23 LTD v. Herman

Outcome

Excerpt

Herman worked as a legal recruiter for 23 LTD, d/b/a Bradsby Group (Bradsby). When she was hired, Herman signed an employment agreement with a nonsolicitation provision and a noncompete provision. Bradsby terminated Herman's employment and she thereafter founded a company that did some legal recruiting and law firm succession planning. Bradsby sued Herman for breach of the noncompete and nonsolicitation provisions. A jury determined that Herman had not breached the noncompete provision, but returned a verdict in favor of Bradsby on the nonsolicitation claim and awarded nominal damages of one dollar. The district court set aside that verdict and entered judgment in favor of Herman because the nonsolicitation provision violates Colorado law and the court declined to narrow the provision to render it enforceable. The court denied Herman's request for attorney fees under the employment agreement's fee-shifting provision. On appeal, Bradsby argued that the district court erred in declining to blue pencil the nonsolicitation provision. Parties to an employment, noncompete, or nonsolicitation agreement cannot contractually obligate a court to blue pencil noncompete or nonsolicitation provisions to render unenforceable terms enforceable. But a trial court has broad discretion to blue pencil an otherwise offensive restrictive covenant. Here, the district court gave substantial reasons why it declined to exercise its discretion to blue pencil the agreement, including the general Colorado public policy against noncompete provisions, authority in other jurisdictions, and the significant overbreadth of the nonsolicitation provision. Thus, the district court did not err. Bradsby next argued that the jury's verdict that Herman did not form a competing company in violation of the noncompete provision is not supported by the evidence. The noncompete provision stated that, upon her termination, Herman would not become involved in a company that competed with Bradsby within a defined