Robert B. McCullough, Erie, for appellant.
T. Warren Jones, MacDonald, Illig, Jones & Britton, Erie, for appellee.
Jones, C. J., did not participate in the consideration or decision of this case. Pomeroy, J., filed an opinion in support of affirming in part and vacating and remanding in part, which was joined by Eagen and O'Brien, JJ. Roberts, J., filed an opinion in support of modification. Nix and Manderino, JJ., filed opinions in support of reversal.
This appeal is from a decree in equity enforcing a post-employment restraint on competition in a contract of employment. Mr. Justice EAGEN, Mr. Justice O'BRIEN, Mr. Justice ROBERTS and Mr. Justice POMEROY are of opinion that the covenant is enforceable to the extent indicated in the appended opinions of Mr. Justice POMEROY, speaking for himself and Justices
EAGEN and O'BRIEN, and of Mr. Justice ROBERTS, respectively.
Mr. Justice NIX and Mr. Justice MANDERINO would hold the covenant unenforceable in its entirety.
With regard to the territorial area in which competition is proscribed, Justice EAGEN, O'BRIEN, ROBERTS and POMEROY believe that the covenant is overly broad, and would therefore vacate the decree and remand the case for the entry of a decree limited to the sales territory appellant covered while employed by the appellee. IT IS SO ORDERED.
With respect to the duration of the restraint, Mr. Justice EAGEN, Mr. Justice O'BRIEN, and Mr. Justice POMEROY are of opinion that the covenant is enforceable, whereas Mr. Justice ROBERTS is of opinion that the decree should be remanded for modification by the trial court. There being no majority opinion as to the proper disposition of the decree insofar as it enforces the covenant as to time, this aspect of the decree of trial court remains undisturbed.
Costs to be equally divided between the parties.
ROBERTS, Justice (in support of modification).
I agree that the decree should be vacated and the case remanded, but I do not agree that the five year duration of the postemployment restraint is reasonable.
Employee covenants not to compete will be enforced "only so far as reasonably necessary for the protection of the employer." Sidco Paper Company v. Aaron, 465 Pa. 586, 594, 351 A.2d 250, 254 (1976); Bettinger v. Carl Berke Associates, Inc., 455 Pa. 100, 314 A.2d 296 (1974); Reading Aviation Service Co. v. Berolet, 454 Pa. 488, 311 A.2d 628 (1973). In order to obtain enforcement of a covenant of this duration, appellee would have to show that the five year restraint was necessary to protect appellee's interest in customer relationships developed while appellant was employed by appellee. In my view, the necessity for such a lengthy restraint is not established in the record.
The facts in the record create serious doubt whether appellant's activities with his new employer have adversely affected appellee. A representative of appellee testified, "[A]ppellant knows the volume of business we have done. I can't see that is hurting us competitively, no." Moreover, the record reflects that price lists were freely circulated by appellee and that appellant's new employer had contacts with the same customers as appellee in the past. This indicates that appellant's knowledge
of appellee's customers and prices caused appellee no harm.
The majority in sustaining the five year restraint is giving the past employer far greater protection than the record establishes is necessary. In doing so it restrains competition and unfairly deprives appellant of his livelihood. The five year restraint should be substantially reduced to afford only that protection which the record supports as necessary.
POMEROY, Justice (in support of affirming in part and vacating and remanding in part).
This is a suit in equity*fn1 for enforcement of a covenant against post-employment competition contained in a contract of employment. The plaintiff, Boldt Machinery & Tools, Inc. [hereinafter "Boldt"] is a seller and distributor of industrial machinery and tools (lathes, drill presses, etc.) in an area comprised of western Pennsylvania, southwestern New York, and eastern Ohio. The defendant, Glenn Wallace, was employed by Boldt as a salesman in 1959 and was assigned a sales territory composed of portions of northwestern Pennsylvania and southwestern New York. On February 9, 1973, Wallace voluntarily ...