Horner International Co. v. McKoy

NO. COA13-964
NORTH CAROLINA COURT OF APPEALS
Filed: 4 March 2014
HORNER INTERNATIONAL COMPANY,
Plaintiff,
v. Wake County
No. 13 CVS 7131
BILL M. MCKOY,
Defendant.
Appeal by Plaintiff and cross-appeal by Defendant from
preliminary injunction entered 14 June 2013 by Judge G. Bryan
Collins in Wake County Superior Court. Heard in the Court of
Appeals 8 January 2014.
Wallace & Nordan, L.L.P., by John R. Wallace and Joseph A.
Newsome, for Plaintiff.
Robinson Bradshaw & Hinson, P.A., by J. Dickson Phillips
and Brian L. Church, for Defendant.
STEPHENS, Judge.
Procedural History and Factual Background
This case concerns the grant in part and denial in part of
a motion for a preliminary injunction in a dispute between a
company and its former employee. Plaintiff Horner International
Company manufactures flavor materials for use in tobacco and
food products. Defendant Bill M. McKoy was employed by
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Plaintiff from May 2006 until October 2012. In 2006, Defendant,
who had worked in the food processing and flavor industry since
the early 1980s, assisted Plaintiff with setting up a new
manufacturing plant in Durham and served as plant manager
thereafter. In May 2006, Defendant signed a Non-Competition
Agreement (“NCA”) and Agreement Not to Disclose Trade Secrets
(“ANDTS”) as conditions of his employment with Plaintiff.
Defendant resigned from Plaintiff on 8 October 2012 and,
thereafter, began employment with Teawolf, LLC, a Delaware
Limited Liability Company with its principal place of business
in New Jersey. Defendant’s work for Teawolf involves
installing, maintaining, and optimizing equipment used in the
production of new flavor products. Both Plaintiff and Teawolf
sell flavor materials derived from cocoa, chocolate, coffee,
tea, fenugreek, ginseng, and chamomile.
On 20 May 2013, Plaintiff filed (1) a complaint; (2) a
motion for temporary restraining order (“TRO”), preliminary
injunction, and permanent injunction; and (3) a motion for an
order allowing expedited discovery of Defendant. The motions
for TRO and expedited discovery were allowed on 22 May 2013, and
Defendant was restrained from violating the NCA and ANDTS.
Following a hearing on the motion for preliminary injunction in
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early June 2013, the trial court entered an order on 14 June
2013, nunc pro tunc, to 4 June 2013, which enjoined Defendant
from disclosing Plaintiff’s confidential information and trade
secrets, but denied the motion as to the NCA. On 27 June 2013,
Plaintiff filed notice of appeal from the trial court’s denial
of the preliminary injunction as to the NCA. On 8 July 2013,
Defendant filed notice of cross-appeal from the grant of the
preliminary injunction as to Plaintiff’s confidential
information and trade secrets.
Grounds for Appellate Review
Preliminary injunctions are “interlocutory and thus
generally not immediately reviewable. An appeal may be proper,
however, in cases, including those involving trade secrets and
non-compete agreements, where the denial of the injunction
deprives the appellant of a substantial right which he would
lose absent review prior to final determination.” VisionAIR,
Inc. v. James, 167 N.C. App. 504, 507, 606 S.E.2d 359, 361
(2004) (citations and internal quotation marks omitted).
The purpose of a preliminary injunction is
ordinarily to preserve the status quo
pending trial on the merits. Its issuance
is a matter of discretion to be exercised by
the hearing judge after a careful balancing
of the equities. Its impact is temporary
and lasts no longer than the pendency of the
action. Its decree bears no precedent to
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guide the final determination of the rights
of the parties. In form, purpose, and
effect, it is purely interlocutory. Thus,
the threshold question presented by a
purported appeal from an order granting a
preliminary injunction is whether the
appellant has been deprived of any
substantial right which might be lost should
the order escape appellate review before
final judgment.
A.E.P. Indus., Inc. v. McClure, 308 N.C. 393, 400, 302 S.E.2d
754, 759 (1983) (citation and internal quotation marks omitted).
Our Supreme Court went on to hold that
where time is of the essence, the appellate
process is not the procedural mechanism best
suited for resolving the dispute. The
parties would be better advised to seek a
final determination on the merits at the
earliest possible time. Nevertheless,
[where a] case presents an important
question affecting the respective rights of
employers and employees who choose to
execute agreements involving covenants not
to compete, [appellate courts should]
address the issues.
