non-compete article

274 / Journal of the MISSOURI BAR
Is It Time to Reconside
Geographic Restriction
BY JASON M. RUGO
& CONN Q. DAVIS1
Jason M. Rugo
Jenkins & Kling, PC
Considering the potentially
harmful nature of broad non-
compete geographic restrictions,
it is surprising that geographic
restrictions have not received
the same level of analysis as less
harmful non-solicitation/service
restrictions. This article examines
the recent important case of
Whelan Security v. Kennebrew
and asks whether the time has
come to re-consider when
broad geographic restrictions
are appropriate in non-compete
agreements.
Introduction
Forty years ago, few non-compete
agreements existed.2
In today’s vastly
more competitive economic world,
employers are increasingly interested
in protecting themselves from unfair
competition by former employees,
and non-compete agreements
have become commonplace. Non-
compete agreements3
are now
found throughout the commercial
world, all the way from the highest
level key officer down to the lowest
level of manual labor. This article
will provide a brief overview of the
policies and principles underlying
the law respecting covenants against
competition by ex-employees
contained in non-competition
agreements. Special emphasis will then
be placed on a close examination of
the recent important Supreme Court
of Missouri case of Whelan Security
Co. v. Kennebrew4
and how it fits into
a cohesive body of developing law.
Through Kennebrew, examination
will also be placed on the one area of
non-competition law which appears to
require more analysis and clarification:
geographic restrictions on an ex-
employee’s ability to compete with his
former employer and, in some cases,
to practice his craft or trade at all.5
Policy
Certain areas of policy are very
well established with respect to non-
compete agreements. Missouri law is
clear that, in general, the “restraint of
trade or commerce … is unlawful.”6
This rule is subject to certain well-
Conn Q. Davis
Jenkins & Kling, PC

September-October 2013 / 275
er Non-Compete
ns?
delineated exceptions based upon the
policy that an employer can protect
itself against “unfair” competition by
an ex-employee.7
These exceptions
include the protection of an
employer’s trade secrets, its customer
base or stock of regular and repeat
customers,8
and (since 2001) its
employees from being hired away by
ex-employees.9
When a non-compete
agreement is properly based on at
least one of these exceptions to the
general rule against restraint of trade,
the non-compete agreement can be
enforced by the employer against its
ex-employee and becomes a significant
weapon for the employer to limit
competition with its business.10
Trade Secrets and Confidential
Information
The protection of an employer’s
trade secrets or confidential
information forms one of the three
grounds for the enforcement of a
non-compete agreement against an
employee. A non-compete agreement
typically contains separate recitals
and protections for (1) the employer’s
trade secrets and (2) the employer’s
confidential information that might
not rise to the level of a trade secret.
“The Missouri Uniform Trade
Secrets Act” separately protects the
misappropriation of trade secrets.11
Employers frequently insert trade
secret protection into non-compete
agreements, however, to provide
additional protections and remedies
not available under the act against
an ex-employee. The act protects
both technical and non-technical
information, so customer data,
pricing, customer lists, and other
commercial data are protectable if the
definition in the act is met.12
Significantly, the act states
that its injunction and damages
remedies do not affect “[c]ontractual
remedies, whether or not based
upon misappropriation of …
trade secret[s].”13
This means that
an employer is free to draft non-
compete agreements based on trade
secret protection that provides
for additional remedies, such as a
limitation on post-employment
competition, the recovery of attorneys’
fees if the employer must file suit for
enforcement, or the use of arbitration
for litigating trade secrets to keep
them out of the public eye.
Customer lists and contacts need
not rise to the level of a trade secret
to constitute a protectable interest,
as they can be protected as the
employer’s confidential information.14
Stock of Customers and Customer
Goodwill
An employer’s desire to protect
its stock of customers and customer
goodwill from unfair competition
by an ex-employee, which have been
considered protectable interests
since the earliest days of this area
of law, goes to the very heart of a
non-compete agreement.15
Unlike
trade secrets, no statute protects an
employer’s stock of customers from
the actions of an ex-employee; a non-
compete agreement is the only way for
an employer to protect this asset.16
Missouri courts define a customer
as “one who repeatedly has business
dealings with a particular [person] or
business.”17
An employer’s customer
relationships are protectable because
the goodwill of a customer often
attaches to the employer’s personal
service, sales or management
employee, which, in turn, leads the
customer to associate the employer’s
product with that employee.18
As

a consequence, the employee may
exert a special influence over the
customer and be in a position to
entice the customer’s business away
from the employer. It is contact by
the employee with the customer
that makes protection possible for
the employer.19
Conversely, if the
employee has little, if any, ability to
influence customers due to a lack of
contact or by the very nature of his
job, courts are reluctant to impose
restrictions.20
The employer can protect its
customers even if the employee had
dealings with the same customers
prior to employment or the customers
were brought to the employer by the
employee.21
Moreover, the employer
does not need to show it has a secret
customer list, or even a list capable
of protection as a trade secret, to be
entitled to protection of its stock of
customers and their goodwill toward
the employer under a non-compete
agreement.22
Workforce Stability
A third protectable interest
appeared in 2001 with the enactment
of § 431.202, designed to overrule the
holding in Schmersahl, Treloar & Co.
