Reformation Clause Can’t Save Noncompetition Agreements

An overly broad noncompetition agreement cannot be saved by the agreement’s reformation clause, according to a state supreme court. The court rejected the assertion that the clause, which expressly granted the authority of a court to make the agreement enforceable, could be used by the court. As a result, the noncompetition agreement was not enforceable. The decision is a stark reminder to practitioners that states that apply the “blue pencil” doctrine will not add terms to noncompetition agreements to make them enforceable.

Court Denies Addition to Contract Terms

In Heraeus Medical, LLC v. Zimmer, Inc., an employee left his position to work for a competitor. Within a few weeks following his transition to the competitor, the former employee began recruiting other employees from his former employer to the competitor. Because of a noncompete agreement, the former employer sued the former employee, relying on the non-solicitation clause in the agreement. The non-solicitation clause stated that the former employee could not solicit or employ any individual employed by the former employer to work for a competitor. The agreement also contained a reformation clause giving the court the authority to reform any provisions “to make it enforceable under applicable law.”