Readers of this blog have become conditioned to seeing non-compete disputes in a range of sophisticated professional services industries. In fact, non-competes are the norm in fields such as insurance brokerage, technology services, veterinary services and many business-to-business industries that grow through long-term corporate client relationships.
But non-competes are prevalent in a wide range of businesses, even those that may be a surprise. I have counseled a fair number of health clubs who have personal trainers sign non-compete or non-solicit agreements. Case law reporters reveal a number of decisions that allow enforcement of restrictive covenant agreements against hair stylists. And the next exterminator to get sued for violating a non-compete won't be the first by a long stretch.
A recent Florida case even upheld the issuance of a temporary restraining order against an independent contractor tattoo artist, who violated a 15-mile covenant in his contract with Atomic Tattoos. The company developed a database that strongly suggested most of its customers lived within a short distance of the shop, and that many were repeat customers. (This should surprise absolutely no one.) Of course, Florida law concerning restrictive covenants is highly pro-business, as courts are not allowed to consider facts related to individual hardship and certain covenants are presumptively reasonable.
In many ways, non-competes in retail industries like those mentioned above are a bit easier to enforce. First, it is much easier to define the prohibited business. By way of example, most people understand a restriction that does not allow someone to perform "body piercing and tattoo artist services." Contrast this with trying to define a restriction in a complicated business-to-business technology field that changes every couple of months with new product offerings and niche marketing plans.
Second, a geographic restriction makes more sense in a consumer-centric retail business. Because individuals tend not to travel very far for personal services (how far would you drive to work out every day?), retail-oriented non-competes often contain a very tight prohibited area of competition and can be enforced fairly easily. In many business-to-business environments, a geographic restriction is much more difficult to enforce, since account executives may travel great distances to see clients and a home office location may mean very little in the sales process. In a retail business, the business' store location often has great value in and of itself.
Court: Court of Appeal of Florida, Second District
Opinion Date: 9/10/10
Cite: Atomic Tattoos, LLC v. Morgan, 45 So. 3d 63 (Fla. Ct. App. 2d Dist. 2010)