(251) 299-0101

NON-COMPETE AGREEMENTS; TEMPORARY & PERMANENT INJUNCTIONS - CRANEWORKS, INC. V. RPM CRANES, LLC

CraneWorks, Inc. v. RPM Cranes, LLC, [Ms. 1150018, June 16, 2017] __ So. 3d __ (Ala. 2017). In this per curiam opinion, the Supreme Court (Stuart, C.J., and Parker, Shaw, Wise, and Sellers, JJ.) reverses the Jefferson Circuit Court's entry of a preliminary injunction in favor of a business and its owner who contended they were irreparably harmed when key professional employees left their Crane rental business and began working with a competitor. The Court found an absence of evidence of any of the required elements to sustain the preliminary injunction.

The opinion reiterates the required elements of proof to establish a rebuttable presumption of irreparable injury when an employer alleges a violation of a non-competition agreement by a former salesperson:

"(1) the existence of a valid noncompetition agreement, (2) a protectable interest of the employer, (3) and a violation of the former employee salesperson' noncompetition agreement by 'actively competing with his or her former employer in the same geographic area.' "

Ms. * 9-10 (quoting Ormco Corp. v. Johns, 869 So. 2d 1109, 1118-19 (Ala. 2003)). The Jefferson Circuit Court's opinion reviewed the evidence in light of each of these three required elements and concluded that the employer and its owner failed to prove any one of the elements. Despite the absence of proof, the trial court inexplicably granted the requested preliminary injunction. Hence, the opinion reviews the required elements for preliminary and permanent injunctions as well.

First, the Court states the standards of review concerning orders granting injunctive relief:

" 'The applicable standard of review [of an order granting injunctive relief] depends on whether the trial court entered a preliminary injunction or a permanent injunction. A preliminary injunction is reviewed under an abuse-of-discretion standard, whereas a permanent injunction is reviewed de novo.' TFT, Inc. v. Warning Sys., Inc., 751 So. 2d 1238, 1241–42 (Ala. 1999); see also Smith v. Madison County Comm'n, 658 So. 2d 422, 423 n. 1 (Ala. 1995)."

Ms. * 15-16 (quoting Weeks v. Wolf Creek Indus., Inc., 941 So. 2d 263, 271 (Ala. 2006)).

Next, the Court explains the distinction between the proof required for a preliminary injunction and that required for a permanent injunction:

("The elements required for a preliminary injunction and the elements required for a permanent injunction are substantially similar, except that the movant must prevail on the merits in order to obtain a permanent injunction, while the movant need only show a likelihood of success on the merits in order to obtain a preliminary injunction. Pryor v. Reno, 998 F. Supp. 1317 (M.D. Ala. 1998).").

Ms. * 17 (quoting TFT, Inc. v. Warning Sys., Inc., 751 So. 2d 1238, 1242 (Ala. 1999)), overruled on other grounds by Holiday Isle, LLC v. Adkins, 12 So. 3d 1173, 1176 (Ala. 2008)).

Also, the Jefferson Circuit Court's preliminary injunction was deficient because of its non-compliance with Rule 65(d)(2), Ala. R. Civ. P., which provides:

"(2) Every order granting an injunction shall set forth the reasons for its issuance; shall be specific in terms; shall describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained; and is binding only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise."

Id. Because the trial court's order was not supported by the evidence and failed to comply with the requirements of the Rule of Civil Procedure pertaining to injunctions, it was required to be reversed.

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