Data Management v. Greene

Mr. Greene & a colleague ("Greene") worked for Data Management, Inc. ("Data Management") (plaintiff) in Alaska.

Greene's covenant of employment with Data Management stipulated that Greene not compete with Data Management for at least 5 years after the end of the employment contract.

Data Management terminated Greene's employment.

(Data Management) (plaintiff) sued Greene in Alaska state court.

The court found the contractual covenant not to compete was over-broad & un-enforceable. Greene won.

Are there circumstances in which a court may make reasonable alterations to an overly broad covenant not to compete in order to render the covenant enforceable?

What happens if an employer's non-compete provision is overly restrictive?

Yes. If making reasonable alterations to an overly broad covenant not to compete would render the covenant enforceable, then a court must make the alterations unless the court determines that the covenant wasn't drafted in good faith.

Remanded to the trial court to determine if Data Management drafted the covenant in good faith.

Under the Blue-Pencil Rule, the court examines whether an over-broad covenant could be rendered enforceable by deleting certain words.

• Contracts_Ayres/9th_ed._Outline#H._Illegality_and_Public_Policy