever the doctor-patient relationship.</p>
</blockquote>
<p><em id="__mceDel"><i>Id</i>. at 11 n.51.</em></p>
<p>None of the above public interest concerns, however, were discussed in <i>Baugh</i>.  Although South Carolina case law grudgingly acknowledges the possibility of public injury considerations in non-compete agreements, it treats this issue as generally antiquated and relevant only in the most compelling circumstances.  <i>See</i> <i>Reeves v. Sargeant</i> , 200 S.C. 494, 499-504, 21 S.E.2d 184, 187-89 (S.C. 1942) (acknowledging past concerns that non-compete agreements may deprive society of services but nevertheless ordering enforcement of a non-compete agreement on a photographer).  <i>Standard Register Co. v. Kerrigan</i>, 238 S.C. 54, 69, 119 S.E.2d 533, 541, (S.C. 1961) (acknowledging public policy/supply-and-demand considerations, but finding no shortage of services or products offered by a salesman); <i>Wolf v. Colonial Life and Acc. Ins. Co</i>., 309 S.C. 100, 420 S.E.2d 217, (S.C. App. 1992) (analyzing &#8220;reasonableness to the general public&#8221;, the court found &#8220;nothing indicates a shortage of other insurance agents&#8221; and enforced forfeiture provision).  <i>Cf.</i> <i>Alexander &amp; Alexander, Inc. v. Wohlman</i>, 578 P.2d 530, 539-40 (Wash. Ct. App. 1978) (finding that a non-compete covenant entered by insurance brokerage employees was unreasonable in its geographic scope based in part &#8220;whether the degree of injury to the public is such loss of the service and skill of the employee to warrant nonenforcement of the covenant.&#8221;)</p>
<p> But the very selective vetting process for physicians combined their much higher societal value and shorter supply would seem to make for much more a compelling public interest debate on non-competes than the photographers, salesman and insurance employees focused on in previous South Carolina cases. In South Carolina appellate courts, however, that debate will have to wait for another day.</p>
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		<title>Andy Arnold Named One of Greenville Business Magazine’s Legal Elite</title>
		<link>http://www.scnoncompetelawyer.com/andy-arnold-named-one-of-greenville-business-magazines-legal-elite/</link>
		<comments>http://www.scnoncompetelawyer.com/andy-arnold-named-one-of-greenville-business-magazines-legal-elite/#comments</comments>
		<pubDate>Wed, 01 Aug 2012 17:37:45 +0000</pubDate>
		<dc:creator>Andy Arnold</dc:creator>
				<category><![CDATA[Basics]]></category>

		<guid isPermaLink="false">http://www.scnoncompetelawyer.com/?p=479</guid>
		<description><![CDATA[Greenville Business Magazine has recognized Andy Arnold as one of the area’s Legal Elite in the practice of Labor and Employment Law.]]></description>
				<content:encoded><![CDATA[<p>FOR IMMEDIATE RELEASE</p>
<p><strong>GREENVILLE, S.C.</strong> – Greenville Business Magazine has recognized Andy Arnold as one of the area’s Legal Elite in the practice of Labor and Employment Law.</p>
<p>In its first-ever survey, the magazine sent emails to 850 Greenville-area lawyers and asked them who, in their opinions, were the best lawyers in 20 practice areas. Respondents could nominate lawyers in their firms, but for each in-firm lawyer there had to be an out-of-firm lawyer nominated, although not necessarily in the same practice area.</p>
<p>A total of 95 lawyers were identified by their partners and peers as the Legal Elite of the Greenville area.</p>
<p>Greenville Business Magazine will honor the Legal Elite with a reception Aug. 16 at High Cotton.</p>
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		<title>South Carolina Case Review: Team IA, Inc. v. Lucas</title>
		<link>http://www.scnoncompetelawyer.com/south-carolina-law-team-ia-inc-v-lucas/</link>
		<comments>http://www.scnoncompetelawyer.com/south-carolina-law-team-ia-inc-v-lucas/#comments</comments>
		<pubDate>Tue, 15 May 2012 16:56:15 +0000</pubDate>
		<dc:creator>Andy Arnold</dc:creator>
				<category><![CDATA[Forum Selection / Choice of Law]]></category>
		<category><![CDATA[Geographical Limitations]]></category>
		<category><![CDATA[Non-Compete Trends]]></category>

		<guid isPermaLink="false">http://www.scnoncompetelawyer.com/?p=466</guid>
		<description><![CDATA[The most recent reported South Carolina case involving non-compete is Team IA, Inc. v. Lucas, 717 S.E.2d 103 (S.C. Ct. of App. Oct. 2011).  The case provides only modest insight into the legal landscapes of non-compete agreements, and in some ways creates a bit of uncertainty.]]></description>
