Pickvet v. Viking Group, Inc. et al
OPINION AND ORDER granting in part Viking Group's motion for a preliminary injunction and denying Pickvet's motion for a preliminary injunction 2 ; signed by District Judge Paul L. Maloney (Judge Paul L. Maloney, cmc)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MICHIGAN
VIKING GROUP, INC. and
SUPPLY NETWORK INC.,
-vVIKING GROUP, INC., and
SUPPLY NETWORK, INC.
Honorable Paul L. Maloney
Honorable Paul L. Maloney
OPINION AND ORDER GRANTING IN PART VIKING GROUP’S MOTION FOR
A PRELIMINARY INJUNCTION AND DENYING PICKVET’S MOTION FOR A
Before this Court are two cases involving identical parties. In both cases, the parties
raise claims arising from a noncompete agreement. Both parties have filed motions for a
preliminary injunction. As the plaintiff, Viking Group wants the Court to enforce portions
of a noncompete agreement. As the plaintiff, Terry Pickvet wants the Court to prevent
Viking Group from enforcing the noncompete agreement. The resolution of the competing
motions turns on whether Michigan law applies or whether Georgia law applies. The Court
concludes that Michigan law applies to the noncompete agreement and will grant, in part,
Viking Group’s motion.
Terry Pickvet worked for a subsidiary of Viking Group from late 2009 until January
23, 2017, when he submitted his resignation. Pickvet applied for a position with Atlanta
Winsupply, a competitor of Viking Group, and received an offer from them.
The same day he resigned from Viking Group, Pickvet filed a lawsuit against his
former employer in the Fulton County Superior Court for Fulton County, Georgia. Pickvet
sought a declaration that the Noncompete Agreement was unenforceable. Viking Group
removed the lawsuit to the United States District Court for Northern District of Georgia. On
February 3, 2017, Judge William Duffy granted Viking Group’s motion to transfer venue
and transferred the lawsuit to this district. Currently pending in the Pickvet case, Pickvet v.
Viking Group, No. 1:17-cv-116 (W.D. Mich.) (Pickvet) is Pickvet’s motion for injunctive
relief (ECF No. 2).
On January 26, 2017, the day that Viking Group was served with the complaint and
summons from Pickvet’s Georgia lawsuit, Viking Group filed its own lawsuit against Pickvet
in the Kent County Circuit Court for Kent County, Michigan. Pickvet removed the lawsuit
to this Court on January 30, 2017. Currently pending in the Viking Group case, Viking
Group v. Pickvet, No. 1:17-cv-103 (W.D. Mich.) (Viking Group) is Viking Group’s motion
for a preliminary injunction. (ECF No. 4.)
The parties generally agree on the relevant facts. Pickvet received and signed an offer
of employment from Viking SupplyNet on October 30, 2009.1 (Viking Group ECF No. 5-1
PageID.50-52.) As a condition of employment, Pickvet was required to sign a noncompete
and confidentiality agreement. (Id. PageID.51.) Pickvet signed the agreement on October
30, 2009. (Id. PageID.53-55.)
The Noncompete Agreement is broad in scope. The agreement was between Pickvet
and the Viking Group (Viking Group ECF No. 5-1 PageID.53), which included all parent,
subsidiary, and affiliated corporations, as well as any joint ventures, partnerships or other
business entities in which the parent, subsidiaries, and affiliates participate or own, and their
successors and assigns (PageID.55).
The agreement generally prohibits Pickvet from
“competing in any way” with Viking Group. (Id. PageID.53.) The prohibition precludes
Pickvet from working “with, for, or hav[ing] any interest in, any organization that competes
with” Viking Group. (Id.) The agreement not to compete extends for two years after
Pickvet’s employment ends. (PageID.53.) The agreement applies to the Southeastern US
Sales Region, which is defined as North Carolina, South Carolina, Georgia, Florida,
Alabama, Mississippi, Louisiana, Arkansas, Tennessee, and Texas. (Id.)
The Noncompete Agreement contains both a forum selection clause and a choice of
The choice of law provision specifies that Michigan law governs the
agreement. (Viking Group ECF No. 5-1 PageID.53.) The document specifies that disputes
When referencing documents in the records of the two cases, the Court will first indicate which
case contains the document.
arising under the agreement “shall be filed, heard and decided in either Kent County Circuit
Court or the U.S. District Court for the Western District of Michigan.” (Id.)
Pickvet sold fire suppression products and related services. According to Pickvet, his
sales territory included all of Georgia, the southern-half of Alabama, the panhandle region
of Florida, and the Chattanooga and Cleveland areas of Tennessee. (Pickvet ECF No. 1-1
Affidavit PageID.44.) Pickvet also had one account in Lucedale, Mississippi. (Id.) Pickvet
received an offer to work for Atlanta Winsupply selling similar products and services.