Id. at 401, 302 S.E.2d at 759. We believe the same reasoning
applies to agreements between an employer and employee regarding
protection of the employer’s alleged trade secrets.
Accordingly, we address the merits of both Plaintiff’s appeal
and Defendant’s cross-appeal.
Discussion
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In its appeal, Plaintiff argues that the trial court erred
in denying its motion for a preliminary injunction as to the
NCA, contending that (1) a non-compete agreement can be properly
enforced by means of a preliminary injunction and (2) the NCA is
valid and enforceable. In his cross-appeal, Defendant argues
that the court erred in enjoining him from disclosure of
Plaintiff’s confidential information and trade secrets,
contending that (1) Plaintiff failed to sufficiently identify
the trade secrets allegedly at risk of disclosure, (2)
Defendant’s mere “opportunity to misappropriate” cannot support
the court’s determination of Plaintiff’s likelihood of success
on the merits of its claims, and (3) the preliminary injunction
entered was too “broad and nebulous.” As discussed herein, we
affirm.
I. Standard of Review
As a general rule, a preliminary injunction
is an extraordinary measure taken by a court
to preserve the status quo of the parties
during litigation. It will be issued only
(1) if a plaintiff is able to show
likelihood of success on the merits of his
case and (2) if a plaintiff is likely to
sustain irreparable loss unless the
injunction is issued, or if, in the opinion
of the Court, issuance is necessary for the
protection of a plaintiff’s rights during
the course of litigation.
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Id. at 401, 302 S.E.2d at 759-60 (citations, internal quotation
marks, and emphasis omitted).
“The standard of review from a preliminary injunction is
essentially de novo.” VisionAIR, Inc., 167 N.C. App. at 507,
606 S.E.2d at 362 (citation and internal quotation marks
omitted). Thus, “on appeal from an order of a superior court
granting or denying a preliminary injunction, an appellate court
is not bound by the findings, but may review and weigh the
evidence and find facts for itself.” A.E.P. Indus., Inc., 308
N.C. at 402, 302 S.E.2d at 760 (citation omitted).
“Nevertheless[,] a trial court’s ruling on a motion for a
preliminary injunction is presumed to be correct, and the party
challenging the ruling bears the burden of showing it was
erroneous.” VisionAIR, Inc., 167 N.C. App. at 507, 606 S.E.2d
at 362 (citation and internal quotation marks omitted).
II. Plaintiff’s Appeal
Plaintiff argues that the trial court erred in denying its
motion for a preliminary injunction as to the NCA, contending
that (1) non-compete agreements may be properly enforced by
means of a preliminary injunction and (2) the NCA is valid and
enforceable. While Plaintiff’s first contention is correct, we
disagree with the second.
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Plaintiff asserts that this Court should reverse the denial
of its motion and remand for entry of a preliminary injunction
as to the NCA, citing the following discussion from A.E.P.
Indus., Inc.:
[T]here are two important aspects of this
case which distinguish it substantively and
procedurally from the more usual case in
which a preliminary injunction is sought.
The first is that the ultimate relief [the]
plaintiff seeks is enforcement of a covenant
not to compete. The promised performance by
the employee is forbearance to act and the
remedy is one for specific performance of
the contract in the nature of an injunction
prohibiting any further violation of it.
The second distinguishing feature of this
case is that the decision made at the
preliminary injunction stage of the
proceedings becomes, in effect, a
determination on the merits. This is so
because the validity of the covenant
depends, among other things, on the duration
of the time limitation which, in order to be
reasonable, must be brief. The case is
clothed with immediacy. Frequently the time
limitation will have expired prior to final
determination. Moreover, because the
primary relief sought by the plaintiff is a
permanent injunction, many of the
considerations involved in the decision to
grant or deny the preliminary injunction
parallel those involved in a final
determination on the merits. Specifically,
the court must decide whether the remedy
sought by the plaintiff is the most
appropriate for preserving and protecting
its rights or whether there is an adequate
remedy at law.
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A.E.P. Indus., Inc., 308 N.C. at 405-06, 302 S.E.2d at 762(citations omitted; emphasis in original). Thus, our Supreme
Court held:
Because of the need for immediacy of
appropriate relief in cases dealing with
covenants not to compete, as for example in
the present case where [the] defendant
contracted not to engage in a competitive
business for only eighteen months, the law
as stated above is particularly applicable.
