Court Enforces Non-Compete for Breach Within the Courier Services Industry

Express Courier Systems, Inc. was a company that provided courier services to large hospitals, laboratories, and other medical facilities throughout New England, New York, and New Jersey.  The company provided high-efficiency route planning, dispatch services, monitored courier performance, and analyzed customer feedback.  One of the company’s biggest accounts was with Stamford Hospital with whom it had a contract since 2000.  Express Courier generally recruited its couriers through Contractor Management Services, LLC (CMS), an independent third-party human resources firm. Express Courier employed Misters Seymour Brown, Chip Joseph, and Moses Stephenson as independent contractors from 1999, 2002, and 2005 respectively, as couriers in connection with its agreement with Stamford Hospital.

Violating the Employment Agreements

In December 2005, the company required that these employees register and become members of CMS if they wished to continue to provide services as independent contractors.  As part of the registration process with CMS to continue their employment with Express Courier, the three employees signed non-compete agreements that prohibited them from working at a company providing the same or similar services within the “Standard Metropolitan Statistical Area of the Eastern Seaboard” to an entity that was a client in the preceding six months for a one-year period following termination.  Additionally, the agreements stated that Express Courier was entitled to injunctive relief in the event of a breach of the non-compete agreements.

Stamford Hospital informed Express Courier in September 2006 that it was terminating its services except for those associated with the hospital’s laboratory.  At the same time, Misters Seymour, Joseph, and Stephenson informed Express Courier that they had accepted positions with Xerox.  The employees said that the offers were “too good to refuse” and that their last days would be September 30, 2006.

All three men began to work for Xerox on October 1, 2006 where their positions were very similar to their previous ones at Express Couriers and they were paid to perform very similar services.  Express Courier saw these actions as clear violations of the non-compete agreements and sued its three former employees in Connecticut state court where it sought an injunction enforcing the provisions of the restrictive covenants.

The Court’s Ruling

All three defendants claimed that their work as Xerox employees was vastly different from the services they provided as Express Courier employees but the court rejected this argument and concluded that they were performing the same services as they had done while still employed by Express Couriers.  The court established that there was a clear breach of the agreements’ provisions but next had to determine if the provisions were in fact reasonable, a requirement for enforcement under Connecticut law.

The restrictive covenants, according to the court provided Express Courier with a reasonable degree of protection while simultaneously not preventing the former employees from securing future employment.  The Eastern Seaboard is a large geographical area but even this restriction was severely limited by only applying to Express Courier’s clients in the six months prior to an employee’s termination.

In light of a clear breach of the non-compete agreements and a finding that they contained reasonable restrictions, the court found in favor of Express Courier and granted the company’s request for injunctions enjoining the former employees from providing services to Stamford Hospital in connection with their new employment with Xerox.

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