Cmgrp, Inc. v. Maggie Gallant , 343 Ga. App. 91 ( 2017 )

FOURTH DIVISION
DILLARD, C. J.,
RAY, P. J., and SELF, J.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
October 4, 2017
In the Court of Appeals of Georgia
A17A1168. CMGRP, INC. v. GALLANT, et al.
DILLARD, Chief Judge.
CMGRP, Inc. appeals the trial court’s declaratory judgment, which invalidated
certain restrictive covenants in its employment agreement with Maggie Gallant, one
of its former employees. On appeal, CMGRP argues that the trial court erred to the
extent it found that the non-recruitment provision in the agreement is invalid because
(1) it does not contain a geographic limitation; (2) it is not limited to the recruitment
of CMGRP employees with whom Gallant had an established relationship; or (3) the
admittedly void customer non-solicitation provision renders all other restrictive
covenants in the agreement unenforceable. For the reasons set forth infra, we affirm,
in part, and reverse, in part.
The underlying facts necessary to decide this appeal are undisputed.1 On
October 1, 2008, Gallant became an employee of Rogers & Cowan (R&C), which is
a “unit” of CMGRP. As a requirement of her employment, Gallant signed an
employment agreement, which was executed by Gallant and R&C on October 7,
2008. The agreement contained certain restrictive covenants, detailed infra, that
precluded Gallant from recruiting R&C employees and soliciting its clients or
prospective clients for one year after her term of employment ended. After several
years with the company, Gallant resigned from her position at R&C, effective
December 4, 2015. Subsequently, Gallant accepted an offer of employment with the
Agency for the Performing Arts, Inc. (the “APA”).
On January 11, 2016, an attorney for R&C sent Gallant a cease-and-desist
letter, highlighting the restrictive covenants contained in the agreement that
1
As discussed more fully infra, “[w]hether the restraint imposed by the
employment contract is reasonable is a question of law for determination by the court
. . . .” Coleman v. Retina Consultants, P.C., 286 Ga. 317, 319-20 (1) (687 SE2d 457)
(2009) (punctuation omitted). And when only a question of law is at issue, as here,
we “owe no deference to the trial court’s ruling and apply the ‘plain legal error’
standard of review.” Kemp v. Kemp, 337 Ga. App. 627, 632 (788 SE2d 517) (2016)
(punctuation omitted). Here, the trial court issued a summary order making no factual
findings, presumably because no testimony or other evidence was presented below
and the terms of the employment contract are undisputed. Thus, the background facts
as stated in this opinion are merely to provide context for the underlying contract
dispute and are gleaned from the parties’ pleadings.
2
“survive[d] the termination of [her] employment with R&C.” The attorney noted,
inter alia, that, under the agreement, Gallant was prohibited from soliciting clients
or prospective clients of R&C and from recruiting or hiring any employee of R&C for
a period of one year following her resignation. According to the letter, R&C had
learned that Gallant “appear[ed] to have been actively involved in recruiting other
R&C employees to join [her] at [the] APA and may have engaged in improper
solicitation of R&C clients or prospective clients.” Specifically, the attorney
explained that five R&C employees with whom Gallant worked closely tendered their
resignations shortly after Gallant announced her own, and R&C believed that some
or all of those employees had since become employed at the APA or planned to do
so shortly. Additionally, R&C’s attorney contended that a review of company emails
strongly suggested that, around the time of her resignation, Gallant was in active
contact with R&C clients in attempt to solicit them to do business with the APA or
to cease doing business with R&C. Given this alleged conduct, R&C demanded that
Gallant cease and desist engaging in any additional conduct that violated the
restrictive covenants in the agreement.