We hold that where the primary ultimate
remedy sought is an injunction; where the
denial of a preliminary injunction would
serve effectively to foreclose adequate
relief to [the] plaintiff; where no “legal”
(as opposed to equitable) remedy will
suffice; and where the decision to grant or
deny a preliminary injunction in effect
results in a determination on the merits,
[the] plaintiff has made a showing that the
issuance of a preliminary injunction is
necessary for the protection of its rights
during the course of litigation.
Id. at 410, 302 S.E.2d at 764. Thus, valid non-compete
agreements can be enforced by a preliminary injunction, and
Defendant freely concedes this point. What is not discussed in
A.E.P. Indus., Inc., but forms the central question in this
appeal, is the second prong of Plaintiff’s appellate argument:
whether the NCA is valid.
Covenants not to compete between an employer
and employee are not viewed favorably in
modern law. To be valid, the restrictions
on the employee’s future employability by
others must be no wider in scope than is
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necessary to protect the business of the
employer. If a non-compete covenant is too
broad to be a reasonable protection to the
employer’s business it will not be enforced.
The courts will not rewrite a contract if it
is too broad but will simply not enforce it.
VisionAIR, Inc., 167 N.C. App. at 508, 606 S.E.2d at 362(citations and internal quotation marks omitted). In that case,
this Court observed that the non-compete clause in question
provided that the defendant
may not “own, manage, be employed by or
otherwise participate in, directly or
indirectly, any business similar to
Employer’s . . . within the Southeast” for
two years after the termination of his
employ with VisionAIR. Under this covenant
[the defendant] would not merely be
prevented from engaging in work similar to
that which he did for VisionAIR at VisionAIR
competitors; [the defendant] would be
prevented from doing even wholly unrelated
work at any firm similar to VisionAIR.
Further, by preventing [the defendant] from
even “indirectly” owning any similar firm,
[the defendant] may, for example, even be
prohibited from holding interest in a mutual
fund invested in part in a firm engaged in
business similar to VisionAIR. Such vast
restrictions on [the defendant] cannot be
enforced.
Id. at 508-09, 606 S.E.2d at 362-63 (footnote omitted; emphasis
added).
The NCA here is quite similar to the non-compete covenant
in VisionAIR, Inc. The NCA purports to bar Defendant from
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“directly or indirectly” being employed by or acting “as an
advisor, consultant, or salesperson for, or becom[ing]
financially interested, directly or indirectly, in any person,
proprietorship, partnership, firm, or corporation engaged in, or
about to become engaged in, the business of selling flavor
materials” for a period of 18 months after his employment with
Plaintiff ended. (Emphasis added).
We perceive no meaningful distinction between the NCA here
and the non-compete covenant held to be overbroad in VisionAIR,
Inc. The duration of time is slightly shorter (18 months here
versus two years in VisionAIR, Inc.). However, the NCA contains
no geographical limitation, unlike the restriction of the
VisionAIR, Inc. covenant to similar businesses in “the
Southeast.” More importantly, just as, “[u]nder th[e] covenant
[the defendant in VisionAIR] would not [have] merely be[en]
prevented from engaging in work similar to that which he did for
VisionAIR at VisionAIR competitors; [the defendant] would [have]
be[en] prevented from doing even wholly unrelated work at any
firm similar to VisionAIR[,]” the NCA purports to bar Defendant
from doing wholly unrelated work for any firm that sells “flavor
materials[,]” even if that firm’s products do not compete with
those of Plaintiff. Finally, the NCA purports to bar Defendant
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from having even an indirect financial interest in such a
business, a condition specifically rejected by the Court in
VisionAIR, Inc. See id. at 509, 606 S.E.2d at 362-63 (“Further,
by preventing [the defendant] from even ‘indirectly’ owning any
similar firm, [the defendant] may, for example, even be
prohibited from holding interest in a mutual fund invested in
part in a firm engaged in business similar to VisionAIR. Such
vast restrictions on [the defendant] cannot be enforced.”).
Plaintiff further cites Precision Walls, Inc. v. Servie,
152 N.C. App. 630, 568 S.E.2d 267 (2002) and Okuma Am. Corp. v.
Bowers, 181 N.C. App. 85, 638 S.E.2d 617 (2007) in support of
its position. These cases are distinguishable.
In Okuma Am. Corp., this Court observed:
When considering the time and geographic
limits outlined in a covenant not to
compete, we look to six overlapping factors:
(1) the area, or scope, of the restriction;
(2) the area assigned to the employee; (3)
the area where the employee actually worked
or was subject to work; (4) the area in
which the employer operated; (5) the nature
of the business involved; and (6) the nature
of the employee’s duty and his knowledge of
the employer’s business operation.
