United Rentals, Inc. v. Frey, 2011 U.S. Dist. LEXIS 16375

United Rentals, Inc. was a Delaware corporation headquartered in Connecticut that rented and sold merchandise to the commercial and general public throughout the country.  United employed Mr. Evan Frey at its Indianapolis office as an Outside Sales Representative from December 2007 to October 6, 2010.  As part of his employment contract signed October 4, 2007, Mr. Frey agreed to a non-compete covenant that would be in effect twelve months from the last day of employment with United and would extend to a 50-mile radius from any and all locations that Frey performed services for the company in the previous two years.

Mr. Frey received all his training and sales from United and the company entrusted him with all of the Indianapolis office’s client relationships because he was the sole Outside Sales Representative at that location.  Mr. Frey accepted a position with MacAllister Machinery Company, Inc., a direct competitor, upon his resignation from United on October 6, 2010 and began contacting United’s customers and submitting bids on behalf of his new employer.

United Rentals sued for injunctive relief for Mr. Frey’s breach of the non-compete covenant, improper competition with United, and the improper disclosure of trade secrets/confidential information.  Mr. Frey challenged the validity and enforceability of the covenant based on a claim of containing unreasonable provisions.

The Court’s Findings

The court found in favor of United Rentals and granted their request for an injunction that would be in effect for one year from the date of the ruling.  The injunction barred Mr. Frey’s further employment with MacAllister Machinery Company, Inc. or other competitors in accordance with the non-compete covenant.  The court rejected Mr. Frey’s argument that the provisions of the non-compete agreement were overly broad and unenforceable.  When a defendant makes this claim, he or she bears the burden of proving that the non-compete is in fact unenforceable.

Mr. Frey failed to meet the burden according to the court and it held that the time and geographical limitations were both reasonable.  It cited a plethora of previous cases to legitimate the one-year time limitation.  Additionally, the geographical limitations were appropriate and reasonable given the company’s location(s), the performance of services for its clients, and any management responsibilities previously belonging to Mr. Frey.

If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.