Fullerton Lumber Co. v. Torborg
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.
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.
This case changed the
 See Joseph M. Perillo, CALAMARI AND PERILLO ON CONTRACTS § 16.19(b) (2003).