Digital Recorders, Inc. v. McFarland, 2007 NCBC 23 (N.C. Super. June 29, 2007)(Diaz)

The Court denied a motion for preliminary injunction on two covenants not to compete.  It found that one covenant was overly broad, since it had no geographic scope whatsoever.  Another covenant was also overly broad, as it restrained the defendant from working for a competitor in any capacity at all, including as a security guard or a custodian.  The defendant had been plaintiff's Director of Software Engineering. The Court refused to blue-pencil the covenant. 

The covenant was also invalid becasue it unreasonably prevented the defendant from having an interest in a mutual fund which held shares in a publicly traded competitor, and because it attempted to prevent contact with future customers.  The Court found that a restriction on future customers did not protect any legitimate interest of any employer. 

At the conclusion of its opinion, the Court rejected plaintiff's argument that the Court was making a decision that was "bad for business," and therefore inconsistent with its mandate.  The Court held that "the North Carolina Business Court was created to provide judicial specialization in complex business litigation. This Court’s judges do not, however, decide cases based on the prevailing economic winds, nor do we consider how best to promote a litigant’s business interests. Our oath is the same as that of any judge of this state—to apply the law and decide cases without regard to the parties who are before us."

Full Opinion

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