On January 25, 2016, Gallant and the APA filed a petition for a declaratory
judgment against CMGRP (d/b/a R&C) in the Superior Court of Fulton County,
3
seeking a declaration as to the legal effect of certain restrictive covenants in Gallant’s
employment agreement.2 But instead of filing an answer, CMGRP filed a notice,
removing the case to the United States District Court for the Northern District of
Georgia based on diversity jurisdiction. Gallant and the APA then filed a motion in
federal court to remand the case to the Fulton County Superior Court because,
although diversity of citizenship existed among the parties, CMGRP failed to
establish that the relief sought by Gallant and the APA exceeded the jurisdictional
threshold amount of $75,000. The district court granted the motion, and remanded the
case to the superior court.
Thereafter, Gallant and the APA filed a renewed motion for a declaratory
judgment, seeking, in relevant part, a declaration that Section 7.05 (a) of the
agreement, which precluded Gallant from recruiting or hiring R&C employees (the
“non-recruitment provision”), and Section 7.05 (b), which precluded Gallant from
2
In her petition, Gallant correctly noted that the 2011 act revising Georgia law
related to restrictive covenants in contracts (OCGA § 13-8-50 et seq.) does not apply
to contracts entered into before May 11, 2011. Ga. L.2011, p. 399, § 5; Holton v.
Physician Oncology Servs, LP, 292 Ga. 864, 870 (3) n.4 (742 SE2d 702) (2013).
Because it is undisputed that the employment agreement in this case was entered into
in 2008, OCGA § 13-8-50 et seq. does not apply. Instead, we apply Georgia law
relating to restrictive covenants in employment contracts as it existed prior to the
revisions in OCGA § 13-8-50 et seq.
4
soliciting R&C clients or potential clients (the “non-solicitation provision”), were
overbroad and unenforceable. CMGRP filed an answer, opposing the motion for a
declaratory judgment, and asserting numerous counterclaims against Gallant and the
APA.3 Following a hearing on the matter, the trial court, in a somewhat conclusory
order, granted Gallant and the APA’s petition for a declaratory judgment, declaring,
inter alia, that Section 7.05 of the agreement, which contained the non-solicitation
and non-recruitment provisions, was void and unenforceable. In its order, the trial
court cited no legal authority to support the foregoing declaration and did not provide
the bases for its conclusion.4 This appeal by CMGRP follows.
1. As an initial matter, Gallant5 argues that the declaratory judgment should be
affirmed because CMGRP “tendered no evidence” to show that the employee non-
recruitment provision in Section 7.05 (a) of the agreement was “reasonably necessary
3
It appears that CMGRP’s counterclaims and other claims between the parties
that were not resolved by the declaratory judgment are still pending before the trial
court.
4
We note that neither party requested that the trial court provide specific
findings or reasoning to support its judgment, but “we will nonetheless affirm a
judgment that is right for any reason.” Fox Run Props., LLC v. Murray, 288 Ga. App.
568, 572 (2) (a) n.2 (654 SE2d 676) (2007).
5
For ease of reference, Gallant and the APA will now be referred to
collectively as “Gallant.”
5
to protect a legitimate business interest.”6 And although the trial court did not address
this issue, Gallant notes that this Court can affirm the trial court’s judgment if it is
right for any reason.7 But our right-for-any-reason rule applies only when “the movant
raised the issue in the trial court and the nonmovant had a fair opportunity to
respond.”8 Here, at the hearing on Gallant’s motion for a declaratory judgment, she
never contended that CMGRP was required to present evidence to show that the non-
recruitment provision in her employment contract was reasonably necessary to protect
a legitimate business interest. Instead, she argued that whether the provision was
enforceable was a “judicial question” that the trial court must make after reviewing
the contract. And because she failed to raise the issue of CMGRP’s failure to present
6
On appeal, CMGRP challenges only the trial court’s determination that the
employee non-recruitment provision in Section 7.05 (a) of the agreement is void and
unenforceable. CMGRP appears to concede that the client non-solicitation provision
in Section 7.05 (b) is invalid.
7
See supra note 4.
8
Georgia-Pacific, LLC v. Fields, 293 Ga. 499, 504 (2) (748 SE2d 407) (2013);
see, e.g., Abellera v. Williamson, 274 Ga. 324, 327 (2) (553 SE2d 806) (2001)
(explaining that when an appellate court determines whether a trial court’s judgment
was right for any reason, it must ascertain whether the judgment was right for a
ground presented to the trial court that the court chose not to address in its judgment).
