[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR TH E ELEV ENTH C IRCUIT FILED
____________________________ COURT OF APPEALS
U.S.
ELEVENTH CIRCUIT
No. 02-11324 AUGUST 21, 2003
____________________________ THOMAS K. KAHN
CLERK
D. C. Docket No. 01-00182-CV -4
JAMES A. KEENER,
Plaintiff-Counter-
Defendant-Appellee,
versus
CONVERGYS CORPORATION,
Defendant-Counter-
Claiman t-App ellant.
____________________________
Appeal from the United States District Court
for the S outhern District o f Geor gia
____________________________
(August 21, 2003)
Before BIRCH and BLACK, Circuit Judges, and PROPST*, District Judge.
BIRCH, Circuit Judge:
*
Honorable Robert B. Propst, United States District Judge for the Northern District of
Alabama, sitting by designation.
In this appeal, we apply the law as certified by the Supreme Court of Georgia and
affirm the district court’s grant of summary judgment, which declared a non-
compe tition agre ement (“N CA”) betwee n Con vergys a nd Ke ener un enforce able
under Georgia law. However, we hold that the district court abused its discretion
when it enjoined Conv ergys fro m seekin g to enfo rce the N CA ag ainst Ke ener in
any court in the world. We also reverse the portion of the judgment that dismissed
Conv ergys’s co unterclaim s.
I. BACKGROUND
To reach the merits of Convergys’s appeal regarding the enforceability of
the NCA, we concluded that we must first decide whether the district court
properly elected to apply Georgia law to the agreement, instead of Ohio law, as
was contracted to by the parties to the NCA. Because this issue involved what we
considered a dispute within Georgia conflicts of law jurisprudence, we certified the
follow ing que stion to th e Supr eme Co urt of G eorgia:
WHETHER A COURT APPLYING GEORGIA CONFLICT OF
LAWS RULES FOLLOWS THE LANGUAGE OF RESTATEMENT
(SECOND) CONFLICT OF LAWS § 187(2) AND, THEREFORE,
FIRST MUST ASCERTAIN WHETHER GEORG IA HAS A
“MATERIALLY GREATER INTEREST” IN APPLYING
GEORGIA LAW, RATHER THAN THE CONTRACTUALLY
SELECTED FORUM’S LAW, BEFORE IT ELECTS TO APPLY
GEORGIA LAW TO INVALIDATE A NON-COMPETE
AGREEMENT AS CONTRARY TO GEORGIA PUBLIC POLICY.
2
Keener v. Convergys Corp., 312 F.3d 1236, 1241 (11th Cir. 2002) (per curiam).
The S uprem e Cour t of Geo rgia answ ered in th e negativ e. Convergys Corp.
v. Keener, 582 S.E.2d 84, 87 (Ga. 2003). The court noted the conflicting law
found in our cir cuit: Nordson Corp. v. Plasschaert, 674 F.2d 1371(11th Cir. 1982),
and Bryan v. Hall Chemical Company, 993 F.2d 831 (11th Cir. 1993). Deeming
the decisions “erroneous” interpretations of Georgia law, the Supreme Court of
Georgia m ade it clear that “until ‘it becom es clear that a better ru le exists,’” 1 it
continu es to adh ere to trad itional con flicts of law rules. Convergys, 582 S.E.2d at
87 (citing General Tel. Co. v. Trimm, 252 G a. 95, 96 , 311 S .E.2d 4 60, 462 (1984 )).
We acknowledge the Supreme Court of Georgia’s clarification of the rule and
apply it here.
Accordingly, the rule is that
[a]fter first ascertaining that there were significant contacts with the
State of Georgia, such that the choice of [Georgia] law was neither
arbitrary nor constitutionally impermissible, see Allstate v. Hague,
449 U.S. 302, 101 S. Ct. 633 . . . (1981) . . . “[t]he law of the
jurisdiction chosen by parties to a contract to govern their contractual
rights will not be applied by Georgia courts where application of the
chosen law w ould co ntraven e the polic y of, or w ould be prejudic ial to
the interests of, this state. Covenants against disclosure, like
1
There is indication from the Supreme Court of Georgia that the better rule may in fact
be the one found in Restatement (Second) of Conflict of Laws § 187(2). See Convergys, 582
S.E.2d at 87-88 (Sears, J., concurring). The concurrence urges the General Assembly of Georgia
to adopt § 187(2) because of several advantages listed therein, including the protection of
“justified expectations.” Convergys, 582 S.E.2d at 87 (quotation omitted).
3
covena nts again st comp etition, affe ct the intere sts of this s tate, name ly
the flow of information needed for competition among businesses, and
hence their validity is determined by the public policy of this state.”
