740020CO1
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                    Supreme Court of the State of Washington

                            Opinion Information Sheet

Docket Number:       74002-0
Title of Case:       Anthony Alan Labriola V Pollard Group, Inc.,
                     a Washington Corporation
File Date:           11/10/2004
Oral Argument Date:  03/09/2004


                                SOURCE OF APPEAL
                                ----------------
Appeal from Superior Court of Pierce County
Docket No:      02-2-13483-7
Judgment or order under review
Date filed:     04/25/2003
Judge signing:  Hon. Kitty-Ann Van Doorninck


                                    JUSTICES
                                    --------
Authored by Faith Ireland
Concurring: Barbara A. Madsen
            Bobbe J Bridge
            Charles W. Johnson
            Gerry L Alexander
            Richard B. Sanders
            Susan Owens
            Tom Chambers
            Mary Fairhurst


                                COUNSEL OF RECORD
                                -----------------
Counsel for Appellant(s)
            A Richard Maloney
            Law Offices of A Richard Maloney
            3800 Wells Fargo Center
            999 3rd Ave
            Seattle, WA  98104-4019

Counsel for Respondent(s)
            Stuart Charles Morgan
            Attorney at Law
            1201 Pacific Ave Ste 1200
            Tacoma, WA  98402-4395


Labriola v. Pollard Group, Inc.
Concurrence by Madsen, J.