6
evidence below, we will not consider it for the first time on appeal.9 Moreover, any
presentation of evidence by CMGRP (other than the employment contract itself)
would have been irrelevant because, as acknowledged by Gallant below, “[w]hether
the restraint imposed by [an] employment contract is reasonable is a question of law
for determination by the court . . . .”10
2. CMGRP argues that the trial court erred to the extent that it found that the
non-recruitment provision is void because it lacked a geographic limitation or
because it was not limited to the recruitment of employees with whom Gallant had an
established relationship (an “employee-relationship limitation”).
9
See Pfeiffer v. Ga. Dep’t of Transp., 275 Ga. 827, 829 (2) (573 SE2d 389)
(2002) (“Routinely, this Court refuses to review issues not raised in the trial court. .
. . Fairness to the trial court and to the parties demands that legal issues be asserted
in the trial court.” (punctuation and footnotes omitted)).
10
W. R. Grace & Co., Dearborn Div. v. Mouyal, 262 Ga. 464, 465 (1) (422
SE2d 529) (1992). We acknowledge that “[a] questionable restriction, if not void on
its face, may require the introduction of additional facts to determine whether it is
reasonable.” Atlanta Bread Co. Int’l v. Lupton-Smith, 292 Ga. App. 14, 15 (663 SE2d
743) (2008). But again, neither party argued to the trial court that the validity of the
non-recruitment provision was “questionable,” and regardless, we hold that the
provision is indubitably valid for the reasons set forth infra.
7
We begin by reiterating that whether “the restraints imposed by a restrictive
covenant are reasonable is a question of law for determination by the court.”11 And
generally, we have held that employee non-recruitment provisions must be both
reasonably limited in time, as well as not so vague or ambiguous as to be
unenforceable.12 Here, the employee non-recruitment provision in the agreement
provides:
11
Lupton-Smith, 292 Ga. App. at 15.
12
See Wright v. Power Indus. Consultants, Inc., 234 Ga. App. 833, 839 (5)
(508 SE2d 191) (1998), overruled on other grounds by Advance Tech. Consultants,
Inc. v. Roadtrac, LLC, 250 Ga. App. 317 (551 SE2d 735) (2001) (holding that a
covenant prohibiting an employee from attempting to recruit or entice an employee
away from the employer for a period of one year following termination of
employment was reasonable in scope and duration); Sunstates Refrigerated Servs.,
Inc. v. Griffin, 215 Ga. App. 61, 61, 64 (2) (449 SE2d 858) (1994) (holding that a
covenant against interference with the employment relations of the former employer
for a period of two years following the employment contract’s termination was
reasonably limited in time and not so vague or ambiguous as to be unenforceable);
U3S Corp. of Am. v. Parker, 202 Ga. App. 374, 376-77 (2) (a) (414 SE2d 513) (1991)
(holding that a two-year employee non-recruitment covenant was not so vague as to
make the covenant unenforceable when it stipulated that the employee may not
“solicit or otherwise encourage others to leave” their employment). Although the
parties have not raised the issue, we note that, given the foregoing cases upholding
one-and-two-year non-recruitment provisions, the one-year employee non-recruitment
provision in Gallant’s employment contract is reasonably limited in time.
8
7.05 During the period from the [date of the agreement] through and for
a period of one (1) year following the termination of Employee’s
employment hereunder for any reason, the Employee shall not:
(a) directly or indirectly (i) solicit any employee of the Company
to leave such employ to enter the employ of Employee or of any person,
firm, or corporation with which the Employee is then associated, or (ii)
induce or encourage any such employee of the Company to leave the
employment of the Company or to join any other company, or (iii) hire
any such employee of the Company, or (iv) otherwise interfere with the
relationship between the Company and any employee of the Company
....
With these legal principles and contract provisions in mind, we turn now to
CMGRP’s specific claims of error.