Convergys, 582 S.E.2d at 85-86 (quoting Nasco, Inc. v. Gimbert, 238 S.E.2d 368,
369 (G a. 1977 ) (citations omitted in original) ).
II. DISCUSSION
We now turn to the appeal before us: (1) whether Georgia law applies
because the NC A viola tes Geo rgia pub lic policy, an d, if so, w hether th e NCA is
unenfo rceable u nder G eorgia law ; (2) wh ether the d istrict cour t abused its
discretion in permanently enjoining the enforcement of the NCA worldwide; and
(3) whether the district court properly granted summary judgment for Keener on
Convergys’s counterclaims for restitution, provided the NCA was unenforceable,
and for an injun ction pro hibiting K eener fro m wo rking fo r H.O . System s, a
competitor, because he had access to C onvergys’s trade secrets that he would u se
during the cour se of his e mploym ent.
A. Summary Judgment
We review a district court’s legal conclusions underlying a decision to grant
injunctive relief de novo. Major League B aseball v. Crist, 331 F.3d 1177, 1183
(11th C ir. 2003 ). We agree with the district court’s determination that the
applicatio n of G eorgia law is not arb itrary or co nstitution ally imper missible
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because Convergys would be attempting to enforce the NCA against Keener, who
is living an d wor king in G eorgia, w here the e ffects w ould be felt. 2 Applying
Georgia conflicts of law rules, the district court assessed whether the NCA was
contrary to Geo rgia pub lic policy an d, findin g that it w as, refuse d to app ly Ohio
law. Keener v. Convergys Corp., 205 F. Supp. 2d 1374, 1377-80, 1381-82 (S.D.
Ga. 20 02) (citin g, inter alia, Hulcher Svcs., Inc. v. R.J. Corman R.R. Co., L.L.C.,
543 S .E.2d 4 61, 465 (Ga. A pp. 200 0) (refu sing to honor ch oice of law clauses if
chosen law w ould co ntraven e Geor gia pub lic policy); Nasco Inc., 238 S.E.2d at
369 (sa me); Troup County Elec. Membership Corp. v. Georgia Power Co., 191
S.E.2d 33, 36 (1972) (citing Georgia State Constitution provision for public policy
disfavoring restrictions of right of persons attempting to do business with the
public)).
Georgia law applies strict scrutiny to restrictive covenants in employment
contracts . New Atlanta E ar, Nos e & Th roat As socs., P.C . v. Pratt, 560 S.E.2d 268,
270-71 (Ga. App. 2002). Recognizing that Georgia does not employ the “blue
pencil” doctrine of severability, the district court deemed the NCA overbroad
2
Although the application of Georgia law is not arbitrary, it does not follow necessarily
that it is the preferred law. We acknowledge that the contract was entered into in Ohio, the
contract selected Ohio law, and it was the expectation of both parties that Ohio law would apply.
Ohio employs the blue pencil doctrine and an otherwise overbroad non-compete agreement
would be tailored in scope under Ohio law to the extent it is enforceable. Enonomou v.
Physicians Weight Loss Ctrs, 756 F. Supp. 1024, 1031 (N.D. Ohio 1991) (citing Raimonde v.
Van Vlerah, 325 N.E.2d 544 (Ohio 1975)).
5
because its prohibition of working for any competitor necessarily included any
similar co mpany world wide b ecause C onverg ys is an inte rnationa l compa ny.
Keener, 205 F. Supp. 2d at 1380 (citing Advance Tech. Consultants, Inc. v.
RoadTrac, L.L.C., 551 S.E.2d 735, 738-39 (Ga. App. 2001) (invalidating entire
NCA containing an overbroad restriction), and Morgan Stanley DW, Inc. v. Frisby,
163 F. Supp. 2d 1371, 1377-78 (N.D. Ga. 2001) (applying Georgia law and
refusing to “blue p encil” a res trictive cov enant)). F urtherm ore, the g eograp hic
reach of the NCA was indeterminate until the date of termination, thereby
invalidating the NCA because Georgia law invalidates “territorial restrictions that
change and expand during the course of the agreement.” Id. at 1381 (quoting New
Atlanta Ear, Nose & Throat Assocs., 560 S.E.2d at 272)). Third, the district court
found the non -solicitation compo nent of th e NCA to be “likew ise unen forceab le,”
for reasons of overbreadth, lack of definite geographic limitations, and blanket
restrictions against soliciting any customers, whether a prior relationship existed or
not. Id. at 1382 (quoting Capricorn Sys., Inc. v. Pednekar, 546 S.E.2d 554, 557-58
(Ga. A pp. 200 1)); but see W.R. Grace & Co., Dearborn D iv., Conn. v. Mouyal, 982
F.2d 480, 481 (11th Cir. 1993) (applying law as certified by the Georgia Supreme
Court and holding that a non-solicitation clause need not contain a geographical
restriction so “long as the sco pe of res triction is d efined in a mann er that is ex plicit,
6
does not require the restricted employee to speculate as to the bounds of the
restriction, and does not overreach”). Accordingly, the district court found the
NCA unenforceable “in toto, thus entitling Keener to declaratory and injunctive
relief.” Keener, 205 F. Supp. 2d at 1382.
