Insight

Non-Compete News: Georgia Appeals Court Clarifies What Constitutes Appropriate Definition of Territory In Non-Compete Under RCA

Non-Compete News: Georgia Appeals Court Clarifies What Constitutes Appropriate Definition of Territory In Non-Compete Under RCA

Jeffrey D. "Jeff" Mokotoff

Jeffrey D. "Jeff" Mokotoff

December 15, 2022 04:04 PM

Non-Compete News: Georgia Appeals Court Clarifies What Constitutes Appropriate Definition of Territory In Non-Compete Under RCA

Apr 4, 2022

Last month, in American Plumbing Professionals, Inc. v. ServeStar, LLC, Georgia’s Court of Appeals reversed a trial court’s determination that a non-compete provision was unenforceable and void because its territory was too broad. The non-compete at issue defined the geographic restriction as “the territory where Employee provided services on behalf of [the employer] during the last twelve months of his or her employment,” which extended “throughout those parts of the United States of America where [the employer] transacts business.”

Relying in part on case law that existed prior to the May 2011 enactment of Georgia’s Restrictive Covenant Act (“RCA”), the lower court determined that the non-compete “contained vague geographic limitations, and thus were void and unenforceable.” The Court of Appeals first acknowledged that, under the RCA, “enforcement of contracts that restrict competition” shall be permitted “so long as such restrictions are reasonable in time, geographic area, and scope of prohibited activities.”

With respect to “geographic area,” the RCA specifically states that a territory is presumed to be reasonable if (a) it “includes the areas in which the employer does business at any time during the parties’ relationship, even if not known at the time of entry into the restrictive covenant,” and (b) “[t]he total distance encompassed by the provisions of the covenant also is reasonable.” The Appeals Court also noted the RCA provides further guidance regarding the language that is necessary for geographic limitations in non-compete provisions: “the phrase ‘the territory where the employee is working at the time of termination’ or similar language shall be considered sufficient as a description of geographic areas if the person or entity bound by the restraint can reasonably determine the maximum reasonable scope of the restraint at the time of termination.”

The former employer relied on law that pre-existed the RCA and, thus, the Appeals Court held that law inapplicable. It also distinguished RCA cases finding non-compete provisions void and unenforceable because they were missing terms, i.e., they were missing a territory entirely. Construing the non-compete as it was required under the RCA, i.e., in favor of protecting an employer’s legitimate business interests to comport with the reasonable intent and expectations of the parties to the agreement, the Court of Appeals held that the territorial restriction satisfies the statutory requirement because it “provides fair notice of the maximum reasonable scope of the restraint.” Accordingly, the Appeals Court reversed the determination that the agreement was void and unenforceable as written and sent the case back to the lower court to determine whether the geographic scope was reasonable or otherwise enforceable.

Jeff Mokotoff is Co-Chair of FordHarrison’s Non-Compete, Trade Secrets and Business Litigation practice group. If you have any questions regarding this decision, please feel free to contact Jeff at jmokotoff@fordharrison.com or the FordHarrison attorney with whom you usually work.

Related Articles

IN PARTNERSHIP

Embedded Advantage: The Value in Partnering with Appellate Counsel


by Justin Smulison

Most litigants should expect the non-prevailing party in their case to challenge the trial court’s final judgment in post-judgment motions and/or on appeal. Robert A. Mandel discusses how aligning with a seasoned appellate lawyer can make all the difference in securing a favorable resolution.

Headshot of male lawyer with brown hair in dark suit

An Interview With Marie Tomassi


by Best Lawyers

St. Petersburg's 2020 "Lawyer of the Year" honoree in Appellate Practice

Marie Tomassi Appellate Practice

Robin Meadow, Southern California 2018 "Lawyer of the Year" for Appellate Practice


by Greines, Martin, Stein & Richland

Robin Meadow of Greines, Martin, Stein & Richland LLP was named 2018 "Lawyer of the Year" for Appellate Practice.

Robin Meadow LOTY

Trending Articles

2025 Best Lawyers Awards Announced: Honoring Outstanding Legal Professionals Across the U.S.


by Jennifer Verta

Introducing the 31st edition of The Best Lawyers in America and the fifth edition of Best Lawyers: Ones to Watch in America.

