By: marvin Posted: June 25, 2007
MarvQuin LLC was served with its first lawsuit today. As with every successful company, this will not be last. However the causes of action alleged in the lawsuit and prayer for relief lack common sense and certainly lack a legal ground. I have included below a letter drafted discussing the law on non-compete agreements in Arizona. Of course,this attempt by an avaricious malcontent and his band of spineless lackeys will only serve to motivate MarvQuin and will not slow us down in any way shape or form!
Dear Glenn:
It is unfortunate that we must respond to your letter dated June 1, 2007 due to numerous factors that will be addressed in this letter, however we have dealt with David Smith for a significant amount of time therefore we knew he would attempt this and I specifically have been put in positions where I was asked to draft similar type letters, however most letters I declined because the request was contrary to any law and common sense.
This is another case where the law and common sense is clear regarding non-compete agreements and despite the law and common sense, you have chosen to pursue it.
First and foremost, MarvQuin LLC does not compete in any way with Company LLC. In fact the members of MarvQuin LLC attempted in vain to get Company LLC to participate in the business MarvQuin LLC has pursued. Company LLC refused. Witnesses for this include, David Smith, Jerry Jones, Steve Harmeyer, Andrew McAdams, Quinton Figueroa and myself among many others.
Secondly, this Agreement is egregiously overbroad in everyway. It specifically states that the “Employee shall not, anywhere in the United States or any other country, directly or indirectly…develop…or assist any person in developing, marketing, selling…any products or services competitive” with Company LLC. Therefore, the Employee is only permitted to work in this industry on another planet.
Third, your letter does not address the non-compete agreement in any way. In your letter you state that “the agreement specifically prohibits [Quinton] from working in any manner related to the design, development…production of any web based sales and / or marketing business.” However the Agreement specifically states that Figueroa cannot engage in design, development…of products which are competitive with Company LLC, not that Figueroa can never engage in the activities stated in your letter. Additionally, in your letter you do not state anything that is in competition with Company LLC because there is nothing in competition.
This is just another attempt by David Smith to control, manipulate and undermine the lives of others instead of focusing on his own life and his own business. Again, I have seen this unproductive and disappointing behavior for over a year.
The law on non compete agreements is very clear in Arizona and is as follows:
Under Arizona law, a restrictive covenant will be considered unreasonable and unenforceable: "1) if the restraint is greater than necessary to protect the employer's legitimate interest; or 2) if that interest is outweighed by the hardship to the employee and the likely injury to the public." Valley Med. Specialists v. Farber, 982 P.2d 1277, 1281 (Ariz. 1999). Generally, non-competition restrictive covenants are either reasonable and enforceable or unreasonable and unenforceable. However, "[i]f it is clear from its terms that a contract was intended to be severable, the court can enforce the lawful part and ignore the unlawful part." Olliver/Pilcher Ins. v. Daniels, 715 P.2d 1218, 1221 (Ariz. 1986). As a result, Arizona courts have adopted the "blue pencil" doctrine as expressed in the Restatement (Second) of Contracts. See, Farber, 982 P.2d at 1286 ("Arizona courts will 'blue-pencil' restrictive covenants, eliminating grammatically severable, unreasonable provisions.") "Where the severability of the agreement is not evident from the contract itself, the court cannot create a new agreement for the parties to uphold the contract." Olliver/Pilcher Ins. v. Daniels, 715 P.2d at 1221.
First and foremost, the restraint in your letter, which is not even the focus on the agreement prohibiting Figueroa from work in any web related matter does not protect Company’s legitimate interest because Company did not want to participate in this type of business.
Additionally, the hardship to the employee in this particular case is extreme. Web related work is and his been Figueroa’s business for over five years and he is only twenty one years old.
A problem that arises with the "blue pencil" rule is that the overbroad provisions are typically the geographic or temporal restrictions. See, e.g., Varsity Gold, Inc. v. Porzio, 45 P.3d 352, 356 (Ariz. App. 2002) (noting that the geographical provision in a non-compete agreement, which encompassed the entire state and contiguous states, was unreasonable, where the employee worked only in one portion of one city). Once a court strikes those provisions, there generally are no geographic or temporal restrictions at all, rendering the agreement overbroad per se and, therefore, unenforceable. In other words, courts following the blue pencil rule will not do anything more than strike overbroad provisions; they will not revise the agreement to be enforceable even if the agreement expressly authorizes the court to do so.
The geographical restrictions in the non-compete signed by Quinton Figueroa and David Smith state that Figueroa cannot engage in the restricted work “anywhere in the United States or any other country.” Therefore, Figueroa could only engage in this type of work on another planet. Glenn please. As seen in the above paragraph, Arizona courts find that limiting a person to work within an entire state is egregious and unenforceable, let alone the entire world.
Also, as seen above, an overbroad agreement is unenforceable.
Moreover, Arizona courts rigorously scrutinize geographic and temporal restrictions, as they will enforce only those agreements in which the "restraint does not exceed that reasonably necessary to protect the employer's business, is not unreasonably restrictive of the rights of the employee, does not contravene public policy, and is reasonable as to time and space." Bed Mart, Inc. v. Kelley, 45 P.3d 1219, 1221 (Ariz. App. 2002); see also, Bryceland v. Northey, 772 P.2d 36, 40 (Ariz. App. 1989) (suggesting, in dicta, that a reasonable temporal restriction should not exceed 14 weeks); Amex Distrib. Co., Inc. v. Mascari, 724 P.2d 596, 604 (Ariz. App. 1986) (asserting, in dicta, that a period of a few months is probably the maximum appropriate temporal restriction for a sales representative).
For the reasons listed above and supported by the appropriate law, this Non-Compete Agreement is unenforceable. Additionally, we are now focused on good quality, business and relationships which David Smith is disappointed that we do not want him involved. We have no interest in wasting other people’s times with frivolous claims. Our goal from the beginning has been to focus on good business. We wish for the best of everyone. We do not try to manipulate, undermine and control other people’s lives. There is an enormous list of people who think the opposite about David Smith because they have experienced it.
I moved out here in reliance on representations made by David Smith and put my full trust, loyalty and faith in him, only to almost end up homeless. I have worked tirelessly for David Smith and earned almost nothing to this point. I look back on a year of opportunity and besides the real estate projects that I remain a part of, however earned no money from, I have nothing to show. We just want to be left alone to pursue our business and enjoy our lives.
Glenn based on the law, this agreement, and the history between the parties; you have an obligation to advise your client appropriately. If we are forced to hire counsel, for these truly outrageous claims, then we will have to seek damages from your client including attorney’s fees and we will seek sanctions against you as well. Glenn please call me upon review of this letter.
Thank you for your time,
Marvin Jones
President MarvQuin LLC
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