				<content:encoded><![CDATA[<p>The most recent reported South Carolina case involving a non-compete is <em>Team IA, Inc. v. Lucas</em>, 717 S.E.2d 103 (S.C. Ct. of App. Oct. 2011).  The case provides only modest insight into the legal landscapes of non-compete agreements, and in some ways creates a bit of uncertainty.  In <em>Lucas, </em>the Court of Appeals struck down the nationwide non-compete as being overly broad, but left open the possibility of enforcing the alternative geographic restriction “defined as the states of South Carolina, North Carolina, Georgia and Alabama.”  Not unlike the last Supreme Court case on the subject, this case is curious for the issues not addressed in more detail and the cases not cited. But, I get ahead of myself:  First the facts.<span id="more-466"></span></p>
<p>Lucas resigned from Team IA in February 2009.  After he resigned, Lucas contacted all but one of the customers with whom he had worked and advised each of his departure.  One such customer, Fulton County, Georgia, pulled a project from Team IA and awarded it to 5 Point Solutions, LLC, which is the company Lucas established just one week after his resignation.  Another customer pulled a scanning project and awarded it to 5 Point Solutions.  A lawsuit quickly followed.</p>
<p>The non-compete at issue prohibited Lucas from soliciting and/or selling within the “Restricted Territory” for 12 months after termination.  Restricted Territory was defined as “the entire continental United States” but if this was deemed unreasonable “then such territory, shall be defined as the states of South Carolina, North Carolina, Georgia and Alabama.”  The court held that the nationwide restriction was “overly broad on its face.”  However, the Court of Appeals determined there was a question of fact as to whether the “step down” provision four state territory was overly broad and remanded the case back for further proceedings.</p>
<p>The Court then notes that there was conflicting evidence in the record as to “whether the ‘sales activity’ Lucas conducted as documented in the expense report included contact with Team IA customers in South Carolina, North Carolina, Georgia and Alabama is unclear.” So, it was necessary to inquire “into the nature of Lucas’ assigned territory and contact with customers/potential customers….” In support of this inquiry, the Court cited <em>Standard Register.</em></p>
<p>In <em>Standard Register Co. v. Kerrigan </em>238 S.C. 54 (1961) the Supreme Court precluded an employee from “selling to the accounts or <em><span style="text-decoration: underline;">in the territory</span></em> in which he has been performing his duties as such sales representative.” But, doesn’t that just beg the question, what is the meaning of “territory?”  Does it mean the national territory (no), the state territory, the county territory, the neighborhood, or the actual plot of land on which the customer was located?</p>
<p>Although the case was not cited, it seems this question has been mostly answered in <em>Oxman v. Sherman</em>,   239 S.C. 218, 122 S.E.2d 559 (1961). In <em>Oxman, </em>the South Carolina Supreme Court held that a state wide prohibition when the employee’s dealings occurred in only two counties was overly broad. <strong>“Any covenant should have been limited to the area where he worked. Extending it to the entire State rendered it unenforceable.” </strong><em>See also Rental Uniform Serv. v. Dudley,</em>  278 S.C. 674, 301 S.E.2d 142 (1983)(citation omitted)(“A geographic restriction is generally reasonable if the area covered by the restraint is limited to the territory in which the employee was able, during the term of his employment, to establish contact with his employer’s customers.”). So, shouldn’t the lower court be looking at contact on at most a county by county basis to determine if a statewide prohibition is enforceable? Hopefully, we shall find out.</p>
<p>The Court of Appeals wanted to make sure that it acknowledge the Supreme Court’s last case on blue penciling, <em>Poynter Invs., Inc. v. Century Builders, </em>694 S.E.2d 15<em> (2010), </em>in evaluating the step down provision.  The Court emphasized that it was not “insert[ing] a geographical limitation <em>where none existed.”  </em>In fact, the Court concluded this discussion with the following:</p>
<blockquote><p> Therefore we interpret the Supreme Court’s holding in <em>Poynter</em> to mean that (1) a court  may not “blue pencil” the restriction contained in a non-competition provision by inserting or subtracting terms not agreed to by the parties in order to make it valid and enforceable, and (2) the parties may not of their own accord convert an overly broad  territorial restriction into an enforceable one by entering into a subsequent agreement that artificially limits the actual terms used by the parties original contract.</p></blockquote>