Id. at 89, 638 S.E.2d at 620 (citation and internal quotation
marks omitted; emphasis added). In Precision Walls, this Court
considered only “the reasonableness of time and territory
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restrictions” and a bar on employment with competitors.
Precision Walls, Inc., 152 N.C. App. at 637, 639, 568 S.E.2d at
272, 273. As noted supra, it is the broad sweep of the
activities covered by the NCA which renders the agreement
overbroad and thus unenforceable. Accordingly, these cases are
largely inapposite. However, we do find it instructive that the
Court in Okuma Am. Corp. noted that “a covenant not to compete
is overly broad [when], rather than attempting to prevent [the
former employee] from competing for []business, it requires [the
former employee] to have no association whatsoever with any
business that provides [similar] services . . . .” 181 N.C.
App. at 91, 638 S.E.2d at 621 (citations and internal quotation
marks omitted). We believe this is the situation presented by
the NCA here.
In sum, because the NCA is overbroad and thus
unenforceable, Plaintiff cannot demonstrate likely success on
the merits. See VisionAIR, Inc., 167 N.C. App. at 508, 606
S.E.2d at 362. We conclude that the trial court did not err in
denying Plaintiff’s motion for a preliminary injunction as to
the NCA, and, accordingly, that portion of the order is
affirmed.
III. Defendant’s Cross-Appeal
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In his cross-appeal, Defendant advances two bases for his
argument that the trial court erred in granting the preliminary
injunction as to confidential information and trade secrets
obtained by Defendant during his employment with Plaintiff:
that Plaintiff failed to show a likelihood of success on the
merits of its claim for violations of the North Carolina Trade
Secrets Protection Act (“TSPA”) and that the trial court’s
injunction was too broad and nebulous. We disagree.
A. Specificity of allegations
Defendant first contends that the trial court erred in
concluding that Plaintiff showed a likelihood of success on the
merits of its claim for violations of the TSPA because Plaintiff
failed to plead the trade secrets at risk of disclosure with
sufficient particularity and alleged only the opportunity to
misappropriate the trade secrets. We disagree with both
contentions.
The TSPA
provides that the owner of a trade secret
shall have remedy by civil action for
misappropriation of the secret.
“Trade secret” means business or technical
information, including but not limited to a
formula, pattern, program, device,
compilation of information, method,
technique, or process that:
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a. Derives independent actual or potential
commercial value from not being generally
known or readily ascertainable through
independent development or reverse
engineering by persons who can obtain
economic value from its disclosure or use;
and
b. Is the subject of efforts that are
reasonable under the circumstances to
maintain its secrecy.
“Misappropriation” means acquisition,
disclosure, or use of a trade secret of
another without express or implied authority
or consent, unless such trade secret was
arrived at by independent development,
reverse engineering, or was obtained from
another person with a right to disclose the
trade secret. The TSPA also provides that
actual or threatened misappropriation of a
trade secret may be preliminarily enjoined
during the pendency of the action and shall
be permanently enjoined upon judgment
finding misappropriation . . . .
Washburn v. Yadkin Valley Bank & Trust Co., 190 N.C. App. 315,
326, 660 S.E.2d 577, 585 (2008) (citations and internal
quotation marks omitted), disc. review denied, 363 N.C. 139, 674
S.E.2d 422 (2009).
To determine what information should be
treated as a trade secret, a court should
consider the following factors:
(1) the extent to which information is known
outside the business;
(2) the extent to which it is known to
employees and others involved in the
business;
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(3) the extent of measures taken to guard
secrecy of the information;
(4) the value of information to the business
and its competitors;
(5) the amount of effort or money expended
in developing the information; and
(6) the ease or difficulty with which the
information could properly be acquired or
duplicated by others.
Area Landscaping, L.L.C. v. Glaxo-Wellcome, Inc., 160 N.C. App.
520, 525, 586 S.E.2d 507, 511 (2003) (citations and internal
quotation marks omitted). “[A] complaint that makes general
allegations in sweeping and conclusory statements, without
specifically identifying the trade secrets allegedly
misappropriated, is insufficient to state a claim for
misappropriation of trade secrets.” Washburn, 190 N.C. App. at
327, 660 S.E.2d at 585-86 (citation and internal quotation marks
omitted). Rather, to successfully plead misappropriation of
trade secrets, “a plaintiff must identify a trade secret with
sufficient particularity so as to enable a defendant to
delineate that which he is accused of misappropriating and a
court to determine whether misappropriation has or is threatened
to occur.” VisionAIR, Inc., 167 N.C. App. at 510-11, 606 S.E.2d
at 364 (citation and internal quotation marks omitted).