No. 74002-0

MADSEN, J. (concurring)  --  The majority reaches the correct result but
fails to sufficiently articulate the multiple legal grounds raised for
striking down a facially unreasonable noncompete agreement formed during
the course of at-will employment, leaving doubt as to the permissible scope
of a valid noncompete agreement.  First, the majority's position on the
adequacy of continued employment as consideration is unclear.  Continued at-
will employment is never independently sufficient to uphold a covenant not
to compete, and we should not suggest otherwise.  Second, the unreasonable
nature of the noncompete agreement in question is overlooked as an
independent basis for finding the agreement unenforceable.  Therefore, I
write separately to clarify that continued at-will employment is never
sufficient consideration for a noncompete agreement formed after the outset
of employment and to explain that the agreement in question is also
unenforceable on the independent ground that it is unreasonable.1
ANALYSIS
Continued at-will employment, without more, is never sufficient
consideration for a noncompete agreement formed subsequent to employment.
As the majority correctly states, where the only consideration is continued
employment, "{t}he general rule in Washington is that consideration exists
{only} if the {e}mployee enters into a noncompete agreement when he or she
is first hired."  Majority at 6.  This proposition is well-settled and
without exception.  See, e.g., Wood v. May, 73 Wn.2d 307, 312, 438 P.2d 587
(1968); Racine v. Bender, 141 Wash. 606, 612, 252 P. 115 (1927); Knight,
Vale & Gregory v. McDaniel, 37 Wn. App. 366, 369, 680 P.2d 448 (1984); see
also 2 Corbin on Contracts sec. 6.19, at 338 (1995); 15 Corbin on Contracts
sec. 80.23, at 169 (2003).  As such, the majority properly holds that
Labriola's continued employment was insufficient to uphold a noncompete
agreement formed long after he was hired.  Majority at 12.
While correctly establishing that "independent consideration is required at
the time promises are made . . . {to validate} a noncompete agreement
{formed} when employment has already commenced," the majority then sends a
confusing message with regard to the potential adequacy of continued
employment and training as independent forms of consideration, by adding
that "{w}hile continued employment and/or continued training may serve as
sufficient consideration, it certainly was not the case here."  Majority at
12 (emphasis added).
Established case law does not support the majority's incautious suggestion
that continued employment or routine training may serve as independently
sufficient consideration in some cases where a noncompete agreement is
formed after employment begins.  At-will employment is by definition non-
binding, as either party may terminate the relationship at any time.2  As
such, continued at-will employment cannot sustain a covenant not to compete
without supplemental consideration such as explicitly promised or
substantially realized future employment or specialized training, increased
wages, or the disclosure of confidential information of value.  Wood,
Racine, and Knight accordingly recognize that while offers of at-will
employment may serve as consideration for noncompete agreements formed at
the inception of employment, promises of employment, or training are
otherwise sufficient only where they are explicit and convey something more
than that which was bargained for or inherent in the original terms of
employment.
In accord with these principles, an employer's explicit promise "to teach
{an employee} the {new} skill of horseshoeing" was held sufficient to
support a noncompete agreement in Wood, 73 Wn.2d at 310, as were explicit
promises of "future employment" for specific terms in Racine, 141 Wash. at
609.  Relying on our decisions in Wood and Racine, the Court of Appeals
subsequently reasoned in Knight that "{c}ontinued employment and training
{together} are sufficient consideration for an employee's promise not to
compete."  Knight, 37 Wn. App. at 368-69 (emphasis added) (citing Wood, 73
Wn.2d at 310-11; Racine, 141 Wash. at 606).  While the Court of Appeals'
reliance on our decision in Wood was sound with regard to training, Racine
did not, as Knight suggests, address "continued employment," but rather the
analytically distinct category of guaranteed "future employment." 3  Thus,
none of the cases from this court that are cited by the majority recognize
continued employment as sufficient consideration for noncompete agreements
entered into after employment has commenced.
Moreover, in Schneller v. Hayes, 176 Wash. 115, 119-21, 28 P.2d 273 (1934)
this court held that a promise of employment which could be terminated at
the employer's pleasure was not adequate consideration for an employee's
promise not to compete, even though the employee received instruction and
work-related experience during the routine course of his employment.  The
agreement in Schneller, like the agreement at issue here, was "wholly
lacking in consideration" because it "promised {the employee} nothing in
the way of future employment, and {moreover} stipulated nothing as to
wages."  Schneller, 176 Wash. at 118-19.  In sum, this court has never held
that continued employment alone is sufficient consideration to uphold a
noncompete agreement, and we should be careful not to suggest otherwise.
While largely overlooked in the majority's analysis, a covenant not to
compete is also unenforceable if unreasonable.  Sheppard v. Blackstak
Lunber Co., 85 Wn.2d 929, 931, 540 P.2d 1373 (1975); Racine, 141 Wash. at
611, Wood, 73 Wn.2d 307, Knight, 37 Wn. App at 369. Recognizing this fact,
the majority acknowledges that only "noncompete agreements that are validly
formed and are reasonable" will be enforced.  Majority at 5 (emphasis
added).  The majority's focus on the absence of consideration should
therefore not be interpreted to suggest that the agreement at issue here
would be made enforceable merely by the addition of consideration in the
form of "increased wages, a promotion, a bonus, a fixed term of employment,
or perhaps access to protected information."  Majority at 6.  A restrictive
covenant that is unreasonable is unenforceable even where the requirements
of consideration are met.
Whether a noncompete agreement is reasonable is a matter of law to be
decided by the courts.  Knight, 37 Wn. App. at 368; Marquez v. Univ. of
Washington, 32 Wn. App. 302, 648 P.2d 94 (1982); Alexander & Alexander,
Inc. v. Wohlman, 19 Wn. App. 670, 578 P.2d 530 (1978).  Agreements cannot
be more restrictive than is reasonably necessary to protect the legitimate
business interests of employers.  Racine, 141 Wash. at 612; Wood, 73 Wn.2d
at 312; Sheppard, 85 Wn.2d at 931-33; Knight, 37 Wn. App. at 369.  The test
for reasonableness takes into account "whether or not the restraint is
necessary for the protection of the business or good will of the employer,"
and "whether it imposes on the employee any greater restraint than is
reasonably necessary to secure to the business of the employer, or the good
will thereof, such protection."  Racine, 141 Wash. at 611-12; see also
Wood, 73 Wn.2d at 309.
In short, employers can take measures to protect legitimate business
interests, but may not unreasonably restrict the freedom of current or
former employees to earn a living.4  Noncompete agreements are therefore
unreasonable whenever they are used to secure employers against employees'
lawful use of labor and skills.5  Alexander, 19 Wn. App. at 687;  .
Noncompete agreements designed to stabilize a company's current workforce
through unreasonable restraints are similarly unenforceable.6
The agreement at issue here is unreasonable because it bars Labriola from
working in his field of expertise even where he takes no unfair advantage
of his former employer.  The agreement specifically prohibits Labriola both
"during and after termination of {e}mployment" from "perform{ing} any work
in competition with the services, sales and products of Employer" or
"{b}ecom{ing} employed by any business competing with Employer."  Ex. C,
Clerk's Papers at 131-34.  By prohibiting Labriola from gaining lawful
posttermination employment in such broad-sweeping terms, the agreement
represents an unfair attempt to stabilize Pollard's workforce and secure
its business against legitimate competition.  Postemployment restraints of
this nature are never reasonable.  Ekman v. United Film Service, Inc., 53
Wn.2d 652, 657, 335 P.2d 813 (1959). 7  Because the noncompete agreement at
issue is much more restrictive than reasonably necessary to protect
legitimate business interests, the agreement would be unenforceable even if
the requirements of consideration were met.

