Fullerton Lumber Co. v.
Torborg
270
Facts: The plaintiff hired the defendant to work as a
manager. Their contract said that if the
defendant stopped working for the plaintiff for any reason, he couldn’t work
for any other lumber companies within a certain radius for 10 years. The defendant quit and opened his own lumber
yard in the same town. The plaintiff
sued for an injunction against the defendant to make him stop working in that
town. The trial court dismissed the
complaint and the plaintiff appealed.
Issue: Should the court enforce the contractual restraint on
the defendant’s employment?
Rule: An employee’s promise not to compete may not be
enforced unless the employee has learned trade secrets, has made contacts with
members of the employer’s customer list, or when the employee’s services are
unique. Even then, a court might still
refuse to enforce it on the grounds of public policy.[1]
Analysis: The court says that the 10 year time limit is
excessive. The court suggests that a 3
year time limit would be adequate because it took the defendant three years to
build up the plaintiff’s lumber yard.
Conclusion: The court remanded the case to determine what length
of time would be reasonable.
Note
This case changed the