CopyCited 10 times | Published | Supreme Court of Georgia | Sep 4, 2024 | 319 Ga. 641
...n
Georgia. The GRCA authorizes the “enforcement of contracts that
restrict competition during the term of a restrictive covenant, so long
as such restrictions are reasonable in time, geographic area, and
scope of prohibited activities.” OCGA §
13-8-53 (a)....
...In this case, we
focus on the requirement of geographic reasonableness. The
petitioner — a Georgia corporation seeking to enforce a restrictive
covenant against two former employees — asks us to review the
conclusion reached by the Court of Appeals that, to be deemed
geographically reasonable under OCGA §
13-8-53 (a), a restrictive
covenant must contain an express geographic term....
...Wimmers argue dooms NASB’s claims. The State-wide Business
Court agreed and granted in part the Wimmers’ motion for judgment
on the pleadings on this basis.
The Court of Appeals affirmed, concluding that, in order to be
deemed reasonable under OCGA §
13-8-53 (a), a restrictive covenant
must include an express geographic term, though one judge
dissented.2 See North American Senior Benefits v....
...at 133 (Markle, J., dissenting).
In reaching this conclusion, the Wimmer majority looked to the
Court of Appeals’ prior decision in CarpetCare Multiservices v. Carle,
347 Ga. App. 497 (819 SE2d 894) (2018),3 which held that a
restrictive covenant must contain an express geographic term in
order to comply with OCGA §
13-8-53 (a)....
...with whom [the independent contractor] had any contact during the
term of his employment.” CarpetCare,
347 Ga. App. at 497-498. The
trial court found that the restrictive covenant was “void and
unenforceable because it did not contain a geographic limitation as
required by OCGA §
13-8-53 (a).” Id....
...CarpetCare panel
majority narrowly focused its analysis on the phrase “geographic
area,” which appears in subsections (a), (b), (c), and (e) of the statute.
Pointing to subsection (b),4 which is applicable only to customer non-
4 OCGA §
13-8-53 (b) states in relevant part:
[A]n employee may agree in writing for the benefit of an
employer to refrain, for a stated period of time following
termination, from soliciting, or attempting to solicit, directly or by...
...Finding that distinction between subsections (a) and (b)
dispositive of the issue on appeal, the CarpetCare majority
concluded that a “non-compete covenant [that] did not contain any
reference to a geographic area limitation . . . failed to comply with
OCGA §
13-8-53 (a), and, thus, ....
...globe — the harm to the employer is the same.” Id. at 134-135
(Markle, J., dissenting) (citation and punctuation omitted). In the
7
dissenting opinion’s view, the GRCA reflects this rationale,
providing in OCGA §
13-8-53 (c) (1) that “[w]henever a description
of ....
...And the
dissenting opinion concluded that the non-recruitment provision
here satisfies that requirement and is enforceable. Id. at 135.
Thereafter, we granted NASB’s petition for a writ of certiorari to
determine whether the Court of Appeals properly construed OCGA
§
13-8-53 (a).
2....
...in which it appears, and read it in its most natural and reasonable
way.” State v. Cook,
317 Ga. 659, 660 (1) (893 SE2d 670) (2023)
8
(citation and punctuation omitted). And though our focus here is on
the meaning of OCGA §
13-8-53 (a), “[w]e do not limit our
consideration to the words of [that subsection] alone.” West v....
...as it is not presumed that the legislature intended that any part
would be without meaning.” McIver v. State,
314 Ga. 109, 120 (2) (b)
(875 SE2d 810) (2022) (citation and punctuation omitted).
This case turns on the meaning of the first sentence of OCGA
§
13-8-53 (a), which provides that “enforcement of contracts that
restrict competition during the term of a restrictive covenant, so long
as such restrictions are reasonable in time, geographic area, and
scope of prohibited activities, shall be...
...th either
subsection (a) or subsection (b), see CarpetCare,
347 Ga. App. at 498, an
assumption the Wimmer majority echoes, see Wimmer,
368 Ga. App. at 127 (2).
Both the Business Court and the Wimmers likewise appear to subscribe to this
view of OCGA §
13-8-53....
...Read as a whole, subsection
(a) establishes a general standard of enforceability for “contracts
that restrict competition during the term of a restrictive covenant”
and specifically requires that “such restrictions” be “reasonable in
time, geographic area, and scope of prohibited activities.” OCGA §
13-8-53 (a)....
...Several contextual considerations underscore this conclusion.
First, other provisions of the GRCA separately address how
restrictions contained in restrictive covenants should be described.
12
Specifically, OCGA §
13-8-53 (c)6 sets forth guidelines for
descriptions contained in restrictive covenants, stating that the
description must provide “fair notice of the maximum reasonable
scope of the restraint,” even if the description “is generalized or
could possibly be stated more narrowly to exclude extraneous
matters.” OCGA §
13-8-53 (c) (1)....
...traint at the time of
termination.
13
or “geographic areas” are “sufficiently described,” providing
exemplar phrasing while also indicating that “similar language”
may be sufficient. See OCGA §
13-8-53 (c) (2)....
