but otherwise containing the same provisions as the first contract. In 1972, plaintiff resigned and accepted employment at a higher salary with Marlo Furniture Company in Washington, D.C.
The plaintiff was required to sign these contracts if he desired to be retained as vice president at the salaries stipulated, and he was required to waive participation in a pension plan in effect for middle management employees of defendant.
Pursuant to the deferred compensation plan, the plaintiff contributed to the fund 50% of any annual bonus declared by defendant
and the defendant contributed to the fund an additional sum equal to 50% of the plaintiff's contribution. During the period from 1966 to 1972, plaintiff contributed $32,500 and the defendant contributed $16,250, making the total of $48,750. The bonus funds so contributed were commingled with the general corporate revenues. Plaintiff did not have to pay income tax on these bonus contributions. No interest accrued on them. The plaintiff could not withdraw money from the fund as long as he remained an employee of defendant.
The amount of the annual bonus was fixed by defendant in its sole discretion; no bonus was mandated. Although there is considerable doubt, we assume the deferred compensation plan was contributive to the extent of the $32,500 which was included in the fund from the bonuses awarded to the plaintiff.
The employment contract provided that the deferred compensation would be forfeited under the following contingencies: (a) If within two years of his leaving the defendant's employ, the plaintiff worked for any retail department store or speciality store with gross annual sales in excess of one million dollars and in any city of the United States having a population of more than 200,000 without first having procured the written consent of the employer; or (b) if within three years of leaving the defendant's employ, the plaintiff were to work for any retail department or speciality store with gross annual sales in excess of one million dollars in any city in which the defendant maintains a retail store without first having procured the written consent of the defendant.
Written permission for plaintiff to accept employment with Marlo Furniture Company in Washington, D.C. as of September 1, 1972, was given by defendant in a letter dated August 25, 1972.
The above-mentioned provisions providing for forfeiture if plaintiff accepted other employment are now moot.
Since September, 1972, plaintiff has retained his employment with Marlo Furniture Company.
Plaintiff has admitted that in each year since leaving defendant he has earned a larger salary than when he was employed by the defendant.
Paragraph 4(c) of the employment contract provided, inter alia, that after plaintiff ceased to be employed by defendant, payment of the amount obligated to plaintiff would be made in 15 equal annual installments subject to the aforesaid contingencies.
In addition Paragraph 5 of the contract provided that each year's deferred payment was to be eliminated or reduced to the extent that the plaintiff's business earnings for the year when added to the amount of the contingent payment would exceed 75% of the average of the plaintiff's base salary for the last three years of his employ with the defendant.
Since plaintiff admitted that in each of the five years since leaving the defendant he has earned a greater amount of income than when he was employed by defendant, as of now he is not entitled to any deferred compensation payments.
We hold not only that the two restrictive covenants in the deferred compensation plan that would have effected a forfeiture of plaintiff's right to deferred compensation payments had he taken a job without written permission from defendant are now moot, but also that a restrictive covenant which effects a forfeiture in a deferred compensation plan is not actionable under the anti-trust laws. The forfeiture provisions and the covenants not to compete are germane to the deferred compensation plan but not to that part of the contract pertaining to employment.
Plaintiff did not agree as a condition to his employment that he would not go to work for a competitor for a period of two or three years. There is no express covenant not to compete in any of the employment contracts signed by the plaintiff.
Under the contracts sub judice the plaintiff was and is free to work for any competitor of defendant that he desires. He was not subject to a covenant not to compete. Under the contracts the defendant has no right to sue any person or company that hires plaintiff. There is no restraint on competitive employment. The provisions providing for forfeiture of deferred compensation for engaging in subsequent competitive employment are valid even though unrestricted in time or geography. Likewise the provision for forfeiture contained in Paragraph 5 is a valid attempt to encourage plaintiff to remain in the services of the defendant. The restrictive employment covenants did not in any way interfere with plaintiff's ability to find and retain other employment if he so desired.
In our opinion the anti-trust laws have not been violated.
An appropriate order will be entered.