A Missouri employer failed in its attempt to enjoin a former employee from working for a competitor after a Missouri appeals court ruled his employment agreement was unenforceable as a matter of law. In Sigma-Aldrich Corp. v. Vikin, No. ED-100575, (Mo. Ct. App. Oct. 14, 2014), the Missouri Court of Appeals (Eastern District) upheld a St. Louis County trial judge’s ruling that a non-compete without a geographic restriction, that sought to protect information widely known to the public, was unenforceable.
In this case, Sigma-Aldrich employed Omar Vikin in a number of sales and related roles for its products. Vikin signed a non-compete agreement which provided that he could not work for a competing employer for a period of two years. The non-compete did not have a geographic restriction. Vikin later resigned and went to work for a competitor in a general manager position. Sigma-Aldrich sued, and in response Vikin contended that the agreement was unenforceable in part because it was not drafted to protect reasonable employer interests. The trial court held that the agreement was not enforceable because it contained no geographic limit and was essentially was a world-wide restriction. The trial court also held that the information Sigma-Aldrich tried to protect in the agreement was not protectable as a trade secret. Sigma-Aldrich appealed.
Affirming the decision, the Missouri Court of Appeals noted that the lack of geographic limitation in a non-compete agreement does not automatically render an employment non-compete void as a matter law in Missouri. The Appeals Court held that that an agreement that had no geographic limit required some additional limitation on the class with whom contact was limited: “[T]he lack of a geographic limitation here renders the non-compete provision unenforceable without accompaniment by any specificity of limitation on the class with whom contact is limited. Rather, the non-compete provision creates a global prohibition in which Sigma attempted to ban employees from working for any of its competitors globally in any capacity.” Given the lack of any limitation on a class of competitors, the Court of Appeals held the agreement unenforceable.
The Court of Appeals then analyzed whether Sigma-Aldrich had met its burden that the agreement protected confidential information or trade secrets. In order to be valid under Missouri law, a restrictive covenant must seek to protect reasonable employer interests such as trade secrets or customer lists. Here, Sigma-Aldrich did not contend that Vikin had taken customer lists, but did contend that Vikin had access to its trade secrets, including marketing plans and website development information. Ultimately, the Missouri Court of Appeals disagreed, finding that the evidence demonstrated that the information Sigma-Aldrich sought to protect was widely known in the industry and that Sigma-Aldrich had made no effort to protect the secrecy of the information. The Court of Appeals concluded that Sigma-Aldrich had not established that the information at issue was a trade secret.
The Court of Appeals held that Sigma-Aldrich had failed to meet its burden to show that the non-compete was not overly-broad and protected reasonable interests such as trade secrets and customer lists.
A restrictive covenant with no geographic limitation can still be enforceable in Missouri if some consideration has been given to limiting the application of the restriction to certain types of employers, roles, or customers. Courts in other states have reached similar conclusions. Also, given that the employee in this case did not have access to any trade secrets or customer lists, the agreement was viewed as unreasonable by both the trial court and the Court of Appeals. As always, employers must give careful consideration to which employees or positions should be required to sign a non-compete agreement.