Labor & Employment – Contract – Covenant Not to Compete – Tort/Negligence – Interference with Contract – Unfair Trade Practices – Competitor – Staffing Companies

Clinical Staffing, Inc. v. Worldwide Travel Staffing Ltd. (Lawyers Weekly No. 13-02-1034, 15 pp.) (James C. Dever III, Ch.J.) 5:12-cv-00647; E.D.N.C.

Holding: As drafted by the plaintiff-staffing agency, the covenant not to compete in its contracts with nurses would prohibit them from providing any services, not just nursing services, to plaintiff’s competitors anywhere in the world; consequently, the covenant not to compete is unenforceable.

The court grants defendant’s motion for summary judgment.

The covenant states, “I will not provide service to any Dzeel client or individual who has received services under the direction of Dzeel Clinical for a period of six months from my termination date.”

Although Dzeel (plaintiff’s d/b/a) argues that this court should construe the term “service” to mean nursing service, that is not what the covenant says. Moreover, Dzeel drafted the provision and even if the court believed the word “service” to be ambiguous (which it does not), the court would construe the ambiguity against Dzeel. Furthermore, under N.C. law, the court cannot “blue pencil” the word “service” and add the word “nursing” to the covenant to attempt to make it enforceable.

As written, the covenant not to compete prohibits former Dzeel employees from providing any service of any kind to “any Dzeel client or individual … for a period of six months from [the employee’s] terminate date.” Moreover, the restriction applies not only to those clients or individuals who have interacted with the former Dzeel employee, but also to any Dzeel client anywhere in the world. The covenant is overbroad as to terms and is therefore unenforceable.

Because the non-competition covenant is not valid, Dzeel cannot prove that a valid contract existed between Dzeel and a third person (i.e., Dzeel’s former employees), conferring upon Dzeel some contractual right against the third person (i.e., the right to enforce the non-competition covenant). Furthermore, defendant did not act without justification in recruiting, hiring, and placing former Dzeel employees in the same facilities in which Dzeel had placed them, even though defendant was aware of the non-competition covenants in the former Dzeel employees’ contracts. As a result, Dzeel has not made out a claim of tortious interference with contract.

Plaintiff’s unfair trade practices claim also fails. Defendant correctly opined that the covenants not to compete were unenforceable. Moreover, defendant engaged in justifiable and appropriate competition in recruiting, hiring and placing the former Dzeel employees.

Motion granted.