In Ohio, courts have the discretion to redraw an overly broad non-competition agreement so that its restrictions are no greater than are needed to protect the employer’s legitimate business interests. As a result, Ohio employers often cavalierly draft the terms of their employee non-competition agreements as broadly as possible, believing the worst case scenario is that a court will rein in and “re-draft” the terms if necessary to make them reasonable and enforceable. Unfortunately, a federal district court in Illinois and the Seventh Circuit court of appeals clearly were unwilling to endorse this somewhat common Ohio employment practice despite analyzing a non-competition agreement’s enforceability under Ohio law pursuant to the agreement’s choice of law provision.   

In Cintas Corporation v. Perry, Daniel Perry’s employment agreement contained a non-competition provision that imposed a two-year, effectively world-wide ban on any employment with, consultation for, or ownership interest in more than 30 listed competitors of Cintas with operations around the world — despite the fact that his sales territory for the company was limited to Illinois and Indiana. In October 2003, Perry left his sales manager position with Cintas to become vice president of sales at the largest Cintas competitor listed in the agreement — a clear violation of the terms of the non-competition provision. In attempting to enforce the non-compete before the Illinois court, however, Cintas made no effort to demonstrate that the terms of the non-compete were reasonable as written but, instead, asked the court to use its discretion to modify the agreement’s terms to make them reasonable. The court acknowledged its discretion under Ohio law to rewrite the overbroad non-competition provision but declined to do so and refused to enforce the agreement. The court also held that Cintas offered no evidence suggesting that Perry had solicited Cintas’ customers, recruited its employees, or used the confidential information in his possession in violation of other provisions in the employment agreement. Even worse for Cintas, several months later the court ordered Cintas to pay Perry’s attorney’s fees and litigation costs in an amount exceeding $300,000 pursuant to the agreement’s requirement that such fees and costs be paid to the "prevailing party." The court of appeals upheld the district court’s decision and assessment of attorney fees and costs. 

The lessons from Cintas are many. First, employers should resist the temptation to be too greedy when writing their non-competition agreements. Even if Ohio law is applied there is a risk that a court, particularly ones in jurisdictions that tend to be hostile toward non-competes, will not rewrite overly broad restrictions even though they are permitted to do so under Ohio law. Indeed, despite the fact that Perry violated the non-compete, the Cintas court’s refusal to rewrite the terms of that non-compete was devastating to Cintas. Cintas could have avoided this fate by drafting a more tailored non-compete itself at the front end. Second, employers may want to consider reducing the risk of having a foreign court apply Ohio law by including a provision requiring that any lawsuit be filed in a court of competent jurisdiction in Ohio. Finally, employers should re-think prevailing party fee shifting provisions. The $300,000 "bill" for Perry’s attorney fees and litigation costs must have made this litigation particularly painful for Cintas. Though some courts may not enforce a provision that is not reciprocal, Cintas could have avoided this insult upon injury had the agreement merely provided for the payment of reasonable attorney fees and litigation costs incurred in enforcing the agreement, instead of payment to the "prevailing party."