In its motion, Viking Group seeks to enforce several provisions of the Noncompete
Agreement. Viking Group asks the Court to enter an injunction to prevent Pickvet from
using or disclosing Viking Group’s confidential information and also to prevent Pickvet from
soliciting customers. Viking offers the following proposed injunction:
Until further Order of this Court, Pickvet is prohibited from:
A. Within the states of North Carolina, South Carolina, Georgia, Florida,
Alabama, Mississippi, Louisiana, Arkansas, Tennessee, and Texas:
1) attempting to persuade any customer, supplier, or potential customer
or supplier of Viking that they should not do business with Viking,
should reduce their purchases of Viking’s products or services, or
should do business with a competitor of Viking;
2) selling or aiding in the sale of any products or services that are
competitive with any services or products of Viking to any customer or
potential customer of Viking;
3) soliciting, encouraging or persuading any employee of Viking to
terminate their employment with Viking or to take any action that
adversely affects their ability to carry out their employment duties with
B. Retaining, disclosing to any person or entity, or using for any purpose any
confidential information concerning Viking’s customers, marketing strategy,
product cost, pricing information, or other business information which he
obtained in the course of his employment with Viking.
(Viking Group ECF No. 5-9 PageID.89.)
In his proposed order attached to his motion, Pickvet ask the Court to enjoin Viking
Group from “taking any steps to enforce the 2009 Agreement between the parties until the
present litigation is resolved between the parties.” (Pickvet ECF No. 2 PageID.76.)
These lawsuits come to federal court under the diversity statute. See 28 U.S.C. §
1132. The parties are from different states and the amount in controversy exceeds $75,000.
Viking Group is a Michigan corporation. Pickvet is a citizen and resident of Georgia. In the
Pickvet case, Viking Group states, in its notice of removal, that the value of its interest in
enforcing the noncompete agreement exceeds $75,000. (Pickvet ECF No. 1 PageID.3) In
the Viking Group case, Pickvet relies on Viking Group’s own valuation of its interest in his
notice of removal. (Viking Group ECF No. 1 PageID.3.)
In diversity suits, federal courts apply the substantive law of the forum state. CenTra,
Inc. v. Estrin, 538 F.3d 402, 409 (6th Cir. 2008) (citing Himmel v. Ford Motor Co., 342 F.3d
593, 598 (6th Cir. 2003)). When applying state law to a diversity action, the federal court
Amust follow the decisions of the state=s highest court when that court has addressed the
relevant issue.@ Talley, 223 F.3d at 326. Where the state=s supreme court has not weighed
in on the issue, federal courts must anticipate how the state=s supreme court would rule by
considering Aall available data, including the decisional law of the state=s lower courts.@
Ziegler v. IBP Hog Mkt., Inc., 249 F.3d 509, 517 (6th Cir. 2001). A>Where a state=s highest
court has not spoken on a precise issue, a federal court may not disregard a decision of the
state appellate court on point, unless it is convinced by other persuasive data that the highest
court of the state would decide otherwise.= This rule applies regardless of whether the
appellate court decision is published or unpublished.@ Id. (citations omitted).
The parties disagree about which state’s law should govern this matter. Pickvet insists
that Georgia laws should govern. In his motion for injunctive relief, Pickvet relies on Georgia
law, including an analysis of Georgia’s choice of law rules. Viking Group contends that
Michigan law applies.
At the outset, this Court must apply Michigan’s conflict of law rules to the choice of
law provision in the Noncompete Agreement. As a federal court in the State of Michigan,
this Court applies Michigan law to state law claims brought in diversity cases, including the
state’s conflict of law rules. See Security Ins. Co. v. Kevin Tucker & Assoc., 64 F.3d 1001,
1005 (6th Cir. 1995); see also Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)
(“The conflict of laws rules to be applied by the federal court in Delaware must conform to
those prevailing in Delaware’s state courts.”). Also, through the forum selection clause, the
parties agreed that “any dispute” arising from the Agreement must be filed, heard and
decided by a Michigan court. (Viking Group ECF No. 5-1 PageID.55.)
Michigan applies Section 187 of the Restatement 2d of Conflict of Laws when
considering which state’s law to apply to a contract. Mill’s Pride, Inc. v. Cont’l Ins. Co., 300
F.3d 701, 705 (6th Cir. 2002); Chrysler Corp. v. Skyline Indus. Servs., Inc., 528 N.W.2d
698, 703 (Mich. 1995). Initially, the parties must have selected a state to supply the governing
law. Kipin Indus., Inc. v. Van Deilen Int’l, Inc., 182 F.3d 490, 493 (6th Cir. 1999). Michigan
conflict of law rules require courts “to balance the expectations of the parties to a contract
with the interests of the states involved to determine which state’s law to apply.” Equitable
Life Assurance Soc’y of the United States v. Poe, 143 F.3d 1013, 1016 (6th Cir. 1998) (citing
Chrysler Corp., 528 N.W.2d at 703). Section 187 provides
(1) The law of the state chosen by the parties to govern their contractual rights
and duties will be applied if the particular issue is one which the parties could
have resolved by an explicit provision in their agreement directed to that issue.
(2) The law of the state chosen by the parties to govern their contractual rights
and duties will be applied, even if the particular issue is one which the parties
could not have resolved by an explicit provision in their agreement directed to
that issue, unless either
(a) the chosen state has no substantial relationship to the parties or the
transaction and there is no other reasonable basis for the parties’
(b) application of the law of the chosen state would be contrary to the
fundamental policy of a state which has a materially greater interest than
the chosen state in the determination of the particular issue which,
under the rule of § 188, would be the state of the applicable law in the
absence of an effective choice of law by the parties.
Chrysler Corp., 528 N.W.2d at 701 n.13 (quoting Restatement 2d Conflict of Laws).