v. McHugh.23
Section 431.202 allows
an employer to protect its workforce
stability and skills by restricting the
hiring or solicitation of its employees
by ex-employees.24
This protection also
permits an employer to protect against
what the Court confronted and
struggled with in Healthcare Services
of the Ozarks Inc. v. Copeland:25
ex-management employees with
few direct customer contacts who
were able to divert employees with
significant customer contacts to their
competing business.26
Section 431.202 has no self-
executing enforcement provision,
and its restrictions must be written
into an enforceable non-compete
agreement to be of aid to the
employer in protecting the stability of
its workforce.27
Enforcement Principles and Impact
of Kennebrew
Non-compete agreements are
usually enforced in equity with
injunctive relief.28
Prompt action is
necessary to restrain the ex-employee
from the diversion of customers, lest
the customers be lost forever. The
employer can obtain injunctive relief
even if it has suffered no damages, and
it need not wait for significant harm
to its customer base before seeking
such relief.29
Non-compete agreement protection
usually takes two basic forms: (1)
protection from the solicitation of,
contact with or service of customers
of the employer with whom the
ex-employee had sufficient contact,
directly, or through subordinate
employees; or (2) an outright
prohibition against competing with
the employer within an entire defined
geographic area (the latter being
referred to as “geographic restrictions”
in this article), all for a defined period
of time.30
Often, these two forms of
protection are combined in a non-
compete agreement. The reported
opinions have devoted a large amount
of time and focus to analyzing
restrictions on the solicitation of
customers of the employer, but have
given less detailed analysis of the
positives and negatives of geographic
restrictions.
The stated goal of the courts is
to balance the employer’s legitimate
protectable interests and the
employee’s interest in freedom in
order to craft relief that ensures there
is no outright restriction on legitimate
competition.31
Customer-based
restrictions are, necessarily, more
limited in their scope, as they only
prevent an employee from contacting
or servicing a specifically defined
set of customers, while geographic
restrictions usually prevent an
employee from practicing his trade
or career at all within the defined
geographic boundary.
The cases are fact-intensive as the
courts struggle to maintain the proper
balance. There is another important
consideration that gives geographic
restrictions more strength in
enforcement than might otherwise be
justified by policy concerns: the right
of parties to enter into contracts and
to have the contract terms enforced as
written.32
This last point may be the
greatest reason for the lack of deep
analysis of the relative pros and cons
of outright geographic restrictions.
The Court’s August 2012
decision in Kennebrew offers a host
of clarifications and raises further
questions on several of the “hot”
enforcement issues litigated in non-
compete cases.
In Kennebrew, the non-compete
agreement at issue provided that
Kennebrew, who was the director
of quality assurance for the Dallas
office of Whelan Security (a private
security company), could not solicit,
for two years after his employment
ended, any customers or prospective
customers of Whelan Security whose
business was sought by Whelan
Security within the last 12 months
of employment.33
The agreement
also provided that Kennebrew could
not solicit any of Whelan Security’s
employees or agents, work for a
customer or prospective customer
of Whelan Security if security
"Judicial discretion is perhaps
the greatest strength of
Missouri law in this area,
and the greatest protection
against purely
anti-competitive covenants."

services were provided, or work for a
competing business within 50 miles
of any location where Kennebrew
had provided or arranged to provide
security services for Whelan Security.34
Thus, all three of the enforcement
mechanisms available to employers
were at issue in Kennebrew: non-
solicitation of customers, non-hire
of the employer’s employees, and a
broad geographic restriction against
competing in the security business
in a defined area. It is, therefore, an
excellent case for the examination of
the relative impact of the available
enforcement mechanisms.
After his resignation, Kennebrew
set up a business in competition
with Whelan Security in Dallas.
Kennebrew then solicited the
business of one of Whelan Security’s
condominium customers. Another
Whelan Security employee, Morgan,
joined Kennebrew soon after
Kennebrew began his competing
business. After soliciting the Whelan
Security condominium customer,
Morgan gave the Whelan Security
employees working at the customer
site forms for employment with the
new Kennebrew competing entity.
