Noncompete Agreements May Need to be Adjusted as Business Lines Expand
The district court of South Dakota denied a preliminary injunction in Universal Underwriters Ins. Co. v. Schmidt, 2008 WL 631197 (D.S.D. 3/6/08).
Schmidt was an employee of Universal selling property, casualty and life insurance products to automobile dealers. He signed a noncompete agreement that prohibited him from selling these products for 2 years after his employment. During his employment with Universal, Schmidt began selling finance products to automobile dealers. He quit his job with Universal and opened his own business selling these other finance products.
The court construed the noncompete agreement narrowly, finding that Schmidt's actions were not prohibited by the contract. The court indicated Universal might incur some harm because of Schmidt's business but concluded any such harm would not be irreparable. After 3 months of discovery and briefing, the court denied the preliminary injunction.
