Application of Statute and Noncompete Clauses

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WI Court of Appeals – District IV

Case Name: John Karsten v. Terra Engineering & Construction Corporation, et al.

Case No.: 2016AP2025

Officials: Lundsten, P.J., Blanchard and Kloppenburg, JJ.

Focus: Application of Statute and Noncompete Clauses

The dispute on appeal is limited to whether Terra may enforce noncompete clauses, otherwise known as restrictive covenants, in a contract between Terra and Karsten, a former Terra employee. According to Terra, Karsten diverted business from Terra to one or more Midwest defendants in violation of that contract.

Terra argues that the circuit court erred in granting summary judgment against Terra and in favor of the Midwest defendants after the court concluded that the restrictive covenants are unreasonable and, thus, unenforceable. More specifically, Terra argues that, based on our decision in Selmer Company v. Rinn, 2010 WI App 106, 328 Wis. 2d 263, 789 N.W.2d 621, we should conclude that the statute that ordinarily governs restrictive covenants does not apply here or, at a minimum, that there is a factual dispute as to whether the statute applies. Terra further argues that, even if the statute applies, the restrictive covenants are reasonable and, thus, enforceable. We reject both arguments and therefore affirm.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.