James A. Keener v. Convergys Corp.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED
____________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
November 19, 2002
No. 02-11324 THOMAS K. KAHN
____________________________ CLERK
D. C. Docket No. 01-00182-CV-4

JAMES A. KEENER,

Plaintiff-Counter-
Defendant-Appellee,

versus

CONVERGYS CORPORATION,

Defendant-Counter-
Claimant-Appellant.
____________________________
Appeal from the United States District Court
for the Southern District of Georgia
____________________________
(November 19, 2002)

Before BIRCH and BLACK, Circuit Judges, and PROPST*, District Judge.

PER CURIAM:

CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF GEORGIA,

*
Honorable Robert B. Propst, U.S. District Judge for the Northern District
of Alabama, sitting by designation.
PURSUANT TO O.C.G.A. § 15-2-9. TO THE SUPREME COURT OF

GEORGIA AND ITS HONORABLE JUSTICES:

Convergys Corporation appeals a declaratory judgment granted to James A.

Keener and a permanent injunction imposed against Convergys. The district court

declared a non-competition agreement (“NCA”) between Convergys and Keener

unenforceable under Georgia law, enjoined Convergys from seeking to enforce the

NCA against Keener, and dismissed Convergys’ counterclaims. To reach the

merits of Convergys’ appeal regarding the enforceability of the NCA, we must first

decide whether the district court properly elected to apply Georgia law to the

agreement, instead of Ohio law, as contracted to by the parties to the NCA.

Because this issue involves a dispute within Georgia conflicts of law jurisprudence,

we certify this question to the Supreme Court of Georgia and postpone any further

determination of the appeal in this case until we receive an answer from them.

Question CERTIFIED.

I. BACKGROUND

James A. Keener is a former employee of Convergys Corporation

(“Convergys”), an Ohio corporation. In 1984, Keener began working for

Cincinnati Bell Information Systems (“CBIS”), located in Cincinnati, Ohio, and

remained employed with CBIS through its ultimate evolution into what is now

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Convergys until he voluntarily terminated his employment in March 2001. During

the course of his employment with CBIS/Convergys, Keener worked in Cincinnati,

Ohio, and Chicago, Illinois.

In 1995, Keener executed the NCA with CBIS as a condition of his

continued employment, which contemplated Keener’s increasing exposure and

responsibilities with regard to the development and marketing of CBIS’s

proprietary software billing systems, which are utilized by telecommunications

companies, particularly providers of wireless telephone services. The NCA was

supported by consideration in the form of stock options. The NCA provided, in

relevant part:

Employee agrees for two years following termination of employment
for any reason (or if this period is unenforceable by law, then for such
period as shall be enforceable), not to engage in any business offering
services related to the business of the Company at the time of
termination in any capacity which requires or utilizes the skill,
training or knowledge acquired by Employee while employed by the
Company, whether such capacity be as a principal, partner, joint
venturer, agent, employee, salesperson, consultant, director or officer,
where such position would involve Employee in any business activity
in competition with the Company or in any business that provides
billing and/or customer care systems to third parties engaged in the
communication business (including wireless, wireline and cable
communication businesses). This restriction will be limited to the
geographical area where the Company is doing business at the
termination of employment or to such other geographical area as a
court shall find reasonably necessary to protect the goodwill and
business of the Company. R1-29, Ex. A.

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The NCA contained a “choice of law” provision, which selected Ohio as the law

governing the NCA. Id.

In 2001, Keener accepted a position in Savannah, Georgia, with H.O.

Systems, a competitor of Convergys. Upon leaving Convergys, however, Keener

informed his co-workers that he was going to work in the banking industry and led

them to believe that he was leaving the telecommunications and computer software

industries. Keener admitted that he was concerned about the effect of the

Convergys NCA on his employment prospects and negotiated with H.O. Systems

for their assistance in the event the NCA became an issue.