Under § 187(1), the parties’ choice of law in the agreement will be upheld if the
“particular issue” is an issue that the parties could have resolved by explicit agreement. If
the parties could not resolve the issue by agreement, then § 187(1) does not end the inquiry
and § 187(2) applies. The commentary in the Restatement provides examples of issues that
parties could not have determined by an explicit agreement, including the validity of their
agreement. Restatement (Second) of Conflict of Laws § 187 cmt. d. The particular issue
presented here is whether the noncompete agreement is enforceable, an issue that the parties
could not have resolved by agreement. See Lifestyle Implant Ctrs., LLC v. East Bay Health,
LLC, No. 2:13-cv-735, 2013 WL 5564144, at *6-*7 (S.D. Ohio Oct. 7, 2013) (collecting and
discussing cases and secondary authority); accord Cardoni v. Prosperity Bank, 805 F.3d 573,
581 n.7 (5th Cir. 2015) (“However, Section 187(1) is inapplicable to this case because the
enforceability of restrictive covenants is generally not one which the parties could have
resolved by an explicit provision in their agreement.”) (internal quotation marks omitted);
Baxter Int’l, Inc. v. Morris, 976 F.2d 1189, 1196 (8th Cir. 1992) (“We agree with the district
court that section 187(1) does not apply in this instance because the parties could not have
provided for the enforceability of the noncompete covenant. Only a court applying the
appropriate law can assess the validity of contract terms.”). Because the parties could not
resolve the enforceability of the noncompete agreement by the terms of the contract, the
Court must consider § 187(2).
Section 187(2) requires a court to apply the law of the state designated in the parties’
agreement, unless either of two conditions exists. See Kipin Indus., 182 F.3d at 493. First,
under subsection 2(a), a court would not apply the parties’ choice of law if the chosen state
has no substantial relationship to the parties or the transaction and there is no other
reasonable basis for the choice. This first condition does not apply. Viking Group is a
Michigan company with its principle place of business in Grand Rapids, Michigan. (Pickvet
ECF No. 1 PageID.2.) The Michigan Supreme Court has stated that having a principle place
of business within the state and being incorporated within the state are each significant
contacts that would constitute a substantial relationship. Chrysler Corp., 528 N.W.2d at 704;
see Kipin Indus., 182 F.3d at 494 (“First, it is clear under the Restatement that a party’s place
of domicile is sufficient to meet the substantial relationship test of § 187(2)(a).”).
The central dispute in these motions is whether subsection 2(b) requires the Court to
ignore parties’ choice of law and apply Georgia law, instead of Michigan law, to determine
the enforceability of the Noncompete Agreement. Under § 187(2)(b) of the Restatement, a
court should not apply the law chosen by the parties if the result would be (1) contrary to a
fundamental policy of the state (2) which has a materially greater interest than the chosen
state in the determination of the particular interest and, (3) in the absence of an effective
choice of law by the parties, would have been the state supplying the law under § 188. For
the purpose of this analysis, the Court will assume that Georgia has a materially greater
interest in the enforceability of the Noncompete Agreement and that Georgia law would be
used if an analysis of the § 188 factors were performed. If neither of those two conclusions
are correct, the Court would apply Michigan law.
The question is whether enforcing the Noncompete Agreement would be contrary to
a fundamental policy of the State of Georgia. Georgia courts look to the state constitution
and statutes to determine the public policy of the state. See Murphy v. Bajjani, 647 S.E.2d
54, 58 (Ga. 2007) (“While OCGA § 20-2-1184 establishes Georgia’s public policy
concerning the need to report timely to the appropriate authorities the identify of students
who commit certain proscribed acts on school grounds, it does not create a civil cause of
action for damages in favor of the victim or anyone else for the purported failure to report
timely.”); Melton v. Georgia, 178 S.E. 447, 448 (Ga. 1935) (“A constitutional statute cannot
be declared inoperative because [it is] opposed to public policy, since the statute itself
determines public policy.”).
Historically, Georgia’s public policy clearly disfavored restrictive employment
covenants. Becham v. Synthes USA, 482 F. App’x 387, 388 (11th Cir. 2012) (per curiam);
e.g., Atlanta Bread Co. Int’l, Inc. v. Lupton-Smith, 679 S.E.2d 722, 724 (Ga. 2009) (quoting
Rakestraw v. Lanier, 30 S.E. 735 (Ga. 1898)). Prior to 2011, Georgia’s constitution
prohibited the state’s legislature from authorizing restrictive covenants. Becham, 482 F.
App’x at 388. And, Georgia courts reviewed restrictive covenants in employment contracts
with strict scrutiny because of the imbalance in bargaining power between employers and
employees. See Malice v. Coloplast Corp., 629 S.E.2d 95, 99 (Ga. Ct. App. 2006) (citation
On November 2, 2010, Georgia voters approved a constitutional amendment that
allowed the state legislature to approve restrictive covenants. Becham, 482 F. App’x at 389.
And, on May 11, 2011, the governor signed HB 30, Ga. Code Ann. § 13-8-50, et seq., which
contained statutory guidance for the validity and enforcement of restrictive covenants in
employment. 2011 Ga. Laws Act 99. Section 5 of the Session law states that the Act “shall
not apply in actions determining the enforceability of restrictive covenants entered into
before” the date the Act becomes effective. Id. Section 5. The portion of the session law
that explicitly states that the statute would not be retroactive is not, however, part of the
enacted statute. Section 5 has been referenced by Georgia courts as evidence of legislative
intent. See Carson v. Obor Holding Co., LLC, 734 S.E.2d 477, 479 n.1 (Ga. Ct. App. 2012).
