Ohio Court Grants Injunction But Reduces Term of Agreement

Posted: Monday, October 20, 2008

By: David M. Kight

Topic: Non-Compete Cases

The Ohio Court of Appeals reversed a trial court decision against an employer seeking to have its non-compete agreement enforced, but reduced the term of the restriction from two (2) years to one (1).  Murray v. Accounting Center & Tax Services, Inc., 2008 WL 4531941 (Ohio App. 2008). 

In this case, a tax preparation company, Accounting Center & Tax Services, Inc., had a non-compete with a tax preparer that provided that she could not service any customer or client of the company for two years following the termination of her employment.  The tax preparer was fired by the employer when the two parties could not come to terms on a new employment agreement.  The tax preparer received a reminder letter from the employer.  The tax preparer then filed a declaratory judgment action against the employer seeking to void the non-compete agreement.  The trial court granted summary judgment for the employee holding that the agreement was unenforceable and the employer appealed.

On appeal, the Ohio Court of Appeals reversed the trial court and found that the employer had a legitimate commercial interest to protect.  However, the Court ruled that the restriction of two years was too long. The opinion appears to rest on the conclusion that because the employee's sole measure of support was tax preparation, she shouldn't be enjoined for two years.  It is key to note that the non-compete prevented her from serving all customers of the employer not just those for whom she was familiar.  

Note: Ohio employers who have non-competes should consider covenants which restrict competition to those clients for whom the former employee had specific knowledge rather than all customers of the client.