The condominium terminated
Whelan Security’s services, and several
Whelan Security employees working
at the customer chose to work for
Kennebrew’s competing business.35
Whelan Security was denied a
preliminary injunction by the trial
court, and the parties filed cross-
motions from summary judgment
in which Whelan Security sought
to equitably modify the terms of
the non-compete agreement. The
trial court denied Whelan Security’s
request and found that the non-
compete agreement as written was
“overbroad, not reasonable as to time
and space and therefore not valid.”36
Appeal followed, and the case reached
the Supreme Court of Missouri.
As a summary judgment case, the
review was de novo, giving the Court
the perfect opportunity to opine on
several contested issues.
Nonsolicit, Service or Contact
Covenants
Customer non-solicitation
restrictions are potentially far more
reasonable to the employee and more
effective for the employer. Customer-
specific restrictions, while they must
be limited in time, need not be
restricted by geography if they apply
only to those customers with whom
the employee had contact. Thus, an
employee who has substantial contact
with 100 customers in Kansas City
and in St. Louis could be prevented
from soliciting or servicing any of
the customers, wherever located, but
could still theoretically continue to
practice his trade or craft in both
cities.37
Another key advantage of
customer non-solicitation restrictions
is developing due to today’s
increasingly electronic world, where
commerce over the Internet and other
electronic media is becoming more
commonplace. Geographic restrictions
can sometimes be overcome by an
employee traveling just outside of
the restricted geographic area and
contacting customers from there. This
strategy by an ex-employee may be an
effective circumvention of geographic
restrictions against working for
a competitor in an area, and
enforcement of a restriction would
depend upon its precise language.
Customer-specific restrictions,
on the other hand, eliminate the
circumvention of geographic
restrictions through the telephone or
digital media when the ex-employee
places himself just outside of the
restricted geography, because the
customers themselves are protected.
In Kennebrew, the Court examined
the provision in the non-compete
agreement seeking to prohibit
the solicitation of customers and
prospective customers, and found
several faults with this provision.
Customer contacts, the Court said,
are “the influence [that] an employee
acquires over … customers through
personal contact” and through
repeated “business dealings with a …
tradesman or business.”38
Reaffirming
the principles clearly stated in
Copeland, the Court said that the
question of customer restrictions
on an ex-employee “depends on the
‘quality, frequency and duration
of [the] employee’s exposure to
[the] customers,’” the location of
the customers and the position the
employee held with the employer.39
The Court observed that non-solicit
covenants have been and can be
enforced without geographic limits
so long as other limiting factors are
present (covenant not to solicit all
customers with whom the employee
had direct and repeated contact, for
example), or “if the employee had
significant contact with a substantial
number of … customers” because of
his duties.40
The Kennebrew agreement,
however, contained no geographic
restrictions in the customer non-
solicitation provisions and no other
limitations such as those based on
Kennebrew’s own personal contact
with customers. It made no difference
under the agreement, the Court
said, if Kennebrew dealt with the
customers or even knew that they
were customers.41
Whelan Security
is a national security company with
many branches and there was simply
no showing that Kennebrew had
contact with customers throughout
the nation to warrant such a broad
non-solicitation clause, which was, in
essence, a national restriction against
solicitation of all Whelan Security
customers.42
The clause was overbroad
in the absence of any limiting
language.

In addition, the Court felt that the
“prospective customer” restriction
presented another problem. The Court
in Copeland previously questioned the
protection of prospective customers
as perhaps going too far toward
protecting the employer and reaching
the boundaries of being “overly
restrictive.”43
It noted, however, that
“it may be difficult [at times] to
distinguish between competition for
new or [prospective customers versus]
existing customers” and did no more
with the issue.44
This time, the Kennebrew Court
stated that while Copeland was
correct in that it may be difficult to
distinguish among new, prospective,
and existing customers, an employer
must be prepared to deal with
competition from ex-employees,
and the purpose of non-compete
law is only to “protect the employer
from unfair competition, not from
all competition.”45
In considering
all of the language of the non-
solicit provisions of the Kennebrew
agreement, the Court found that it
forbade solicitation of anyone whom
“Whelan sought as a customer in any
of its 38 branches” across the country
during the final year of Kennebrew’s
employment. The Court found that
this did not merely protect Whelan
Security from an employee’s influence
over customers, but would prevent
competition, period.46
The Court concluded that the
Kennebrew non-solicitation restriction
was too broad to be enforced as
written. However, the Court noted,
Missouri does not necessarily apply all
normal rules of contract interpretation
to non-compete agreements. Since the
goal is balancing competing interests
and fairness, Missouri courts have
long been granted the power to refuse
to enforce unreasonable parts of a
non-compete agreement or to modify
the terms to make them reasonable.47
The Court, therefore, modified the
terms of the non-solicit provisions of
Kennebrew’s agreement to limit its
effects to those customers with whom
Kennebrew had substantial contact,
and entirely removed the provision
pertaining to prospective customers.48
While no bright line rule was laid
down with respect to prospective
customers, the Court made it clear by
the discussion and holding that this
issue should receive strong scrutiny
in the future, implying that it must
either be tied to trade secrets or
confidential information used in an
ongoing solicitation of a prospective
customer. For now, practitioners
are on notice that the protection of
prospective customers is in peril, and
rightly so considering the policies
underlying the enforcement of non-
compete agreements.