The Eleventh Circuit commented that Georgia’s public policy did not change until the
Georgia legislature acted after the constitutional amendment passed. See Becham, 482 F.
App’x at 391.
The fundamental disagreement is how to determine, for the purpose of § 187(2)(b),
what Georgia’s “fundamental policy” is with regard to the restrictive covenant in this case.
Viking Group argues that courts look at Georgia’s current public policy. Viking Group
points to the wording of the Restatement and authority from Michigan federal courts and
from authority outside Georgia and the Eleventh Circuit. Pickvet argues that courts must
look at Georgia’s public policy at the time the employment contract was signed. Pickvet
points to federal and state courts examining Georgia law and which applied Georgia law that
existed at the time the restrictive covenant was signed.
In determining whether the restrictive covenant is contrary to the fundamental policy
of Georgia, this Court will look at Georgia’s current policy, as reflected in its existing statutes.
This conclusion is supported by opinions issued by several courts. The earliest opinion was
issued by the Sixth Circuit in an unpublished opinion issued in 1988, Monsanto Company
v. Manning, 841 F.2d 1126 (6th Cir. 1988) (unpublished per curiam opinion). Manning
started working for Monsanto in 1972. He signed a noncompete agreement that included a
provision prohibiting Manning from using or disclosing confidential information. When
Manning quit in 1987 and began working for a competitor, Monsanto filed the lawsuit
seeking to enforce the agreement. Because the employment contract was completed in
Missouri, the court applied Missouri law. The court concluded that with the 1985 repeal of
Michigan’s prohibition on noncompete agreements, application of Missouri law to the
noncompete agreement would not be contrary to Michigan’s public policy. The court
explained that enforcement of the contract was “sought at a time when Michigan law does
not prohibit such covenants as a matter of public policy.” Id. at *5. Although this is an
unpublished case, it persuasively demonstrates how the Sixth Circuit might resolve the
A similar result occurred in the federal district court in Massachusetts in Shipley
Company, Incorporated v. Clark, 728 F. Supp. 2d 818 (D. Ma. 1990). In Shipley, the
defendant employees signed restrictive employment contracts in the late 1970s. The two
defendants were Michigan residents and worked in Michigan. At the time, Michigan, by
statute, generally prohibited noncompete agreements.
The noncompete agreement,
however, included a choice of law provision stating that Massachusetts law would govern any
dispute. Michigan repealed its statute in 1985, and the new statute explicitly stated that it
applied only to covenants entered into after March 29, 1985. The two defendants quit their
employment in 1989, and their employer sought to enforce the noncompete agreements.
The district court analyzed the situation using the Restatement for the Conflict of Laws, §
187, as required by Massachusetts law. The court carefully explained the issue that was
Accordingly, the proper inquiry is whether Michigan has a fundamental public
policy that would be frustrated by the application of Massachusetts’ substantive
law, and not whether a Michigan court would void the covenant pursuant to a
Id. at 826 (italics in original). The court explicitly found that enforcement of the choice of
law provision might violate Michigan law, but it would not be contrary to Michigan’s public
policy, “[b]ecause Michigan no longer has a public policy against no-compete agreements[.]”
Id. at 826.
The holdings in Monsanto and Shipley were followed by the federal district court for
the Eastern District of Michigan in Park-Ohio Industries, Incorporated v. Carter, No. 0615652, 2007 WL 470405 (E.D Mich. Feb. 8, 2007). In Carter, the defendant employee
started working for the plaintiff employer in 1978, when Michigan’s public policy
disapproved of restrictive covenants. The employer was an Ohio corporation and it asserted
that Carter violated portions of his noncompete agreement when he resigned and began
working for a competitor in 2006. The noncompete agreement contained a choice of law
provision specifying that the agreement would be governed by Ohio law. Because the lawsuit
was filed in Michigan, the district court applied Michigan’s conflict of law rules, § 187. The
court held that it had to consider Michigan’s current public policy toward noncompete
agreements, not what Michigan law stated at the time the contract was signed, pointing to
both Monsanto and Shipley. Carter, 2007 WL 470405 at *7-*9. The court concluded
the fact that Michigan’s current and former laws would prohibit enforcement
of the non-compete agreement in this case reflects only on Michigan law, not
on its public policy. The existing public policy indisputably permits noncompete agreements[.]
Id. at *9. The court concluded that applying Ohio law, which permitted the enforcement of
non-compete agreements, would not frustrate a fundamental Michigan public policy. Id.
Finally, in a similar situation, the Eastern District held that even though a contract
might fail and be unenforceable for other reasons, those reasons do not establish that a
noncompete clause would be contrary to a state’s public policy. See Kelly Servs., Inc. v.
Marzullo, 591 F. Supp. 2d 924, 937 (E.D. Mich. 2008). In Kelly Services, the employer was
based in Michigan and the employee, Manzullo, was based in Texas. Manzullo was hired in
1998. In 2007, after several promotions, Manzullo signed noncompete, nonsolicitation, and
confidentiality agreements. In all of his employment agreements, Manzullo consented to
jurisdiction in Michigan courts and each agreement identified Michigan law as the governing
law. Manzullo resigned in 2008 to work for a competitor and Kelly Services then filed the
lawsuit. The district court applied § 187 to determine whether Michigan law or Texas law
would govern the matter. Although the noncompete agreements might not have been
enforceable under Texas contract law for reasons of consideration, the court concluded that
the agreements were not contrary to Texas’ public policy, citing, among others, Shipley.
