Georgia Court of Appeals Addresses Injunctive Relief in Dispute Between Former Employee and Employer Regarding Restrictive Covenants

The validity of a covenant not to compete or other restriction in an employment agreement can be the focus of an Atlanta employment lawsuit. Typically, the employee urges the court to find that the agreement was not valid for a particular reason, such as being overly broad in its terms.

The employer, by contrast, tends to advocate for a finding that the employee is bound by the terms of the agreement, regardless of their scope. As in most disputes between employees and employers, the issue will likely be decided by a state or federal court judge if the parties are unable to resolve the matter between themselves.

Facts of the Case

In a recent case, the plaintiff was a man who began working for the defendant asset management firm in 2008. At the time that he was hired, the plaintiff signed an employment agreement. In 2010, the plaintiff signed a new employment agreement, which superseded the 2008 agreement. Several restrictive covenants were contained in the 2010 agreement, including a non-compete clause, a prohibition on soliciting or hiring the defendant’s current or former employees, and a prohibition on soliciting certain entities who had done business with the defendant.

After the plaintiff resigned in 2018 and began looking for work with a different firm, the defendant sent letters to one firm alleging that the plaintiff had violated his employment agreement and threatening a lawsuit if that firm hired the plaintiff to work for it. The plaintiff filed suit against the defendant, seeking a declaration that the restrictive covenants upon which the defendant relied were invalid and unenforceable. The trial court granted the plaintiff’s motion, thereby granting him an interlocutory injunction enjoining the defendant from enforcing, threatening to enforce, or attempting to enforce the restrictive covenants arising from his employment with the defendant.

The Court’s Holding

The defendant argued on appeal that the trial court had erred in granting injunctive relief to the plaintiff because it had failed to weigh the evidence of the plaintiff’s unclean hands and had overlooked certain material provisions of the agreement between the parties. The defendant further asserted that, even if injunctive relief was an appropriate measure under the circumstances, the trial court had erred in making its injunction overly broad. The Court of Appeals of Georgia rejected the defendant’s first two contentions, noting that the trial court had indeed considered the issue of the plaintiff’s unclean hands and had held that he could not be found to have unclean hands for violating an unenforceable agreement.

The appellate court did agree that the injunction entered by the lower tribunal was overly broad insomuch as it prohibited them from enforcing their legal rights in manners not tied to the restrictive covenants contained within the employment contract at issue. This included matters such as counterclaims for breach of fiduciary duty, conversion, theft, and trespass. The court thus vacated the trial court’s judgment and remanded the case with instructions to enter an order that did not prevent the defendant from pursuing remedies that were not dependent upon the restrictive covenants that were set forth in the plaintiff’s employment agreement with it.

Have an Employment Law Question for an Atlanta Attorney?

If you have a dispute with your employer and need the assistance of an experienced Atlanta employment law attorney, Parks, Chesin & Walbert is here for  you. Please phone us at 877-986-5529 to schedule a consultation, or, if you prefer, you may contact us through this website. Be mindful that many types of employment-related claims have time limitations, so it is important that you pursue any legal remedies to which you may be entitled in a prompt manner. Otherwise, a potentially valuable legal right may be deemed to have been waived or forfeited.