<p><em>Lucas, </em>717 S.E.2d at 107.</p>
<p>Perhaps the most irritating part of the <em>Lucas </em>case is this footnote:  “We decline to rule on whether a non-solicitation agreement’s prohibition on contact with former prospective customers of a former employer is overly broad and unenforceable on its face….” It seems that present law supports enforcement of a non-geographic non-solicit if it limited to “existing customers.”  <em>See </em><em>Wolf v. Colonial Life and Acc. Ins. Co.</em><strong>, </strong>309 S.C. 100, 420 S.E.2d 217 (S.C. App. 1992).  This footnote only presents more cause for confusion at the trial court level—in this case and others.</p>
<p>Finally, the case also contains some rather unsurprising discussion of the choice of law provision.  The bottom line is if a contract provides South Carolina law applies, then there is no need to apply traditional choice of law rules.  The Court of Appeals believes the contract answers that question.</p>
<p><strong>Take away:</strong>  A nation-wide prohibitions are overly broad “on its face.” (I don’t believe it in all cases.) Statewide non-competes are not per se overly broad, but precedent still intact holding employee contact must be statewide and not limited to just a few counties.  Non-solicitations also present factual questions, apparently even if the apply to “prospective customers.” (If this is affirmed by the Supreme Court, it will be a dramatic expansion of enforcement.) And, &#8220;step down&#8221; provisions are probably enforceable, although they only invite mischief.</p>
<p><strong>Note:</strong>  At time of drafting of this post, I believe one of the parties had petitioned the South Carolina Supreme Court for c<em>ert</em>.</p>
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		<title>Non-Compete Beat: Just a Few Facts</title>
		<link>http://www.scnoncompetelawyer.com/south-carolina-noncompete-facts/</link>
		<comments>http://www.scnoncompetelawyer.com/south-carolina-noncompete-facts/#comments</comments>
		<pubDate>Sun, 11 Mar 2012 14:14:07 +0000</pubDate>
		<dc:creator>Andy Arnold</dc:creator>
				<category><![CDATA[Basics]]></category>

		<guid isPermaLink="false">http://www.scnoncompetelawyer.com/?p=462</guid>
		<description><![CDATA[So, the fact is that non-competes are not just a matter between employer and employee, but impact customer, hiring businesses, and consumers.]]></description>
				<content:encoded><![CDATA[<p>After a lull in January, non-compete inquiries to my law office and resulting consults have returned to 2011 levels.  The most disturbing trend seems to be that young, ambitious individuals who have seen their pay and commissions cut feel trapped because the risk of fighting a non-compete seems so daunting.  Many of these folks believe they can offer more efficient service and better prices to customers.  I can&#8217;t recall an instance in which the customers committed to an exclusive relationship. These customers stand to gain from competition: This is a fact.<span id="more-462"></span></p>
<p>I represent a couple of businesses hiring employees with non-competes: speak of uncertainty.  In addition to uncertainty, litigation expense can be significant, especially the way time-churning larger firms bill.  Litigation can function as a tax (payable to lawyers) incurred for those businesses which hire employees with a non-compete&#8211;and <span style="color: #ffcc00;"><a href="http://http://www.scnoncompetelawyer.com/inevitable-disclosure-who-really-owns-your-brain/"><span style="color: #ffcc00;">now it does not always even take a non-compete</span></a>.</span>  So, the fact is that non-competes are not just a matter between employer and employee, but impact customer, hiring businesses, and consumers.</p>
<p>Another fact: Politicians from both parties are AWOL.  State Democrats are mostly clueless. The issue does not fit the interest group politics that dominate its agenda. On the other hand, Republicans get their marching orders from the chambers of commerce, which tends to represent established business interests as opposed to consumers, employees and entrepreneurs. This crowd calls itself “pro-business,” which apparently means the ability of some businesses to prevent competition so that you can protect customers from efficient and cheaper goods and services.</p>
