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Gaver v. Schneider's O.K. Tire Co.

Supreme Court of Nebraska

November 14, 2014

JASON GAVER, APPELLEE,
v.
SCHNEIDER'S O.K. TIRE CO., APPELLANT

Page 122

[Copyrighted Material Omitted]

Page 123

Appeal from the District Court for Platte County: ROBERT R. STEINKE, Judge.

Ralph A. Froehlich, of Locher, Pavelka, Dostal, Braddy & Hammes, L.L.C., for appellant.

Stan A. Emerson, of Sipple, Hansen, Emerson, Schumacher & Klutman, for appellee.

HEAVICAN, C.J., WRIGHT, CONNOLLY, STEPHAN, MCCORMACK, MILLER-LERMAN, and CASSEL, JJ.

OPINION

Page 124

[289 Neb. 493] Miller-Lerman, J.

NATURE OF CASE

Jason Gaver, the appellee, was employed by Schneider's O.K. Tire Co. (Schneider's), the appellant, on two separate occasions, and on each occasion, Gaver signed a noncompete agreement. After Gaver's second employment relationship with Schneider's ended on July 23, 2012, he filed his amended complaint in the district court for Platte County seeking a declaratory judgment that the noncompete agreements were unenforceable. After a bench trial, the district court filed an order in which it determined that the scope of the noncompete agreements was greater than reasonably necessary to protect Schneider's against unfair competition and that therefore, the noncompete agreements were unreasonable and unenforceable. The district court entered declaratory judgment in favor of Gaver and against Schneider's. Schneider's appeals. We determine that the applicable noncompete agreement at issue in this case is greater than reasonably necessary to protect a legitimate interest of Schneider's, and therefore, we affirm the district court's determination that it is unreasonable and unenforceable.

STATEMENT OF FACTS

Schneider's is a business located in Columbus, Nebraska that sells tires and services motor vehicles. Gaver was twice employed by Schneider's: from October 29, 2001, to September 18, 2006, and from February 25, 2008, to July 23, 2012. Gaver voluntarily ended his employment relationships with Schneider's.

In 1991, prior to Gaver's employment relationship with Schneider's, Schneider's had established a profit-sharing plan with the First National Bank of Omaha as the trustee. The plan was later transferred to another entity. The profit-sharing plan is not in the record, but the adoption agreement, titled " Adoption Agreement #001 Standardized Profit Sharing Plan (Paired Profit Sharing Plan)," is in the record.

On each occasion that Gaver was employed by Schneider's, Gaver and the president of Schneider's, Bruce Schneider, entered into almost identical noncompete agreements. The [289 Neb. 494] agreements are freestanding documents, not provisions of the profit-sharing plan, and we make no comment on the propriety of such noncompete provisions in profit-sharing plans. Schneider's asked its employees to enter into the noncompete agreements as a condition of participating in the company's profit-sharing plan.

The first agreement was entered into on April 16, 2003, and it was drafted by Schneider's attorney. The second agreement was entered into on December 5, 2008, and it was drafted by Schneider's secretary and treasurer, using the 2003 agreement as a model. As set forth in more detail below, the noncompete agreements

Page 125

generally state that Gaver may not establish or open any business similar to Schneider's or " in any manner become interested, directly or indirectly, either as an owner, partner, agent, stockholder, officer or otherwise, in any such business or trade" within a 25-mile radius of Columbus for a period of 5 years after the termination of Gaver's employment.

Because Gaver's first term of employment ended on September 18, 2006, the 5-year term designated in the 2003 agreement has expired. Because Gaver's second term of employment ended on July 23, 2012, the 5-year term designated in the 2008 agreement is still in effect. The second noncompete agreement is therefore the applicable agreement and the subject of our analysis.

The 2008 agreement provided:

This Agreement made and entered into this first day of December 5, 2008, by and between [Schneider's] of Columbus, Nebraska, hereinafter referred to as Employer, and . . . Gaver, hereinafter referred to as Employee.
Whereas, Employee is employed, at will, by Employer under terms and conditions acceptable to both parties, and;
Whereas, Employer has established a Profit Sharing Plan for the benefit of his Employees, and;
Whereas, Employer desires to insure [sic] that the benefits of said Profit Sharing Plan are not used by Employee to the detriment of the Employer,
[289 Neb. 495] Now THEREFORE, in consideration of the benefits accruing to both parties as a result of the above-mentioned Profit Sharing Plan, the parties agree:
1. Employer shall maintain the Schneider's . . . Profit Sharing Plan under the terms and conditions as set forth in the Adoption Agreement #001, Standardized Profit Sharing Plan, (Paired Profit Sharing Plan) entered into by Employer on September 26, 1991.
2. Employee shall not establish or open any trade business similar to the business owned and operated by Employer or in any manner become interested, directly or indirectly, either as an owner, partner, agent, stockholder, officer or otherwise, in any such business or trade, within [a] twenty-five mile radius of Columbus, Platte County, Nebraska from and after the date of the execution of this agreement and continuing for a period of five (5) years after the termination of the Employee's employment for whatever reason.
THIS AGREEMENT IS NOT AND SHALL NOT BE INTERPRETED AS AN EMPLOYMENT AGREEMENT AND THIS AGREEMENT DOES NOT GIVE THE EMPLOYEE THE RIGHT TO BE EMPLOYED BY EMPLOYER.
THIS AGREEMENT IS NOT AND SHALL NOT BE INTERPRETED AS A RESTRICTION ON EMPLOYEE'S RIGHT TO BE EMPLOYEED [sic] IN A TRADE OR BUSINESS SIMILAR TO THE TRADE AND BUSINESS OWNED AND OPERATED BY EMPLOYED [sic].

(Emphasis supplied.)

It appears undisputed that Gaver received all the profit-sharing money he was due with respect to each period of employment.

Gaver filed his amended complaint on July 23, 2013, against Schneider's, seeking a declaratory judgment that the 2003 and 2008 noncompete agreements were unenforceable. Gaver alleged, inter alia, that he " desires to operate a business consisting of buying and selling new and used tires, installing them and servicing them in all aspects of tire ...


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