We conclude that, in the factual circumstances of this case, the restrictive covenant was necessary to protect a legitimate business interest. They also disagree as to whether the judge may use the court's equitable powers to extend the length of the restrictive covenant beyond the terms of the contract. On appeal, the parties contest whether such a provision is necessary to protect a legitimate business interest.
Instead, the judge issued injunctive relief extending the length of the restrictive covenant for one additional year beyond the end date provided for in the contract. The judge declined to enjoin the three employees McGovern had hired from continuing to work for him. Further, the judge found that McGovern had 3 misrepresented the nature of a transaction to the court in order to obfuscate his violation of the restrictive covenant. The judge further concluded that McGovern had committed a breach of the covenant by hiring at least three employees from his former company. He determined that, in the case at bar, the anti-raiding purpose of the provision constituted a legitimate business interest. A judge in the Superior Court concluded that the restrictive covenant at issue was enforceable. In spite of this provision, McGovern went on to hire numerous employees from his former company in breach of the restrictive covenant. The restriction was designed to prevent McGovern from "raiding" the company by targeting and soliciting key employees to work for him. The provision at issue prohibited defendant Matthew McGovern from soliciting or hiring employees from his former company for a defined period of time.
At issue in the instant case is an "anti- raiding" restrictive covenant entered into between an automotive dealership group and a former executive and minority owner. 2 2 The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.
AUTOMILE MOTORS SACO SERIES
AMR Real Estate Holdings, LLC AMR Real Estate Holdings, LLC, Hanover Series AMR Real Estate Holdings, LLC, Westwood Series AMR Real Estate Holdings, LLC, West Roxbury Series AMR Real Estate Holdings, LLC, West Roxbury II Series AMR Real Estate Holdings, LLC, Walpole Series AMR Real Estate Holdings, LLC North Hampton Series AMR Real Estate Holdings II, LLC Saco Auto Holdings, LLC Saco Real Estate Holdings, LLC Real Estate Holdings, LLC, Saco I Series Saco Real Estate Holdings, LLC, Saco II Series Saco Real Estate Holdings, LLC, Saco III Series Saco Real Estate Holdings, LLC, Saco IV Series AMR Auto Holdings-TY, LLC AMR Auto Holdings-TH, LLC AMR Auto HoldingsTO, LLC and AMR Auto Holdings-LN, LLC.
Civil action commenced in the Superior Court Department on November 21, 2017. Contract, Agreement not to compete, Performance and breach. Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, & Kafker, JJ. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750 (617) 5571030 SJC-12740 AUTOMILE HOLDINGS, LLC, & others1 & others.2 Suffolk. NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. The Supreme Judicial Court held (1) the restrictive covenant was necessary to protect a legitimate business interest (2) Defendant committed a breach of the anti-raiding provision but (3) the use of an equitable remedy to extend the restriction beyond the plain terms of the contract was not warranted without a finding that damages would be inadequate. The judge issued injunctive relief extending the length of the restrictive covenant for an additional year beyond the date provided for in the contract. The superior court judge concluded that the restrictive covenant was enforceable and that Defendant had committed a breach of the covenant. Defendant, however, hired employees from his former company in breach of the restrictive covenant. The restrictive covenant in this case prohibited Defendant from soliciting or hiring employees from Plaintiff, his former company, for a defined period of time.
AUTOMILE MOTORS SACO TRIAL
The Supreme Judicial Court affirmed the judgment of the superior court concluding that Defendant committed a breach of an "anti-raiding" restrictive covenant entered into between between the parties but held that the equitable remedy fashioned by the trial judge, which expanded the restrictive covenant beyond its plain terms, constituted an abuse of discretion.
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