<p>Final fact:  South Carolina courts provide little guidance. Trial courts are ill-equipped to issue a speedy resolution of matters where delay is truly justice denied.  So, employees, customers, and real job creators are left to wonder and wait.  And the fact is no one knows how long.</p>
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		<title>When Law Becomes Craps: Betting on Whether the Judge Read The Brief</title>
		<link>http://www.scnoncompetelawyer.com/south-carolina-noncompete-law-chronicles/</link>
		<comments>http://www.scnoncompetelawyer.com/south-carolina-noncompete-law-chronicles/#comments</comments>
		<pubDate>Thu, 23 Feb 2012 15:20:42 +0000</pubDate>
		<dc:creator>Andy Arnold</dc:creator>
				<category><![CDATA[Basics]]></category>

		<guid isPermaLink="false">http://www.scnoncompetelawyer.com/?p=448</guid>
		<description><![CDATA[The law in South Carolina regarding non-compete agreements is sparse.  So, trial courts are left to hash out disputes with modest guidance.  Unfortunately, more times than not legal memorandums are not read prior to the hearing. ]]></description>
				<content:encoded><![CDATA[<p><a href="http://www.scnoncompetelawyer.com/wp-content/uploads/2012/02/craps-0208-300x199.jpg"><img class="alignleft size-full wp-image-450" title="Is law like craps?" src="http://www.scnoncompetelawyer.com/wp-content/uploads/2012/02/craps-0208-300x199.jpg" alt="" width="300" height="199" /></a>The <a href="http://www.scnoncompetelawyer.com/basics/">law in South Carolina regarding non-compete agreements</a> is sparse.  So, trial courts are left to hash out disputes with modest guidance.  Unfortunately, too often legal memorandums are not read prior to the hearing.  In my last 3 non-compete hearings all in different counties, the opposing parties and I have submitted briefs, affidavits and exhibits before the hearings (two injunctions and one summary judgment motion) and not once had the judge read any of it by the time the arguments began. This would not have been so disturbing but for the fact that two of the three judges who had done no preparatory work felt able to rule from the bench after 15 or 20 minutes of opposing arguments, when some minimal review of the written materials submitted by both parties&#8211;even just the written contract itself&#8211;was necessary for a minimal understanding of the facts and the arguments. <span id="more-448"></span></p>
<p>I should probably be careful here.  First, many judges do read materials prior to the hearing and those who cannot/do not, generally take the matter under advisement to consult the materials after the hearing. Why not before the hearing?  There are several reasons, and many are not the fault of the trial judges.  Our judicial system is underfunded, many/most judges don&#8217;t even have law clerks and dockets are crammed with civil and criminal cases. Also, many times the parties overbrief the issues.  Two fifteen page memorandums with fifty pages of exhibits is a deterrent to a judge who will have five different motions scheduled at the same time. (You never know which lawyers will chicken out before the hearing.)</p>
<p>However, there are more than a few judges who simply do not read the submissions or only sometimes read them or only partially read them.  Too many times, my client&#8217;s guess is as good as mine as to which will happen in each case (unless I am at home in Greenville County, in which case I have a better idea.)  And, because different judges hear motions each week, you usually do not know which judge will hear your case until after you file your motion. And for this reason (and others), no matter what the law is and/or what the facts are, a lawyer cannot guarantee what a judge will do:  EVEN IF THE LAW APPEARS CLEAR.  Law should not be a game of craps, but too often, it sure feels like it.</p>
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		<title>2012: Twenty Years as a South Carolina Lawyer</title>
		<link>http://www.scnoncompetelawyer.com/2012-twenty-years-as-a-south-carolina-lawyer/</link>
		<comments>http://www.scnoncompetelawyer.com/2012-twenty-years-as-a-south-carolina-lawyer/#comments</comments>
		<pubDate>Thu, 12 Jan 2012 14:49:33 +0000</pubDate>
		<dc:creator>Andy Arnold</dc:creator>
				<category><![CDATA[Basics]]></category>

		<guid isPermaLink="false">http://www.scnoncompetelawyer.com/?p=439</guid>
		<description><![CDATA[I was admitted to the practice of law in South Carolina on November 18, 1992.  Just as watching my children age so rapidly before my eyes amazes me, the realization that I have practiced law for almost 20 years is hard to believe.  When I first opened my own practice in 1994 I dreaded being [...]]]></description>
