Gary Forsee was an executive officer with responsibility for the U.S. operations
ID: 447809 • Letter: G
Question
Gary Forsee was an executive officer with responsibility for the U.S. operations of BellSouth Corp., a company providing global telecommunications services. Under a covenant not to compete, Forsee agreed that for a period of eighteen months after termination from employment, he would not “provide services * * * in competition with [BellSouth] * * * to any person or entity which provides products or services identical or similar to products and services provided by [BellSouth] * * * within the territory.” Territory was defined to include the geographic area in which Forsee provided services to BellSouth. The services included “management, strategic planning, business planning, administration, or other participation in or providing advice with respect to the communications services business.” Forsee announced his intent to resign and accept a position as chief executive officer of Sprint Corp., a competitor of BellSouth. BellSouth filed a suit in a Georgia state court against Forsee, claiming in part that his acceptance of employment with Sprint would violate the covenant not to compete. Is the covenant legal? Should it be enforced? Why or why not?
Explanation / Answer
Yes, covenant is legal but it shouldn’t be enforced in this case. Non-compete covenant typically generally protects business interest of employee by preventing employees to work with direct competitors. Non-compete agreement enforced when genuine business interest is at the stake like prevent competition to learning about tread secrete or pouching the customers. But non-compete covenant must not hinder one’s freedom to pursue other employment and our legal system put emphasis on that.
In our case Gary was involved in services like management, strategic planning, business planning, administration, etc. which are generic in nature. And there is no reason to believe that Gary have specific insider knowledge which would adversely affect business interest of BellSouth Corp if he goes working for Sprint Corp.
I hope this would help. Good Luck.
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