Kelly Services, 591 F. Supp. 2d at 934-35.
This Court must acknowledge that Georgia courts, in both the federal and state legal
systems, have reached the opposite conclusion. In Bunker Hill, the Georgia appellate court
invalidated a forum selection clause contained in a noncompete employment agreement
signed before Georgia changed its law. Bunker Hill Int’l, Ltd. v. Nationsbuilder Ins. Servs.,
Inc., 710 S.E.2d 662, 667 (Ga. Ct. App. 2011). Conducting a conflict of law analysis, the
court concluded that Illinois courts would likely enforce the agreement, but that the Georgia
courts would not. Id. at 666. The court stated that it would apply Georgia law that existed at
the time the contract was formed. Id. at 665 n.1. The court, however, failed to consider
whether the change in the law constituted a change in Georgia’s public policy, the critical
distinction on which the opinions cited above relied.2 In addition, all of the cases cited by
court in the portion of the opinion that did discuss public policy were cases that applied then
existing public policy and did not address situations where statutes and corresponding public
policy had changed. Id. at 665-66.
In Boone, the federal district for the Northern District of Georgia reconsidered an
earlier ruling and followed Bunker Hill and two other opinions issued by Georgia courts to
invalidate a choice of law provision in an employment agreement. Boone v. Corestaff
Support Servs., Inc., 805 F. Supp. 2d 1362, 1369 (N.D. Ga. 2011). The Boone opinion
stated that the Georgia courts looked to Georgia’s public policy at the time the employment
agreement was made to hold that the agreements were unenforceable in Georgia. Id. But,
as discussed above, Bunker Hill did not consider how, or even whether, the change in
Georgia’s law affected Georgia’s public policy for the purpose of a conflict of law analysis.
And, the other two state court opinions, Gordon Document Products, Incorporated v.
Service Technologies, Incorporated, 708 S.E.2d 48 (Ga. Ct. App. 2011) and Cox v. Altus
Healthcare and Hospice, Incorporated, 706 S.E.2d 660 (Ga. Ct. App. 2011), did not require
In his response brief, Pickvet cites Lapolla Industries, Incorporated v. Hess, 750 S.E.2d 467, 475
(Ga. Ct. App. 2013) as further support for the conclusion that the change in Georgia’s law should
not affect the conflict of law analysis. But, the Lapolla opinion suffers the same problem as the
Bunker Hill opinion. The court assumed, without any discussion, that the manner in which the
court would analyze the enforcement of the noncompete and Georgia public policy were
synonymous, even though a statute authorizing noncompete agreements had been passed since the
agreement was signed. The court did not even consider whether Georgia’s current public policy
with regard to restrictive covenants affected the conflict of law analysis. See also Carson, 734
S.E.2d at 481 (“During the relevant time period, one such settled public policy in Georgia was that
certain agreements in partial restraint of trade, if unreasonable, were unenforceable.”).
a conflict of laws analysis. In both of those cases, the Georgia courts simply applied Georgia
law to a Georgia employment contract.
The strongest statement in favor of applying Georgia’s former public policy was made
in Becham v. Synthes (USA), No. 5:11-cv-73 (M.D. Ga. Sept. 14, 2011). In Becham, the
federal district court for the Middle District of Georgia invalidated a choice of law provision
in an employment contract. Examining Bunker Hill, Boone, Gordon Documents, and Cox,
the court concluded that it must look at Georgia’s public policy at the time the employment
contract was signed, and not at Georgia’s current public policy. Id. at *4-*5. As explained
above, this Court has reservations that the precedent identified in Becham compels that
Even if this Court could be convinced that Georgia state courts have held that they
must look at past public policy for a conflict of law analysis, the Sixth Circuit in Monsanto
and the Eastern District of Michigan’s analysis of Michigan’s law compels this Court to
consider Georgia’s current public policy when performing a conflict of law analysis.
A district court has discretion to grant or deny preliminary injunctions. Warshak v.
U.S., 490 F.3d 455, 465 (6th Cir. 2007). When deciding a motion for a preliminary
injunction, a court should consider and balance four factors: (1) whether the plaintiff has
established a substantial likelihood or probability of success on the merits; (2) whether there
is a threat of irreparable harm to the plaintiff; (3) whether issuance of the injunction would
cause substantial harm to others; and (4) whether the public interest would be served by
granting injunctive relief. Id. (quoting Nightclubs, Inc. v. City of Paducah, 202 F.3d 884, 888
(6th Cir. 2000) (overruled on other grounds, City of Littleton v. Z.J. Gifts D-F, L.L.C., 541
U.S. 774, 784 (2004)). The four factors are not prerequisites that must be established at the
outset, but are interconnected considerations that must be balanced together. Coal. to
Defend Affirmative Action v Granholm, 473 F.3d 237, 244 (6th Cir. 2006).
A. Success on the Merits
For this element, the Court must consider whether the noncompete agreement is
enforceable. The complaint filed by Viking Group contains a single count for breach of
contract. (Viking Group ECF No. 1-1.) Viking Group argues Pickvet violated the terms of
his post-employment noncompete agreement. If the noncompete agreement is reasonable
and enforceable, Viking Group will likely succeed on the merits. The complaint filed by
Pickvet also contains a single count, a request for a declaratory judgment. (Pickvet ECF No.