Geographic Restrictions
The case law regarding geographic
restrictions has needed further
developmentforsometime.Geographic
restrictions severely limit the
freedom of the employee, and the
enforcement of such restrictions must
be carefully scrutinized to ensure that
they are designed to protect one of
the employer’s protectable interests
and not designed to be purely anti-
competitive. Geographic restrictions
can also lead to inconsistent results.
A customer-specific restriction limits
the ex-employee’s ability to solicit or
service identified customers, but does
not extend to non-customers and
prospective customers. In a geographic
restriction, non-customers and
prospective customers are restricted
from competition by the ex-employee
within the geographic area. This is
an inconsistency that the cases have
never fully addressed. The potential
harshness of geographic restrictions is
implicitly recognized by the equitable
rule that allows courts to throw
out geographic restrictions where
an employee has been terminated
without cause, while still protecting
the ex-employer’s customers with a
non-solicitation injunction.49
The scope of a geographic
restriction is also an important
consideration. Generally, the smaller
the restricted area, the more likely the
agreement will be enforced as written.
The geographic area must bear a direct
relationship to (a) where the employer
does business, (b) where the employee
did business for the employer, and (c)
the location of the customers that the
employee has the ability to influence
and divert.50
A nationwide restriction
for an employee who worked only
in Missouri and had no contact with
nationwide customers would be
unenforceable, although – following
Kennebrew – courts are encouraged
to alter the dimensions of protection
to give effect to the true intent of the
parties and to provide reasonable relief
for the employer.51
In the earlier cases of Osage Glass,
Inc. v. Donovan52
and Copeland, the
Supreme Court was confronted with
a situation where the geographic
restrictions in the non-compete
agreements were not directly at issue.
Thus, Kennebrew was the first case
where the Court squarely examined
this issue. As might be expected,
the Court’s discussion of geographic
restrictions leaves questions open
for future cases; additionally, the
cases cited in support of upholding
the restriction in Kennebrew leave
something to be desired.
Geographic Restrictions in
Kennebrew
With respect to the geographic
restrictions, the Court’s discussion
seemed rather peremptory in
Kennebrew. Since the clause at issue
was for 50 miles from any location
where service had been rendered by
Kennebrew and for a two-year period,
the Court merely cited to cases that
accepted restrictions of this nature
and remanded to the trial court to

resolve a factual dispute on whether
Kennebrew had rendered services
in both Houston and Dallas.53
Four
cases were cited as providing ample
authority supporting such restrictions:
Osage Glass, Alltype Fire Protection
Co. v. Mayfield,54
Mid-States Paint &
Chemical Co. v. Herr,55
and Orchard
Container Corp. v. Orchard.56
The citation to Osage Glass is
particularly surprising, as in that
case an auto glass installer managing
the employer’s Kansas City office
was restricted throughout the
state of Missouri. The Osage Glass
Court made it clear that the extent
of the geographic restriction was
not before it and, therefore, not
addressed.57
However, in Copeland,
the Court suggested that such a
statewide restriction might not pass
muster today.58
Therefore, citation to
Osage Glass for blanket geographic
restriction authority would seem to be
misplaced.
In Orchard Container, the court
found the employer had the bulk of its
customers within 50 miles of St Louis,
a few important customers within
125 miles, and a few 400 miles away
in Oklahoma.59
The appellate court
thus reduced the trial court’s 200-mile
restriction (provided for in the non-
compete agreement) to 125 miles,
as more reasonable.60
In Mid-States,
the trial court adjusted a 350-mile
restriction to a 125-mile radius, as
that was where most of the employer’s
customers were located.61
Even though
the clause at issue prohibited the
employee from contacting existing
or potential clients, the court noted
that this was supported by the fact
that there was extensive confidential
information involved in the business.62
Since the court could not say that 350
miles was unreasonable for a company
having national customers, it held that
the trial court’s reduction to 125 miles
was certainly reasonable.63
In Alltype,
the court was confronted only with a
challenge to the trial court’s reduction
of two years to one year for a 100-
mile restriction. Citing Osage Glass
as allowing three years and finding
no case where a court reduced a two-
year restriction, the Alltype court held
that once a “protectable interest”
was found, it would be arbitrary and
unreasonable to reduce the time from
two years to one year.64
This is all Kennebrew said about
geographic restrictions, after giving
significant analysis to customer
solicitation. One can easily see
the conflict between these and
the customer solicitation/service
restrictions. It is difficult to imagine
that Whelan Security’s penetration
of the Dallas market was such that
literally all persons needing security
were Whelan Security customers.
