Indefinite Geographical Range Sacks Enforceability of Non-Compete Agreement

Business Insights

Indefinite Geographical Range Sacks Enforceability of Non-Compete Agreement

Jun 26, 2017 | Business Insights

Judge Liam O’Grady of the U.S. District Court, sitting in Alexandria, has found a non-competition agreement overbroad and unenforceable because its geographical component was defined by an irrelevant factor that resulted in a zone of prohibited competition that was indefinite in geographical range. The non-compete in NVR v. Nelson prevented the defendant / former employee from, among other things, providing competing services anywhere he had obtained Confidential Information during the 24 months immediately preceding his termination.

Nelson was employed as a Division Manager for a subdivision of NRV, a home developer and construction company. After leaving NRV, Nelson took a sales job with Siminini Homes, a competitor. Attempting to enforce the non-compete, counsel for NVR argued that it was enforceable because a narrow reading of the provision was necessarily implied, but the court noted that even under the most favorable interpretation, NVR was arguing for a limit that would prevent Nelson from competing in places where he hadn’t worked while employed by NVR. For example, while he worked in what NVR called the North District of Charlotte, North Carolina, NVR sought to exclude Nelson from working anywhere in the city of Charlotte. Moreover, by tying the geographical restriction to the locations from which Nelson had obtained Confidential Information, NRV had created an irrelevant and illogical test for this element of competitive protection.

Interestingly, Judge O’Grady found other components of the non-compete to be narrowly drawn and potentially enforceable. For example, the restriction on prohibited activities was carefully limited to NRV’s protectable interest and was therefore reasonable. However a non-compete that is overbroad in scope, duration or geography will not be enforced in Virginia. O’Grady denied NRV’s request for an injunction because the Plaintiff was “not likely to succeed on the merits.” In all likelihood, this preliminary ruling marks the practical end of the case.


Follow us on LinkedIn to view the latest blogs from our team.

About – Business Insights

Our business blog focuses on issues affecting Virginia, D.C. and Maryland business owners as well as those in other jurisdictions throughout the country. We provide timely insight and commentary on federal and state rules and how they affect you. If you are interested in having us cover a specific topic, please let us know.

About – Employment Law

As employment law constantly changes, the attorneys at Bean, Kinney & Korman stay up to date on the law as it develops. Our blog topics focus on those changes and what you need to know about them, ranging from severance agreements and the FLSA to social media in the workplace and recent court decisions. If you are interested in having us cover a specific topic, please let us know.

About- Real Estate

This blog focuses on real estate, land use and construction-related topics affecting Virginia and the Washington, D.C. metro area. With topics ranging from contract drafting and negotiation to local and regional land use project updates, the attorneys at Bean, Kinney & Korman provide timely insight and commentary on the issues affecting owners, builders, developers, contractors, subcontractors and other players in the industry. If you are interested in having us cover a specific topic, please let us know.

The Basics of Nonprofit Governing Documents

This second post in our four-part series explores the basic documents that establish the structure of a non-profit and its governance. It is axiomatic that nonprofits exist to create positive change, serving communities, and advancing societal betterment. Yet, even...

Laying the Groundwork for an Effective Nonprofit

This is the first part in a four-part series on “Legal Foundations for Starting and Operating a Nonprofit.” Starting a new business is exciting for every founder. Founding a nonprofit adds the layer of creating positive change in the world which adds depth and meaning...