(a) Geographic Limitation
Although the brief in support of Gallant’s motion for a declaratory judgment
specifically discussed the absence of a geographical limitation in the non-recruitment
provision, she now contends that she never argued that “an employee restriction was
void absent a territorial restriction.” Regardless, the hearing transcript establishes that
the trial court considered only Gallant’s argument that the provision was overbroad
because it was not limited to the recruitment of employees with whom she had an
9
established relationship. Specifically, when CMGRP began to address the issue of a
geographic limitation, the court interjected, stating that it never heard Gallant mention
a geographic limitation, and clarified that her concern was with the lack of an
employee-relationship limitation. When CMGRP further explained that the
geographic-limitation issue had been raised in Gallant’s briefs, the trial court posited
that she had abandoned that issue and instructed CMGRP to “stick to the issue that
[she had] raised.” Subsequently, Gallant confirmed that she did not believe that a
non-recruitment provision must always contain a geographic limitation, but that
absent such a limitation, the provision must be limited to the recruitment of
employees with whom she had “material contact.”
As previously mentioned, issues not raised at trial “will not be considered for
the first time on appeal.”13 Appellate courts are courts for the correction of errors of
law made by the trial courts, and “an error of law has as its basis a specific ruling
made by the trial court.”14 And while the trial court did not detail its conclusions of
law in the declaratory judgment, the court made clear at the hearing that it did not
13
Guin v. Alarm Detection Indus., Inc., 278 Ga. App. 114, 117 (2) (628 SE2d
376) (2006).
14
Campbell v. Ailion, 338 Ga. App. 382, 385 n.3 (790 SE2d 68) (2016)
(punctuation omitted).
10
believe that the lack of a geographic limitation in the non-recruitment provision was
at issue. Nevertheless, it is worth noting that this Court has upheld employee non-
recruitment provisions that lacked a geographic limitation.15
(b) Employee-Relationship Limitation.
We have repeatedly upheld employee non-recruitment provisions that were not
limited to employees with whom the former employee had an established relationship.
15
See, e.g., Sanford v. RDA Consultants, Ltd., 244 Ga. App. 308, 310 (1), 311
(2) (535 SE2d 321) (2000) (upholding an employee non-recruitment provision that
lacked a geographic limitation); Wright, 234 Ga. App. at 839 (5) (same); Griffin, 215
Ga. App. at 61, 64 (2) (same); Parker, 202 Ga. App. at 376-77 (2) (a) (same); Lane
Co. v. Taylor, 174 Ga. App. 356, 359-60 (2) (b) (330 SE2d 112) (1985) (physical
precedent only) (same); but see Capricorn Sys., Inc. v. Pednekar, 248 Ga. App. 424,
427 (2) (b) (546 SE2d 554) (2001) (holding that a restrictive covenant that had no
definite geographic-area limitations as to competition, solicitation of clients, or
recruiting of employees rendered the covenant unenforceable for being overbroad);
see also Palmer & Cay of Ga., Inc. v. Lockton Cos., Inc., 273 Ga. App. 511, 514 (1)
(615 SE2d 752) (2005), reversed on other grounds by Palmer & Cay of Ga., Inc. v.
Lockton Cos., Inc., 280 Ga. 479 (629 SE2d 800) (2006) (noting that, as to the lack of
a territorial restriction in an employee non-recruitment clause, “requiring an express
geographic territorial description in all cases is not in keeping with the reality of the
modern business world in which an employee’s ‘territory’ knows no geographic
bounds, as the technology of today permits an employee to service clients located
throughout the country and the world” (punctuation omitted)). As discussed infra,
although Lane is physical precedent only, it was approved of and relied upon in
Wright and Parker. See Wright, 234 Ga. App. at 839 (5); Parker, 202 Ga. App. at 377
(2) (a); see also Johnson v. Butler, 323 Ga. App. 743, 746 n.13 (748 SE2d 111)
(2013) (explaining that the fact an opinion is physical precedent is ultimately of no
consequence if a subsequent, unanimous panel of this Court fully adopts the opinion’s
reasoning).
