In November 1981 Mr. Perrelli voluntarily left the employ of New Haven Tobacco and proceeded to start his own wholesale tobacco business. New Haven Tobacco sued to recover money damages and for injunctive relief in the form of a court order restraining Mr. Perrelli’s wholesale tobacco business activities.
The Court’s Decision
The trial court found in favor of Mr. Perrelli and denied New Haven Tobacco’s injunction application. It found that the agreement lacked geographical limitations and went against the public’s interest. New Haven Tobacco appealed to the Appellate Court of Connecticut claiming that the trial court erred when it held that the non-compete agreement was unenforceable. The Appellate Court reversed the trial court’s decision and found in favor of New Haven Tobacco. The Appellate Court held that the agreement in dispute focused not on Mr. Perrelli engaging in a certain business sector, but instead on the prohibition of transacting with a specific group of customers, namely those of his former employer, New Haven Tobacco.
By limiting the customers the agreement applied to, the agreement in essence instituted a geographical limitation. The customer list was local and de facto limited the agreement to the greater New Haven area. The Appellate Court also held that the trial court erred with regard to invalidating the non-compete agreement on the grounds of public interest. The trial court concluded that the provisions of the agreement aided in creating and maintaining a monopoly on the wholesale tobacco business and thus disadvantaged customers and was contrary to public interest.
The Appellate Court however found this assertion to be unsubstantiated and held that the non-compete agreement did not unreasonably interfere with the public’ interest. The enforcement of the non-compete agreement would not disadvantage the public or place hardships on individuals wishing to transact in the local tobacco wholesale industry.
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