Georgia Enterprise Courtroom makes use of Georgia’s Restrictive Agreements Act to vary the relevant interval of an unsolicited buyer time period |  Seyfarth Shaw LLP

A decade ago, Georgia legislature enacted a new restrictive federal law, OCGA Section 13-8-51 et al. (the “Georgia RCA”). Among other things, the Georgia RCA allowed the courts of Georgia to amend or amend a contract that is otherwise void and unenforceable, as long as the amendment does not make the contract more restrictive in relation to the employee than it was originally drafted by the parties . “OCGA § 13-8-53 (d).

There was initially some confusion about the scope of the Georgia RCA’s use of the word “modify”. Did “modify” mean that a court could only remove offensive language? Or did this mean that a court could actually reform or rewrite a contract to make it enforceable? In late 2016, the Northern District of Georgia incorporated into LifeBrite Labs., LLC v. Cooksey, No. 1: 15-CV-4309-TWT, 2016 WL 7840217 (ND Ga. December 9, 2016) directly addressed this issue.

In LifeBrite, Ms. Cooksey sought a declaratory judgment that a non-compete clause was unenforceable because it lacks a geographic restriction necessary for enforceability. In making its decision, the Northern District of Georgia relied on the landmark decision of the Georgia Supreme Court, Hamrick v. Kelley, 260 Ga. 307, 392 SE2d 518 (1990): “[t]he marks ‘blue pencil’, but he doesn’t write. It can delimit an area and thus make it meaningful, but it must not rewrite a contract due to ambiguity by making it final by defining a new, clearly delimited area. “

Based on Hamrick, LifeBrite concluded that “[t]although courts can impose unreasonable restrictions, and can narrow down territorial names that are too broad, Courts cannot completely reform and rewrite contracts by providing new and substantive terms out of all the stuff. ”(emphasis added) Therefore, the court found the contested non-compete clause“ void and unenforceable ”because the court did not rewrite the contract was able to deliver the missing geographic area. That would be beyond his “blue pencil” power.

Recently, the Georgia Business Court was ruled on a similar question in the Cameron Martin v. Hauser, Inc., Case No. “). The non-solicit states as follows:

The employee hereby agrees that after the employee’s employment relationship with the company has ended and for a period of three (3) years thereafter, the employee will not recruit direct or indirect customers, regardless of whether such customer recruitment is initiated by the employee or another party , or customers of the company who were customers or customers of the company at the time the employee’s employment relationship with the company was terminated or at any time during the 18 months prior to that customer or customer of the company [sic] to change or relocate his insurance or other business to another company or agency during the aforementioned three (3) years.

Mr. Martin filed a declaratory complaint seeking, among other things, that the above non-solicitation was unenforceable because: (1) it was longer than two years and; (2) its scope was too wide.

In his March 5, 2021 judgment, Judge Davis concluded that Hauser, Inc not presented sufficient evidence to warrant three years of reluctance, noting that the Georgia RCA produces: “[A] The court believes that a limit of two years or less is appropriate, and Any restraint of more than two years is considered inappropriate, measured from the date the business relationship was terminated. “OCGA § 13-8-57 (b) (emphasis added.)

The court also found that the scope of the non-solicit is too broad and in violation of OCGA § 13-8-53 (b) for preventing Mr. Martin from soliciting a company that was a customer of Hauser, Inc. was months prior to his departure, and not just Hauser, Inc.’s customers at the time of Mr. Martin’s departure.

Regardless of these findings, however, Judge Davis refused to hit the entire non-solicit, as requested by Mr. Martin’s attorney. Instead, Judge Davis relied heavily on LifeBrite, arguing that the Georgia RCA allowed him to “blue pen” the language of non-solicitousness to make it enforceable.

To make it enforceable under Georgian law, Judge Davis did two things. First, he reduced the three-year prison term to just one year. Second, he separated the words “or at any time during the 18 months prior” from the non-inquiry, referring to “all customers or customers of the company who were customers or customers of the company at the time of termination of the employment relationship of the employee with the company Company goods … ”

Judge Davis found these revisions “honorable”.[] both the intent of the parties “as much as possible” in maintaining a limited post-employment limit on the plaintiff’s ability to solicit customers or clients of the company while at the same time only giving the defendant as much exoneration as – the court’s judgment – is reasonably necessary to protect the company’s interests in such relationships. See OCGA, § 13-8-54 (b). “

This holding appears to be the first instance a Georgia court uses the Georgia RCA to change an oversized customer by shortening the duration without prompting. It could be argued that this is how the court “rewritten” the non-solicit by adding the one-year deadline (rather than simply removing the overly three-year deadline). However, it seems more accurate to conclude that the decision was consistent with LifeBrite, as a term that was too broad (the duration) was simply narrowed down and not entirely rewritten. Just as LifeBrite narrowed too wide a geographic area, Georgia now has a precedent for narrowing too wide a duration.

Ultimately, the decision in Martin v. Hauser would be good news for Georgia employers looking to enforce restrictive agreements with too broad a duration. There is now a precedent for a court to reduce an excessively long duration to only what it deems to be enforceable, and by doing so, the court will not violate the Georgia RCA’s “Blue Pencil” rule.