				<content:encoded><![CDATA[<p>I was admitted to the practice of law in South Carolina on November 18, 1992.  Just as watching my children age so rapidly before my eyes amazes me, the realization that I have practiced law for almost 20 years is hard to believe.  When I first opened my own practice in 1994 I dreaded being asked how long I had practiced law; who in their right mind would hire someone only two years out of law school to handle an important case?  Fortunately, the answer was enough for my practice to survive and eventually thrive.<span id="more-439"></span></p>
<p>During my 20 years, I have learned much.  My experience has taught me that most of the time the truth is somewhere in the middle and so is a fair outcome.  But, litigation, like much of life, can be unfair.  In the employment area, the law is stacked against employees, who can be whipped into submission with threats of pay forfeiture, at-will terminations, and non-competes.  People who suffer injury at the hands of others must wait years for a chance at justice and in the meantime must battle insurance companies and large corporations for their fair share.  The system is too expensive for many people to get help.</p>
<p>However, my experience gives me some hope.  Juries are not perfect, but they get it right enough to provide leverage for middle class litigants to negotiate on a more equal footing with big business. Most judges want to do the right thing (even if time did not permit him/her to read my brief before the hearing).  Most people only want what is fair and are not looking to enrich themselves (and it is a good thing because despite what chamber of commerce pawns say, windfall jury awards are rare.)  Most lawyers are honest and hardworking people.  So, there is reason for optimism for those who must turn to our court system.</p>
<p>But, never to be complacent, my staff and I are tweaking some of our practices to be even more responsive to our clients, to use technology to improve communication and efficiency, to continue educating ourselves about developments in the law, and to use the internet to educate employees, consumers and breadwinners about their legal rights.  Although I have gotten a late start on my resolution of blogging more regularly, this post is my start.</p>
<p>The challenge and potential of a solo practitioner has made toughened me up and calmed me down; the stakes are always high for me and my clients so maintaining an even keel is critical to success as well as sanity.  I am committed to making my 20<sup>th</sup> year my best, although I am fairly certain I do not have another 20 years as a litigator ahead of me.  However, at present, I am at the top of my game and ready to use my hard earned experience for the benefit of my clients.</p>
<p>Take stock, take control and take time to enjoy it whenever you can.  Happy New Year!</p>
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		<title>Proud to be a South Carolina Lawyer</title>
		<link>http://www.scnoncompetelawyer.com/proud-to-be-south-carolina-lawyer/</link>
		<comments>http://www.scnoncompetelawyer.com/proud-to-be-south-carolina-lawyer/#comments</comments>
		<pubDate>Mon, 01 Aug 2011 13:59:27 +0000</pubDate>
		<dc:creator>Andy Arnold</dc:creator>
				<category><![CDATA[Basics]]></category>

		<guid isPermaLink="false">http://www.scnoncompetelawyer.com/?p=427</guid>
		<description><![CDATA[The South Carolina Bar kicked off its Proud to be a South Carolina Lawyer" campaign. I was one of 13 featured.]]></description>
				<content:encoded><![CDATA[<div>
<p>The South Carolina Bar kicked off its <span style="color: #ff9900;">&#8220;</span><a href="http://www.youtube.com/user/SouthCarolinaBar"><span style="color: #ff9900;">Proud to be a South Carolina Lawyer&#8221; campaign</span></a><span style="color: #ff9900;">. </span>I was one of 13 featured.</p>
</div>
<p><iframe width="500" height="300" src="http://www.youtube.com/embed/3yBBJlbSrLo" frameborder="0" allowfullscreen></iframe></p>
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		<title>Georgia and Texas Follow the Trend: Non-Competes Easier to Enforce</title>
		<link>http://www.scnoncompetelawyer.com/georgia-texas-follow-trend-non-competes-easier-to-enforce/</link>
		<comments>http://www.scnoncompetelawyer.com/georgia-texas-follow-trend-non-competes-easier-to-enforce/#comments</comments>
		<pubDate>Fri, 15 Jul 2011 19:18:01 +0000</pubDate>
		<dc:creator>Andy Arnold</dc:creator>
				<category><![CDATA[Non-Compete Trends]]></category>

		<guid isPermaLink="false">http://www.scnoncompetelawyer.com/?p=422</guid>