Based o n the distr ict court’s th oroug h analysis and app lication of Georg ia
law, we affirm the district court’s order granting summary judgment in favor of
Keener. The NCA w as contrary to Georgia public policy, Georgia law therefore
applied, a nd the N CA w as unen forceab le under Georg ia law du e to its ove rbreadth .
B. Permanent Injunction
We review the district court’s grant of injunctive relief for abuse of
discretion . Alabama Disabilities Advocacy Program v. J.S. Tarwater
Developmental Ctr., 97 F.3d 492, 496 (11th Cir. 1996). Permanent injunctive
relief requ ires three e lements: ( 1) succe ss on the merits; (2 ) continu ing irrep arable
injury; an d (3) no adequa te remed y at law. Newman v. Alabama, 683 F.2d 1312,
1319 (11th Cir. 1982). Injunctive relief should be limited in scope to the extent
necessar y to prote ct the intere sts of the p arties. See Gibson v. Firestone, 741 F.2d
1268, 1 273 (1 1th Cir. 1 984) (c onstitutio nal violatio n contex t); see also Soc’y for
Goodwill to Retarded Children, Inc. v. Cuomo, 737 F.2d 1239, 1251 (2d Cir. 1984)
(“Injunctive relief should be narrowly tailored to fit the specific legal violations
7
adjudg ed.”); Consolidation Coal Co. v. Disabled Miners of S. W. Va., 442 F.2d
1261, 1267 (4th Cir. 1971) (An injunction “should be tailored to restrain no more
than what is reasonably required to accomplish its ends.”).
Keener prevailed on summary judgment when the district court declared that
the NCA is unenforceable under Georgia law, thus entitling him to injunctive relief
if he demonstrated irreparable harm and that there was no adequate remedy at law.3
Finding the circumstances amenable to injunctive relief, the district court awarded
it to Keener by permanently enjoining Convergys from attempting to enforce the
NCA “in any court worldwide.” Keener, 205 F. Supp. 2d at 1382. Convergys
contests the equity of the result, claiming that Keener should not be permitted the
protection of the injunction because he intentionally misrepresented to C onvergys
the natur e of his n ew em ployme nt whe n he left C onverg ys in ord er to avo id their
enforcement of the NCA in Ohio by applying Ohio law. Convergys decries the
fact that the district court did not consider this uncontested fact in its order granting
injunctive relief. In addition, Convergys argues that the injunction should be
limited to in clude G eorgia o nly.
We hold that the district court abused its discretion because it did not tailor
the injun ction to in clude G eorgia only. The NCA is unenf orceable under G eorgia
3
The parties do not dispute the presence of these elements or the availability of
injunctive relief because of their absence.
8
law, however, because the public policy of Georgia is hostile toward any
limitations on competition, and it will apply its own law to any ag reements against
its public policy even if the parties contracted in another state with the
understanding that the other state’s law wou ld apply. For example, Oh io employs
the blue pencil doctrine; therefore, if the NCA were overbroad under Ohio law, the
court would be empowered to modify the agreement to enforce it and protect the
interests o f the partie s involv ed. Geo rgia law does no t offer tha t flexibility.
Georg ia of cou rse is entitled to enfor ce its pub lic policy in terests w ithin its
bound aries and , in the circu mstance that litigation over an NCA is initiated in
Georgia, it may employ that public policy to override a contracted choice of law
provision. However, Georgia cannot in effect impute its public policy decisions
nationw ide - the p ublic po licy of G eorgia is n ot that eve rywhe re. To p ermit a
nationwide injunction would in effect interfere both with parties’ ability to contract
and their ability to en force ap propria tely derive d expec tations.