Since Dallas is a large metropolitan
area, it is easy to imagine that there
are a host of potential customers
around which Kennebrew could build
a new business without depriving
Whelan Security of a single customer.
Significantly, there was no discussion
of trade secret protection as justifying
the geographic restriction, although
the Court noted in the introductory
paragraphs of the case that Kennebrew
had access through his position with
Whelan Security to employee and
customer information.65
It is notable that, after throwing
out the solicitation of prospective
customers, the Kennebrew Court
then enforced a 50-mile geographic
restriction around Dallas (and, on
remand, perhaps Houston, too),
which prevented the very same
thing: the solicitation of prospective
customers. It is hard to reconcile these
conflicting holdings. In particular,
it is difficult to reconcile the policies
underlying non-compete restrictions,
as set forth in Kennebrew, and the
resultant questioning in Kennebrew
(and previously in Copeland) as
to whether prospective customers
deserved any protection, with the
enforcement of geographic restrictions
that prevent a former employee from
practicing his trade with prospective
customers. The result seems highly
anti-competitive and overly protective
of Whelan Security.
Although not discussed by the
Court in Kennebrew, there are other
Missouri cases analyzing geographic
restrictions worth noting. In Copeland,
the Court observed that several cases
appear to go beyond the protection
of trade secrets and customer contacts
to impose greater geographic and
temporal restrictions, citing Osage
Glass and others. The Copeland
Court stated that prohibiting ex-
employees “from seeking new
customers [(potential customers to the
employer)] in competition with” the
employer “may be overly restrictive.”66
The Copeland Court stated, however,
that the issue was not presented in the
case, and the defendant in Copeland

clearly sought the existing customers
of the former employer.67
Although
the ex-employees in Copeland went
directly after the customers of their ex-
employer, was a 125-mile restriction
really the best way to protect the
employer’s customer base without
restraining all competition? The
analysis of this issue would have been
difficult in Copeland given the brazen
and aggressive raiding of customers
and employees by the defendants. In
equity, the parties’ conduct matters
in a multitude of ways and perhaps
impacted the holding in Copeland.
Additionally, in Superior Gearbox
Co. v. Edwards, a five-year restriction
(modified from 10 years by the
trial court) across the entire nation
was endorsed by the court against
the sales manager and operations
manager of a gearbox company on
the basis that he was like a partner,
had extensive knowledge of the entire
business and day-to-day operations,
and embodied the employer in the
eyes of customers.68
While the court
examined the 5-10 year restriction
in great detail, it did not analyze the
propriety of the nationwide restriction
with respect to the issue of customers.
Superior Gearbox stands as an example
of how real trade secrets (more
substantial than an employer’s basic
customer information) coupled with
a senior management position can
justify broad geographic restrictions.
In the absence of such trade secrets
or a senior management level ex-
employee, geographic restrictions can
and often are overly restrictive where
customer protection is the primary
issue.
An arguably over-restrictive
geographic restriction was at issue
in Silvers, Asher, where the court
enforced a 75-mile radius restriction
against a neurologist from practicing
neurology and a restriction providing
that he could not service any patients
of the former practice.69
The court
said the practice drew customers/
patients from five states and the field
was highly technical, so a 75-mile
radius was acceptable.70
However, this
explanation is less than satisfactory
when analyzing the protectable
interests of the employer. The effect
of the radius geographic restriction
was not to protect the existing
customer base of the practice; that
was adequately protected by the
non-solicit/service restriction on
existing patients. The effect of the
radius restriction was that a physician
could not practice neurology within
75 miles of his former office, even if
none of his patients were or ever had
been patients of the former practice.
The net effect was to prevent him
from practicing with a patient base
made up exclusively of prospective
patients of the former practice, which
would seem purely anti-competitive
– and now subject to question given
Kennebrew’s holding regarding
prospective customers.71
There are certainly circumstances
where broad geographic restrictions
may be necessary, such as in Sigma
Chemical Co. v. Harris, where trade
secrets justified a worldwide restriction
as the company and its competitors
operated worldwide.72
With respect
to customer protection, however,
courts should determine that broad
geographic restrictions are truly
necessary to protect the employer’s
protectable interest before imposing
such harsh restrictions unfettered.
