Labor & Employment – Breach of Non-Compete Agreement – Wrongful Interference with Contract

The non-compete provision is facially overbroad and does not reasonably put Defendant on notice of what services he is prohibited from providing.

The Court granted in part and denied in part Defendant’s motion.

This action arose out of Plaintiff’s contention that Robert Yoder, a former employee, left to work for a competitor, Defendant Relentless Solutions, Inc., taking with him Plaintiff’s trade secrets and confidential information in violation of restrictive covenants found within his subcontractor agreement with Plaintiff. Plaintiff also contended that Yoder has wrongfully interfered with its service contracts with its customers by inducing them to terminate those service contracts to work with Relentless instead.

Yoder sought judgment on the pleadings as to each of the following claims asserted against him by Plaintiff: (1) breach of restrictive covenants related to the Non-Compete Agreement (Count Two); (2) wrongful interference with contract (Count Four); (3) unfair and deceptive trade practices pursuant to N.C.G.S. § 75-1.1, et seq. (Count Five); (4) unjust enrichment (Count Six); and (5) permanent injunction (Count Seven).

Among other things, Plaintiff asserted Count Two against Yoder for breach of the Non-Compete Agreement, alleging that the Non-Compete Agreement is a “valid and enforceable contract” and that Yoder breached both the non-compete and confidentiality provisions contained therein. Specifically, Plaintiff alleged Yoder breached the Non-Compete Agreement by “working for Relentless, [Plaintiff’s] competitor, in a nearly identical position, immediately after he stopped working for [Plaintiff][,]” and by “disclosing [Plaintiff’s] confidential information to Relentless.”

Yoder argued the non-compete provision is facially overbroad in that it purports to bar Yoder from directly or indirectly providing services “to any of the Company’s customers, clients or accounts that might be considered competitive in nature” for two years, “regardless of whether Yoder worked with that specific customer while employed with [Plaintiff].” Additionally, Yoder argued that the non-competition provision is overbroad as to territory as it contains no limitation on geographic scope and thus is, in essence, a worldwide restriction. The Court held that the provision is unreasonably overbroad. As an initial matter, the provision purports to prohibit Yoder from indirectly competing with Plaintiff. The provision also prohibits Yoder from providing services to Plaintiff’s customers, clients, or accounts “that might be considered competitive in nature.” While Plaintiff contends the term “services” in this context means only those same services Yoder provided while employed by Plaintiff, the Court notes that the Non-Compete Agreement does not expressly define the term “services,” nor does it identify which individual or entity is to determine what services “might be considered competitive in nature.” This language, coupled with the use of the phrase “directly or indirectly,” is overbroad and does not reasonably put Yoder on notice of what services he is prohibited from providing.

Additionally, the language of the non-competition provision is unclear as to the temporality of the phrase “any of the Company’s customers, clients or accounts[.]” In other words, it is unclear whether Yoder is prohibited from providing competitive services to any customer or client who has ever worked with Plaintiff, including those who have since ceased working with Plaintiff or who became a customer or client after Yoder’s employment with Plaintiff ended, or whether the prohibition is limited to those customers, clients, and accounts who were serviced by Plaintiff specifically during the period of Yoder’s employment. The Court granted in part the Motion as to Count Two and dismissed that claim to the extent it is based on a breach of the non-competition restrictive covenant contained in the Non-Compete Agreement.

Granted in part, denied in part.

Accelerando Inc. v. Relentless Solutions Inc. (Lawyers’ Weekly No. 020-029-25, 22 pp.) (Michael L. Robinson, J.) 2025 NCBC 29. Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P. by Jennifer K. Van Zant and Amanda S. Hawkins, for Plaintiff Accelerando, Inc. Randolph M. James, P.C. by Randolph M. James, for Defendant Robert Yoder. North Carolina Business Court