1-1.) Pickvet asserts that, under Georgia law, the post-employment noncompete agreement
is unenforceable. If the noncompete agreement is not reasonable and is unenforceable,
Pickvet will likely succeed on the merits.
Viking Group has demonstrated a likelihood of success on the merits. To the extent
that any portion of the noncompete agreement is unreasonable, the Court may limit the
agreement to make it reasonable and enforceable.
Having concluded that the Court must apply Michigan law to the noncompete
agreement, Pickvet has not demonstrated a likelihood of success on the merits. Pickvet’s
motion assumes that Georgia law would be applied. In the discussion below, the Court notes
what Georgia’s current statute permits for noncompete agreements in order to show that
enforcing the agreement would not be contrary to Georgia’s current public policy.
Both Michigan and Georgia have enacted statutes which allow reasonable restrictive
employment covenants. The Michigan statute allows employers to obtain noncompete
agreements “which protect an employer’s reasonable competitive business interests” when
the agreement “is reasonable as to its duration, geographical area, and the type of
employment or a line of business.” Mich. Comp. Laws § 445.774a(1); see Innovation
Ventures v. Liquid Manufacturing, 885 N.W.2d 861, 873 (Mich. 2016) (indicating that §
445.774(a) is the “proper framework to evaluate the reasonableness of noncompete
agreements between employees and employers.”). The Georgia statute allows similar
restrictions in noncompete agreements. The statute allows “enforcement of contracts that
restrict competitive during the term of a restrictive covenant, so long as such restrictions are
reasonable in time, geographic area, and scope of prohibited activities[.]” Ga. Code Ann. §
The proposed preliminary injunction contains multiple restrictions on Pickvet. The
proposed injunction includes limitations based in time (duration) and space (geographic
area). The propose injunction contains limitations on competition with potential customers
and limitations on the solicitation of existing customers. The proposed injunction includes
a restriction on recruiting. It also contains restrictions on retaining and using confidential
information. Anyone of the individual restrictions could be reasonable in isolation, but when
combined with the other restrictions, it could become unreasonable.
The two-year duration of the noncompete agreement is reasonable under Michigan
and Georgia law. Both Michigan and Georgia law allows noncompete agreements to
continue after employment for a reasonable amount of time. “With respect to duration,
Michigan courts have not provided any bright line rules. Rather, they ‘have upheld noncompete agreements covering time periods from six months to three years.’” Certified
Restoration Dry Cleaning Network, LLC v. Tenke Corp., 511 F.3d 535, 547 (6th Cir. 2007)
(citation omitted); e.g., Rooyakker & Sitz, PLLC v. Plante & Moran, PLLC, 742 N.W.2d
409, 418 (Mich. Ct. App. 2007) (upholding as reasonable a two year agreement preventing
the former employees from providing the same accounting services to former clients). By
statute, Georgia has established a rebuttable presumption that restrictive covenants up to two
years are reasonable. Ga. Code Ann. § 13-8-57(b). Even under Georgia’s strict scrutiny
review of restrictive covenants prior to 2011, Georgia courts found that restrictive covenants
that lasted for two years were reasonable. E.g., Azzouz v. Prime Pediatrics, PC, 675 S.E.2d
314, 319 (Ga. Ct. App. 2009).
2. Geographic Scope
Like duration, Michigan courts have not imposed any strict limitations on
geographical restrictions in noncompete agreements. Certified Restoration Dry Cleaning
Network, 511 F.3d at 547. Under Michigan law, geographic limitations in noncompete
agreements must be tailored to protect the employer’s legitimate business interests, a
determination which is inherently fact specific. Capaldi v. LiftAid Transp., LLC, No.
267981, 2006 WL 3019799, at *4-*5 (Mich. Ct. App. Oct. 24, 2006) (per curiam). “The
standard for reasonableness of geographic limitations in restrictive covenants is whether they
are no greater than reasonably necessary to protect an employer’s legitimate business
interests.” Kelly Servs., 591 F. Supp. 2d at 939 (finding reasonable geographical limits
restricting the employee from working for a competitor in the same geographical territory
where he worked for his former employer). Where an employer conducts business on a
worldwide scale, Michigan courts have held a restriction on the former employee can be
imposed that prevents the employee from competing in the global market. Superior
Consulting Co., Inc. v. Walling, 851 F. Supp. 839, 847 (E.D. Mich. 1994). Under the
Georgia statute, noncompete agreements must be reasonable in geographical limitation. Ga.
Code Ann. § 13-8-53(a). The statute specifies that nonsolicitation agreements need not
identify specific geographical restrictions, but must instead limit contact with the employer’s
customers or prospective customers with whom the employee had material contacts. Id. §
13-8-53(b). Under Georgia’s old law, any geographic limitation in a noncompete agreement
must have been narrowly tailored to the area where the employee actually worked.
Paramount Tax & Accounting, LLC v. H&R Block Eastern Enterprises, Inc., 683 S.E.2d
141, 146 (Ga. Ct. App. 2009).
