Thursday, November 11, 2010

Federal Court In Maine Holds Involuntary Termination Can Be Considered In Enforcement of Non-Compete (OfficeMax v. County Qwick Print)

Having a federal court judge in Maine draft an opinion which discusses and analyzes, in some detail, a law review article is not all that common.

And it's certainly not very common when the author of that law review article happens to be, um, me, and when I have no involvement representing a party in the case. In a way, it's kind of like watching your own funeral.

But on with it.

I wrote an article for the DePaul Business & Commercial Law Journal about 8 years ago that canvassed the law on the enforceability of non-competes in involuntary discharge cases. The law was, and remains, a bit scattered, with courts coming down in four general categories:

(1) The non-compete is per se invalid;
(2) There is a presumption against enforceability;
(3) The circumstances of termination are a factor to consider in an overal balancing analysis; and
(4) The termination is not even a factor a court can consider.

A federal court in Maine, in OfficeMax Inc v. County Qwick Print, acknowledged no decision in that state had considered the impact of involuntary termination on a non-compete. After summarizing my law review article, it determined that "the safer approach is to consider the circumstances of [the defendant]'s termination as a factor in balancing the relative equities between the parties." In so deciding, the court exercised some restraint by not attempting to create a new rule of substantive law for the state of Maine. Put differently, the court examined this factor under its procedural injunction rules rather than as a question of state substantive law.

This is an understandably cautious approach, but consistent with what I suggested courts adopt as far as considering the impact of termination. In my article, I recommended that the most sound analysis was option (3), the balancing inquiry. Stated another way, courts should scrutinize under the rubric of "reasonableness" how an employee's tenure ended. This would not bind courts to bright-line rules and would allow for some needed flexibility, rather than having the case turn into a collateral after-the-fact job performance inquiry, something totally ill-suited to emergency, expedited proceedings.

In this regard, I still believe that how employment ended is highly relevant to the question of reasonableness of a post-employment restraint. It is at least as important of whether third-parties or the public will encounter some hardship through enforcement.

Anecdotally, I know judges are sympathetic to employees who have been terminated for reasons other than cause and are more troubled by sudden, abrupt resignations that leave an employer in the lurch with a key account or at an important juncture of a project. Though courts may not voice every single factor that comes into play in their decision, I think it's reasonable to assume that a terminated employee stands a better chance of prevailing in a close case.


Court: United States District Court for the District of Maine
Opinion Date: 11/8/10
Cite: OfficeMax Inc. v. County Qwick Print, Inc., 2010 U.S. Dist. LEXIS 119070 (D. Me. Nov. 8, 2010)
Favors: Employer
Law: Maine


  1. This decision was over-turned by the Appellete Court.

  2. True, but not on the grounds discussed in this post.