Home Paramount Pest Control Companies, Inc. v. Justin Shaffer et al.

Departing from precedent, the Supreme Court of Virginia narrowed the outer limits of enforceability for non-competition agreements in its Nov. 4, 2011 opinion in Home Paramount. The decision has created a stir with legal observers and drew some criticism from dissenting Justice McClanahan for its opposite holding to a prior case, Paramount Termite Control Co. v. Rector, 238 Va. 171 (1989), despite that case’s identical non-compete being upheld. The language that troubled the majority in the employment agreement clashed with the “function” element of the standard non-compete reasonability test. While the geographic scope and duration of the non-competition agreement were quite limited, the court found the functional aspects to be overbroad, because they prevented Shaffer from associating with other pest control companies in any manner, even as a passive stockholder. This was so overbroad as to nullify the narrowness of the other factors in evaluating reasonability. Concerning the departure from precedent, the court noted that Paramount Termite was decided twenty-two years earlier, and that in the intervening time, jurisprudence surrounding such broadly drafted non-competes had been “gradually refined.” In this sense, the case represents a reining in of previously acceptable, but very broad, non-competes in Virginia.

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