When combined with the other restrictions, the geographic limitation in the
nonsolicitation provision is overbroad. Pickvet is restricted from working for a competitor
in ten states, even though he only sold products and services in five of those states. With the
exception of Georgia, Pickvet sold products and services in only limited areas in those five
states. Where courts have sanctioned broad geographical limitations, the noncompete or
nonsolicitation agreement contained fewer restrictions on other activities. For example, in
Superior Consulting, the restrictive covenant lasted only six months and the former
employee was prohibited from soliciting existing clients of the former employer and potential
clients, which were defined as those entities that had been subject to “sales or marketing
activity, other than mass mailings, within six (6) months prior to the employee’s termination
date.” 851 F. Supp. at 841. The geographical limitations, in combination with the other
restriction in Viking Group’s proposed order, under Michigan law, is not sufficiently tailored
to protect Viking Group’s legitimate business interests.3 See Mapal, Inc. v. Atarsia, 147 F.
Supp. 2d 670, 678-79 (E.D. Mich. 2015). Georgia, under the new statute and the old law,
would also find the restrictions overly broad.
3. Current and Potential Customers
Viking Group’s proposed injunction prohibits Pickvet from selling to existing Viking
customers and potential customers. Both Michigan law and the Georgia statute would find
reasonable a nonsolicitation limitation on existing customers of the former employer, as well
as prospective customer with whom the employer or the former employee had contact.
Superior Consulting, 851 F. Supp. at 842; Ga. Code Ann. § 13-8-53(b). Michigan courts
have reasoned that a restrictive covenant is reasonable when it protects against the employee
from getting an unfair advantage in competition with the former employer, without
prohibiting the employee from using general knowledge or skill. Rooyakker & Sitz, 742
N.W.2d at 418. Restricting a former employee from soliciting business from individuals and
entities with whom he had a prior relationship or material contact is reasonable.
Viking Group cites Owens v. Hatler, 129 N.W.2d 414, 406 (Mich. 1964) for the proposition that
Michigan law would support very broad geographic limitations in restrictive covenants for
employees. But, Owens and the cases cited in that opinion, involved the sale of businesses where
noncompete provisions were placed on the former business owner or partner.
4. Confidential Information
The proposed injunction also prohibits Pickvet from retaining, disclosing, or
otherwise using any of Viking Group’s confidential information. Under Michigan law,
restrictions on former employees from using confidential information in an anticompetitive
manner is reasonable. Rooyakker & Sitz, 742 N.W.2d at 418. The Georgia statute allows
employers to include confidentiality restrictions.
Ga. Code Ann. § 13-8-53(e).
prohibiting Pickvet from soliciting current Viking Group customers, the noncompete
agreement prevents Pickvet from exploiting confidential information about those customers.
Viking Group contends Pickvet had access to other confidential information, including
pricing, product cost, technical data, marketing strategies, and other business information.
Viking Group contends Pickvet can exploit his access to its confidential information
when submitting quotes to potential customers, which would give Pickvet and his new
employer a distinct and unfair advantage in pricing. Viking Group claims that, one week
before he resigned, Pickvet downloaded to a thumb drive, information about his existing
customers and other customers of Viking Group. He also downloaded pricing information
about special types of projects. Viking Group insists that Pickvet had no reason to download
this information while he was an employee, because he could access it any time.
The Court agrees that Pickvet’s decision to access and save to a thumb drive
confidential information one week before leaving Viking Group is concerning. Restricting
Pickvet from soliciting Viking Group customers is a reasonable restriction that minimizes his
ability to exploit the confidential information. Prohibiting Pickvet from using or sharing that
information is also reasonable restriction. To prevent Pickvet from exploiting this knowledge
when in competition with Viking Group for new customers, the Court concludes that some
additional limitation must be in place, such as geographical restrictions.
5. Blue Pencil or Reformation
Both the Michigan statute and the current Georgia statue allow courts to “blue pencil”
or limit the restrictive agreement to make it reasonable. Mich. Comp. Laws § 445.774a(1)
(providing that “a court may limit the agreement to render it reasonable in light of the
circumstances in which it was made and specifically enforce the agreement as limited.”); Ga.
Code Ann. § 13-8-53(d) (providing that a “court may modify a covenant that is otherwise
void and unenforceable so long as the modification does not render the covenant more
restrictive with regard to the employee than as originally drafted by the parties.”).
To balance Viking Group’s reasonable business interests with Pickvet’s own interest
in employment and his reasonable expectation to be able to use general sales knowledge, the
Court will enforce the noncompete and nonsolicit agreements for territory where Pickvet
actually sold products and services for Viking Group.
6. Other Considerations
In his motion, Pickvet identifies a number of other concerns in the noncompete
agreement, all of which can be resolved by limiting the restrictive agreement to make it
reasonable. Pickvet supports each of these concerns, and attempts to show that each is not
reasonable, by citing opinions issued by Georgia courts.
First, Pickvet argues the definition of “the Company” in the noncompete agreement
is overbroad. The noncompete agreement prevents Pickvet from competing against Viking
Corporation, all of its parents, subsidiaries and affiliates, and any joint ventures, partnerships
or other business entities, as well as their successors and assigns. Pickvet argues that the
breadth of this restriction is unreasonable because the agreement does not provide sufficient
notice; he does not know which business entities are covered or what services and products
they sold. To remedy the lack of notice, the noncompete could be limited to prohibiting
Pickvet from selling services and products similar to the ones he was selling. This limitation
resolves the notice problems.
