Readers of this blog know that reasonableness of non-competes in Minnesota is measured in terms of geographic scope (miles) and temporal scope (months/years). To be enforceable, both must be necessary to protect an employer’s legitimate business interest. Measuring time is a pretty straightforward affair. Not necessarily so with distances. When a non-compete prohibits competition “within a 10-mile distance of” former of an employer’s place of business, is this distance measured with a ruler or compass on a map, irrespective of roads or geographical barriers, or by clicking on Mapquest, Google Maps or some other computer program or smart phone application that calculates distances using public thoroughfares? The way most people get from point A to point B in an urban or suburban setting, whether by car, bicycle, bus or even walking.
One Minnesota court took the latter approach, choosing driving distance over straight-line distance or, in the vernacular, “as the crow flies”. The case in question, Tom Schmidt & Associates, Inc. v. Autumn Williams and The Refinery, inc., CX-00-1547, Minn. Ct. App. (Feb. 20, 2001) (unpublished), involved an employee of a hair and body salon subject to a one-year non-compete with a 5-mile zone of prohibition who quit and opened a competing salon only days later. The distance between the salons by one of two possible driving routes was over 5 miles, but within 5 miles as measured using the straight-line method. (In a footnote, the court noted that longer of the two driving distances was from the new salon to the old one, owing to one-way streets.) In its suit, the plaintiff/former employer brought a motion to enjoin, meaning legally prohibit, the former employee from continuing to engage in competitive activities. If granted, this would have effectively shut down Ms. Williams’ business and means of livelihood. One issue for consideration in the case was how to measure the five mile distance. After hearing the parties’ competing arguments, the district court denied the employer’s motion for an injunction, a decision subsequently upheld by the Minnesota Court of Appeals. Addressing the merits, the Court began from the premise that post-employment restrictive covenants are disfavored under the law, and are enforceable only to the extent they are reasonably necessary to protect a company’s legitimate business interests. It went on to explain, “the ease with which one can travel that distance [five miles in an urban setting] must also be considered.” Accordingly, in lieu of non-compete language specifying the method of calculating the prohibited zone, the method most favorable to the employee will win. The takeaway for employers is when drafting a non-compete, say what you mean to say as clearly as possible, defining any term that can be interpreted more than one way.