Restrictions on Employee Hiring
Kennebrew provided the first
opportunity for the Court to
weigh in on the interpretation
of § 431.202 restricting the
solicitation of employees, and the
Court took advantage of it to offer
clarification of the statute. With
respect to agreements between
the company and its employees,
anti-hire restrictions are valid in a
non-compete agreement if they are
intended to protect confidential
or trade secret information of the
employer or the employer’s customer
or supplier goodwill, loyalty and/or
relationships.73
The statute provides
that, even in the absence of one of
these protectable interests, a covenant
not exceeding one year forbidding an
ex-employee from hiring the former
employer’s employees is enforceable
so long as the ex-employee is not
secretarial or clerical.74
The statute provides that a one-year
restriction is “conclusively presumed
to be reasonable.”75
The statute leaves
open to what extent an extended
period of time may be fairly obtained
by the employer based upon the facts
and circumstances, and instead only
states that the time period must be
reasonable.
Looking to the express language of
the statute, the Court found that an
employee’s one-year restriction was
deemed presumptively reasonable
by the statute. The restriction
on Kennebrew, however, was for
two years; it was not, therefore,
presumptively reasonable under the
statute but could still be enforced
depending upon the intent of the
parties.76
In the trial court, Whelan Security
alternatively explained that the basis
for the restriction was “to protect …
its customer contacts” and employees
from interference and its “Secret
and Confidential Information.”77
At deposition, a Whelan Security
manager stated that the restriction was
to protect the company’s relationship
with Kennebrew’s management team
and his confidential information.
Given these conflicting rationales, the
Court held that summary judgment
invalidating the restriction was
improper and remand was necessary
to determine the reason for the two-
year restriction and if it fit within the

statute’s definitions. The clauses may
be enforceable, the Court stressed,
but since facts were lacking as to the
motivating purpose for the restriction,
additional findings were required.78
The Court did not opine on
whether the almost unlimited
discretion of a trial court to
fashion reasonable remedies from
an overbroad agreement included
the power to reduce a two-year
restriction under the statute to less
than two years, although it noted
§ 431.202.2 expressly states that a
covenant that restricts in excess of
one year, but is not supported by the
listed protectable interests, can still
be enforceable depending upon the
facts and circumstances of the case.79
Practitioners will want to note this
part of the decision and carefully
craft employee anti-hire restrictions
by stating the purposes for the
restrictions and ensuring that these
purposes are endorsed by the statute.
Practitioners will also want to closely
track the statutory language, since an
outright “you cannot hire” restriction
is stronger and less prone to employee
attempts to circumvent compared
to anti-solicitation, inducing or
encouraging language which can be
difficult to prove and not all that hard
for a motivated employee-raider to
circumvent.
The Impact of the Digital Age on
Employer Customer Protection
Practitioners also need to be
mindful of the new digital world
in how they draft geographic
restrictions. A geographic restriction
that prohibits an ex-employee from
“working” within the area, or taking
employment with a competitor, for
example, may not provide any real
protection at all for customers. People
now have the ability to move to just
outside the restricted area and use
the Internet, video conferencing and
social media to contact and continue
to do business with customers, or at
least to maintain strong customer
contacts. Taking employment with a
competitor, or forming a competitive
company just outside the geographic
area, could still allow an ex-employee
to seek customers at will within the
geographic area, and the Internet
makes it possible to do this without
setting foot in the geographic area.
In a world of increasing lack of
personal contact, replaced with a
plethora of digital communication
techniques, geographic restrictions
could have little protective effect
for an employer’s customer base. A
restriction on soliciting, servicing or
contacting designated customers, on
the other hand, cannot be overcome
with digital communications, cannot
be subverted by locating just outside
the geographic area, and is therefore
potentially much more effective and is
completely unambiguous.
Conclusion
The authors submit that it is
customer non-solicitation, non-service
and non-contact covenants that best
achieve the balancing of interests
the case law repeatedly prescribes,
in the absence of trade secrets that
could make any competition within a
described geographic radius damaging
to the ex-employer. Geographic
restrictions, by definition, restrict the
ex-employee from any employment
in his chosen field. Geographic
restrictions, also by definition, give
little consideration to the market
penetration of the ex-employer in the
area at issue and restrict ex-employees
from even attempting to form a
business in their hometown and
building it with customers who have
no relationship with the ex-employer.
In this respect, it is submitted
that in many cases broad geographic

restrictions, which go beyond merely
protecting the existing customers
of the ex-employer, protect the
employer’s ability to grow its business
without competition from an ex-
employee for prospective customers
and completely shut out an ex-
employee from what may be the
only career he has. Such restrictions
seem offensive to the balancing of
competing concerns that the courts
claim to cherish in these cases.
