Enforcing Non-Compete and Non-Solicitation Provisions in Virginia: Three Recent Takeaways From a Virginia Trial Court

In Virginia demurrers had been routinely used to determine the enforceability of restrictive covenants – this changed with the Virginia Supreme Court’s decision in Assurance Data, Inc. v. Malyevac.[5] In Assurance Data, the Virginia Supreme Court reversed the trial court’s dismissal of a non-compete claim on demurrer. There, the Virginia Supreme Court reiterated the principal that a demurrer does not allow the court to decide the merits of a claim, but rather only if a claim has been stated. Drawing on prior opinions, the Court further stated that each non-compete case “must be determined on its own facts,” that enforceability cannot be determined “in a factual vacuum,” and that the employer ought to have had the opportunity to present evidence as to enforceability. Assurance Data left open the question of whether non-compete claims could, going forward, be dismissed at the earliest stage of litigation.

Enter the plea in bar, which emerged as the post Assurance Data means of dismissing non-compete claims on early motion.[6] Recognizing that some “confusion” exists regarding who bears the burden of proof when the enforceability of a restrictive covenant is challenged on plea in bar, the trial court in Metis expanded on the framework from Assurance Data and held that both parties have a burden of proof – and which party has the burden of proof depends on which is in the better position to produce evidence on each of the enforceability factors.[7] 

Toward that end, the Court held that the employer is in a better position to produce evidence of factor one – that the restraint is no greater than necessary to protect its legitimate business interests and therefore has the burden of proof in that regard. As to the second factor, whether the restraint was unduly harsh or oppressive in obstructing an employee’s efforts to earn a livelihood, the Court held that the employee has the burden of proof. The last factor, whether the restraint violated public policy, is to be proven by both parties.

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