Lake Land Employment Group of Akron, LLC v. Columber | Law Riot

Posted by LawRiotAdmin on August 25th, 2012

LAKE LAND EMPLOYMENT GROUP OF AKRON, LLC V. COLUMBER (SUP. CT. OF OHIO 2004)

PARTIES:? Appellant-Lake Land

Appellee?Columber

Columber was an at-will employee of Lake Lan

PROCEDURAL HISTORY:

• Lake Land initiated this action by filing a complaint asserting that its ex-employee, Lee Columber had breached a non-competition agreement the parties had executed
• The agreement stated that for 3 years, Columber would not engage in any business within a 50 mile radius of Akron, Ohio that competed with Lake Land
• Lake Land sought money damages after it alleged that Columber violated the agreement

• Columber moved for summary judgment claiming the noncompetition agreement was unenforceable because it lacked consideration

• The trial court granted summary judgment for Columber and court of appeals affirmed; Lake Land appealled

FACTS:

• Columber had been employed by Lake Land from 1988-2001

• He signed the non competition agreement in 1991 and following his discharge from Lake Land he formed a corporation that is engaged in a business similar to that of Lake Land.

• He states he did not remember whether his continued employment was dependent upon execution of the agreement or whether he had posed questions about the restrictions it contained
• There was no increase of salary, benefits given as consideration for Columber signing the non competition agreement and there was no change in his employment status
• The trial court found that the noncompetition agreement lacked consideration and was unenforceable
• The court of appeals affirmed but did state there was an issue as to:

ISSUE:

Is subsequent employment alone sufficient consideration to support a covenant-not-to-compete agreement with an at-will employee entered into after employment has already begun?

I. Legal Background

• Under English common law noncompetition agreements were disfavored because they went against public policy
• Where working men generally entered skilled trades through apprenticeships, and mobility was minimal, noncompetition agreements destroyed a man?s means of livelihood or bound him to his employer

• However, modern economic realities do not pose such a strict requirement
• If one party can trust the other with confidential information and secrets, then both parties are better positioned to compete with the rest of the world.
• Noncompetition agreements make it easier for people to cooperate productively

• The Supreme Court of Minnesota says regarding the issue:
• Cases that state that continued employment is not consideration stress the fact that an employee lacks bargaining power and can easily be coerced
• By signing a noncompetition agreement, an employee gets no more than he already has
• Decisions that state that continued employment is consideration stress:
• The possibility that the employee otherwise would have been discharged
• The employee was actually employed for a substantial time after executing the contract
• Or the employee received compensation or training
• Court have found continued employment to be consideration where a substantial period of employment ensues after a noncompetition covenant is executed, especially when that employment is supplanted with raises, promotions, or other benefits.
• These courts believe the noncompetition agreement changes the relationship from an at-will
• These courts infer a promise on the part of the employer to employ the employee for a long period of time.

II.Formation of Binding Contract

• Either an employer or an employee in an at-will employment relationship can legally terminate the relationship at any time for any reason
• Either an empoyer or an employee can change the terms of the agreement whenever they want

• The presentation of a noncompetition agreement by an employer is a proposal to renegotiate the terms of the parties? at-will employment.
• Where an employer makes such a proposal and the employee assents to it, thereby accepting continued employment on new terms, consideration supporting the noncompetition agreement exists.
• The employee?s assent is given in exchange for forbearance on the part of the employer from terminating the employee.

• Therefore, consideration exists to support a noncompetition agreement when, in exchange for the assent of an at-will employee to a noncompetition agreement, the employer continues an at-will employment relationship that could legally be terminated without cause.

III.Caveat

• Corbin suggests that we should look into the sufficiency of consideration in cases involving noncompetition agreements by examining the extent and character of the consideration received by the promisor-employee, even though we do not do so ordinarily.
• The court simply recognizes that the balancing test should not be an inquiry into the sufficiency of the consideration, but the reasonableness of the noncompetition agreement

IV.Disposition

• Both Columber and his employer has a legal right to terminate their at-will employment relationship when Columber was presented with the noncompetition agreement in 1991.
• Columber did not exercise that right and continued to work there for ten more years
• Therefore the noncompetition agreement is not void for lack of consideration
• The trial court still needs to determine if the noncompetition agreement is reasonable

RESNICK DISSENTS

• A contract is not binding unless supported by consideration, which is generally defines as ?a detriment to the promisee or a benefit to the promisor.?
• The only difference between Lake Land and Columber after the 1991 agreement, is the agreement itself.
• Lake Land gave up nothing, since it retains the exact same position it had before the agreement
• Columber gained nothing

• Since the same at-will employment relationship continues, then there is no consideration
• The majority is essentially holding that a restrictive covenant can be exacted from an at-will employee without any consideration.

PFEIFER DISSENTS

• An employer?s agreement not to terminate an employee if the employee signs a noncompetition agreement does not constitute consideration, but coercion.

• The? majority should recognize the at-will relationship is altered when the employer forbears his right to fire the employee

• Any promise of continued employment removes the relationship from the at-will realm.
• The employer for some undefined time must refrain from firing the employee

You can leave a response, or trackback from your own site.

Source: http://lawriot.com/2012/08/lake-land-employment-group-of-akron-llc-v-columber/

george clooney rutgers dharun ravi george clooney arrested ravi leigh espn