[author: John Paul Nefflen]

A former employee of Event Logistics, Inc. recently filed suit in the Davidson County Chancery Court challenging her employer’s non-compete agreement signed two years after her employment began.  In Veit v. Event Logistics, Inc., Davidson County Chancery Court Docket No. 12-945-III, Falon Marie Veit (“Veit”) alleges her employer, Event Logistics, Inc. (“ELI”), asked her to sign a “Non-Competition, Non-Solicitation, and Confidentiality Agreement” (the “Agreement”) on November 28, 2007 after she was promoted to a vice president position.  After completing a high profile event for the 2012 Iroquois Steeplechase, Veit resigned her employment with ELI on May 15, 2012.

The Agreement prohibits Veit for a period of two years from (1) engaging in activities competing with ELI within a 50 mile radius of ELI’s office in Nashville; (2) soliciting ELI’s customers with whom Veit had contact while employed by ELI; and (3) soliciting any of ELI’s employees to terminate his/her employment with ELI.

In her Complaint, Veit asks the Court to determine that the Agreement is not enforceable and that she is free to resume her activities as an events coordinator with clients with whom she worked while employed by ELI.  Veit argues ELI is not at risk of unfair competition because (1) event planning does not involve technical skills learned through specialized training provided by ELI; and (2) potential consumers of event planning services are not confidential or proprietary to ELI, but are individuals and commercial businesses that may need such services at any time and any location.

Veit also argues there is no adequate consideration supporting the Agreement.  Veit alleges she signed the Agreement because she was promised she would become an owner of ELI.  She ended her relation with ELI when it became apparent ELI would not give her an ownership interest in the company.

The Court recently denied Veit’s Motion for a temporary injunction enjoining the enforcement of the Agreement.  The Court found there were significant disputes as to whether ELI invested in Veit’s training, whether Veit had access to confidential and proprietary information, and whether Veit had developed into the “face of the company” with respect to ELI’s customers.  However, the Court temporarily modified the Agreement to allow Veit to engage in certain limited event coordinating activities so she could make a living.

This will be an interesting case to watch. Veit’s challenge to ELI’s non-compete agreement goes to the heart of balancing between the desire for free trade and prohibiting a former employee from unfairly competing against her employer.  It also demonstrates the Court’s authority to modify or “blue pencil” a non-compete agreement to achieve this balance.

Watch for updates on Veit v. Events Logistics, Inc. in the near future.