11
For example, in Palmer & Cay of Georgia, Inc. v. Lockton Companies, Inc.16 this
Court rejected the appellants’ claim that an employee non-recruitment covenant was
overbroad because it prohibited solicitation of employees that they had never met and
prohibited encouraging employees to leave regardless of the reason.17 The covenant
in that case mandated that for two years after the employee’s employment ended, “the
[e]mployee will not, directly or indirectly, attempt in any manner to cause or
otherwise encourage any employee of the Company to leave the employ of such
corporation.”18 In upholding this restrictive covenant as valid, we explained that
“there are numerous cases upholding covenants with similar language.”19
Furthermore, we noted that the appellants had cited no case law in support of their
argument regarding the lack of an employee-relationship limitation, and we found
none.20
16
273 Ga. App. 511.
17
See id. at 515 (1).
18
Id. at 514 (1) (emphasis supplied).
19
Id. at 515 (1).
20
See id.
12
Additionally, in Lane v. Taylor,21 we upheld a similar employee non-
recruitment provision that stated that the employee would not “hire or attempt to hire
for another employer any employee of Employer or directly or indirectly cause any
such employee to leave his employment in order to work for another.”22 Indeed, we
explained that the covenant was “not too broad in its scope to sustain a finding that
21
174 Ga. App. 356.
22
Id at 359-60 (2) (b) (emphasis supplied). Gallant argues at length that we
should discount our decision in Lane because it is physical precedent only, and she
contends that this Court erroneously relied on Lane in subsequent cases when
evaluating the validity of employee non-recruitment provisions. Further, Gallant cites
numerous cases in which this Court cited or relied on Lane in doing so. But as
previously explained, the fact that a case is physical precedent is ultimately of no
consequence if a subsequent, unanimous panel of this Court fully adopts the opinion’s
reasoning. See Johnson, 323 Ga. App. at 746 n.13; see also Muldrow v. State, 322 Ga.
App. 190, 195 (3) n.29 (744 SE2d 413) (2013) (“This is not to say, however, that a
party on appeal should shy away from citing physical precedent as persuasive
authority. Indeed, some of the judges on this Court are of the view that our
physical-precedent cases should be afforded greater consideration than decisions from
appellate courts in other jurisdictions. Nevertheless, it is crucial that litigants
explicitly designate physical precedent as such, and thoroughly explain why this
Court should adopt the reasoning from that particular opinion.”). Regardless, Lane
is far from the only case in which this Court upheld a non-recruitment provision that
lacked an employee-relationship limitation. Lastly, Gallant also contends that our
decision in Parker, which relied on Lane, is “a split opinion by nine judges [that]
appears itself to be ‘physical precedent only[.]’” She is mistaken. In Parker, a five-
judge majority fully concurred in the opinion. See 202 Ga. App. at 380 (4).
13
it was needed to protect legitimate business interests.”23 Additionally, similar
language was found to be permissible in both scope and duration in Sanford24 and
Parker25 (which is one of the cases that cites Lane for support).26 In another case, we
upheld an employee non-recruitment provision, which prohibited the former
employee from “contacting or encouraging another to contact any person who is, at
that time, and was, during the term of this Agreement, an employee, agent or
contractor of [the employer] in a managerial, sales, representative or skilled capacity
for the purpose or with the intent of enticing him or her away from the employ of [the
employer] for any reason” for a period of one year.27 And while this non-recruitment
23
Lane, 174 Ga. App. at 360 (2) (b).
24
244 Ga. App. at 309, 311 (2) (upholding a restrictive covenant in which the
employee agreed “not to attempt to employ or assist any other person in employing
or soliciting for employment any employee employed by [the former employer]”)
25
202 Ga. App. at 376-77 (2) (a) (upholding a restrictive covenant wherein the
employee agreed not to “solicit or in any manner encourage employees of the
Company to leave the employ of the Company” for a period of two years and stating
“[w]e do not believe that the phrase ‘or in any manner encourage employees of the
Company to leave” is so vague or ambiguous as to be unenforceable”)
26
See id. at 377 (2) (a).
