For a former employee or contractor who has signed a non-competition agreement, the threshold question is quite often this: Is the non-compete agreement enforceable or not?
How Tennessee courts treat non-compete agreements varies by court and by the unique facts of each case. In my experience, there is quite a bit of subjectivity involved when a court undertakes to determine if a non-competition agreement is enforceable and, if so, to what extent.
Despite the reality that each non-compete case turns on its own facts and on the particular court making the ruling, there are some guidelines that any court must apply when ruling on a non-compete agreement. For employers and employees who want to understand those guidelines, a very good case to read is Vantage Technology, LLC v. Cross, a 1999 decision of the Court of Appeals of Tennessee.
Here is a summary of the facts of the case:
- Cross (“Employee”) went to work for Vantage (“Employer”) in 1994
- Employer was in the business of providing equipment and support to doctors who performed cataract surgeries in rural hospitals
- Employee’s title was “technician” and his duties included transporting materials and instruments to doctors performing cataract surgeries and assisting them during surgery
- An important part of Employee’s job was building relationships with doctors and learning about their surgical preferences
- Employer also provided machines to doctors who performed cataract surgeries in rural hospitals, which machines were crucial for the surgeries
- Employer provided Employee about 241 hours of training during his first month of employment
- By the time Employee resigned, about two years after he started, he had built a strong relationship with a doctor who performed a substantial number of surgeries with the help of Employer
- Employee resigned and immediately formed a business relationship with that physician whereby they started a company which competed with Employer
- Employer filed suit against the Employee alleging that he had breached the non-compete agreement