New Personal Services Case Illustrates Non-Compete Principles
written by Jonathan A. Keselenko
A newly-decided case by Judge Fabricant of the Business Litigation Section of Suffolk Superior Court highlights some interesting trends with regard to the enforcement of non-compete agreements (Lunt v. Campbell, et al.). The case involves three hairdressers who left the Lunt salon in Beverly Farms, Massachusetts to start a new shop in Peabody, Massachusetts. The hairdressers had signed non-compete agreements midway through their employment with Lunt prohibiting them from competing in Essex County for a period of two years. Lunt sought an injunction when the hairdressers left to start Gichelle's Hair Studio.
The court's decision denying injunctive relief for Lunt illustrates important principals -- namely, what constitutes protectable "good will" and "confidential information." As to the former, the court found that "hairdressers are not fungible" and that the choice of hairdressers is a matter of personal taste. To the court, this meant that the good will likely belonged to the hairdresser, not to the shop -- a finding buttressed by the fact that clients followed the hairdressers to a new shop 10 miles away.
As to confidential information, the court found that there is no evidence that records were stolen, but that at any rate "names and telephone numbers of customers" likely do not constitute confidential information.
While not dispositive, the court also made an observation that could be used in future cases. Though it has been established in Massachusetts that continued employment constitutes sufficient consideration for enforcing a non-compete agreement, Judge Fabricant found that the fact that each employee was called upon to sign the non-compete contact during her employment "weigh[ed] in the Court's evaluation of the equitable factors in deciding whether to enforce by means of a grant of an injunction." In other words, if an employer wants the court to take the non-compete more seriously, it should attempt to have the agreement signed at the outset of employment, or if done mid-employment, tie some concrete new benefit to the non-compete.
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