Second, Pickvet argues that the remedies section is overbroad. Specifically, Pickvet
points to the provision that allows the noncompete to be extended beyond two years if the
agreement is breached after leaving Viking Group, and before a court order is issued. To
remedy this potential extension of time, the noncompete could be limited to two years after
Pickvet left his job.
B. Irreparable Harm
Viking Group has established the likelihood that it would suffer irreparable harm if
without a preliminary injunction. Pickvet had access to confidential pricing information from
Viking Group. In situations where Pickvet and Viking Group are bidding competitively
against each other for future projects, Pickvet’s knowledge would make the competition
unfair. And, Pickvet’s access to information about Viking Group’s existing customers would
make solicitation of those customers unfair. In both situation, Pickvet’s access to Viking
Group’s confidential information creates the threat of an irreparable injury to Viking Group.
See Kelly Servs., Inc. v. Noretto, 495 F. Supp. 2d 645, 659 (E.D. Mich. 2007).
Pickvet has not established the likelihood of irreparable harm. Pickvet asserts that,
without an injunction on the enforcement of the noncompete agreement, he would likely be
terminated. The loss of income, standing alone, is not ordinarily an irreparable injury.
Overstreet v. Lexington-Fayette Urban Cty. Gov’t, 305 F.3d 566, 579 (6th Cir. 2002) (citing
Sampson v. Murray, 415 U.S. 61, 90 (1974)). Equally problematic, Pickvet has not
supported this argument with evidence. On the record before this Court, it is not clear if
Pickvet is currently employed by Winsupply. The complaint is not verified. In the
complaint, Pickvet asserts that he has received an offer from a competitor and “wishes to
accept this offer[.]” (Pickvet, ECF No. 1-1 PageID.23.) In the affidavit attached to his motion
for a preliminary injunction, Pickvet states that he has “agreed to new employment with
Atlanta Winsupply[.]” (Pickvet ECF No. 1-1 PageID.44.) Pickvet does not state that he is
currently receiving a paycheck from Winsupply, nor does Pickvet state that if the
noncompete is enforced he would be terminated from Winsupply.
C. Harm to Others
Viking Group has established that the harm to others if an injunction were to issue
would be minimal. Pickvet would be restricted from soliciting business from entities with
which he formerly had a relationship. Pickvet would also be restricted from selling fires
suppression equipment and services in the same geographic areas he formerly serviced.
Pickvet would not be restricted from selling fire suppression equipment altogether.
Were the Court to refrain from issuing an injunction, Pickvet has not established that
the harm to Viking Group would be minimal. Pickvet attempts to minimize the potential
injury to Viking Group by describing the company’s total financial picture. Were that the
standard, larger companies would almost never be entitled to enforce a noncompete
agreement against an individual employee. A more apt comparison would be to consider
the harm to Viking Group in the area were Pickvet intends to work. From that perspective,
the threat to Viking Group from competition by Pickvet is not negligible. Were the Court
to refrain from enforcing the noncompete agreement, Viking Group would likely suffer
unfair competition in those markets.
D. Public Interest
This element does not favor either party. The public has an interest in robust, but
not unfair, competition. The public also has an interest in the enforcement of reasonable
contracts. Both states currently have a public policy favoring reasonable restrictive covenants
and both states currently allow courts to refine restrictive covenants in order to enforce them
as reasonable. Enforcing a limited version of the restrictive covenant will not undermine the
competitive market for fire suppression systems.
Failing to enforce the noncompete
agreement, however, risks introducing unfair competition into the market for fire
suppression systems, at least on the area where Pickvet would be working,
The Court will grant Viking Group’s motion for a preliminary injunction, but will
modify the proposed injunction. The Court will issue the requested preliminary injunction,
but will limit the geographic scope to those areas where Pickvet worked for Viking Group.
By limiting the geographic scope to those areas where Pickvet had clients, the Court protects
Viking Group’s reasonable business interests from unfair competition, while allowing Pickvet
to use his general sales knowledge of fire suppression systems.
Consistent with the contemporaneously issued Opinion, Viking Group’s motion for
a preliminary injunction (Viking Group 1:17-cv-103 ECF No. 4) is GRANTED IN PART
and Pickvet’s motion for a preliminary injunction (Pickvet 1:17-cv-116 ECF No. 2) is
Until further order of this Court, or until January 23, 2019, whichever occurs first,
Terry Pickvet is prohibited from:
A. attempting to persuade any customer or supplier of Viking Group that they should not
continue to do business with Viking or should reduce their purchases of Viking products or
services, or should do business with a competitor of Viking Group;
B. selling or aiding in the sale of any products or services that are competitive with any
services or products of Viking Group in the state of Georgia, in the counties where he served
customers on behalf of Viking Group in the southern-half of Alabama, the panhandle region
of Florida, and in the counties where he served customers on behalf of Viking Group in the
Chattanooga and Cleveland areas of Tennessee and in Lucedale, Mississippi;
C. soliciting, encouraging or persuading any employee of Viking Group to terminate their
employment with Viking or to take any action that adversely affects their ability to carry out
their employment duties with Viking;
D. Retaining, disclosing to any person or entity, or using for any purpose any confidential
information concerning Viking Group’s customers, marketing strategy, product costs, pricing
information, or other business information which he obtained in the course of his
employment with Viking.
IT IS SO ORDERED.
Date: May 3, 2017
/s/ Paul L. Maloney
Paul L. Maloney
United States District Judge
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