On 24 May 2001, Keener by happenstance encountered a Convergys

salesperson while making a business call for H.O. Systems. Later that day, Keener

received a message from an attorney in Convergys’ legal department, reminding

him of the NCA. Keener and H.O. Systems later received a letter from Convergys

reiterating the existence of the NCA and demanding that Keener discontinue his

employment with H.O. Systems. Ultimately, after consultation with H.O. Systems’

legal counsel, Keener and H.O. Systems entered into a separation agreement,

whereby Keener received $50,000 severance and other enumerated benefits.

On 3 August 2001, Keener brought an action for declaratory and injunctive

relief in the United States District Court for the Southern District of Georgia.

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Keener sought a declaratory judgment that the NCA was unenforceable and an

injunction to restrain Convergys from enforcing the NCA. Keener also claimed

damages for tortious interference with his employment with H.O. Systems by

Convergys and asserted entitlement to costs and attorney’s fees resulting from

Convergys’ “stubborn[] litigious[ness]” in enforcing the NCA. R1-1-9.

Convergys counterclaimed for restitution and injunctive relief based upon the right

to enforce the NCA. Keener moved for summary judgment and the district court

ruled in his favor, declaring the NCA unenforceable under Georgia law, enjoining

Convergys from enforcing it, and dismissing Convergys’ counterclaims. It is from

this ruling that Convergys appeals.

II. DISCUSSION

We first review a district court’s order granting summary judgment de novo

and then review for abuse of discretion a district court’s order granting injunctive

relief based upon a proper grant of summary judgment. Salomon Smith Barney,

Inc. v. Harvey, 260 F.3d 1302, 1306 (11th Cir. 2001), petition for cert. filed, 70

U.S.L.W. 3395 (U.S. Nov. 6, 2001) (No. 01-801); see also Alabama Disabilities

Advocacy Program v. J.S. Tarwater Developmental Ctr., 97 F.3d 492, 496 (11th

Cir. 1996).

Keener’s claims were grounded in diversity jurisdiction, therefore the

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district court, sitting in Georgia and acting in accordance with Erie R.R. Co. v.

Tompkins, 304 U.S. 64, 58 S. Ct. 817 (1938), applied Georgia’s conflict of law

rules to determine whether Georgia or Ohio law applied to the NCA. Klaxon Co.

v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 1021 (1941). In

accordance with Erie, we review the district court’s decision in light of Georgia

conflict of laws rules and our precedent in applying those rules.

Convergys contends that the district court acted contrary to precedent by

declaring the NCA unenforceable under Georgia law. Convergys argues that the

district court should have given effect to the choice-of-law provision in the NCA

and decided the merits of Keener’s motion for summary judgment under Ohio law.

In support, Convergys points to the factual record that contains little connection

between the execution of the NCA and Georgia. The only connection argued is

that Keener currently lives in Georgia and was employed by H.O. Systems in

Georgia. Accordingly, Convergys claims, pursuant to the language in Restatement

(Second) Conflict of Laws § 187(2)1, Georgia does not have the requisite

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Restatement (Second) of Conflict of Laws § 187(2) (1971) provides:
(2) The law of the state chosen by the parties to govern their
contractual rights and duties will be applied, even if the particular
issue is one which the parties could not have resolved by an explicit
provision in their agreement directed to that issue, unless either
(a) the chosen state has no substantial relationship to the parties or
the transaction and there is no other reasonable basis for the parties’
choice, or
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“materially greater interest” than Ohio in applying its own law to the NCA, and the

district court erred when it did not consider the relative interest of the two states

before applying Georgia law to declare the NCA unenforceable. Convergys argues

that Ohio law governs and the NCA is enforceable under Ohio law.

Before we can decide the merits of Convergys’ appeal regarding the

enforceability of the NCA, we must first determine whether the district court

correctly elected to apply the law of Georgia. The district court relied upon, inter

alia, Nasco, Inc. v. Gimbert, 238 S.E.2d 368 (Ga. 1977), and Hulcher Services, Inc.

v. R.J. Corman Railroad Company, L.L.C., 543 S.E.2d 461, 465 (Ga. Ct. App.