		<description><![CDATA[It is happening.  Slowly, states are making it easier for employers to enforce non-competes.  Recently, the Texas Supreme Court abandoned a decade of precedent when it expanded the basis for supporting non-compete enforcement.  Check out Michael P. Maslanka&#8217;s Work Matters blog on this topic. Maslanka states &#8220;[w]hile the employer won this case, many employers will lose [...]]]></description>
				<content:encoded><![CDATA[<p>It is happening.  Slowly, states are making it easier for employers to enforce non-competes.  Recently, the Texas Supreme Court abandoned a decade of precedent when it expanded the basis for supporting non-compete enforcement.  Check out Michael P. Maslanka&#8217;s <a href="http://texaslawyer.typepad.com/work_matters/2011/06/texas-supreme-court-makes-noncompetes-more-enforceable.html"><span style="color: #ff9900;">Work Matters</span></a> blog on this topic. Maslanka states &#8220;[w]hile the employer won this case, many employers will lose in the long run. Noncompetes tie up talent, and it is the movement of talent that creates what the concurrence calls &#8220;economic dynamism.&#8221; Amen.</p>
<p>Next door in Georgia, the state has amended the constitution to change its non-compete law. How much so?  The <a href="http://www.georgia-noncompete.com/2010/12/173/"><span style="color: #ff9900;">Georgia Non-Compete and Trade Secrets News</span></a> blog says this: &#8220;This new law makes it significantly easier for employers to enforce non-competes and other restrictive covenants against former employees, at least with respect to restrictive covenants in contracts that are signed from this point forward and are thus governed by the new law.&#8221;  Here is a blog post by <a href="http://www.tradesecretnoncompete.com/georgia-amendment-to-state-constitution-will-it-pass-will-noncompetes-be-more-likely-to-be-enforced-in-georgia/"><span style="color: #ff9900;">Trade Secret/Non-Compete</span></a> that provides a brief description of the law.  The change went into effect in May 2011.  However, the Georgia constitution now grants courts to blue pencil non-competes, which <a href="http://www.scnoncompetelawyer.com/south-carolina-supremes-take-a-side-in-blue-pencil-fight/"><span style="color: #ff9900;">South Carolina courts still refuse to do.</span></a></p>
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		<title>I am Being Sued Where? Forum Selection Clauses</title>
		<link>http://www.scnoncompetelawyer.com/i-am-being-sued-where-forum-selection-clauses/</link>
		<comments>http://www.scnoncompetelawyer.com/i-am-being-sued-where-forum-selection-clauses/#comments</comments>
		<pubDate>Tue, 03 May 2011 23:33:26 +0000</pubDate>
		<dc:creator>Andy Arnold</dc:creator>
				<category><![CDATA[Forum Selection / Choice of Law]]></category>
		<category><![CDATA[Non-Compete Trends]]></category>
		<category><![CDATA[Strategies]]></category>

		<guid isPermaLink="false">http://www.scnoncompetelawyer.com/?p=394</guid>
		<description><![CDATA[Too many employees who have signed a non-compete agreement fail to take notice that they have agreed to be sued in another state.  These provisions are known as "forum selection clauses." ]]></description>
				<content:encoded><![CDATA[<p><iframe width="480" height="315" src="http://www.youtube.com/embed/7i-KCdZn2zs" frameborder="0" allowfullscreen></iframe></p>
<p>Too many employees who have signed a non-compete agreement fail to take notice that they have agreed to be sued in another state.  These provisions are known as &#8220;forum selection clauses.&#8221; The costs of going to another state to defend yourself can be significantly higher than litigating in your home state.  At least half of the agreements I review state that the parties have agreed to having another state&#8217;s court will decide any dispute.<span id="more-394"></span></p>
<p>However, if you are a South Carolina resident, you should know that S.C. Code § 15-7-120(A) states:  &#8221;Notwithstanding a provision in a contract requiring a cause of action arising under it to be brought in a location other than as provided in this title and the South Carolina Rules of Civil Procedure for a similar cause of action, the cause of action alternatively may be brought in the manner provided in this title and the South Carolina Rules of Civil Procedure for such causes of action.&#8221;  This statute essentially provides that a S.C. resident, who has signed a contract with a forum selection clause, may file their case in a South Carolina court as long as it otherwise has jurisdiction.</p>
