Opinion
Civil Action No. 1:01-CV-0678-JOF.
Opinion Filed: April 11, 2001.
Irwin W. Stolz, Jr., Seaton D. Purdom, Gambrell Stolz, ATTORNEYS FOR PLAINTIFF.
James L. Matte, Jack Linden McLean, Jr., Mildred Alesia Bennett, McGuire Woods, ATTORNEYS FOR DEFENDANT.
ORDER
This matter is before the court on Plaintiff's motion for a temporary restraining order [1-1].
On March 13, 2001, Plaintiff, Susan Rinks, filed suit against Defendants Courier Dispatch Group, Inc., and Velocity Express Southeast, Inc., in the Superior Court of Gwinnett County, seeking a declaration that the restrictive covenants which she entered into while employed by Defendants are unenforceable as overbroad restraints of trade in contravention of the constitution and laws of the state of Georgia. On March 15, 2001, Defendants filed a notice of removal. This court held a hearing on Plaintiff's motion for a temporary restraining order on March 29, 2001.
In 1995, Plaintiff partially owned a company called AirVantage. Courier Dispatch Group, Inc., purchased AirVantage and hired Plaintiff as its National Sales Service Manager. At that time, Plaintiff signed the Non-Competition and Severance Pay Agreement at issue in this litigation (the "Agreement"). Plaintiff continued to work for Courier Dispatch, later known as Velocity Express, in jobs of increasing responsibility and compensation. At the time of her termination on February 7, 2001, Plaintiff was Senior Vice President of Air Operations. When Velocity Express indicated to Plaintiff that her employment would not be continued after an authorized leave of absence, Plaintiff threatened to sue Velocity Express on a variety of issues, including sexual harassment. In order to resolve these disputes, on February 15, 2001, the parties entered into a Separation Agreement and Release (the "Release").
The release specifies that Plaintiff must keep its terms confidential.
Under the terms of the Release, Plaintiff agreed that
by executing this Release she does . . . release and forever discharge Velocity . . . from any and all claims . . . which Employee . . . had or now has, from the beginning of time to the date hereof, against Velocity . . . whether known or unknown, whether based on contract or tort, or on Title VII of the Civil Rights Act, the Americans With Disabilities Act, the Age Discrimination in Employment Act, including the Older Workers' Benefit Protection Act, the Family Medical Leave Act, or any other federal or state statute, common law, rule or regulation. Employee acknowledges that by signing this Release, Employee is waiving her rights to bring any claim of any sort related to her employment or the termination of that employment with Velocity.
Release, ¶ 3. The Release also contained a provision that referenced the non-competition agreements.
Employee shall continue to honor any and all restrictive covenants and/or confidentiality obligations set forth in any and all Non-compete Agreements . . . containing restrictive covenants between Employee and any of the Released Parties, including those restrictive covenants set forth in the Noncompetition and Severance Pay Agreement entered between Employee and Courier Dispatch Group, which remain binding and in full effect and enforceable by the Release Parties through the period during which Employee received severance.Id., ¶ 8.
In her motion for a temporary restraining order, Plaintiff asks that the court enjoin Defendants from taking any action to enforce the restrictive covenants and from filing suit or threatening to file suit against any potential employer or business associate of Plaintiff pursuant to the restrictive covenants. To be entitled to a temporary restraining order, Plaintiff must show (1) there is a substantial likelihood of success on the merits, (2) irreparable injury will be suffered without the order, (3) the threatened injury to Plaintiff outweighs the damage the order may cause to Defendants, and (4) if issued, the order would not be adverse to the public interest. See Ingram v. Ault, 50 F.3d 898, 900 (11th Cir. 1995).
Plaintiff is unable to show she has a substantial likelihood of success because she signed a Release waiving her right to sue Defendants and because the likelihood of Plaintiff's success on the underlying merits of her claims is not substantial. Plaintiff signed a general release on February 15, 2001, that waived her right to sue Defendants on any claim in force at the time the Release was signed. In fact, the Release specifically reaffirmed Plaintiff's commitment to honor all restrictive covenants in force at the time Plaintiff signed the Release. Plaintiff does not dispute that the Agreement was in force at the time Plaintiff signed the Release. The Release precludes Plaintiff from bringing an action under any federal statute. See Release, ¶ 1. Although Plaintiff argued at the hearing that the Release was not intended to cover suits for declaratory judgment, but rather only suits for monetary damages, the court finds that the Release is not ambiguous on this point and contains no such distinction. See U.S. Anchor Mfg., Inc. v. Rules Indus., Inc., 264 Ga. 295, 298 (1994) (release subject to same rules of construction as ordinary contracts in writing).
