You may already be aware of how difficult it is to enforce restrictive covenants in Georgia.  If you think you do not need to continue reading because your company either: (1) does not conduct business or employ employees in Georgia or (2) has choice-of-law provisions in its restrictive covenant agreements selecting the application of law of a state other than Georgia, you are mistaken.  As restrictive covenant litigation becomes more prevalent and Georgia’s anti-restrictive covenant reputation grows, even employees who never worked in Georgia and whose agreements contain non-Georgia choice-of-law provisions are seeking- and, in some cases, finding- refuge in Georgia courts.  While there are still steps employers can take to protect their interests, a recent Eleventh Circuit case demonstrates that, for Georgia and nationwide employers alike, the most critical step in restrictive covenant litigation may very well be the race to the courthouse.

 
     The facts of Manuel v. Convergys Corp. involved Convergys, with its principal place of business in Ohio, and its former employee, Manuel, who, after living and working for Convergys in Florida, accepted a job with a competitor in Georgia.  Manuel’s restrictive covenant agreement with Convergys contained an Ohio choice of law provision and a clause permitting, but not requiring, that disputes relating to the agreement be brought in Ohio.  After accepting a position with a competitor in Georgia, Manuel filed a declaratory judgment action against Convergys in Georgia seeking to invalidate the restrictive covenant agreement.  Even though Manuel had made misrepresentations to Convergys, depriving the company of the opportunity to initiate an action against Manuel in Ohio or elsewhere, the Eleventh Circuit affirmed the district court’s granting of Manuel’s motion for summary judgment to invalidate the restrictive covenant agreement.

 
     What does this mean for employers?  First, regardless of where companies may have operations or employees, they should ensure that their restrictive covenants comply with Georgia law.  Additionally, restrictive covenant agreements should not only contain choice-of-law provisions, they should also contain mandatory forum-selection clauses.  Finally, while there are certain benefits to negotiating with departing employees and the pre-litigation exchanging of letters which occurs as part of this negotiating process, Manuel demonstrates just how important it is to win the race to the courthouse.  Indeed, as the recent trend in Georgia of employees filing declaratory judgment actions against their former employers increases, it becomes all the more important for employers to select their forum and file their lawsuit first.  There will be plenty of time to resolve the dispute after the lawsuit is filed.  As is the case in many aspects of restrictive covenant litigation, any slight delay could mean the difference in enforcing your company’s agreement.  If you have any questions, please contact the author at capobianco@elarbeethompson.com.