Minnesota Court Declines to “Blue-Pencil” Noncompete Agreement
The Minnesota Federal District Court recently reviewed an employee’s noncompete agreement and determined its terms were unenforceably vague and over broad. See Gavaras v. Greenspring Media, LLC, et. al., Civil No. 13-3566 (D. Minn., Jan. 13, 2014). The terms of the seventeen year old agreement (the company had been sold twice since that time) were conditioned on compliance with the terms of a written employment agreement, which the court found was never clearly defined or executed. At best, the company relied on a proposal setting forth possible benefits rather than certain employment terms. Further, the court found the agreement lacked a geographic limitation and left “the employee guessing” as to the scope of the noncompete.
The company urged the court to exercise its discretion to “blue-pencil” or edit the agreement to make its terms reasonable and enforceable. See Bess v. Bothman, 257 N.W.2d 791 (Minn. 1977). The court refused, however, to do so and stated: “Modifying this agreement would require more than modifying the duration and territorial scope. The Court would need to rewrite the agreement wholesale, and rewriting would require the Court to divine the parties’ intent at the time of contracting, seventeen years after the fact, and with a different employer.”
Takeaway: Minnesota employers should make sure any noncompete agreement it uses is drafted to contain reasonable and articulate terms. While a court has the inherent authority to blue-pencil overbroad terms, it will not do so if such modification requires the court to comprehensively rewrite the agreement. Further, successor employers should conduct due diligence on existing employee noncompete agreements and, where appropriate, update or amend the terms of such agreements to enhance enforceability.