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Regarding specificity of those trade secrets allegedly at risk,
for example, allegations that an employee “acquired knowledge of
[the employer’s] business methods; clients, their specific
requirements and needs; and other confidential information
pertaining to [the employer’s] business” are too “broad and
vague” to allege a TSPA claim. Washburn, 190 N.C. App. at 327,
660 S.E.2d at 586.
Here, in contrast, the verified amendment to Plaintiff’s
complaint alleges with great detail and specificity the
information Defendant has allegedly provided to his new
employer, describing, inter alia, various raw materials and raw
material treatments; extraction, filtration, separation, and
distillation techniques; and methods for compounding of flavors,
packaging, and plant utility. Further, the amendment alleged
that these processes and methods were used in the production of
flavor materials derived from seven specifically identified
substances, such as cocoa, ginseng, and chamomile. Accordingly,
we reject Defendant’s assertions that Plaintiff failed to
properly plead its claims under the TSPA.
Regarding allegations supporting the threat of
misappropriation, Defendant contends that the trial court erred
in granting the preliminary injunction because Plaintiff could
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only show “opportunity” for misappropriation. As noted supra,
the TSPA provides that “actual or threatened misappropriation of
a trade secret may be preliminarily enjoined during the pendency
of the action and shall be permanently enjoined upon judgment
finding misappropriation . . . .” N.C. Gen. Stat. § 66-154(a)
(2013) (emphasis added). Further,
[m]isappropriation of a trade secret is
prima facie established by the introduction
of substantial evidence that the person
against whom relief is sought both:
(1) Knows or should have known of the
trade secret; and
(2) Has had a specific opportunity to
acquire it for disclosure or use or has
acquired, disclosed, or used it without the
express or implied consent or authority of
the owner.
This prima facie evidence is rebutted by the
introduction of substantial evidence that
the person against whom relief is sought
acquired the information comprising the
trade secret by independent development,
reverse engineering, or it was obtained from
another person with a right to disclose the
trade secret. This section shall not be
construed to deprive the person against whom
relief is sought of any other defenses
provided under the law.
N.C. Gen. Stat. § 66-155 (2013) (italics added). Courts have
upheld grants of a preliminary injunction where plaintiffs have
presented some evidence that former employees have or
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necessarily will use trade secrets. Compare Barr-Mullin, Inc.
v. Browning, 108 N.C. App. 590, 597-98, 424 S.E.2d 226, 230-31
(1993) (finding a prima facie case for misappropriation existed
which supported a preliminary injunction where the defendant
helped develop software while working for the plaintiff and then
began producing identical software after leaving the plaintiff’s
employment); Analog Devices, Inc. v. Michalski, 157 N.C. App.
462, 467, 579 S.E.2d 449, 453 (2003) (upholding denial of
preliminary injunction where product design differences between
the defendant’s former and new employers “render[ed] the alleged
trade secrets largely non-transferable”).
Here, unlike in Analog Devices, Inc., there are no product
design differences which would render “non-transferable” the
trade secrets of Plaintiff which Defendant possesses.
Defendant’s strenuous assertions on appeal that Plaintiff
produced no direct or circumstantial evidence of his
“acquisition, use, or disclosure of [Plaintiff’s] information”
is misplaced. The TSPA permits preliminary injunctions where a
prima facie case for “actual or threatened misappropriation of a
trade secret” is established. N.C. Gen. Stat. § 66-154(a)
(emphasis added). In turn, that prima facie case is established
by showing that a defendant “(1) [k]nows or should have known of
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the trade secret; and (2) [h]as had a specific opportunity to
acquire it for disclosure or use or has acquired, disclosed, or
used it without the express or implied consent or authority of
the owner.” N.C. Gen. Stat. § 66-155 (emphasis added).
Defendant’s knowledge of trade secrets and opportunity to use
those in his work for his new employer create a threat of
misappropriation, and thus the trial court’s grant of a
preliminary injunction during the pendency of the action was
proper.1
B. Specificity of the preliminary injunction
Defendant also argues that the court’s injunction was too
broad and nebulous, citing Travenol Labs., Inc. v. Turner, 30
N.C. App. 686, 228 S.E.2d 478 (1976).