Digital map of the United States illuminated by numerous bright lights

Unveiling the 2025 Best Lawyers Awards Canada: Celebrating Legal Excellence


by Jennifer Verta

Presenting the 19th edition of The Best Lawyers in Canada and the 4th edition of Best Lawyers: Ones to Watch in Canada.

Digital map of Canadathis on illuminated by numerous bright lights

Legal Distinction on Display: 15th Edition of The Best Lawyers in France™


by Best Lawyers

The industry’s best lawyers and firms working in France are revealed in the newly released, comprehensive the 15th Edition of The Best Lawyers in France™.

French flag in front of country's outline

Presenting the 2025 Best Lawyers Editions in Chile, Colombia, Peru and Puerto Rico


by Jennifer Verta

Celebrating top legal professionals in South America and the Caribbean.

Flags of Puerto Rico, Chile, Colombia, and Peru, representing countries featured in the Best Lawyers

Announcing the 13th Edition of Best Lawyers Rankings in the United Kingdom


by Best Lawyers

Best Lawyers is proud to announce the newest edition of legal rankings in the United Kingdom, marking the 13th consecutive edition of awards in the country.

British flag in front of country's outline

Unveiling the 2025 Best Lawyers Editions in Brazil, Mexico, Portugal and South Africa


by Jennifer Verta

Best Lawyers celebrates the finest in law, reaffirming its commitment to the global legal community.

Flags of Brazil, Mexico, Portugal and South Africa, representing Best Lawyers countries

Prop 36 California 2024: California’s Path to Stricter Sentencing and Criminal Justice Reform


by Jennifer Verta

Explore how Prop 36 could shape California's sentencing laws and justice reform.

Illustrated Hands Breaking Chains Against a Bright Red Background

Announcing the 16th Edition of the Best Lawyers in Germany Rankings


by Best Lawyers

Best Lawyers announces the 16th edition of The Best Lawyers in Germany™, featuring a unique set of rankings that highlights Germany's top legal talent.

German flag in front of country's outline

Celebrating Excellence in Law: 11th Edition of Best Lawyers in Italy™


by Best Lawyers

Best Lawyers announces the 11th edition of The Best Lawyers in Italy™, which features an elite list of awards showcasing Italy's current legal talent.

Italian flag in front of country's outline

Tampa Appeals Court ‘Sends Clear Message,” Ensuring School Tax Referendum Stays on Ballot


by Gregory Sirico

Hillsborough County's tax referendum is back on the 2024 ballot, promising $177 million for schools and empowering residents to decide the future of education.

Graduation cap in air surrounded by pencils and money

Find the Best Lawyers for Your Needs


by Jennifer Verta

Discover how Best Lawyers simplifies the attorney search process.

A focused woman with dark hair wearing a green top and beige blazer, working on a tablet in a dimly

Key Developments and Trends in U.S. Commercial Litigation


by Justin Smulison

Whether it's multibillion-dollar water cleanliness verdicts or college athletes vying for the right to compensation, the state of litigation remains strong.

Basketball sits in front of stacks of money

Woman on a Mission


by Rebecca Blackwell

Baker Botts partner and intellectual property chair Christa Brown-Sanford discusses how she juggles work, personal life, being a mentor and leadership duties.

Woman in green dress crossing her arms and posing for headshot

Best Lawyers Celebrates Women in the Law: Ninth Edition


by Alliccia Odeyemi

Released in both print and digital form, Best Lawyers Ninth Edition of Women in the Law features stories of inspiring leadership and timely legal issues.

Lawyer in green dress stands with hands on table and cityscape in background

The Human Cost


by Justin Smulison

2 new EU laws aim to reshape global business by enforcing ethical supply chains, focusing on human rights and sustainability

Worker wearing hat stands in field carrying equipemtn

Beyond the Billables


by Michele M. Jochner

In a recently conducted, comprehensive study, data reveals a plethora of hidden realities that parents working full-time in the legal industry face every day.

Women in business attire pushing stroller takes a phone call