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Shores v. Global Experience Specialists, Inc.

Supreme Court of Nevada

August 2, 2018


          Appeal from a district court order granting a preliminary injunction in an employment matter. Eighth Judicial District Court, Clark County; Mark R. Denton, Judge.

          Kemp, Jones & Coulthard, LLP, and Mark M. Jones and Madison Zornes-Vela, Las Vegas, for Appellant.

          Jolley Urga Woodbury & Little and David J. Malley and William R. Urga, Las Vegas, for Respondent.

          BEFORE CHERRY and STIGLICH, JJ., and SAITTA, Sr. J. [1]


          CHERRY, J.

         In this appeal, we consider a preliminary injunction enforcing a noncompete agreement against a former employee. The question presented to this court is whether respondent Global Experience Specialists, Inc. (GES) demonstrated a likelihood of success on the merits sufficient to warrant temporarily upholding the agreement with a preliminary injunction, where the noncompete agreement geographically covers the entire United States, but the evidence presented demonstrated that GES had business contacts in a limited number of jurisdictions. To be upheld as reasonable, a noncompete agreement must be limited to geographical areas in which the employer has particular business interests. While an employer claiming breach of a noncompete agreement need not prove its case in order to obtain a preliminary injunction, it must make a prima facie showing that the noncompete agreement is reasonable in scope in order to establish a likelihood of success on the merits of such a claim. As that was not done here, we reverse.


         Appellant Landon Shores worked as a sales associate for GES from June 2013 to September 2016. In September 2016, GES promoted Shores to sales manager, where his duties involved soliciting trade shows and conventions to contract with GES to build show floors and exhibits. As a condition of his promotion, Shores was required to sign a Confidentiality and Non-Competition Agreement (NCA).

         The NCA stated, in relevant part, that Shores would be unable to compete with GES directly or indirectly, or work in a similar capacity for any of GES's competitors, for the 12 months following the end of his employment. It indicated that these restrictions would apply throughout the United States.

         In January 2017, Shores informed GES that he had taken a position with one of GES's competitors in Southern California in a position that was the same or substantially similar to his position at GES. He moved to Southern California shortly thereafter and began working for the competitor, but he states that he has made no attempts to solicit the clients he solicited on behalf of GES, undisputed by GES to this point.

         GES filed a complaint against Shores, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment, and seeking damages and injunctive relief. GES moved for a preliminary injunction, seeking to enforce the terms of the NCA against Shores. Shores opposed the motion, arguing that, in order to make the requisite showing of a likelihood of success on the merits, GES was required to provide evidence that the restrictions in the NCA were reasonable. He asserted that, because GES had not provided the court with evidence of protectable business interests across the United States, it had not made a prima facie showing of reasonableness and thus failed to demonstrate a likelihood of success. GES replied by providing a spreadsheet showing that over the last two years it had conducted business with clients in at least one city in 33 states, the District of Columbia, and Puerto Rico.

         The district court granted the preliminary injunction, enjoining Shores from performing services "that are competitive with and/or similar to the services he performed for GES." The court concluded that (1) GES's contracts in 33 states established that it had a national client base and Shores had interacted with clients on behalf of GES in a number of major American cities; (2) by actively marketing to customers in competition with GES, Shores obtained an unfair advantage and GES suffered a corresponding unfair disadvantage; (3) the geographic scope of the NCA was reasonable given GES's nationwide dealings; (4) if Shores was knowingly and intentionally accepting competing employment in violation of the NCA, the balance of hardships would weigh in favor of GES based on GES's potential loss of clients; and (5) Shores' competitive conduct created an unreasonable interference with GES's business. The court concluded that compensatory damages would be an inadequate remedy, such that GES met the irreparable harm element for preliminary injunctive relief. Shores now appeals that decision.


         Standard ...

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