In Travenol Labs., Inc., the plaintiff-employer
sought and the trial court . . . granted an
injunction to prevent [the employee] from
revealing “all information regarded as
confidential . . . including but not limited
to information concerning the mechanical
modification of the Westphalia centrifuge
. . .” and to prevent [the new employer]
from receiving the same. Again [the Court]
weigh[ed] the factors relevant to the
1
Defendant also identifies two e-mails, the contents of which
Defendant asserts were improperly proved by testimony. However,
the court did not rely on the e-mails to support its conclusions
of law. Accordingly, we need not consider the admissibility of
this evidence.
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likelihood of disclosure in determining the
appropriateness of injunctive relief.
Ordinarily, mere employment by a competitor
alone will not create a likelihood of
disclosure sufficient to support an
injunction. An employee may take from his
employment general knowledge and skills.
[The plaintiff-employer] has clearly shown
that it is probable that at trial it will
establish that the mechanical modification
of the Westphalia centrifuge is a trade
secret. This modification has been the
subject of research and development and
would be of current use to [the new
employer] in its production process. [The
employee] has worked in the production field
for 22 years. Since this is precisely the
field in which [the employee] will be
employed by [the new employer], not merely
as a worker but at a high level supervisory
position, the possibility of disclosure is
high even absent any underhanded dealing in
the circumstances of his termination of
employment with [the plaintiff-employer].
[The plaintiff-employer] has also presented
evidence showing that several competitors
have tried without success to make a similar
modification. The disclosure of this
modification would cost [the plaintiff-
employer] a competitive advantage worth many
thousands of dollars. We f[ou]nd,
therefore, that with respect to the
modification of the Westphalia centrifuge,
the trial court was correct in issuing a
preliminary injunction in [the plaintiff-
employer’s] favor.
We [did] not agree, however, that [the
plaintiff-employer] made an adequate showing
to support that part of the injunction
broadly prohibiting disclosure of “all
information regarded as confidential.” This
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provision presents problems of scope and
nebulosity.
The showing made with respect to the
centrifuge modification rested upon its use
in production, [the employee’s] high level
position in production, and the failure of
competitors to make a similar modification.
These factors have no bearing to the more
broadly phrased part of the injunction . .
. . Sub judice, [the plaintiff-employer]
apparently considers its entire production
process as secret and confidential. Yet it
appears that [the plaintiff-employer, the
new employer,] and other competing
enterprises use the standard . . . process
in their plasma fractionation operations.
Though there may be some variation in the
production process among the competing
enterprises, [the plaintiff-employer] has
failed to show unique processing, other than
the modified Westphalia centrifuge, the
disclosure of which would result in
irreparable damage.
Id. at 694-95, 228 S.E.2d at 485 (citations omitted). This
Court went on to “emphasize that the facts and circumstances of
each case dictate the propriety of injunctive relief[.]” Id. at
695, 228 S.E.2d at 485.
Here, looking at the individual facts and circumstances of
the matter, the enjoining of Defendant from “[u]sing,
disclosing, or transmitting for any purpose any confidential
information obtained by [Defendant] from [Plaintiff]” plainly
applies to the methods, processes, and techniques described as
trade secrets in the preliminary injunction’s findings of fact
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and conclusions of law. As discussed supra, those trade secrets
are described with sufficient specificity that Defendant will
not be prevented from working with any “standard processes” with
his new employer. Accordingly, we overrule this argument.
The trial court’s order is
AFFIRMED.
Judge DAVIS concurs.
Judge STEELMAN concurs in a separate opinion.
NO. COA13-964
NORTH CAROLINA COURT OF APPEALS
Filed: 4 March 2014
HORNER INTERNATIONAL COMPANY,
Plaintiff,
v. Wake County
No. 10 CVS 7131
BILL M. McKOY,
Defendant.
STEELMAN, Judge, concurring.
I fully concur with the legal reasoning and result set
forth in the opinion, but write separately to again express
concern over the state of our law of restrictive employment
covenants in the context of our increasingly integrated global
economy.
At the time that our law in the area of restrictive
employment covenants was developed, much of our commerce was
local, and restrictive covenants were imposed only to protect
specific local interests. Any covenants that attempted to
protect broader commercial interests were held to be invalid as
an improper restraint of trade. Today’s economy is global in
nature. In the instant case, plaintiff conducts a very
specialized niche type of business, but its scope is worldwide,
rather than being focused upon a few counties in North Carolina.
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Our Supreme Court should re-evaluate the law of restrictive
covenants in the context of changed economic conditions to allow
restrictions upon competing business activities for a specific
period of time, limited to a specific, narrow type of business,
but with fewer geographic limitations.