"[P]arties are free, except as prohibited by statute or public policy to contract on any terms and about any subject matter they so desire." Gibbs v. Dodson, 229 Ga. App. 64, 67 (1997) (holding that plaintiff's claim was barred by mutual release signed by parties). While Plaintiff argues that the underlying Agreement should be void against Georgia's public policy favoring free trade, she makes no argument that the Release itself violates any public policy. A finding that Plaintiff's declaratory judgment action is barred by the Release she signed does not necessarily mean that Defendants will be able to enforce the allegedly overbroad Agreement. Thus, enforcing the Release against Plaintiff will not result in the sustaining of allegedly void non-compete agreements. Moreover, "it is the paramount public policy of [Georgia] that courts will not lightly interfere with the freedom of parties to contract on any subject matter, on any terms, unless prohibited by statute or public policy, and injury to the public interest clearly appears." Bryan v. MBC Partners, L.P., 246 Ga. App. 549, 552 (2000). Enforcing the Release signed by Plaintiff is consistent with this "paramount public policy."
Furthermore, at the time Plaintiff and Defendants negotiated the Release, Plaintiff was an at-will employee and had no continued right to employment. See, e.g., Borden v. Johnson, 196 Ga. App. 288, 289 (1990) (employer may terminate at-will employee with or without cause and regardless of its motives); Gale v. Hayes Microcomputer Prods., Inc., 192 Ga. App. 30, 30-31 (1989) (holding that at-will employee has no continued right to employment and no cause of action was created when her employment ended) (citing O.C.G.A. § 34-7-1). When Plaintiff threatened to file suit, however, Plaintiff and Defendants negotiated a resolution as equal parties. In fact, Plaintiff was able to negotiate a reduction in the time period for which the Agreement would apply from two years to one year. She then reaffirmed that she would abide by the Agreement and released her rights to sue Defendants on anything in force as of the date of the Release in exchange for additional compensation — to which she was not otherwise entitled — upon signing the Release. As such, Plaintiff does not have a substantial likelihood of success on the merits because she has likely waived her right to sue Defendants under the declaratory judgment statute.
Additionally, Plaintiff's actions with respect to the Release raise the question as to whether she may even petition this court for equitable relief at all. As the Supreme Court noted:
The guiding doctrine in this case is the equitable maxim that "he who comes into equity must come with clean hands." This maxim is far more than a mere banality. It is a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief, however improper may have been the behavior of the defendant.Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 814 (1945). Despite the fact that Plaintiff signed the Release on February 15, 2001, she filed the instant action in state court less than one month later, even though she was beginning to receive compensation under the terms of the Release. As such, it is far from clear that Plaintiff has come to the court with "clean hands."
Plaintiff also cannot show that she has a substantial likelihood of success on the merits of her claim. The Agreement signed by Plaintiff, in general terms, contains four restrictive covenant clauses prohibiting Plaintiff from: (i) soliciting business from any customer of Defendants where Plaintiff worked with that customer; (ii) soliciting for employment any of Defendants' employees; (iii) performing a controlling or management function for any competing business in a sixteen state territory; and (iv) performing similar services for a competing business in a sixteen state territory. Plaintiff does not argue that the time period is overbroad. Georgia courts have upheld restrictions similar to those covered in clause (i). See W.R. Grace Co. v. Mouyal, 262 Ga. 464, 466-67 (1992). Plaintiff also does not dispute clause (ii) prohibiting solicitation of Defendants' employees. See also Wright v. Power Industry Consultants, Inc., 234 Ga. App. 833, 839 (1998) (upholding restrictive covenant prohibiting employee from enticing away employees of former employer). Accordingly, the court finds that Plaintiff is unlikely to succeed with respect to clauses (i) and (ii).
This is not surprising since Plaintiff, herself, negotiated a change in the time restriction from two years to one year before signing the Release. Cf. Release, ¶ 2 with Agreement, ¶ 1.D.vi.
While clauses (iii) and (iv) may be problematic in their geographic scope, see American Software USA, Inc. v. Moore, 264 Ga. 480, 481-82 (1994) (geographical area overbroad where it is tied to operations of employer rather than employee), under Georgia law, courts may "blue pencil" restrictive covenants to remove offending clauses in a "sale of business" context. See Drumheller v. Drumheller Bag Supply, Inc., 204 Ga. App. 623, 626 (1992) ("The rationale behind the distinction in analyzing covenants not to compete is that a contract of employment inherently involves parties of unequal bargaining power to the extent that the result is often a contract of adhesion. On the other hand, a contract for the sale of a business interest is far more likely to be one entered into by parties on equal footing."). While neither party was able to show the specific circumstances of Plaintiff's sale of AirVantage to Defendants, it appears that Plaintiff had at least a 20% interest in AirVantage at the time it was sold to Defendants. As such, Plaintiff certainly had the business savvy and acumen to negotiate the scope of the Agreement. Between 1995 and the present, Plaintiff continued to move up Defendants' corporate ranks. In fact, during the relevant time period, Plaintiff had taken a leave of absence to put together a prospectus for the planning and funding of Plaintiff's goal to purchase the Air Courier Division of Defendant Velocity Express. The court finds, then, that between these equally sophisticated parties, it would be appropriate to "blue pencil" the non-compete agreements as Georgia courts do in the "sale of business" context. As such, the court finds that there is not a substantial likelihood that Plaintiff will succeed on the merits of her claim so as to support a motion for a temporary restraining order.
Accordingly, the court DENIES Plaintiff's motion for a temporary restraining order [1-1].
SO ORDERED this 11th day of April 2001.