2000), for the Georgia conflict of laws rule that “[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 would contravene the policy

of, or would be prejudicial to the interests of, this state.” Nasco, 238 S.E.2d at 369

(citing, inter alia, Restatement (Second) Conflict of Laws § 187(2)(b)). The

district court assessed whether the NCA was contrary to Georgia public policy and,

finding that it was, refused to apply Ohio law.

(b) application of the law of the chosen state would be contrary to a
fundamental policy of a state which has a materially greater interest
than the chosen state in the determination of the particular issue and
which, under the rule of § 188 [(Law Governing in Absence of
Effective Choice by the Parties)], would be the state of the applicable
law in the absence of an effective choice of law by the parties.
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 There are two cases in this circuit that appear to conflict with the district

court’s method of analysis, a fact the district court acknowledged and opted to

disregard in favor of what it perceived to be actual controlling Georgia precedent.

In Nordson Corp. v. Plasschaert, 674 F.2d 1371(11th Cir. 1982), we followed

Nasco and, noting Nasco’s citation of the Restatement section, looked toward

Restatement (Second) Conflict of Laws § 187(2) to determine whether Georgia

would honor the parties’ choice of law provision. We understood Nasco and §

187(2) to require that “Georgia will honor the choice of law provision unless there

was no reasonable basis for the parties’ choice or unless the provision is ‘contrary

to a fundamental policy of a state which has a materially greater interest than the

chosen state.’” Id. at 1375. Finding a reasonable basis for the election of Ohio law

and that the provision at issue violated Georgia’s policy against restraints of

competition, we decided, specific to the facts in Nordson, that “the controlling

determination is whether Georgia has a materially greater interest than Ohio in this

issue,” and found that Georgia did not. Id. (“Each case must be analyzed on its

own facts.”). We limited the scope of the analysis to instances when the parties

had agreed on a choice of law provision. Id. Likewise, in Bryan v. Hall Chemical

Company, 993 F.2d 831 (11th Cir. 1993), we followed Nordson and Nasco and

sustained a district court’s application of another state’s law when the parties

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contractually provided for the application of that law, based upon the fact that

Georgia did not have a “materially greater interest” in applying its own law.

The district court in this case, instead, followed the reasoning of Marketing

and Research Counselors, Inc. v. Booth, 601 F. Supp. 615 (N.D. Ga. 1985), which

found irreconcilable the Nordson and Nasco decisions. See id. at 617 (finding the

“interest analysis” language in Nordson counter to the language in Nasco that

determined the validity of non-compete agreements by the public policy of

Georgia). Noting that conflict, the district court relied on Booth to support its

initial evaluation of the NCA pursuant to Georgia public policy without first

determining whether Georgia had a “materially greater interest” than Ohio in

enforcing its law.

We now seek the guidance of the Supreme Court of Georgia to settle this

dispute and find it proper to certify the issue for their resolution. The language of

the Restatement § 187(2), as relied upon by Nasco, suggests that an initial

assessment of whether Georgia has a materially greater interest in applying its own

law is a necessary step in the choice of law analysis, a step in addition to the public

policy determination.

“Where there is any doubt as to the application of state law, a federal court

should certify the question to the state supreme court to avoid making unnecessary

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Erie ‘guesses’ and to offer the state court the opportunity to interpret or change

existing law.” Mosher v. Speedstar Div. of AMCA Intern., Inc., 52 F.3d 913, 916-

17 (11th Cir. 1995) (citation omitted). To the extent, if any, our prior decisions

depart from Georgia conflict of laws jurisprudence, it behooves us to seek

guidance as to the proper analytical framework. We find, after thorough review of

Georgia law, that we are best equipped to render a decision on this issue after

certification to the Georgia Supreme Court of the following question:

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

GEORGIA 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.

III. CERTIFICATION

We certify the above-styled question to the Georgia Supreme Court. The

phrasing used in this certified question should not restrict the Supreme Court's

consideration of the problem posed by this case. This extends to the Supreme

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Court's restatement of the issues and the manner in which the answer is given. To

assist the Supreme Court's consideration of the case, the entire record, along with

the briefs of the parties, shall be transmitted to the Supreme Court of Georgia.

QUESTION CERTIFIED.

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