On appeal, the parties contest whether such a provision is necessary to protect a legitimate business interest. Instead, the judge issued injunctive relief extending the length of the restrictive covenant for one additional year beyond the end date provided for in the contract. The judge declined to enjoin the three employees McGovern had hired from continuing to work for him. Further, the judge found that McGovern had misrepresented the nature of a transaction to the court in order to obfuscate his violation of the restrictive covenant. The judge further concluded that McGovern had committed a breach of the covenant by hiring at least three employees from his former company. He determined that, in the case at bar, the anti-raiding purpose of the provision constituted a legitimate business interest. This suit quickly followed.Ī judge in the Superior Court concluded that the restrictive covenant at issue was enforceable. In spite of this provision, McGovern went on to hire numerous employees from his former company in breach of the restrictive covenant. The restriction was designed to prevent McGovern from "raiding" the company by targeting and soliciting key employees to work for him. The provision at issue prohibited defendant Matthew McGovern from soliciting or hiring employees from his former company for a defined period of time. At issue in the instant case is an "anti-raiding" restrictive covenant entered into between an automotive dealership group and a former executive and minority owner. The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.īenjamin M.
ĬIVIL ACTION commenced in the Superior Court Department on November 21, 2017.
AUTOMILE MOTORS LLC TRIAL
In the context of a civil action involving a provision in an agreement entered into by an automotive dealership group (dealership group) and the defendant, who was a former executive and minority owner of the dealership group, prohibiting the defendant for a specified period of time from hiring or soliciting for hire the dealership group's employees or encouraging such employees to leave the dealership group, this court concluded that the provision arose in a context more akin to the sale of a business than to an employment relationship, and that the provision was an enforceable restrictive covenant necessary to protect a legitimate business interest, in that, given the defendant's prior position within the dealership group, his present position as a competitor well poised to steal employees from the dealership group, and the additional consideration that he received for agreeing to the provision, the dealership group had a legitimate "anti-raiding" business interest however, this court further concluded that the trial judge abused his discretion by extending the provision in the agreement for an additional year without first finding that monetary damages could not compensate the dealership group adequately for its lost employees or that the defendant's finances were so precarious that equitable relief should be accelerated. Contract, Agreement not to compete, Performance and breach.
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