...means
that subsection (a) mandates a geographic description in all cases. See
Wimmer,
368 Ga. App. at 128 (2) (“Paragraph (c) (1) must be read to indicate
that a description of geographic areas is required of restrictive covenants
governed by OCGA §
13-8-53 (a).”)....
... conclude that the non-recruitment provision, though stated in
similarly narrow terms as covenants deemed presumptively
reasonable in geographic area under OCGA §
13-8-56, is
categorically unreasonable because it lacks an express geographic
term.
Our reading of OCGA §
13-8-53 (a) likewise comports with the
GRCA’s “more permissive and flexible approach to restrictive
covenants.” Motorsports of Conyers v....
...Alternatively, the absence of any described
geographic boundary could be understood to give the provision
global or universal effect with respect to geographic application.
This sort of distinction is irrelevant because, in any event, the
analysis remains the same under OCGA §
13-8-53 (a)....
...And here, that question boils down
to whether, in light of all the circumstances, it was reasonable to
prohibit the Wimmers from recruiting for employment any NASB
employee regardless of the employee’s location for the term of the
covenant.
In sum, OCGA §
13-8-53 (a) means what it says — to be
enforceable, a restrictive covenant must be “reasonable in time,
geographic area, and scope of prohibited activities.” Whether a given
covenant is reasonable in geographic area under subsection (a) i...
CopyCited 7 times | Published | Supreme Court of Georgia | Sep 6, 2023 | 317 Ga. 206
...The
court then cited the GRCA’s directive that “a court shall not enforce
a restrictive covenant unless it is in compliance with [the Act],”
under which restrictive covenants must be “reasonable in time,
geographic area, and scope of prohibited activities.” Id. at 191 (1)
(quoting OCGA §§
13-8-53 (a),
13-8-54 (b))....
...restrictive covenants in certain kinds of contracts are enforceable.
See generally OCGA §
13-8-50 et seq.3 So, by statute, “[c]ontracts in
3 In particular, see OCGA §§
13-8-52 (a) (listing specific types of
contracts, including employment contracts, to which GRCA applies);
13-8-53
12
general restraint of trade” are against public policy and
unenforceable, while “contracts which restrict certain competitive
activities, as provided in [the GRCA],” are not....
...ode Ann. 1895, § 3668
(same); Code Ann. 1882, § 2750 (same); Irvin’s Code 2d ed. 1873, §
(a) (providing that restrictions that are “reasonable in time, geographic area,
and scope of prohibited activities” “shall be permitted”); and
13-8-53 (c); 13-8-
56; and
13-8-57 (establishing parameters for “reasonableness” of restrictive
covenants).
13
2750 (same); Irvin’s Rev....
...399, 400, § 2 (repealing prior OCGA §
13-8-2 (a) (2) and
reenacting it in its current form). Through the GRCA, the General
Assembly set up a comprehensive scheme for determining whether
restrictive covenants are reasonable and thus enforceable. See
OCGA §§
13-8-53 (a), (c);
13-8-56;
13-8-57 (together, providing that
reasonable restrictive covenants are enforceable and establishing
standards for determining whether a given covenant is reasonable);
13-8-55 (setting pleading and burden of proof requirements)....
...y
modify the restraint provision and grant only the relief reasonably
necessary” to protect the proponent’s legitimate business interests
and to “achieve the original intent of the contracting parties.” OCGA
§
13-8-54 (b). See also OCGA §
13-8-53 (d)....
...hat are unreasonable—
22
i.e., those which do not comply with the GRCA—are against public
policy. Under the GRCA, such restrictive covenants are not only
“unlawful” but “void and unenforceable.” OCGA §
13-8-53 (d)....
...restrictive covenant must first apply the GRCA to determine
24
whether the restrictive covenant complies with it. This includes an
analysis of whether the restrictions at issue are “reasonable in time,
geographic area, and scope.” OCGA §
13-8-53 (a)....
...ovenant and
“grant[ing] only the relief reasonably necessary” to protect
legitimate business interests and achieve the parties’ intent “to the
25
extent possible.” OCGA §
13-8-54 (b); see also OCGA §
13-8-53 (d).6
Our conclusion that Georgia courts may not apply foreign law
to enforce a restrictive covenant that would be deemed unreasonable
under Georgia law largely tracks our courts’ approach before the
GRCA and the corresponding constitutional amendment were in
force....
...approach to
restrictive covenants, but as we have shown above, the legislature
retained the consistent and longstanding view that unreasonable
restrictive covenants are against public policy and may not be
enforced by Georgia courts. See OCGA §§
13-8-53 (a), (d);
13-8-54
(b)....
...it may in the first instance apply the framework set out above. To do
that, the trial court must first apply the GRCA to determine whether
the restrictive covenants in Burbach’s employment agreements
comply with it. If the covenants are reasonable under Georgia law,
see OCGA §
13-8-53, the court must then apply the parties’ chosen
law—Florida law—to determine their ultimate enforceability.7 If the
covenants as written do not comply with the GRCA, then enforcing
them would violate Georgia public policy, and so the court may not
apply foreign law to enforce them....