27
Wright, 234 Ga. App. at 839 (5) (punctuation omitted), overruled on other
grounds by Advance Tech. Consultants, Inc., 250 Ga. App. 317 ; see Griffin, 215 Ga.
App. at 61, 64 (2) (citing Parker and upholding an employee non-recruitment
provision that did not contain an employee-relationship limitation).
14
provision limited the types of employees that could not be recruited, it made no
reference whatsoever to whether those employees had an established relationship with
the former employee at issue.
Rather than reasserting the argument that she made below (i.e., that a non-
recruitment provision without an employee-relationship limitation is void and
unenforceable), Gallant asserts that CMGRP’s “sophistic exegesis on this Court’s
application of restrictive covenant law to employee contacts . . . is, in the end, a
distraction.” She essentially maintains that CMGRP’s argument on appeal is without
consequence because it failed to present evidence to the trial court justifying the
employee-recruitment restriction “in the context of [R&C’s] business and Gallant’s
role in it.” But we have already considered and rejected that argument in Division 1
supra.
Lastly, we acknowledge that, as noted by Gallant, this Court, in Hulcher
Services, Inc. v. R. J. Corman Railroad, Co., LLC,28 stated that “restrictions on
solicitation of [the employer’s] clients or employment of its employees” was
unreasonable, at least in part, because the employee “had no contact with customers
28
247 Ga. App. 486 (543 SE2d 461) (2000).
15
or employees outside his work area sufficient to establish a relationship with them.”29
But significantly, the only restrictive covenant at issue in that case was a non-compete
provision that prevented the former employee from working for a competitor of the
employer for three years in five specific states in any capacity.30 Thus, the additional
language regarding a restriction on “the employment of its employees” was nothing
more than “obiter dicta lacking the force of an adjudication” because it was a
statement that was “not necessarily involved nor essential to determination of the case
in hand.”31 And as the Supreme Court of the United States has aptly noted, “we are
not bound to follow our dicta in a prior case [when] the point now at issue was not
fully debated.”32 In sum, given the numerous cases in which we have upheld non-
29
Id. at 491-92 (4).
30
See id. at 487 (3).
31
Zepp v. Brannen, 283 Ga. 395, 397 (658 SE2d 567) (2008); accord Thorpe
v. Sterling Equip. Co., 315 Ga. App. 909, 911 (1) (729 SE2d 52) (2012).
32
Zepp, 283 Ga. at 397 (punctuation omitted) (citing Cent. Va. Cmty. College
v. Katz, 546 U.S. 356, 363 (126 SCt 990, 163 LE2d 945) (2006)); accord Fed. Tr.
Bank v. C.W. Matthews Contracting Co., 312 Ga. App. 200, 203 (1) (718 SE2d 63)
(2011).
16
recruitment provisions similar to the one at issue in this case, the trial court erred in
finding that it was overbroad and unenforceable.33
3. Lastly, CMGRP argues that the trial court erred to the extent it found that the
non-recruitment provision in the agreement is void because the customer non-
solicitation provision in the same agreement is void. Again, we agree.
As noted supra, CMGRP does not challenge the trial court’s finding that the
non-solicitation provision of the agreement, which prevents a former CMGRP
employee from soliciting its clients or potential clients for a period of one year is void
and unenforceable. In Georgia, there are four basic types of restrictive covenants: (1)
non-competition; (2) non-solicitation of customers/clients; (3) non-recruitment of
employees; and (4) non-disclosure of confidential information.34 And we have held
that, as to non-compete and non-solicitation covenants (the first two types), “if one
of them is unenforceable, then they are all unenforceable.”35 On appeal, Gallant
33
See supra notes 16-27 & accompanying text.
34
Albany Bone & Joint Clinic, P.C. v. Hajek, 272 Ga. App. 464, 466 (612 SE2d
509) (2005).
