More on Larry Conners and Noncompetes in Missouri

Last month, we took a look at one aspect of the lawsuit brought by former news anchor Larry Conners, who had been terminated by KMOV-TV 4 in St. Louis, Missouri after posting various political comments to his Facebook page.  Specifically, we discussed the implications of the Missouri court’s denial of Conners’s motion for a Temporary Restraining Order (TRO) seeking to invalidate Conners’s non-compete clause in order to permit him to seek another TV job in St. Louis.  To refresh your memory:  we concluded that the court’s refusal to grant a TRO did not necessarily indicate that the clause would ultimately be held enforceable – given the heavy burden a litigant must meet in order to get a TRO – but several aspects of Missouri law seemed to weigh in favor of the clause’s enforceability.  (Our full reasoning is set forth here.)  We also told you that Conners would be headed back to court to argue his case on the merits.

Well, Conners returned to court a few days ago.  According to the St. Louis Post-Dispatch, Conners’s lawyers argued that (1) that the noncompete clause was unenforceable because KMOV-TV first breached its employment contract with Conners by firing him without cause; and (2) that “[r]ecent Missouri Supreme Court rulings call into question the legality of no-compete clauses aimed solely at killing potential competition between businesses.” 

We discuss these arguments below, with an eye beyond the specifics of Mr. Conners’s case and to the relationship between employers and employees in Missouri  more generally.  (We know that some of our readers come from the Show-Me state.)

First, Conners’s lawyers have it exactly right that if the court determines that KMOV-TV breached its contract with Conners by terminating him without cause, then KMOV would not be able to rely on or otherwise enforce the noncompete clause; Missouri law is clear that an “employer that has materially breached an employment agreement before an employee has violated a covenant not to compete may not enforce the covenant.”   Washington County Mem'l Hosp. v. Sidebottom, 7 S.W.3d 542, 546 (Mo.App. E.D.1999).  This, in turn, reflects the hornbook principle in Missouri (and most states) that a “party to a contract cannot seek to enforce its benefits where he is the first to violate its terms.”  Ozark Appraisal Serice, Inc. v. Neale, 67 S.W.3d 759, 764 (Mo.App. S.D.2002).  We have not and do not opine as to whether KMOV terminated Mr. Conners for cause; that’s a fact-specific determination that the court will have to make.  But if the station breached its employment contract, Conners is correct that the court will almost certainly strike down the noncompete clause.

What about Mr. Conners’s second argument, that “recent Missouri Supreme Court rulings” call into question the enforceability of covenants not to compete?  To put it bluntly:  we can’t find any evidence of any such rulings.

The most recent Missouri Supreme Court decision regarding covenants not to compete is Whelan Security Co. v. Kennebrew, 379 S.W.3d 835 (Mo. 2012), which held that a two-year covenant not to compete within 50 miles of his previous employer was valid and enforceable.  Id. at 846-47.  Similarly, the most recent intermediate appellate decision in Missouri with respect to noncompete clauses is JumboSack Corp. v. Buyck, ___ S.W.3d ___, 2013 WL 2181375 (Mo.  App. E.D. May 21, 2013), in which the Court of Appeals of Missouri held that an employee’s continued employment at-will, salary, and commissions constituted sufficient consideration to enforce a three-year covenant not to compete.  The only other appellate decision to consider this issue since the Missouri Supreme Court decided Kennebrew is Central Trust and Investment Co. v. Kennedy, ___ S.W.3d ___, 2013 WL 268687 (Mo.App. S.D. Jan. 24, 2013), which held that an ex-employee has a right to compete with a former employer if the employee has not entered into a valid covenant-not-to-compete agreement, suggesting, of course, that such clauses can be valid under Missouri law.  Id. at *6.  All of this suggests to us that the Missouri courts have not recently reversed course on the long-standing law of the state providing for the enforceability of employee covenants not to compete.

Moreover, the Missouri state legislature has enacted a “safe harbor” provision, M.R.S. § 431.202, which provides that employee covenants not to compete are considered presumptively reasonable if they run for no more than one year, and KMOV’s clause runs for exactly one year.  Ordinarily, in order to overturn legislation such as § 431.202, the Missouri Supreme Court would have to find that the law violates some aspect of either the Missouri or United States Constitutions, and we know of no such argument of any force.

Section 431.202 also provides that a noncompete clause can reasonably seek to protect an employer’s legitimate, protectable interests in “customer or supplier relationships, goodwill, or loyalty,” which we infer in this case to be the relationship between KMOV-TV and its viewers.

Therefore, it strikes us as highly unlikely that Mr. Conners will prevail on this second argument; Missouri law seems to clearly recognize and protect the enforceability of limited covenants not to compete, and the one drafted by KMOV-TV seems to fit within both the statutory safe harbor and the prevailing case law, including the most recent decisions by the Missouri appellate courts.

As always, we’ll continue to monitor and let you know as events develop.

• Noncompete Agreements ‎