Enforcement of a Non-Compete Agreement in the Salon Industry
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Case Background
Ms. Francine Piscitelli owned and operated a hairdressing and beauty salon since 1985. She employed Ms. Bernadette Pepe as a stylist from 1990 to July 31, 2004. The salon moved and underwent a change in its trade name in 1997. Ms. Piscitelli had Ms. Pepe sign an Employment Agreement on February 27, 1997, that contained a restrictive non-compete covenant.
The non-compete agreement prohibited Ms. Pepe for one year following termination from engaging in competing business activities, soliciting the salon’s employees, or soliciting the salon’s current clients. The agreement designated a restricted area for the covenant not to compete: Branford, North Branford, East Haven, Guilford, and the portion of New Haven east of the waterway formed by the Quinnipiac River, New Haven Harbor, and Morris Cove.
Ms. Pepe signed a three-year lease on March 9, 2002 for a premise in North Branford to operate a full-service hair and nail salon. Ms. Piscitelli learned of this in May 2004, confronted Ms. Pepe about the development, and Ms. Pepe confirmed what her boss had been hearing around the salon. Ms. Pepe assured her boss that she would not be soliciting any of the employees or any current clients beyond her own. Ms. Piscitelli was comforted by these assurances and allowed Ms. Pepe to continue to schedule appointments at the salon until she voluntarily terminated her employment on July 31, 2004.
In the following months, three stylists left the salon to work for Ms. Pepe at La Bella salon and Ms. Pepe solicited clients of her previous salon regarding the opening of her own salon.
The Court Hearing and its Outcome
Ms. Piscitelli sued Ms. Pepe in Connecticut state court for breach of the non-compete agreement. Ms. Pepe however contended that the agreement was unenforceable because it: 1) lacked adequate consideration, 2) contained unreasonable restrictions, and 3) there was an adequate remedy at law, thus barring injunctive relief as an appropriate legal solution. The court rejected these defenses, found in favor of Ms. Piscitelli, and granted her request for enforcement of the covenant not to compete.
While the agreement did not increase Ms. Pepe’s compensation, paragraph ten created additional consideration because it obligated the employer, Ms. Piscitelli, to pay for “certain courses in professional education and training”. This benefit, according to the court, was adequate consideration in exchange for Ms. Pepe’s covenants.
Furthermore, the court concluded that the covenant not to compete was reasonable with respect to the time and geographical limitations contained therein. The restrictions did not unnecessarily restrict Ms. Pepe’s ability to earn a living or secure future employment within the salon industry. The restriction adequately protected Ms. Piscitelli’s legitimate business interests while not excessively harming Ms. Pepe’s career opportunities.
Lastly, the court disagreed with Ms. Pepe that there was an adequate remedy at law available for the case. The court held that Ms. Piscitelli met the burden of proof to show the need for an injunction and concluded that injunctive relief was appropriate for the case.
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