Noncompetes in Missouri: An In-Depth Look at the Larry Conners Case
You may have heard about the strange case of Larry Conners, the former news anchor for KMOV-TV 4 in St. Louis, Missouri who was fired after posting on his Facebook page that he suspected that he was being targeted by the IRS in response to a hostile interview he conducted with Pres. Barack Obama in 2012. (The IRS claims that Conners and his wife owe more than $85,000 in back taxes from 2008-2010.) You may have even read our coverage of Conners’s subsequent lawsuit against KMOV-TV here on Suits By Suits.
Last Friday, a state court judge in Missouri denied Conners’s motion for a temporary restraining order (TRO) that would have suspended the operation of Conners’s non-compete clause with KMOV and permitted Conners to seek another TV job in St. Louis.
What does this mean for Conners – and, more broadly, for employers and employees in Missouri? Read on.
Preliminarily, it’s important to recognize that a party moving for a TRO carries a very high burden. In Missouri (as in most jurisdictions), a movant must demonstrate to the court that she (1) has a substantial likelihood of prevailing on the merits of her underlying claim; (2) has no adequate remedy at law; and (3) will suffer irreparable harm absent injunctive relief in order to prevail. See MB Town Center, LP v. Clayton Forsyth Foods, Inc., 364 S.W.3d 595, 600 (Mo. App. E.D. 2012). Thus, the fact that Conners lost on a motion for a TRO should not be read as an indication that the court has necessarily determined that KMOV’s non-compete clause is necessarily valid and enforceable. Indeed, the Court may even believe that Conners is more likely than not to prevail on his claim, but nevertheless have failed to grant injunctive relief on the grounds that Conners could not demonstrate irreparable injury. (Typically, lost wages are precisely the sort of injury that courts find to be reparable because it is easily quantifiable.)
On the other hand, Conners overstates the case when he writes on his Facebook wall that “[G]enerally, Missouri courts are against non-compete clauses.” The reality is that the law concerning the enforceability of non-compete clauses in Missouri is similar to the law in the majority of states; that is, that Missouri will follow the traditional Legitimate Business Interests (LBI) test that balances the harm to the employee against the legitimate interests of the employer in protecting its trade secrets and customer case. Here’s how the Missouri Supreme Court put it:
There are at least four valid and conflicting concerns at issue in the law of non-compete agreements. First, the employer needs to be able to engage a highly trained workforce to be competitive and profitable, without fear that the employee will use the employer's business secrets against it or steal the employer's customers after leaving employment. Second, the employee must be mobile in order to provide for his or her family and to advance his or her career in an ever-changing marketplace. This mobility is dependent upon the ability of the employee to take his or her increasing skills and put them to work from one employer to the next. Third, the law favors the freedom of parties to value their respective interests in negotiated contracts. And fourth, contracts in restraint of trade are unlawful.
Missouri courts balance these concerns by enforcing non-compete agreements in certain limited circumstances. Non-compete agreements are typically enforceable so long as they are reasonable. In practical terms, a non-compete agreement is reasonable if it is no more restrictive than is necessary to protect the legitimate interests of the employer.
Healthcare Svcs. v. Copeland, 198 S.W.3d 604, 609-610 (Mo. 2006) (internal citations omitted). As in most other LBI jurisdictions, Missouri implements that balancing test by examining the geographic scope and time of the non-compete clause.
However, the Missouri General Assembly departed from the typical common-law LBI approach by codifying into law Section 431.202 of the Missouri Revised Statutes, which impacts this case in two ways.
First, subsection 1(3)(b) defines “customer or supplier reliationships, goodwill or loyalty” as “among the protectable interests of the employer.” That means that, although KMOV-TV 4 probably does not have confidential trade secrets in the traditional sense of the word (i.e., the formula for Coca-Cola), it may have protectable customer relationships or goodwill in terms of its viewers who have previously tuned in to Mr. Conners’s broadcasts. Id. at 611 (“‘Customer contacts’ has been defined as ‘essentially the influence an employee acquires over his employer’s customers through personal contact. The quality, frequency, and duration of an employee’s exposure to an employer’s customers are crucial in determining the covenant’s reasonableness.”) (internal citations omitted).
Second, subsections 1(4) and 2 provide that noncompete clauses “shall be conclusively presumed to be reasonable if its postemployment duration is no more than one year.” KMOV-TV’s noncompete clause runs for exactly one year and thus falls within this safe harbor provision.
Moreover, in addition to the relevant statutory provisions, a Missouri appellate court recently decided – unlike the state of Illinois in Fifield – that an employee’s continued employment constitutes adequate consideration for an employer’s noncompete clause. JumboSack Corp v. Buyck, ___ S.W.3d ____, 2013 WL 2181375 (Mo. App. E.D. May 21, 2013). Similarly, the Missouri Supreme Court recently blue-penciled an otherwise invalid covenant not to compete, excising an overbroad geographical provision in order to enforce the balance of the clause. Whelan Security Co. v. Kennebrew, 379 S.W.3d 835, 846-47 (Mo. 2012).
As a result, we can infer that KMOV-TV believes that its noncompete clause with Conners will be enforced by the St. Louis courts; indeed, when KMOV-TV made Conners a settlement offer in July, the settlement included as part of its terms the continued enforcement of Conners’s noncompete clause. Conners refused the offer.
Conners and KMOV-TV return to court for an evidentiary hearing on September 3, 2013; we’ll be following and will be sure to keep you updated.