Court Upholds Non-compete's Geographic Scope and Duration

In Senture, LLC v. Dietrich, 2008 WL 4108046 (E.D.Va. 2008), the Eastern District was presented with a non-compete agreement with a national geographic scope and a one year duration.  Defendants filed a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).  Applying the law of Kentucky, the court denied the Defendants’ motion to dismiss while upholding the reasonableness of the non-compete agreement’s one year duration and stating that a national geographic scope in the same agreement is reasonable if the employer conducts business nationwide.

Senture, LLC (“Senture”) is a Kentucky company offering  services and support for national security programs.  In the present case, Senture performed  services for the government’s new Transportation Workers’ Identification Credential (“TWIC”) security program.

Defendants, Joseph E. Dietrich and Thomas F. Swider, were formerly employed by Senture.  During their employment they each signed employment agreements containing non-compete and confidentiality provisions.  After leaving their employment with Senture, both Defendants went to work for SAIC, Inc., a competitor of Senture.

Sometime in early 2008, SAIC purportedly obtained a subcontract with Lockheed Martin Corporation, a major government contractor, to perform certain TWIC related work.  Ultimately, SAIC assumed management over the TWIC services that Senture formerly managed.  Senture filed suit against the Defendants for alleged violations of their respective non-compete and confidentiality agreements.  The agreements contained forum-selection clauses naming Kentucky law as the law governing the agreements.  The Defendants moved to dismiss the suit, arguing that the agreements were unduly broad and against public policy.  Applying Kentucky law, the court denied Defendant’s motion to dismiss, holding that the non-compete agreement’s nationwide geographic scope was reasonable and not unduly broad and that the one year temporal limitation on the agreement was also reasonable.