35
Advance Tech. Consultants, Inc. v. Roadtrac, LLC, 250 Ga. App. 317, 320
(2) (551 SE2d 735) (2001); see Ward v. Process Control Corp., 247 Ga. 583, 584 (2)
(277 SE2d 671) (1981) (“If any covenant not to compete within a given employment
contract is unreasonable either in time, territory, or prohibited business activity, then
17
argues that because the non-solicitation provision, which prohibits the solicitation of
CMGRP’s clients or prospective clients, is void, all restrictive covenants in the
agreement, including the non-recruitment provision, are unenforceable. But her
argument ignores that “the rule that unenforceable non-compete covenants will not
be severed . . . does not apply equally to all types of covenants restricting
competition.”36
Indeed, non-compete and non-solicitation covenants are “all . . . treated as
non-compete covenants for purposes of the non-severability rule [that] if any one is
all covenants not to compete within the same employment contract are
unenforceable.” (emphasis supplied)); Lapolla Indus., Inc. v. Hess, 325 Ga. App. 256,
263 (2) (750 SE2d 467) (2013) (holding that, as to three non-compete and
non-solicitation covenants at issue, “all are treated as non-compete covenants for
purposes of the non-severability rule—if any one is unenforceable, all three are
unenforceable”); Hogan Mgmt. Servs., P.C. v. Martino, 242 Ga. App. 791, 793 (1)
(530 SE2d 508) (2000) (holding that because a non-solicitation clause was overly
broad, the “entire covenant not to compete [was] unenforceable”); Griffin, 215 Ga.
App. at 63 (2) (holding that a restrictive covenant not to compete with a former
employer was over broad due to the lack of a territorial restriction, which meant that
the “non-competition provision concerning solicitation of [the employer’s] customers
must also fail”); Adcock v. Speir Ins. Agency, Inc., 158 Ga. App. 317, 319 (279 SE2d
759) (1981) (“If any of the several limitations on competition contained within the
restrictive covenants are invalid, the entire covenant must fall.” (emphasis supplied)).
36
Hess, 325 Ga. App. at 263 (2).
18
unenforceable, all three are unenforceable.”37 But covenants restricting the
solicitation, recruitment, or hiring of employees, such as the non-recruitment
provision at issue in this case, “are analyzed separately.”38 And such covenants do not
“automatically fail under the non-severability rule if any one of the others fail.”39
In arguing that if any restrictive covenant in an employment agreement is void,
than all other covenants are void, including non-recruitment provisions, Gallant cites
to cases of this Court in which the broad language, at first glance, appears to support
that position. For example, Gallant relies on Vulcan Steel Structures, Inc. v.
37
Id.
38
Id.
39
Id.; see Mathis v. Orkin Exterminating Co., 254 Ga. App. 335, 337 (2) (562
SE2d 213) (2002) (“We analyze [non-recruitment] clauses in employment agreements
separately from non[-]solicit and non[-]compete clauses and clauses dealing with
clients of the former employer.”); Griffin, 215 Ga. App. at 62 (2) (“[T]he specific
‘non[-]competition” prohibitions concerning employment and customer solicitation
must be analyzed separately from those concerning disclosure of confidential
business information and employee piracy [i.e., recruitment].”); Lane, 174 Ga. App.
at 359 (2) (noting that, although there can be no severability of covenants not to
compete, the same is not true for covenants not to hire employees of a former
employer); Cf. Ward, 247 Ga. at 584 (1) (noting that “a covenant not to compete and
a covenant not to disclose confidential information may be independently maintained
under the same employment contract”); Wiley v. Royal Cup, Inc., 258 Ga. 357, 359
(1), 360 (2) (370 SE2d 744) (1988) (holding that a non-disclosure provision could be
enforced independently of an unenforceable covenant not to compete whether it is in
the same or distinct provisions of the employment agreement).
