Opinion
No. CX-00-1547.
Filed February 20, 2001.
Appeal from the District Court, Hennepin County, File No. 008998.
Michael R. Gray, Joanne H. Turner, (for appellant)
Scott R. Carlson, Benjamin R. Skjold, (for respondents)
Considered and decided by Kalitowski, Presiding Judge, Randall, Judge, and Crippen, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant Tom Schmidt Associates contends that the trial court abused its discretion in denying appellant's request, premised on a noncompete agreement, for a temporary injunction that would prohibit respondent Autumn Williams from operating a business. We affirm.
FACTS
From December 1997 to May 2000, respondent Williams worked for Urban Retreat, a hair and body salon owned by appellant and located in the Uptown area of Minneapolis. Williams signed an employment contract that contained several restrictive covenants, including a noncompete clause that forbade her from competing with Urban Retreat by working in or owning another spa or hairstyling business within a five-mile radius for a one-year period following termination of her employment.
In May 2000, Williams gave notice of her intent to quit working at Urban Retreat; two days later she filed articles of incorporation for a salon business to be located in the Dinkytown area of Minneapolis. Williams told employees and clients of Urban Retreat that she was opening her own salon, and she allegedly solicited her clients' business. Fiona Burr, an Urban Retreat employee, resigned so that she could work for respondent.
In June 2000, appellant filed suit, seeking to prevent Williams from operating her salon, The Refinery, within a five-mile radius of Urban Retreat, soliciting Urban Retreat clients or employees, or divulging any confidential information about appellant's business. Appellant also requested damages in excess of $50,000.
In July 2000, the trial court issued a temporary restraining order barring Williams from using or disclosing any of appellant's confidential customer information and from soliciting Urban Retreat clients or employees. The court reserved a decision on whether it would completely enjoin Williams from operating her business until the court received additional evidence on the distance between Urban Retreat and The Refinery.
One week later, the parties submitted conflicting evidence regarding the distance between the two salons. Williams offered evidence that the driving distance from The Refinery to Urban Retreat ranged from 5 to 6.4 miles, depending on the route taken. Appellant introduced evidence that the driving distance between Urban Retreat and The Refinery was 4.8 miles and also within a five-mile radius using a straight-line measurement. The court subsequently sustained the temporary restraining order but denied appellant's motion for a temporary injunction, provided that Williams continue to abide by the remaining terms of the order.
The parties do not dispute that the driving distance between the salons is different depending on the starting point; the driving distance from The Refinery to Urban Retreat is longer than the distance from Urban Retreat to The Refinery because of one-way streets.
DECISION
The parties agree that issuance of a temporary injunction is governed by Dahlberg Bros. v. Ford Motor Co., 272 Minn. 264, 137 N.W.2d 314 (1965). Using the Dahlberg factors, the trial court found that appellant failed to provide proof warranting the issuance of a temporary injunction. Specifically, the court found that appellant failed to show a sufficient likelihood of success on the merits and that the balance-of-harm test favored respondents Autumn Williams and The Refinery, Inc. See id. at 274-75, 137 N.W.2d at 321-22.
The trial court considers five factors in determining whether a temporary injunction is appropriate: (1) the nature and background of the parties' relationship; (2) the harm plaintiff may suffer if the injunction is denied compared to the harm inflicted upon defendant if the injunction is granted; (3) the likelihood one party will prevail on the merits; (4) public policy as expressed in the statutes; and (5) the administrative burdens involved in judicial supervision of the injunction. Dahlberg Bros. v. Ford Motor Co., 272 Minn. 264, 274-75, 137 N.W.2d 314, 321-22 (1965).
1. Success on Merits of Claim
In Minnesota, restrictive employment covenants are "looked upon with disfavor, cautiously considered, and carefully scrutinized." Bennett v. Storz Broad. Co., 270 Minn. 525, 533, 134 N.W.2d 892, 898 (1965) (citation omitted). "Such covenants are upheld nonetheless if the restriction is necessary for the protection of the business or the good will of the employer." Dynamic Air, Inc. v. Bloch, 502 N.W.2d 796, 799 (Minn.App. 1993) (citation omitted). This court will not disturb a trial court's ruling on a motion for temporary injunction absent an abuse of discretion. Eakman v. Brutger, 285 N.W.2d 95, 97 (Minn. 1979).
The trial court analyzed the issue by alternatively assuming that appellant's motion likely would fail either because appellant was unable to show that respondents violated the restrictive covenant or, if the covenant was interpreted differently, that the restriction was overly broad in light of its purpose and would be limited in its application by using the blue-pencil doctrine. See Davies Davies Agency, Inc., v. Davies, 298 N.W.2d 127, 131 n. 1 (Minn. 1980) (describing the blue-pencil doctrine as means for courts to modify unreasonable noncompete agreements and enforce them to the extent they are reasonable, rather than striking the entire agreement as unreasonable).
After reviewing the evidence concerning the distance between the two establishments, the court stated that it could not say "with the degree of certainty necessary that Williams should be barred from operating her business." Furthermore, the court provided that "even if it can be shown that Williams' business is within five miles `as the crow flies' it is not clear that this is a reasonable way to measure distance in the context of this case." The court explained that "the ease with which one can travel that distance must also be considered."
It is evident that the trial court's reasonableness determination was in reference both to the means for measuring distance and the actual distance covered. Either approach is appropriate to support its determination that appellant failed to show a sufficient likelihood of success on the merits. The court did not abuse its discretion.
The agreement fails to specify whether the five-mile measurement is determined by direct-line measurement or if it is measured by actual routes of travel. The trial court questioned whether it was reasonable to disregard the actual driving miles involved for purposes of the temporary injunction. See Satellite Indus., Inc. v. Keeling, 396 N.W.2d 635, 639 (Minn.App. 1986) ("Courts carefully scrutinize employee non-competition agreements because they restrict a person's right to work and earn a livelihood." (citation omitted)), review denied (Minn. Jan. 21, 1987). The court did not abuse its discretion in denying appellant's motion for an injunction after it evidently concluded that the driving distance between the salons was at least five miles.
More importantly, the trial court observed that even if the agreement were to be read more restrictively, the geographic scope was not limited to those areas necessary to protect appellant's interest. See Davies, 298 N.W.2d at 131-32 (limiting geographical restriction to employer's principal business area); Overholt Crop Ins. Serv. Co. v. Bredeson, 437 N.W.2d 698, 703 (Minn.App. 1989) (limiting geographical scope to area in which appellant worked for employer). The court was well within its discretion in finding that it would likely be appropriate to limit the restriction with the blue-pencil doctrine. The court's exercise of discretion is supported by the considerations it took into account: the agreement covered a substantial portion of Minneapolis, the Uptown and Dinkytown areas serve different markets, and the preliminary restraining order reduced appellant's need for further protection.
We conclude that the trial court did not abuse its discretion in finding that appellant failed to show a compelling case for a more restrictive application of the noncompete clause.
2. Balance of Harms
In balancing the harm of enjoining Williams from operating her business against the harm to appellant if the injunction were not issued, the trial court considered all of the information it was given and found in favor of respondents. The court found that putting respondent out of business, despite the fact that she had already entered into contracts with third parties on a lease and for improvements, would cause her serious harm. Appellant, on the other hand, offered limited evidence of any harm that would occur if the injunction were not issued, provided that respondents did not solicit appellant's customers or use confidential customer information. Appellant claims that the trial court over-evaluated the loss of business to respondents but it has failed to provide a reason for giving less weight to that consideration.
Affirmed.