Geographic restrictions, however, are
rarely given significant analysis by
the courts and are typically enforced
without an in-depth review of the
employer’s need for such a broad
restriction.
It seems inadequate for courts to
say that contracts in this field should
be enforced as written, when they
concern an exception to a strong
public policy against restraint of
trade, and when courts are asked to
scrutinize such restrictions closely and
to impose reasonable remedies. Where
so much attention is paid to the
solicitation of customers, the lack of
attention paid to the potentially anti-
competitive impact of a geographic
restriction is indeed noteworthy. One
would think that the reverse would be
true.
While not suggesting that such
restrictions be banished, or that
they are not appropriate under the
right circumstances, it would seem
appropriate for the Supreme Court
of Missouri to encourage local courts
to carefully look at these restrictions
and see whether they are warranted,
or whether they cross the line into
purely anti-competitive covenants.
Given the suggestion in Copeland
that preventing a former employee
from building a new business on
new customers may go too far (while
noting that the issue was not before it)
and the reigning in of protection for
prospective customers in Kennebrew, it
may well be that the current Court is
starting to think along the same lines.
Judicial discretion is perhaps the
greatest strength of Missouri law in
this area, and the greatest protection
against purely anti-competitive
covenants. However, the judicial
discretion encouraged by the courts
has resulted in agreements that try to
apply all of the various restrictions,
customer specific and geographic,
leaving it to the courts to sort out
what is proper in the circumstances.
Those of us who practice in this
interesting area of law can hopefully
look forward to the issue of broad
geographic restrictions being fully
developed and analyzed by the
Supreme Court of Missouri when the
proper case presents itself.
Endnotes
1 Jason M. Rugo is a principal at Jenkins
& Kling, P.C. in St. Louis, a graduate of
Vanderbilt University Law School, and
practices extensively in the areas of non-
compete litigation, non-compete drafting and
equity litigation. Conn Q. Davis is an associate
attorney at Jenkins & Kling, P.C., a graduate
of DePaul University College of Law, and
practices in commercial litigation.
2 See e.g., Mills v. Murray, 472 S.W.2d 6
(Mo. App. W.D. 1971).
3 In this article, we use the term “non-
compete agreement” for any agreement with
post-employment restrictions or covenants,
such as working for or setting up a competing
business, soliciting, contacting or servicing
customers and/or hiring employees of the
former employer.
4379 S.W.3d 835 (Mo. banc 2012).
5 Id. The article also focuses on employer-
employee relationships as opposed to the
purchase or sale of a business or in the context
of agreements between businesses, partnership
agreements or stock buy-sell agreements,
where stronger restrictions have typically been
upheld and arguably stand on a different
legal footing. See, e.g., Furniture Mfg. Corp.
v. Joseph, 900 S.W.2d 642 (Mo. App. W.D.
1995); AEE-EMF, Inc. v. Passmore, 906 S.W.2d
714 (Mo. App. W.D. 1995). This article is
not intended as an exhaustive review of all of
the case law in this area. For a more detailed
review, see William M. Corrigan, Jr. & Michael
B. Kass, Non-Compete Agreements and Unfair
Competition – An Updated Overview, 62 J. Mo.
Bar 81 (2006).
6 Section 416.031, RSMo 2000.
7 Superior Gearbox Co. v. Edwards, 869
S.W.2d 239, 247 (Mo. App. S.D. 1993).
8 Easy Returns Midwest, Inc. v. Schultz, 964
S.W.2d 450, 453 (Mo. App. E.D. 1998).
9 Section 431.202, RSMo Supp. 2012.
10 For an overview of the development of
non-compete law in Missouri, see Angelica
Jacket Co. v. Angelica, 98 S.W. 805 (Mo.
App. E.D. 1906); Renwood Food Prods., Inc.
v. Schaefer, 223 S.W.2d 144 (Mo. App. E.D.
1949).
11 Sections 417.450-417.467, RSMo 2000.
12 Section 417.453, RSMo 2000.
13 Section 417.463.2(1), RSMO 2000.
14 Systematic Bus. Servs., Inc. v. Bratten, 162
S.W.3d 41, 49 (Mo. App. W.D. 2005); see also
Osage Glass, Inc. v. Donovan, 693 S.W.2d 71,
74 (Mo. banc 1985).
15 Renwood Food Prods., Inc., 223 S.W.2d
at 151.
16 Reed, Roberts Assocs., Inc. v. Bailenson,
537 S.W.2d 238, 240 (Mo. App. E.D. 1976).
17 Steamatic of Kansas City, Inc. v. Rhea, 763
S.W.2d 190, 192 (Mo. App. W.D. 1988).
18 Schmersahl, Treloar & Co. v. McHugh, 28
S.W.3d 345, 349 (Mo. App. E.D. 2000).