19
McCarty,40 a case in which we held that a non-solicitation clause was void because
it prohibited unsolicited contact with the employer’s customers.41 And we further held
that “because the non[-]solicitation of customers covenant is unenforceable, the trial
court correctly concluded that none of the covenants are enforceable.”42 But that case
is readily distinguishable because the employment contract at issue did not contain
a non-recruitment provision to be analyzed separately. Indeed, this Court noted that
the agreement the employee signed contained only “confidentiality, non[-]compete,
and non[-]solicitation covenants.”43 Lastly, Gallant attempts to distinguish this
40
329 Ga. App. 220 (764 SE2d 458) (2014).
41
See id. at 223-24 (1)
42
Id. at 225 (2).
43
Id. at 222. To understand the potential confusion that might arise from the
broad language used in McCarty, it is helpful to review the cases that it relied upon
for support. Specifically, in support of its broad pronouncement that, if any of the
covenants in the employment agreement were unenforceable, then all of the restrictive
covenants were unenforceable, the McCarty Court quoted Cox v. Altus Healthcare
& Hospice, Inc., 308 Ga. App. 28 (706 SE2d 660) (2011). But while Cox involved
non-compete, non-solicitation, and non-recruitment provisions, the Court addressed
each restrictive covenant on the merits. See Cox, 308 Ga. App. at 31-32 (b)-(d). As
to the non-recruitment provision, this Court held in Cox that it was invalid on its face
because it barred the employee from even unsolicited contact with the employer’s
other employees or affiliates. See id. at 32 (d). And to support its pronouncement that,
if any restrictive covenant in an employment agreement is invalid, then all covenants
in the agreement are unenforceable, Cox quoted Advance Technology Consultants,
20
Court’s cases holding that a void non-compete provision does not necessarily
invalidate a non-recruitment provision, which must be analyzed separately, by
contending that, unlike this case, the employment agreements in those cases contained
a severability clause.44 But this argument ignores that “[t]here can be no ‘blue pencil
theory’ of severability of covenants not to compete even where there is a severability
clause.”45 Gallant fails to explain or provide any legal support for her apparent
argument that non-recruitment clauses are only severable if an agreement contains a
severability clause, while different non-compete provisions are never severable from
Inc. v. Roadtrac, LLC, which only involved a review of non-solicitation or non-
compete covenants. See Cox, 308 Ga. App. at 32 (e) (quoting Advance Tech.
Consultants, 250 Ga. App. at 320 (2)). Thus, it appears that Gallant is reading
McCarty more broadly than the language in that opinion will allow. Significantly,
neither Advance Technology Consultants, McCarty, nor Cox specifically addressed
or overruled this Court’s precedent, set forth supra, expressly holding that a non-
recruitment provision is evaluated separately from non-compete provisions and is not
necessarily void merely because a non-compete or non-solicitation provision is void.
See Bodiford v. State, 328 Ga. App. 258, 262 (1) n.3 (761 SE2d 818) (2014) (“[A]
unanimous decision by a three-judge panel of this Court remains binding precedent
until such time as it is modified or reversed by this Court en banc or our Supreme
Court.” (punctuation omitted)).
44
See, e.g., Griffin, 215 Ga. App. at 62 (2) (noting that “[t]he parties agreed
upon the severability of the document’s covenants and provisions”); Lane, 174 Ga.
App. at 356 (quoting the relevant agreement’s severability clause). We note that
Gallant also relies on several federal cases, which are not binding on this Court.
45
Lane, 174 Ga. App. at 358 (2) (emphasis supplied).
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each other. In sum, given our well-established precedent, set forth supra, holding that
a non-recruitment provision is not necessarily void merely because a non-compete
provision in the same agreement is void, the trial court erred to the extent that it found
otherwise.
For all these reasons, we affirm, in part, the trial court’s declaratory judgment
as to its ruling on the non-solicitation clause, which has not been challenged on
appeal, and reverse, in part, to the extent that the court found that the non-recruitment
provision in Gallant’s employment agreement was void and unenforceable for any of
the reasons presented below.
Judgment affirmed in part, and reversed in part. Ray, P. J., and Self, J., concur.
22