No Injunction on Accounting Noncompete

A Norfolk Circuit Court denies plaintiff employer’s motion for a preliminary injunction in this suit alleging violation of a noncompete agreement.

When assessing the function element of noncompete clauses, the court determines whether the prohibited activity is of the same type as that actually engaged in by the former employer. In this case, the noncompete clause states the employee “agrees and covenants that for a period of 3 years following the termination of this Agreement, whether such termination is voluntary or involuntary, [the employee] will not directly or indirectly engage in any business competitive with Head Start,” and that the “covenant shall apply to the geographical area that includes all of the State of Virginia.”

An identical noncompete provision is contained in the employment contract signed by codefendant. The subcontractor agreement between Head Start and Brinkley Financial does not contain a noncompete agreement. The employment agreements signed by both defendants, Tanita and James Brinkley, state that they are employed by Head Start as tax professionals.

However, the noncompete clause prohibits the Brinkleys from working in any capacity with any business competitive with Head Start. A valid noncompete provision would only prohibit an employee from engaging in activities that actually or potentially compete with the employee’s former employer.

In this case, plaintiff has not offered a legitimate business interest why defendants cannot act as passive shareholders in another accounting business or work for another accounting business in even an indirect way. Therefore, the function of the noncompete is overly broad and plaintiff is not likely to succeed on the merits.

Plaintiff also has not provided enough evidence that it is likely to suffer irreparable harm. Plaintiff admits that his “numbers are down, but I don’t know. I don’t know if it’s direct from them.” Finally, the balance of equities does not tip in plaintiff’s favor. Both defendants live and work in Virginia, thus if the temporary injunction is granted, they would be forced to move out of the state or change professions. Both defendants have been working in the accounting field their entire professional careers.

Motion for preliminary injunction denied.

K&K of VA LLC v. Brinkley (Fulton) No. CL 13-1424, April 15, 2013; Norfolk Cir.Ct.; Joyvan Malbon, Gabriel L. McCoy for the parties. VLW 013-8-104, 4 pp.