Okla. Court of Civil Appeals Rules Non-Compete Deal Violates Antitrust Law

Article excerpt

A Tulsa company's lawsuit against a former employee accused of violating a non-compete agreement was shot down by the appeals court Wednesday. The court found the non-compete agreement to be unenforceable and in violation of antitrust law.

The Oklahoma Court of Civil Appeals turned to a statute as old as the state in deciding Vanguard Environmental Inc. vs. Misty Lynn Curler. Title 15 Section 217 of the Oklahoma Statutes was enacted by the first Oklahoma Legislature, using the same wording from the statute in effect in the Oklahoma Territory prior to statehood. The statute remained unchanged until a minor amendment in 2001.

The law reads that "every contract by which any one is restrained from exercising a lawful profession, trade or business of any kind ... is to that extent void." The Oklahoma law was passed around the same time a similar law was enacted on the federal level in response to the U.S. Supreme Court's ruling against Standard Oil Co.'s abuse of monopoly power.

Though all contracts involve some restriction on trade, the court found, contracts that effect restraint on competition in the market are unlawful. Antitrust laws were passed "for the protection of competition, not competitors," the court found.

After five years with Vanguard, Curler had accepted a position with a competing company, Cinnabar Environmental Services. Vanguard sued Curler, claiming she had breached the restrictive covenant she had signed with Vanguard. The District Court of Tulsa County sided with Curler, and Vanguard appealed.

The non-compete agreement, or restrictive covenant, Vanguard Environmental had its employees sign went far beyond protecting the company's proprietary information, to effectively barring its former employees from further employment the environmental compliance business. The non-compete agreement was so broad, enforcement of the contract would actually reduce consumers' options in the market, the court found.

The covenant prohibited any post-employment contact with clients - including federal agencies such as the Environmental Protection Agency, the Occupational Safety and Health Administration and the Department of Transportation - for five years. The covenant prohibited Curler from contacting or soliciting both current and former clients of Vanguard. …