1 Appellant argued the issue of reasonableness in Parts VI.A.7 and VI.C of
the brief.
2 Ford v. Trendwest Resorts, Inc., 146 Wn.2d 146, 152, 43 P.3d 1223 (2002);
Thompson v. St. Regis Paper Co., 102 Wn.2d 219, 223, 685 P.2d 1081 (1984);
Roberts v. Atl. Richfield Co., 88 Wn.2d 887, 891, 568 P.2d 764 (1977);
Webster v. Schauble, 65 Wn.2d 849, 852, 400 P.2d 292 (1965).
3 While Knight suggests that three years of continued employment may be
sufficient, our decision today does not establish what a reasonable or
substantial length of time is, only that continued employment was not
sufficient consideration here.  Majority at 12.
4 The Restatement provides: "In the case of a post-employment restraint,
the harm caused to the employee may be excessive if the restraint inhibits
his personal freedom by preventing him from earning his livelihood if he
quits."  Restatement (Second) of Contracts sec. 188, at 43 cmt. c (1981).
See also 2 E. Allan Farnsworth, Farnsworth on Contracts sec. 5.3, at 29 (3d
ed. 2004).
5 The Restatement supports Washington law on this point: An employer cannot
"prevent or inhibit" its former employees from using the "normal skills of
their trade."  Restatement (Second) of Contracts sec. 188, cmt. (b) (1981).
6 See Schmersahl, Treloar & Co., P.C. v. McHugh, 28 S.W.3d 345, 350 (Mo.
Ct. App. 2000) (holding, in part, that a noncompete agreement constituted
an unenforceable restrictive covenant in restraint of trade, since it did
not seek to protect proprietary information or customer contacts but,
rather, the stability of plaintiff's workforce).
7 The Georgia court has observed, for example, that "{t}his court has held
on several occasions that a covenant wherein the employee agreed not to
accept employment with a competitor `in any capacity' imposes a greater
limitation upon the employee than is necessary for the protection of the
employer and therefore is unenforceable."  Howard Schultz & Associates of
the SE, Inc. v. Broniec  239 Ga. 181, 184, 236 S.E.2d 265, 268 (1977)
(citing Dunn v. Frank Miller Assocs., 237 Ga. 266, 227 S.E.2d 243 (1976);
Federated Mutual Ins. Co. v. Whitaker, 232 Ga. 811, 209 S.E.2d 161 (1974);
Dixie Bearings, Inc. v. Walker, 219 Ga. 353, 133 S.E.2d 338 (1963)).
Corbin says: "{P}ublic policy prevents the enforcement of a restraint that
is unconnected with a contract that has a purpose other than restraining
trade."  2 Corbin on Contracts, sec. 6.19, at 340 (1995).
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