Defendant was a sales agronomist in South Dakota for the plaintiff until March 23, 2023, and then began working for a competitor of the plaintiff. The plaintiff is Wilbur-Ellis, a company that sells agricultural products including seed, fertilizer, and pesticides. The parties entered into an employment agreement signed in March 2015. There were three relevant paragraphs within the agreement: (1) the auto renewal of the contract, (2) restrictive covenants that included a non-compete and non-solicitation for two years and within 100 miles, and (3) a survival clause. The survival clause did not expressly state that restrictive covenants survived the termination of employment agreement.
On April 19, the plaintiff brought suit against defendant for violating the restrict covenants in the employment agreement and asked the court for an injunction. The court will grant the injunction if the plaintiff can prove they have “a fair chance of prevailing.” The court found that the existence of the survival clause shows the parties intended certain terms to continue after termination. There were no provisions within the contract that expressly stated the survival clause applied to that term, and rules of interpretation require a court to prefer an interpretation that gives effect to all clauses within a contract. Therefore, the restrictive covenants continued to be in effect after defendant’s employment ended and the employment agreement was terminated. The court ordered that the defendant abide by the parameters found in the employment agreement’s restrictive covenants.
Federal court rules require that a bond is posted when an injunction is ordered. This is to protect the financial interests of the party enjoined, especially if later proceedings determine they were wrongful enjoined from income producing activity. The court ordered the plaintiff to post a $350,000 bond based on loss revenue and lost customers to defendant’s new employer while awaiting trial. The new employer will only receive this money if defendant is found to be successful at trial.
Willbur-Ellis Co. v Erickson, No. 4:23-CV-04058-LLP (D.S.D. June 13, 2023).
