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Five Year Non-Compete Enforced In Indiana

The Indiana Court of Appeals recently affirmed a preliminary injunction enforcing a five-year non-compete agreement against a former employee of a printing business. On its face, the five-year duration is eye-catching. Hence, the question presented by this decision, Mayne v. O’Bannon Publishing Company, Inc., is why a restriction of that length was found to be reasonable?

Here, the former employee, Elizabeth Mayne, had previously owned and operated a printing business in Kentucky. While in the process of closing that business, she accepted a written employment offer from O’Bannon Publishing Company that was contingent on her signing a non-compete that barred her from “directly or indirectly engag[ing] in any activity that competes with the Corporation in the printing business in Harrison County, Indiana or Crawford County, Indiana for a period of five (5) years following [her] termination of employment.”

As a threshold matter, the Appellate Court acknowledged that “five years is a lengthy period of time for these types of restrictions.” Nevertheless, it explained that it had previously upheld five-year non-competes in the employment context.

In this particular case, the Appellate Court noted that Mayne supervised one or two employees; offered direct, personal assistance to business customers; knew business customers’ printing needs well; had a “personal relationship with many of [the company’s] business customers”; and was “the face” of the company. Furthermore, because the non-compete provision only prevented Mayne from competing in two Indiana counties, it did not prevent her from competing in Kentucky – where she previously owned and operated a printing business – and therefore would not preclude her from pursuing printing as a means of support.

Based on these findings, the Appellate Court held that the employer had “presented a prima facie case regarding the reasonableness of the five-year restriction” and that the trial court’s issuance of a preliminary injunction was not erroneous as a matter of law.

This case illustrates how differently courts across the country treat non-competes and how important it is know the law of the pertinent jurisdiction.