More over, K eener is n ot witho ut fault be cause he misrepr esented to
Conv ergys his next occ upation as a stock broker . He adm itted doin g this to av oid
Conv ergys’s en forcem ent of the NCA . That m isreprese ntation, th ough n ot on its
own e gregiou s, when combin ed with Keene r’s preem ptive dec laratory su it, did
result in depriving Convergys of the opportunity of enforcing the NCA in Ohio,
9
under O hio law , as prov ided by th e NCA . Keener, as a con sequen ce of his
misrepr esentation , avoided enforce ment by Conv ergys in O hio and benefitted in
electing a jurisdiction that is hostile to NCAs.
The NCA is unenforceable under Georgia law, in Georgia. The district court
extended the injunction beyond a reasonable scope by permitting the public policy
interests of Georgia to declare an NCA unenforceable nationwide, when its law
was not intended by the parties to apply in the first place. Accordingly, the
injunctio n shou ld be mo dified to p reclude C onverg ys from enforcin g the N CA in
Georg ia only.
C. Con vergys’s Coun terclaim
Convergys appeals the dismissal of its counterclaims for (1) restitution for
the stock options tendered to Keener because of failure of consideration of the
NCA, if unenforceable, and (2) Keener’s violation of the Ohio and Georgia Trade
Secret Acts. The district court indicated in an order entered subsequent to the
notice of appeal that Convergys’s second claim had not been dismissed by the
summ ary judg ment or der. Accor dingly, w e will no t address its merits.
Conv ergys arg ues that K eener, as th e movin g party fo r summ ary judg ment,
never demonstrated an absence of evidence to support Convergys’s case and,
therefor e, did no t carry his b urden to suppo rt the dism issal of its cla ims.
10
Appellant’s Br. at 38 (citing Danskin e v. Miam i Dade Fire Dep’t, 253 F.3d 1288,
1293 ( 11th C ir. 2001 )). A rev iew of th e record demon strates that K eener, in h is
motion for summary judgment, argued only the merits of his claim for declaratory
and injunctive relief. Other than a general claim for summary judgment on
Convergys’s counterclaim in the conclusion of his motion, Keener only references
Convergys’s counterclaim for restitution in a footnote, claiming that he did not
have unclean hands, but deferred to the court’s discretion whether he should give
back the income from stock options that he received as consideration for signing
the NC A. Ke ener oth erwise d id not pr offer a leg al or factu al basis su pportin g his
motion for sum mary jud gment o n Con vergys’s counter claim.
The district court dismissed Convergys’s counterclaim for restitution
because it deemed it abandoned when Convergys failed to raise any argument on
the claim. Keener, 205 F. Supp. 2d at 1382. In addition, the court cited Liautaud v.
Liautaud, 221 F.3d 981, 989 (7th Cir. 2000), for the proposition that a claim for
unjust enrichment is not recoverable when the underlying contract is void as
against p ublic po licy. That d ecision, h owev er, was r endered pursua nt to Illino is
law. The district court’s order does not contain the requisite analysis of
Convergys’s counterclaim to support its dismissal under Georgia law. To the
contrary, it was incumbent upon Keener to demonstrate first the legal and factual
11
bases su pportin g summ ary judg ment of Conv ergys’s co unterclaim . Celotex Corp.
v. Catrett, 477 U .S. 317 , 322-2 3, 106 S . Ct. 254 8, 2552 -53 (19 86). K eener did
neither; instead, he focused his efforts on his own claim. His success does not
render C onverg ys’s claims non-ex istent.
Conv ergys’s co unterclaim , which was ple d in the alte rnative, w as factually
triggered when the district court found the NCA to be unenforceable. The
viability of that claim w as not litiga ted by the parties be fore the d istrict cour t.
Accordingly, the district court’s dismissal of that counterclaim is reversed and
remanded for proce edings consistent with this opinion. W e anticipate the first
counterclaim will now join the second counterclaim, which apparently was not
dismisse d, and b oth will b e prope rly befor e the distric t court.
III. CONCLUSION
Given the clarification by the Supreme Court of Georgia on its conflicts of
law rules, we are able to address the balance o f Convergys’s appeal. Because
Georgia public policy is offended by the NCA, Georgia law applies to render the
NCA unenforceable, as properly held by the district court. It was not an abuse of
discretion to enjoin the enforcement of the NCA in Georgia, while Keener remains
a resident of Georgia. However, the breadth of the injunction, without such
limitation, under the facts of this case, constitutes an abuse of discretion and that
12
portion of the injunction is reversed. In addition, Convergys’s counterclaims either
were not addressed by the district court and not before us, or disposed of without
proper litigation of the issues before the district court. The portion of the order
dismissin g the cou nterclaim is reverse d and re mande d for fu rther pro ceeding s.
Accor dingly, th e judgm ent of the district cou rt is
AFFIRMED IN PART AND REVER SED IN PART.
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