<p>In the case of a forum selection clause in S.C., it can be a race to the courthouse.  The stakes can be high.</p>
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		<title>Land of the Lost:  The Antiquated Notion of Geographically Based Non-Competes</title>
		<link>http://www.scnoncompetelawyer.com/geographically-based-noncompetes-south-carolina-law/</link>
		<comments>http://www.scnoncompetelawyer.com/geographically-based-noncompetes-south-carolina-law/#comments</comments>
		<pubDate>Tue, 15 Mar 2011 12:58:05 +0000</pubDate>
		<dc:creator>Andy Arnold</dc:creator>
				<category><![CDATA[Geographical Limitations]]></category>
		<category><![CDATA[Non-Compete Trends]]></category>
		<category><![CDATA[Trade Secrets]]></category>

		<guid isPermaLink="false">http://www.scnoncompetelawyer.com/?p=387</guid>
		<description><![CDATA[The more non-compete matters I review and litigate the more certain I am that geographically based non-competition covenants should be per se unenforceable. ]]></description>
				<content:encoded><![CDATA[<p>The more non-compete matters I review and litigate the more certain I am that geographically based non-competition covenants should be <em>per se </em>unenforceable.  What is the logic of preventing an employee from selling widgets in Greenville County just because he has sold widgets to certain customers located in Greenville County? (There is none.) How are such non-competes ever reasonable in a post-employment covenant?  (They are not.) Isn’t such a non-compete always broader than it needs to be to protect the former employer’s legitimate interest? (Yes.)<span id="more-387"></span>The increased use of non-solicitation provisions have helped expose the overreach of  geographically based non-compete agreements.  A non-solicitation provision (those which are enforceable) will prevent a former employee from contacting his former employer’s existing customers to sale competitive products and/or services.  It is a<span style="color: #ff9900;"> <a href="http://www.scnoncompetelawyer.com/basics/"><span style="color: #ff9900;">uniform requirement of enforceability</span></a> </span>for any restraint on trade that there be a legitimate interest that is in need of protection, and most employers argue (and most courts agree) that a company’s relationships with existing customers constitute such a legitimate interest. Although the fairness and necessity of a non-solicit can be debated, non-solicitation agreements certainly provide all the protections an employer needs to preserve its existing client base.</p>
<p>The other protectable interest advanced by employers in defense of post-employment non-competes is its trade secrets.  Employers assert that certain confidential information and/or trade secrets justify restrictions on competitive employment. But, of course, trade secrets have no geographic boundaries; what do you think an employer’s response would be to the proposal not to use its trade secrets in South Carolina but to be able to use them anywhere else?  The company would be incredulous.  And so, it is just as ludicrous that a former employer will attempt to restrict an employee’s employment geographically based upon those same boundless trade secrets.</p>
<p>It seems clear to me that in most, if not all, situations an agreement not to solicit existing customers and an <span style="color: #ff9900;"><a href="http://www.scnoncompetelawyer.com/trade-secrets-and-non-disclosure-provisions/"><span style="color: #ff9900;">agreement to refrain from disclosing and/or using trade secrets</span></a> </span>will render  geographic non-competes obsolete.  Certainly, there may be a few circumstances where the scope of knowledge of trade secrets will be asserted as the basis for more restrictive covenants, but even in these instances, geography seems to be of little relevance.  Counsel for employees seeking to beat a non-compete should begin a wholesale attack on geographically based non-competes, and courts should begin to move past the model of the past when business was mostly territorial bound.</p>
<p><span style="text-decoration: underline;">NOTE:</span> I have excluded non-competes arising out of the sale of a business since a geographical limitations might be relevant when someone sales a retail operation with a local presence.  It also seems that the above might not apply to local media personalities who have geographical restrictions, although these non-competes are otherwise problematic.  I welcome any argument about the above—to sharpen the logic will require some blunt rebuttals.</p>
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