19 Healthcare Servs. of the Ozarks, Inc. v.
Copeland, 198 S.W.3d 604, 611 (Mo. banc
2006).
20 Easy Returns Midwest, Inc., 964 S.W.2d
at 454; Rhea, 763 S.W.2d at 192-93.
21 See Naegele v. Biomedical Sys. Corp., 272
S.W.3d 385, 389 (Mo. App. E.D. 2008).
22Osage Glass, 693 S.W.2d at 75.
2328 S.W.3d 345, 350 (Mo. App. E.D.
2000) (holding that employers did not have an
interest protectable by contract in the stability
of their at will workforce or in the skills of
their at will employees).
24Section 431.202, RSMo Supp. 2012.
25198 S.W.3d 604 (Mo. banc 2006).
26Id. at 613.
27Section 431.202, RSMo Supp. 2012 (the
statute provides that these agreements can be
entered into between employers and employees
or the employer and other companies).
28 Superior Gearbox, 869 S.W.2d at 247-48.
29Mills, 472 S.W.2d at 18.
30 Whelan Security Co. v. Kennebrew, 379
S.W.3d 835, 840 (Mo. banc 2012).
31 Id. at 841.
32See Long v. Huffman, 557 S.W.2d 911,
915 (Mo. App. W.D. 1977); Schaefer, 223
S.W.2d at 152.
33 Kennebrew, 379 S.W.3d at 839-40.
34 Id.
35Id.
36Kennebrew, 379 S.W.3d at 840.
37 See, e.g., Mills, 472 S.W.2d 6; Schott v.
Beussink, 950 S.W.2d 621 (Mo. App. E.D.
1997).
38 Kennebrew, 379 S.W.3d at 842.
39 Id.
40 Id. The Kennebrew Court cited and
referred with approval to Mills, Shott, and
Bratten in support of this proposition.
42 Id.

43 Copeland, 198 S.W.3d at 611.
44 Id.
45Kennebrew, 379 S.W.3d at 843.
46 Id. at 843-44.
47 This puts Missouri in a very progressive
position. Trial courts are vested with almost
unlimited discretion in fashioning a reasonable
remedy, putting Missouri squarely outside of
the “blue pencil” rules used in many other
states or the “all or nothing” method of
enforcement, although the Kennebrew Court
in n. 6 noted that Missouri judges still possess
the power to refuse enforcement completely
if the agreement is wholly overbroad or
unreasonable. This refusal, the Court said, is
based on equity and common sense, not on
archaic contract rules of draftsmanship.
49 Property Tax Representatives, Inc. v.
Chatam, 891 S.W.2d 153, 155-58 (Mo. App.
W.D. 1995).
51 Id. at 844.
52693 S.W.2d 71 (Mo. banc 1985).
53 Id. at 847.
54 88 S.W.3d 120 (Mo. App. E.D. 2002).
55746 S.W.2d 613 (Mo. App. E.D. 1988).
56601 S.W.2d 299 (Mo. App. E.D. 1980).
57 Osage Glass, 693 S.W.2d at 74.
59 Orchard Container Corp. v. Orchard, 601
S.W.2d 299, 304 (Mo. App. E.D. 1980).
60Id. at 303-04.
61 Mid-States Paint & Chem. Co. v. Herr,
746 S.W.2d 613, 617 (Mo. App. E.D. 1988).
62 Id.
63 Id. at 616-17.
64 Alltype Fire Prot. Co. v. Mayfield, 88
S.W.3d 120, 123-24 (Mo. App. E.D. 2002).
67 Id. at 611-12.
68 869 S.W.2d at 248.
69 Silvers, Asher, Sher & McLaren, M.D.s
Neurology, P.C. v. Batchu, 16 S.W.3d 340, 344-
45 (Mo. App. W.D. 2000).
70 Id. at 344.
71 But see Bratten, 162 S.W.3d at 51-
52 (court noted the restrictive covenant
was limited to the non-solicitation of the
employer’s clients, which was enforceable
without a geographic limit, and reversed
the trial court’s enforcement of a restriction
preventing the employee from working in the
field generally as too broad and unrestricted).
72 Sigma Chem. Co. v. Harris, 586 F.Supp.
704, 711 (E.D. Mo. 1984); see also, Cape
Mobile Home Mart, Inc. v. Mobley, 780 S.W.2d
116 (Mo. App. E.D. 1989) (enforcing a
35-mile restriction in a highly competitive
industry when trade secrets were involved that
would be highly valuable to any competitor).
73 Section 431.202.1(3), RSMo Supp.
2012.
74 Section 431.202.1(4), RSMo Supp.
2012.
75 Id.
77Id.at 846.
78 Id.
79 Id.

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